1. Chapter 20, Section 2: The Rise of Big Business
Main Idea: As industry boomed, American businesses grew and developed new ways of organizing and limiting competition.

4. A. The Steel Industry
Growth of RRs boosted the steel industry (needed rails, locomotives, etc)
Bessemer Process – made steel stronger & less expensive. As a result, many things began to made of steel.
Pittsburgh becomes the steel capital of US

5. The Steel Industry
1850’s – The Bessemer Process allowed steel to be produced cheaply.
Therefore, the steel industry grew rapidly.
Examples: railroads, skyscrapers, nails, pins
Bessemer converter, Kelham Island Museum, Sheffield, England (2002)
Henry Bessemer

6. B. King of Steel
Andrew Carnegie – created a monopoly in steel through vertical integration (control all phases of manufacturing)
Philanthropist – he spent his later years giving tens of millions of dollars to charity (“ I started life as a poor man, and I wish to end it that way.”)

7. · Carnegie reportedly gave $350 million of his $400 million fortune to charities, including $60 million to build libraries.
By 1919, 2,811 libraries had been founded at a total cost of $56,704,188.
Harper's Weekly April 11, 1903

8. C. New Ways of Doing Business
Catalog shopping by mail – Sears, Wards
Capital = money (needed to expand)
Corporation = business owned by investors
Stock = shares in a business owned by investors (or stockholders)
Dividend = profit shared with investors
Buying stock is less risky than starting your own business (can only lose what you invest)
J.P. Morgan – investment banker, bought US Steel

9. operate for profit in a competitive system without
an economic system
in which resources and
means of production are
privately owned and prices,
production, and the distribution
of goods are determined
mainly by competition
in a free market
U.S. Economy
Free Enterprise Capitalism
Private Property & Enterprise
Competition Driven
Profit Driven
Consumer Driven
freedom of private business to organize and
operate for profit in a competitive system without
interference by government beyond regulation
necessary to protect public interest

10. · Most large businesses are corporations owned by stockholders.
Shares of stock - a unit of ownership in a company

11. · Some corporations issue dividends to their stockholders.
Dividend – payment to stockholders from a corporation’s profits

12. D. Plentiful Resources
US was rich w/ raw materials (iron ore, coal, lumber, minerals, etc)
Oil Boom – John D. Rockefeller & the Standard Oil Company
Trust = smaller corporations turn control of their stock over to a large trust
Monopoly = control of an industry by one corporation

13. Vertical and Horizontal Integration

14. Standard Oil Co.
John Rockefeller

15. E. Big Business: Good or Bad?
---
Lack of competition drives up prices
Smaller businesses can’t compete & are put out
Workers of corporations are often exploited
Trusts had too much political influence ($ = power) +
Carnegie (Gospel of Wealth) argued that competition ruined businesses & put people out of work
Goods could be made cheaply to keep prices down

16. “On Wealth” Andrew Carnegie “Gospel of Wealth” (1901):
Inequality is inevitable and good.
Wealthy should act as “trustees” for their “poorer brethren.”
Wealth no longer looked upon as bad.
Viewed as a sign of God’s approval.
Christian duty to accumulate wealth.
Andrew Carnegie

17. F. Captains of Industry or Robber Barons?
Their leadership made the US the #1 industrial giant of the world
They were self-made (rags to riches)
They gave back to charity later (philanthropists)
Robber Barons (---)
They used cutthroat tactics to drive others out (many now illegal)
They had too much $ & power (political infl.)
They were ruthless businessmen whose workers were often exploited (hard work, low pay, unsafe cond.)

18. Andrew Carnegie in his “Great Double Role”
Caption reads: "Forty-Millionaire Carnegie in his Great Double Role. As the tight-fisted employer he reduces wages that he may play philanthropist and give away libraries, etc.”

19. The Protectors of Our Industries

20. “Congress—Who’s In It and Who Owns It”

21. The World’s 20 Largest Corporations by Market Value, 2003 ($US millions)
Market Value - The number of shares in issue multiplied by their current market price
Source: Financial Times Global 500, May 28th, 2003.

22. The Bosses of the Senate