Robber Barons vs. Robber Barons vs. Captains of IndustryCaptains of Industry

U.S. HistoryU.S. History

Mr. TrivetteMr. Trivette

Warm Up:Warm Up:

Complete the following to the best of Complete the following to the best of your knowledge:your knowledge: In a capitalist economy, how are prices In a capitalist economy, how are prices

determined?determined? Explain the difference between a Explain the difference between a

corporation and a regular company.corporation and a regular company. Why is a monopoly illegal?Why is a monopoly illegal? Define the terms “Robber Baron” and Define the terms “Robber Baron” and

“Captain of Industry”“Captain of Industry”

Terms to knowTerms to know CapitalismCapitalism: An economic system in which : An economic system in which

industries are privately owned, and the prices, industries are privately owned, and the prices, production, and distribution of goods are production, and distribution of goods are determined by competition on a free market.determined by competition on a free market.

Corporation: Corporation: A large company that can A large company that can generate capital (money) by selling stock on the generate capital (money) by selling stock on the stock market.stock market.

Monopoly:Monopoly: A situation in which one company A situation in which one company has eliminated its competition.has eliminated its competition.

TrustTrust: An alliance of companies, run by a board : An alliance of companies, run by a board of trustees, that function as one company. of trustees, that function as one company.

Reduces competitionReduces competition Illegal if it forms a monopolyIllegal if it forms a monopoly

Opposing View PointsOpposing View Points Captains of IndustryCaptains of Industry

Created JobsCreated Jobs Increased productionIncreased production Provided cheap Provided cheap

productsproducts Gave money back to Gave money back to

the communitythe community

Robber BaronsRobber Barons Exploited workersExploited workers Corrupted the Corrupted the

governmentgovernment GreedyGreedy

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Large corporations developed in two major ways: horizontal or vertical integration

Horizontal integration is the growth of a business through acquiring additional business activities in the same industry.

J.D.Rockefeller’s Standard Oil

Vertical integration is the growth of a business through the acquisition of the materials that make the product, the factories that manufacture the products including the machines needed to produce the product, as well as the distribution channels to take the product to market.

Andrew Carnegie's steel company

John Rockefeller and Standard John Rockefeller and Standard Oil TrustOil Trust

To monopolize the oil industry he To monopolize the oil industry he forms the Standard Oil Trust forms the Standard Oil Trust AA trusttrust is an organization of businesses is an organization of businesses

designed to operate like a monopoly designed to operate like a monopoly His corporation Standard Oil owned His corporation Standard Oil owned

about 88% of the oil industry in the US about 88% of the oil industry in the US in 1890in 1890

John Rockefeller and Standard John Rockefeller and Standard OilOil

Recognized the Recognized the potential of the oil potential of the oil industryindustry

Very hard workerVery hard worker Spent all profits from Spent all profits from

the company to the company to improve productionimprove production

Philanthropy-Philanthropy- gave gave over $500 million to over $500 million to charitiescharities

Made deals with the Made deals with the railroads to charge railroads to charge competitors morecompetitors more

Lowers prices to force Lowers prices to force other companies out of other companies out of business-then raised business-then raised pricesprices

Low pay for workersLow pay for workers Sabotaged competitorsSabotaged competitors Paid government Paid government

officials in the Senateofficials in the Senate

Andrew Carnegie (1835-Andrew Carnegie (1835-1919)1919)

Andrew Carnegie Andrew Carnegie came to U.S. as a poor came to U.S. as a poor immigrant from immigrant from Scotland in 1848Scotland in 1848

Built the Carnegie Built the Carnegie Steel Corporation Steel Corporation through through vertical vertical consolidationconsolidation

Retired a millionaire Retired a millionaire and gave much of his and gave much of his money to money to education (Carnegie-education (Carnegie-Mellon University) Mellon University)

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Shipping tycoon- millionaire by 1846

Nicknamed “Commodore”

Built the first railroad line connecting New York City and Chicago. He also built New York’s Grand Central station

Most historians estimate that when he died he was worth $100 million ($1.7 billion in today’s dollars)

Vanderbilt University

Biltmore House

Cornelius Vanderbilt 1794-1877

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John Pierpont Morgan 1837-1913

Born into a wealthy family

Made a huge amount of money by financing railroad companies that were in financial trouble

In 1901, he bought Carnegie Steel. He turned that into U.S. Steel, the world's first billion-dollar corporation

By the early 1900s, Morgan controlled almost all of the major industries in the U.S. and had a large stake in the financial and insurance industries

The Pierpont Morgan Library in New York was donated by Morgan in 1924.

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How rich were the “robber barons” compared to Microsoft founder Bill Gates?

Justifications for Industrialists’ Justifications for Industrialists’ Extreme WealthExtreme Wealth

Social DarwinismSocial Darwinism Herbert SpencerHerbert Spencer

Based on Charles Based on Charles Darwin’s theory of Darwin’s theory of evolutionevolution

Those who are rich are Those who are rich are more fit, than those more fit, than those who are poorwho are poor

Attempted to use Attempted to use science to explain social science to explain social classesclasses

Gospel of WealthGospel of Wealth Andrew CarnegieAndrew Carnegie

God gave wealth to the most God gave wealth to the most capable peoplecapable people

It is the duty of the wealthy It is the duty of the wealthy to give money to help the to give money to help the poor poor

Carnegie gave millions of Carnegie gave millions of dollars away to establish dollars away to establish libraries, colleges, and libraries, colleges, and museumsmuseums

Working ConditionsWorking Conditions

Laborers were immigrants, African Laborers were immigrants, African Americans, women, and childrenAmericans, women, and children

12 hour days, six days a week12 hour days, six days a week Accidents were frequent, deaths Accidents were frequent, deaths

occurred oftenoccurred often Low wagesLow wages

Anti-Trust MovementAnti-Trust Movement The public began to dislike trustsThe public began to dislike trusts

Prices were high on important productsPrices were high on important products Trusts were responsible for a corrupt Trusts were responsible for a corrupt

governmentgovernment Although Congressmen liked trusts they Although Congressmen liked trusts they

needed to please the publicneeded to please the public Passed the Passed the Sherman Antitrust ActSherman Antitrust Act

Made it illegal to form a trust or monopolyMade it illegal to form a trust or monopoly Act was not effective because the act did not Act was not effective because the act did not

clearly define a trustclearly define a trust

Exit PassExit Pass

-Evaluate if Industrialists should be -Evaluate if Industrialists should be viewed as captains of industry or as viewed as captains of industry or as robber barons.robber barons.

-Use details from your notes to -Use details from your notes to support your answer.support your answer.