What is a “baron”?

What was a “robber baron”?

Robber barons were feudal lords in the Middle Ages who owned land along the Rhine River in Europe

What was a “robber baron”?

They abused their power by stopping merchant ships and demanding tolls

“Robber Barons” The term was revived in the late 1800s to describe the industrialists who dominated their industries and amassed fortunes by using unfair business practices.

“The oil industry

belongs to us.”

-John D. Rockefeller

(1876)

John D. RockefellerBUSINESS PRACTICES

Formed Standard Oil of Ohio in 1870 Consolidated the oil industry by forcing

railroads to give it rebates Forced railroads to raise rates for rival refiners Cut prices, forcing competitors out of business During 1873 depression, bought bankrupt

companies Used “vertical integration” until he owned

ships, docks, barrel companies, and even pipelines that carried the oil

Result: Monopoly. Standard Oil controlled all steps of the production of oil, from refining to delivery.

“The oil industry

belongs to us.”

-John D. Rockefeller

(1876)

“trust” = monopolyA NEW BUSINESS PRACTICE

IN THE LATE 19C

Purpose was to minimize competition and create a “monopoly”

Corporate leaders (like Rockefeller) convinced (or forced) shareholders of all the companies in one industry to give their shares to a board of trustees in exchange for certificates, which would pay them dividends

The board would then manage all the companies in “trust”

Result: Gave people like Rockefeller complete control over an industry (since he appointed the board)

philanthropy, philanthropistPHIL = LOVE

ANTHROP = HUMANITY

Literally means “love of humanity”

Concern for human welfare and advancement, usually through donations of money, property, or work to needy persons.

John D. Rockefeller

CON Monopoly destroys

competition, which is the basis of our market economy

Monopoly is inhumane—it forces competitors into bankruptcy and ruin

His wealth made him too powerful; no one should be that powerful in a “democratic” country

PRO• Business combinations

were essential to transform the chaotic business markets of the 1860s and 1870s .

• He was a bold innovator, the first to bring a unifying idea to industry

• He was a philanthropist—he used his money to make society better

Captain of Industry or Robber Baron?

John D. Rockefeller Rockefeller Center, NYC

Captain of Industry or Robber Baron?

Andrew Carnegie Carnegie Hall, NYC