the growth of big business the rise of big business
TRANSCRIPT
The Growth of Big Business
The Rise of Big Business
Warm Up
1. Imagine you are Bill Gates – What would you do with your money? Write it down on a separate sheet of paper.
2. Read the “Gospel of Wealth” and answer the 3 questions.
3. Compare your response to question 1 and question 2. Would Carnegie approve of your decisions??? Why or why not.
The Rise 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)
2: a business owner or executive who acquires wealth through ethically questionable tactics
Captain of Industry
: the head of a great industrial enterprise
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
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
The Rise of Big Business
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
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
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
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
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
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
The Rise of Big Business
Vertical Integration
• Controlling all steps to change raw materials into finished products
The Rise of Big Business
Vertical Integration
• Own iron and coal mines
• Bought railroads, trucking and shipping lines
• Bought warehouses
The Rise of Big Business
Horizontal Consolidation
• Buy out competitors• Companies making
similar products merge
The Rise of Big Business
Growth and Consolidation
• Monopoly- complete control over production, quality, wages, and prices
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
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
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
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
The Rise of Big Business
Standard Oil Trust
• Rockefeller was so successful at his death his personal fortune was estimated at
• $815,647,796
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
The Rise of Big Business