1.  Cornelius Vanderbilt  Chapter 6 Section 3  Objectives:  Identify business and management strategies that led to big business. Explain Social Darwinism Identify methods that led to monopoly

2.  Carnegie controlled more steel production than all of Great Britain.  Management Techniques ◦ How to make better products at cheaper prices  1. Accounting led to cost controls  2. New production techniques led to faster steel production  3. Gave managers stock ownership in companies  These steps reduced costs and increased production.

3.  Attempted to control entire steel industry ◦ Vertical Integration  bought suppliers, controlling every stage of production ◦ Horizontal consolidation  bought out competitors, companies producing similar products merge  Carnegie controlled 80% of the nation’s steel production. He was the second richest man in the world.

6.  Natural Selection- Charles Darwin’s idea of evolution. ◦ weeded out the weak, enabled the strong to survive  Idea helped explain income inequalities.  Led to idea that government should not interfere with business  Appealed to the Protestant work ethic  Work hard, save money, show that you are saved.

7.  Social Darwinism: ◦ Riches are a sign of God’s favor ◦ Poor and lazy people get what they deserve.  It justified the income gap between the incredibly rich and the incredibly poor.

8. Laissez-Faire Economics: government non-interference of business The failures of the poor The extreme income and wealth gap Winners and losers

9.  Monopolies and oligopolies form ◦ Monopoly-one person or firm controls the market ◦ Oligopoly-a few control the market. ◦ Holding companies- buy stock in other companies to control them. ◦ John D. Rockefeller  Established Standard Oil, monopolized the oil industry  Trusts-companies that put their stock ownership into a trust run by one Trustee.  They reap the profits in return. ◦ The Trusts start to control everything.

12.  The term “Robber Baron” comes from the feudal lords of the Middle Ages. They control all aspects of life.  Sold products at below cost to drive competition out of business ◦ Paid employees low wages, reinvested profits to buy out the competition. ◦ This is the business model of the late 1800’s.  The ultimate game of Monopoly.

14.  Once they gained control of an industry, ◦ they raised prices dramatically for huge profits ◦ Railroads were pressured to reduce prices by farmers. (Populist Movement)  Barons donated large parts of their fortunes to charities. (Gospel of Wealth) ◦ Rockefeller: University of Chicago, medical research ◦ Carnegie: Libraries across America, Carnegie Hall, Carnegie Foundation

15.  Fairfield, Iowa received $40,000 to build the first Carnegie Library west of the Alleghany's.  Carnegie eventually gives over $41million to build libraries across America.

16.  Attempt to bust up the Trusts. Monopoly forming is illegal. ◦ Enforcement was difficult because “trust” could not be defined well enough for the courts. ◦ Business dissolved trusts and formed new ones that didn’t fit the definition.  Enforcement slowly ends due to frustration.  Business consolidation increases.

17.  Roosevelt became know as the “Trust Buster” trying to break up monopolies.

18.  South still recovering from the Civil War ◦ Lacked money for investment  Had few cities with sufficient population for large industry.  Few Southerners had money to invest in business, banks still in the North.  Railroads were controlled by Northerners  Overbuilding of railroads caused many railroads to go bankrupt. Vanderbilt bought them up and consolidated the industry.

19.  Lack of skilled workers due to lack of schools in the South.  Both Northern and Southern laborers were exploited by Robber Barons. ◦ Exploitation drew them together in a nationwide labor movement to demand rights.

20.  Labor fights big business by using their own technique of horizontal integration. ◦ There is strength in numbers. ◦ Unionization is illegal at first. Seen as building monopoly.