1. Creation of Monopolies
Big Business
Creation of Monopolies

2. Second Industrial Revolution
Before Civil War industry
Textiles, clothing and leather
During and After Civil War
Steel, petroleum, electricity, and machinery

3. American System of Economics
Capitalism – private ownership of factors of production – competition sets prices and wages
Laissez-faire – “Hands –off” NO GOVERNMENT INTERVENTION

4. American System Cont. Prior to Civil War Post Civil War Small business
Corporations – owned by stock holders
Monopolies or Trust – merger of several companies

5. Social Darwinism Based on Darwin’s Theory of Evolution
Survival of the fittest.
Used to justify beliefs in laissez-faire government.

6. Industrial Tycoons Andrew Carnegie – Steel
Cornelius Vanderbilt – Railroads
John D. Rockefeller – Oil
J.P. Morgan – Banking
James Duke – Tobacco and Electric Power

7. Andrew Carnegie
Inspired by Henry Bessemer and his new process for making steel.
Formed Carnegie Steel in 1889.

8. John D. Rockefeller Standard Oil tycoon.
His business was later declared illegal by the Sherman Anti-Trust Act and busted up into several small business.
Later becomes Exxon-Mobil

9. Two Ways to Form a Monopoly

10. Vertical Consolidation
Process used by Carnegie to become wealthy and establish a monopoly.
Bought out suppliers for steel industry.
Coal fields, iron ore mines, storage, transportation, pipelines, tanker trucks to haul it….etc.

11. Horizontal Consolidation
Purchase of companies producing the same good then merge together.
Lower prices until competition goes bankrupt.
Buy stock and form trusts.

12. Robber Baron or Captain of Industry
Employees of Carnegie and Rockefeller called them robber barons.
Owners reap large profits from paying workers low wages.
Carnegie and Rockefeller considered themselves to be captains of industry.
Those who help the poor by providing them with a job.
Both men donated millions of dollars to libraries and educational institutions-philanthropists.

13. The effects of Big Business
Monopolies drive up prices
Government intervention in business
Wide gap between rich and poor/working class
Development of middle class
Labor Unions