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The Growth of Big Business

Mr. Mizak Modern American History Fall 2009. The Growth of Big Business. Question. Describe a “mom and pop” business. Describe “big business” What is the difference between the two?. Robber Barons or Captains of Industry?.

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The Growth of Big Business

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  1. Mr. Mizak Modern American History Fall 2009 The Growth of Big Business

  2. Question • Describe a “mom and pop” business. • Describe “big business” • What is the difference between the two?

  3. Robber Barons or Captains of Industry? • Historians debate between these two terms when describing the rise of powerful industrialists in the late 1800s. • Robber Baron: The view that wealthy industrialists built their fortunes by stealing from the public and draining the country’s natural resources • Very negative view of the rising industrialists

  4. Captains of Industry: The view that wealthy business leaders served the nation in a positive fashion. • Increased the supply of goods • Expanded to new markets • Provided jobs for many • Which of these two views do you think is true?

  5. Causes of Rapid Industrialization 1. Steam Revolution of the 1830s-1850s. 2. The Railroad fueled the growing US economy: • First big business in the US. • A magnet for financial investment. • The key to opening the West. • Aided the development of other industries.

  6. Causes of Rapid Industrialization 3.Technological innovations. • Bessemer and open hearth process • Refrigerated cars • Edison • light bulb, phonograph, motion pictures.

  7. Causes of Rapid Industrialization 4.Unskilled & semi-skilled labor in abundance. 5. Abundant capital. 6. New, talented group of businessmen [entrepreneurs] and advisors. 7. Market growing as US population increased. 8. Government willing to help at all levels to stimulate economic growth. 9. Abundant natural resources.

  8. Social Darwinism • This “social theory” evolved from Darwin’s theory of evolution • Under this theory, animals survive through natural selection=> only the fittest survive • Social Darwinists believed that the government should stay out of business affairs • The strong, or “fit”, would succeed and become rich, while the unfit would be weeded out • This would improve the nation as a whole Herbert Spencer

  9. New Business Culture Laissez Fairethe ideology of the Industrial Age. • Individual as a moral and economic ideal. • Individuals should compete freely in the marketplace. • The market was not man-made or invented. • No room for government in the market!

  10. Gaining a Competitive Edge • With the possibility of enormous profits, industrialists used new methods to gain an edge over their rivals. • Vertical Consolidation- Controlling all phases of a product’s development (Carnegie) • Horizontal Consolidation- The bringing together of many firms in the same business. (Rockefeller's Standard Oil Trust)

  11. New Type of Business Entities

  12. Iron & Steel Production

  13. At What Cost?

  14. The Industrialists • Andrew Carnegie • Steel • John D. Rockefeller • Oil • J.P. Morgan • Banking • Cornelius “Commodore” Vanderbilt • Railroads and Shipping

  15. Questions • After learning about the growth of big business, do you see the industrialists as robber barons or captains of industry? • Was the providing of jobs by the industrialists worth the cost to the working class?

  16. Modern ‘Robber Barons’??

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