Growth of Big Business

The Gilded Age The Gilded Age - from a novel of the same name published in 1873 by Mark Twain & Charles Dudley Warner. Though fictional, is a critical examination of politics and corruption in the United States during the nineteenth century. glittering on the surface but corrupt underneath Time period from ~1870 to 1890. The closing of the Frontier and the creation of a modern industrial economy. “What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must.” ~ Mark Twain-1871

The Industrial Revolution in America

Main Ideas of Industrial Revolution in America Three technological developments that provide the foundation for the “second” industrial revolution in the U.S. electric-powered machines [Edison] internal combustion engines [Ford] new industrial and consumer applications for chemicals [du Pont]

Main Ideas of Industrial Revolution in America Industrialism changed the nature of work. uneven distribution of power [workers and owners] employees rather than producers labor specialization through simplification [assembly line] brought more women and children into the labor force labor unrest – wages, discrimination, safety, disability insurance and pensions

Main Ideas of Industrial Revolution in America America became a consumer-oriented society. Advertising and Brand names [Levi Strauss – 1853] department stores and chain stores [Sears – 1886; Montgomery Ward -1872; JC Penny – 1913]

Women Go To Work

Child Labor

Industrial Accidents

A Favorable Climate for Business Democracy & Free Markets Capitalism - competition determines prices and wages, and most industries are run by private businesses. laissez-faire: no government intervention in economy Social Darwinism inequalities were part of the natural order of life. Stronger people, businesses, and nations will prosper weaker ones would fail in “survival of the fittest.”

What is Big Business? Often, a negative term used to describe the political and economic power of large corporations. Large corporations have the ability to influence market prices. Wal-Mart/Sam’s Club Microsoft ExxonMobil DeBeers [the diamond people] AT&T [Ma Bell] before the split in 1982

Competition How do we as Consumers benefit from competition in the Market Place? Lower Prices Better Quality More Choices Increased Availability of Products Customer Convenience

How to Eliminate Competition During the rise of Big Business, several men were able to eliminate their competition Ways to eliminate competition? Trust Cartel Monopoly

Trust A group of separate companies placed under the control of a single managing group or board of directors. The managers oversee and control the actions of all the companies Set prices Set wages Control distribution Competition is reduced/eliminated The concept of trusts was invented during the Gilded Age, as a response to the specific legal situation, which forbid corporations from owning other companies or assets in other states. The first and largest trust, sometimes called the "mother of trusts", was the Standard Oil company. The basis of the Standard Oil Trust was the secret association of the major oil refiners in Cleveland, Pittsburgh, Philadelphia and New York.

How did/does competition help consumers and workers (in theory)? Do Now: What social philosophy helped support the idea of “laissez-faire” economics? How did/does competition help consumers and workers (in theory)?

Cartel A loose association of businesses that create the same product. Members agree to fix prices, limit supply, in order to limit competition. They agree to not compete against one another. OPEC Illegal Drug Cartels

Monopoly Monopoly One company has exclusive control over an entire industry. They are able to wipe out all of their competition. Two Methods of forming a monopoly: Vertical Integration Horizontal Integration

Vertical Integration One Company Owns all Phases of Production From Top To Bottom Raw Materials Assembly and Manufacturing End Product Distribution

Horizontal Integration Small Business Small Business Small Business Purchased by one Company Small Business Small Business Small Business To Form a Giant Company Small Business Small Business Small Business Small Business Small Business Small Business

Vertical & Horizontal Integration

Robber Barons and Captains of Industry Due to Laissez Faire economics, several individuals create monopolies, and become incredibly wealthy. Two conflicting views describe these Business Industrialists [entrepreneurs]. Robber Barons [negative term] Captains of Industry [positive term] An entrepreneur is someone who creates/organizes a business venture and assumes the risk for it.

Robber Baron Negative term that describes a business leader that has built his wealth by unethical methods. Robs from the consumers Abuses employees and workers Drives competitors out of business (And enjoys it!) Persuades government officials to pass favorable business legislation [political corruption].

Captain of Industry A business leader that has positively contributed to society as he built wealth. Created jobs/did not abuse employees Moral business philosophy Philanthropy – donates money or goods to a charity & community Creates museums, libraries, universities

Robber Barons or Captains of Industry Andrew Carnegie J.D. Rockefeller J.P. Morgan Cornelius Vanderbilt

Political Cartoons

This political cartoon from 1904 well demonstrates American fears about the Standard Oil Company's vast and growing power over the American government. With arms already wrapped around the steel, copper, and shipping industries; the United States Capitol; and a state capital building; it now stretches out yet another tentacle over the White House.

In the late 1800s the shocking inequalities between the huge fortunes of the nation's "captains of industry" and an ever-growing population of impoverished workers drove Americans to grapple with questions about the rights of workers and employers. This 1883 editorial cartoon mocked the claims that plutocrat businessmen were the protectors of American industries by presenting Cyrus Field, Jay Gould, Cornelius Vanderbilt, and Russell Sage as bloated parasites sitting on bags of "millions," and protective bulwarks resting on the backs industrial workers making only $6 to $11 a week.