The Men of The Men of The Men of The Men of

Big BusinessBig BusinessBig BusinessBig Business

ROBBER BARONS ROBBER BARONS ROBBER BARONS ROBBER BARONS or

CAPTAINS OF INDUSTRY?

Robber Baron: A businessman or banker who used questionable or

unethical business practices to become wealthy.

Captain of Industry:A business leader who has contributed to society in

a positive manner.

NEW BUSINESS STRATEGIES

Vertical Integration: Control ALL elements of production

Horizontal Integration:Control one element of production COMPLETELY

NEW BUSINESS STRATEGIES

SOCIAL DARWINISM• Based up Charles Darwin’s theory of Biological Evolution.

• “Survival of the Fittest”���� Idea that only the best-adapted species will survive.

• Transferred to the business world:• Supports the idea of Laissez-Faire ���� “allow to do”• The business world is governed by natural law• No Regulations

SOCIAL DARWINISM

“The growth of a large business is merely survival of the fittest. The [Rose] can be produced in the splendor and

fragrance which bring cheer to its beholder only by sacrificing the early buds which grow up around it. This is not an evil tendency in business. It is merely the working-

out of a law of nature and a law of God.”

-John D. Rockefeller

ANDREW CARNEGIE

NET WORTH:

$310 Billion

ANDREW CARNEGIE

• Born in Scotland in 1835.

• Grew up in poverty

• Moved to America in 1848 – Pittsburg, PA

• Took work in a cotton factory - $1.20 per day

ANDREW CARNEGIE• Began industrial career on the railroad

• THE STEEL INDUSTRY This is where he made his fortune

• Steel made possible by the Bessemer Process

• Invented by Henry Bessemer• Inject air into molten iron to remove carbon and other impurities• Brittle iron ���� Flexible steel

ANDREW CARNEGIE• Carnegie Steel Company

• Was extremely successful… why?

• Accounting ���� track costs precisely• Attracted talented people• Undercutting competition and price control• Vertical and Horizontal Integration

• By 1901, controlled almost the entire steel industry

ANDREW CARNEGIE• Advocate for workers rights ���� Did not always reflect this

• Long hours, low wages• Homestead Strike of 1892

• Henry Frick locks out striking laborers • Brings in Pinkertons (Private security agency) • 3 agents and 9 workers left dead• Lasted 2 weeks (June 29th – July 12th)

• Stain upon Carnegie’s legacy

ANDREW CARNEGIE

“Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the people.”

• 1901 - sold company to J.P. Morgan for $450 million.

• Spent rest of life giving away his money• Funded over 3,000 public libraries

• Funded Tuskegee and Carnegie Institutes

• Donated nearly 90% of his wealth.

• Responsible for over $4.3 billion in charitable contributions

STOP

• What do you think? Was

Carnegie a “Robber Baron” or a

“Captain of Industry”?

JOHN D. ROCKEFELLER

NET WORTH:

$340 Billion

JOHN D. ROCKEFELLER

• Born in New York in 1839

• Father was a “Pitch Man”

• Began in as a Commission Merchant in farm commodities• Company made nearly $450,000 first year

JOHN D. ROCKEFELLER

• 1863 – Opens first refinery

• THE OIL INDUSTRY This is where he made his fortune

• Oil was refined into Kerosene ���� Used for lamps

• Produced unstable bi-product called “Gas”

JOHN D. ROCKEFELLER

• Standard Oil Company

• 1870 – Processed 3% of the nations oil

• 1890 – Controlled 90% of the nations oil supply

HOW DID HE DO THIS?

JOHN D. ROCKEFELLER1. Low Wages to Laborers

2. Sell oil for less than it cost to produce����Drive out competitors����

Hike prices back up

3. Creating Trusts**Companies turn stock over to board of Trustees who then run the “trust” as one large company

JOHN D. ROCKEFELLER“Competition is a sin.”

• Accused of holding a Monopoly* over the oil industry• *Having complete control over an industries production, wages, prices

• 1911 – Standard oil was broken up into 34 different companies under the Sherman Anti-Trust Act*.

• *Made it illegal to form a trust that interfered with free trade between states or with other countries

• Rockefeller still cashed in

JOHN D. ROCKEFELLER

• Kept much of his wealth for himself

• Gave away over $500 million • Rockefeller Foundation

• University of Chicago

• Medical Institute ���� Cured Yellow Fever

J.P. Morgan

• BANKING This is how he made his fortune

• “Morganization” ���� He would buy failing businesses, reorganize them, and make them profitable

• Loaned the U.S. Government $65 million in gold to prevent an economic panic in 1895

CORNELIUS VANDERBILT

• TRANSPORTATION This is how he made his fortune

• Began with a single boat ferrying people and goods across Hudson Bay.

• 1860 – Began developing his Railroad empire• Reportedly made $25 million in his first 5 years

• The first “Richest Man” in the world

STOP

• What do you think? Was Rockefeller a “Robber Baron” or a “Captain of Industry”?