GILDED AGE: INDUSTRIALIZATION TOPIC 1 THE RISE OF BIG BUSINESS

Essential Questions How did the concept of laissez-faire contribute to the rise of various industries in the United States during the final decades of the 19th century? Evaluate the business practices of the major industrial leaders of the late 19th century?

WHAT IS BIG BUSINESS? Business (a.k.a. Industry, Corporation, Firm) The rise of the United States as an industrial power began after the Civil War. The Industrial Revolution was promoted by cheap labor, new inventions and technology, and plentiful raw materials. By 1900 big business dominated the economy of the United States. Define “regulation.” New resources: Petroleum: drilled first by Edwin Drake in 1859 Bessemer Steel: technique that made steel more efficiently

WHAT IS BIG BUSINESS? By the turn of the 20th century, big businesses dominated the economy, operating vast complexes of factories, warehouses, offices, and distribution facilities. Corporation Monopoly Trust Integration/Merger Stock Exchange

FREE ENTERPRISE Laissez-Faire: relies on supply and demand rather than the government to regulate prices and wages Advocates believed in low taxes, little government debt, and protection of private property Northern leaders sought high tariffs to protect emerging, infant industries, as well as federal subsidies to build roads, canals, and railroads to the West Southern leaders opposed subsidizing internal improvements, and favored low tariffs to promote trade

CAPTAINS OF INDUSTRY OR ROBBER BARONS? 1873 Mark Twain and Charles Warner co-wrote the novel, The Gilded Age. The term “gilded” refers to something being gold on the outside while the inside is made of cheaper material. The authors tried to point out that although this was a time of growth, beneath the surface were corruption, poverty, and a huge difference between rich and poor. To further this uneven distribution of wealth, men like Rockefeller used questionable (but legal) practices to create vast empires; nevertheless, wages and conditions remained pitifully poor. J.P. Morgan: banking and finance Cornelius Vanderbilt: railroads John D. Rockefeller: oil: Standard Oil Company Andrew Carnegie: steel: Carnegie Steel

JUSTIFYING WEALTH Social Darwinism: grew out of Charles Darwin’s theory of biological evolution (Origins of Species 1859). Herbert Spencer and others used these ideas to justify the doctrine laissez-faire. In essence, “free competition in the economy, like natural selection in the biological arena, would ensure survival of the fittest.”

Justifying Wealth A strong belief during the Gilded Age was the idea of individualism. This is the belief that regardless of your background, you could still rise in society. Horatio Alger, a minister from Massachusetts, left the clergy and moved to New York where he wrote over 100 novels about rags-to-riches stories.

Therefore I have some responsibility. JUSTIFYING WEALTH Gospel of Wealth: the “flip side of wealth”: Carnegie, in particular, believed that those with money should give back to society (philanthropy). “God gave me my riches” Therefore I have some responsibility.

So are they Good or Bad? Or somewhere in between Robber Barons: Captains of Industry Business leaders built fortunes by stealing from public Drained country of natural resources Corrupted business officials Forced competitors out of business Paid small wages Forced workers to work in dangerous conditions Business leaders served in a positive way Increased availability of goods Built factories Raised productivity Expanded markets Provided more jobs Built great museums, libraries, and universities (philanthropists)

Inventors and Innovators George Pullman: Pullman cars Alexander Graham Bell: the telephone (“Come here, Watson, I want you”); the Bell Telephone Company (now AT&T) Thomas Alva Edison: Menlo Park, NJ; the Edison Electric Illuminating Company (now GE) Thaddeus Lowe: ice making machine Gustavus Swift: refrigerated railroad car…that’s big Significance: mass production=standard products=lower prices for consumers

THE BIRTH OF ADVERTISING The vast array of new products and competing companies led to the emergence of a new industry…ADVERTISING/ MARKETING! Newspapers, Magazines, Posters The Department Store: ie: the Grand Depot Mail-Order Catalogs: Sears and Roebuck Chain Stores: Woolworth’s

ESSENTIAL CONCLUSIONS In the late 19th century, business owners were essentially given free reign in their own affairs: laissez-faire. As the “rich got richer, and the poor got poorer,” the federal government tried to turn a blind eye to the growing tensions between owners and workers. Although captains of industry often used questionable techniques (ie: rebates), they were not usually breaking any laws.