Richest in the world now? Do you know who is the richest person in the world today? How did he/she make their money?

Bill Gates He is worth an estimated 87 billion dollars He made his fortune as the head of Microsoft computer co. Self-made entrepreneur

Richest Then Do you know the richest people in 1890s/1900s? How do you think they made their money?

John D. Rockefeller John D. Rockefeller made his money in oil, the fuel of industrialization. He purchased as many competing oil companies as he could and by 1882 his companies controlled 90% of the nation’s pipelines and 84% of the nation’s oil. Founded the Standard Oil Co. Horizontal Consolidation

Horizontal Consolidation

Andrew Carnegie Carnegie made his money in steel production He created his empire by buying all parts of the steel making process including coal mines, iron mines, steel refineries. Vertical integration

Vertical integration

Vertical integration v. Horizontal consolidation

J.P. Morgan He bought Carnegie’s steel company and consolidated it with several other firms to create the U.S. Steel Corporation Controlled 60% of American production. He was for corporate mergers.

Corporate mergers The joining together of two or more competing companies or organizations. Led to Trusts & Cartels Ex: Disney and Pixar, Sirius and XM Radio, Exxon and Mobil

Trust “Standard Oil was the first trust.” Trusts are a legal concept that allows one person to manage another person’s property Combining corporations with the purpose of reducing competition and controlling prices Trust is synonymous with monopoly, because the trust was a popular way for monopolists to hold their businesses, and a way for cartel participants to create enforceable agreements “Standard Oil was the first trust.”

Cartel An agreement/alliance between business owners who produced a similar product. As a pool (cartel) they could limit the supply of the product and drive prices up. They would also agree to divide market areas so that each member of the cartel would prosper.

Monopoly - Did you know? Why aren’t there electric streetcars any more? Because in the 1930s, GM, along with Standard Oil, Firestone Tires, and several other corporations formed a company to buy municipal streetcar systems, dismantle them, and replace them with buses. In April 1949, a Chicago federal jury convicted GM, Standard Oil, and Firestone of criminally conspiring to replace electric transportation with buses and monopolizing the sale of buses – they were fined $5,000.

SHERMAN ANTI-TRUST ACT In 1890, the Sherman Anti-Trust Act made it illegal to form a monopoly (Trust) Prosecuting companies under the Act was not easy – a business would simply reorganize into single companies to avoid prosecution Seven of eight cases brought before the Supreme Court were thrown out

DARWIN LIMITED HIS FINDINGS TO THE ANIMAL WORLD Social Darwinism Charles Darwin believed that nature developed by the strongest genes surviving through generations. Herbert Spencer, a social scientist, developed the theory of Social Darwinism, arguing that individuals must compete (economically), with the fittest coming out on top. He believed competition benefited society and opposed government programs to help business or the poor. SPENCER WAS THE ONE WHO COINED THE PHRASE “SURVIVAL OF THE FITTEST”

Social Darwinism

Survival of the Fittest Many industrialists including John D. Rockefeller were Social Darwinists, arguing that the wealthy deserved their success because they had triumphed in economic competition. The poor on the other hand had proven to be “unfit.”

Gospel of Wealth Andrew Carnegie believed in Social Darwinism, but he also believed that the wealthy had a responsibility to help the poor. He called this his Gospel of Wealth Carnegie became a philanthropist, who gave his wealth to build libraries, music halls, and to help the poor.

Robber Barons or Captains of Industry People were divided over the role of Rockefeller, Carnegie, and other emerging capitalists. Admirers of these businessmen referred to them as “captains of industry”, while critics called them “Robber Barons.”

Robber Barons What is a Baron? Where are the Robber Barons in the picture? What are the key terms used in the cartoon?