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The Growth of Big Business

The Rise of Big Business. The Growth of Big Business. Robber Baron or Captains of Industry. Robber Baron 1 : an American capitalist of the latter part of the 19th century who became wealthy through exploitation (as of natural resources, governmental influence, or low wage scales)

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The Growth of Big Business

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  1. The Rise of Big Business The Growth of Big Business

  2. Robber Baron or Captains of Industry Robber Baron 1: an American capitalist of the latter part of the 19th century who became wealthy through exploitation (as of natural resources, governmental influence, or low wage scales) 2: a business owner or executive who acquires wealth through ethically questionable tactics Captain of Industry : the head of a great industrial enterprise

  3. 3 New Vocabulary words… • Monopoly: A company that completely dominates a particular industry • Trust: a set of companies managed by a small group known as trustees, who can prevent companies in the trust from competing with each other • Corporation: A company recognized by law to exist independently from its owners, with the ability to own property, borrow money, sue or be sued

  4. The Rise of Big Business Robber Barons or Captains of Industry • Robber Barons – negative view of big business • As cruel and ruthless • Would stop at nothing to achieve great wealth

  5. The Rise of Big Business Robber Barons or Captains of Industry • Captain of Industry – view that the same men were ingenious and industrial leaders • Transformed the American economy • Praised for their charity

  6. The Rise of Big Business

  7. The Rise of Big Business Social Darwinism • Origins of Species 1859 • Charles Darwin • All animal life had evolved by a process of Natural Selection • Only the strong survive to reproduce

  8. The Rise of Big Business Social Darwinism • Free Competition in the economy, like natural selection, would ensure survival of the fittest • Society should do as little as possible to interfere with people’s pursuit of success

  9. The Rise of Big Business Robber Barons or Captains of Industry • Andrew Carnegie • Gospel of Wealth – people should be free to make as much money as they can. However, after they make it, they should give it away

  10. The Rise of Big Business Carnegie Steel • Arrive in American as a penniless Scottish immigrant • Began to work to assist his family • 1865 Andrew Carnegie was making $50,000

  11. The Rise of Big Business Carnegie Steel • Entered steel business • Stole Bessemer Process from Brits • 1889 Established Carnegie Steel Company • Controlled suppliers and competition • 1899 Carnegie Steel produced more than Great Britain • Carnegie Steel produced 80% of nation’s steel

  12. The Rise of Big Business Robber Barons or Captains of Industry • Carnegie once stated, “I entered this life poor and I wish to leave it the same.” • Gave away $325 million = 90% of his wealth • Carnegie Hall in NY City • Carnegie Foundation • 3,000 libraries across the US

  13. The Rise of Big Business Vertical Integration • Controlling all steps to change raw materials into finished products

  14. The Rise of Big Business Vertical Integration • Own iron and coal mines • Bought railroads, trucking and shipping lines • Bought warehouses

  15. The Rise of Big Business Horizontal Consolidation • Buy out competitors • Companies making similar products merge

  16. The Rise of Big Business Growth and Consolidation • Monopoly- complete control over production, quality, wages, and prices

  17. The Rise of Big Business Holding Company • J.P. Morgan very successful banker • Bought Carnegie Steel in 1901 for $500 million • Changed name to US Steel • Became the largest business organization

  18. The Rise of Big Business Standard Oil Trust • Established by John D. Rockefeller • Was able to undersell his competitors by charging less • Purchased oil refineries and created horizontal consolidation

  19. The Rise of Big Business Standard Oil Trust • Drove competitors out of business by selling oil lower than cost to make it • After competitor are driven out • prices skyrocketed to recoup loss

  20. The Rise of Big Business John D. Rockefeller • Rockefeller gave away $500 million • Founded the University of Chicago which found cure for yellow fever • Land for United Nations

  21. The Rise of Big Business Standard Oil Trust • Rockefeller was so successful at his death his personal fortune was estimated at • $815,647,796

  22. The Rise of Big Business The Government Response • 1890 Sherman Antitrust Act • Outlawed any combination of companies that restrained interstate trade • Was not effective against trusts • Pro business courts had to interpret law

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