1. The Rise of Big Business
How did Capitalism and Capitalists transform the American Economy?

2. The Hook
Make an effort to connect all the information in this presentation to the hook…
“Technology of the late 19th Century was used by capitalists who organized resources to build huge industries and personal fortunes.”

3. Objectives
Describe the economic system of capitalism and note how its supporters and critics felt about this system
Explain how business entrepreneurs developed methods of organizing capital (money) and other resources to build huge corporations.
Describe the efforts of Andrew Carnegie, John Rockefeller, Cornelius Vanderbilt, George Pullman, Frank Woolworth and George Westinghouse transformed the American economy.
How do these objectives connect to the hook for this section?

4. Capitalism, Free Enterprise and the American Economy
From its early history, the American nation supported and protected private property and the freedom of individuals to conduct commerce (trade) with minimal interference
The pursuit of happiness in the Declaration of Independence meant the ability to earn money.
Traditional belief of American freedom- you can earn your way to riches no matter of your birth
Up though the Civil War, businesses were traditionally small and the owner worked side by side his employees
Businesses required limited capital and marketed locally
The economic demands of the Civil War and new technologies would press industries to grow in capacity

5. Some Thoughts about Capitalism: Supporters and Critics
Capitalist Critics
Individuals who accumulate wealth and use increasing economic power to protect and gain more wealth.
The business class (bourgeoisie) take advantage of powerless workers (proletariat) and make money on their labor
Capitalism increases the imbalances in wealth and eventually, the competition will narrow to few players and most people are too poor to consume products
Socialism- system where businesses are owned by government with the focus on economic equality
In Support of Capitalism
Individuals take risks with their wealth in order to make more wealth
Motivated by self-interest, people work hard to build and protect property
People will work to develop skills, products and ideas that are in great demand and will be discouraged from skills, products and ideas whose values are low or declining
Laissez Faire- Hands off- Individuals able to gain great riches of become desperately poor- Focus on economic liberty

6. In Support of Large Scale Capitalism: America in the 19th Century
Capitalism and industry made Britain the world’s most wealthy nation by “A nation of shop keepers”
Capitalism made few people very rich but forced displaced farmers to accept jarring poverty in dangerous employment
Poverty of industrial England memorialized in the work of Charles Dickens
Darwin and evolution-Theories that higher forms of life evolved through an environmental struggle- Survival of the Fittest
Sociologist Herbert Spencer applied evolutionary theory to society and capitalism
New ideas and hard work provides wealth.
Weaker people lose the survival of the fittest and become extinct

7. Technology, Capital and Big Business
Emerging technologies of the late 19th century required larger scale investment and wider networks of communication
Transportation and communication technologies required long distance interdependence
Development of a national standard time necessitated
Ideas and products can move throughout the nation with relative ease- National markets
Emerging technologies involved much larger scale production- more capital than one person could provide
Corporations- Many people pool resources (capital) by purchasing shares of a company (stocks)
Allows many small investors to support an enterprise
Limited liability laws- You can not be held liable for a loss any greater than your investment
Corporations could outlive an entrepreneur- more stable

8. The Rise of Trusts: Corporations on Steroids
Competition between corporations was fierce
Corporations attempted to organize in ways they could defeat competition by…
Organizing and taking control of all inputs and distribution networks of a product (e.g. coal, rail lines, coke plants, iron mines and steel mills in the production of steel) Vertical Integration
Organizing and controlling an entire industry by buying out or burying the competition and forcing them out of business Horizontal Integration
Companies that could not compete failed- social darwinism…

9. The Hook
Make an effort to connect all the information in this presentation to the hook…
“Technology of the late 19th Century was used by capitalists who organized resources to build huge industries and personal fortunes.”

10. Carnegie, Steel and Vertical Integration: The Making of the World’s Richest Man
Scottish immigrant believed that the steel industry would be a rapidly growing business after the Civil War
New technology Bessemer Process could make steel quicker and less expensively.
Growing cities and the railroad would be a market for steel
Organized his company vertically- controlling mines and transportation facilities
Was able to produce steel inexpensively
Pittsburgh became the steel capital of the world

11. Pittsburgh: Hell With the Lid Off
Pittsburgh was the ideal place to build the steel industry
Coal fields nearby
River transportation
Iron ore from Midwest could be transported on Great Lakes
Central location to markets
Growing supply of labor
The steel industry transforms Pittsburgh and steel transforms America

12. Carnegie and the Gospel of Wealth

13. John D. Rockefeller: Organizing Oil

14. Cornelius Vanderbilt: Putting the Rail Industry on Track

15. George Westinghouse: The Inventor as Industrialist

16. Frank Woolworth: Marketing

17. Thomas Edison: More than a Wizard

18. From Industrial to Financial Capitalism
J.P. Morgan, Jay Gould…