Big Business Emerges “I have ways of making money that you know nothing of.” John D. Rockefeller

Natural Resources natural resources, government support of business, and a growing urban population provided both cheap labor and markets for new products.

Steel Process Coal and Iron. –In 1887, prospectors discovered iron ore deposits more than 100 miles long and 3 miles wide in the Mesabi Range in Minnesota Coal production skyrocketed from 33 million tons in 1870 to more than 250 million tons in 1900

The Bessemer Process Removing the carbon from iron produces a lighter, more flexible, and rust resistant metal steel –The technique involved injecting air into molten iron to remove the carbon and other impurities

New Uses of Steel Railroads – became the biggest customer for steel Joseph Gidden’s: barbed wire Cyruys McCormick’s and John Deere’s farm machines helped to transform the Plains into the food producer of the nation

Change Thomas Alva Edison had established the world’s first research laboratory in Menlo Park, New Jersey –perfected the incandescent light bulb and later invented an entire system for producing and distributing electrical power –George Westinghouse later made electricity safer and less expensive

Change of Lifestyles Christopher Sholes invented the typewriter and changed the world of work Next, to the light bulb the most dramatic invention of the time was the telephone invented by Alexander Graham Bell –These inventions affected office work and created new jobs for women

The Age of Railroads

The Union Pacific and the Central Pacific Railroad Companies meet! Transcontinental Railroad Promontory Point, Utah May 10, 1869

Companies at a Glance Central Pacific –Hired many Chinese workers –Often hired blacks as well Union Pacific –Hired many Irish workers –Hired out of work Civil War soldiers Both companies paid their workers very low wages for the harsh work and hazards were numerous. The white workers typically made more money than the other workers.

Social Darwinism Philosophy created by Herbert Spencer Believed in free competition in the business place would ensure ‘survival of the fittest” Based on Charles Darwin’s theories of natural selection (“only the strong survive”) Business was governed by natural law and no one (government) should interfere

John D. Rockefeller Practiced horizontal consolidation in the oil industry and created a monopoly in the business In a monopoly, one controls all the competition and controls the price of a good or service

John D. Rockefeller Rockefeller used a trust to earn profits and control the oil industry Rockefeller controlled 90% of the oil industry Company stock was controlled by a group of trustees and dividends were received on the stock Trusts were illegal

John D. Rockefeller Paid workers extremely low wages Drove out competition by selling oil cheaper than the competition After competition was out of business, he would raise prices to cover his loss

John D. Rockefeller Rockefeller saved millions of dollars by reducing the number of drops of solder it took to build an oil can

John D. Rockefeller Rockefeller gave away $500 million to charities and philanthropy Built Rockefeller Center to house businesses in New York City

Sherman Anti-Trust Act In 1890, the federal government passed the act It stated, “any attempt to interfere with free trade among states was illegal.” It outlawed monopolies The government did not enforce the act and businesses kept on consolidating