Big Business and Society

Changes Shift in the nature of the US economy Corporations A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law. Very few rules restricting them Organization of Business Increase in efficiency and wage

Robber Barons Robber Barons- term given to the excessively wealthy capitalists of the era who dominated their industries (Morgan, Vanderbilt, Rockefeller, etc.) JP Morgan- dominated the banking industry Purchase Carnegie Steel and several other companies to create US Steel- first billion dollar company in the US Also created GE and AT&T Cutthroat tactics

New Scope Now a separation between ownership and management Companies able to span multiple states and cities GE had factories in 23 cities by 1900 Sears & Roebuck catalog Oligopoly- control of an industry by a few groups or businesses

New Tactics Vertical Integration Horizontal Integration A company purchases all smaller companies involved in the production of their product US steel took the ore from the ground, transported it, melted it down, and shipped it to wholesalers- owned every single step- no costs Horizontal Integration A company purchases other companies that sell goods that use their product US steel would look to purchase any company that sold metal products

Trusts Explosion of competition in all industries Started as pools- groups of businesses agreeing to set prices at a certain level Disintegrated under economic pressure Trusts- major business owners assigned all their stock to 1 board of trustees Challenged on the grounds that it illegally restricted trade Sherman Anti-Trust Act in 1890 declared trusts illegal Replaced by holding companies like General Motors

The Gospel of Wealth Andrew Carnegie believed the wealthy should work towards the common good On his death, he had given away 95% of his wealth, along with funding innumerable public works Others said it was God’s will that some attain wealth and those that attained it, deserved it

Social Darwinism Theory that applied Darwin principles of survival of the fittest to economics, ethics and other realms of life. Used as the basis to rule an income tax unconstitutional until the 16th amendment in 1913 Many rejected that this process should not be allowed to proceed unregulated

The Great Chicago Fire- 1871 Dangers of the city life- people living so close together Myth claims that Mrs. O-Leary’s cow kicked over a lantern, starting the 30 hour blaze which destroyed 17,500 buildings and killed at least 250 people Very likely that Mrs. O’Leary’s cow was not the blame Chicago was in the middle of a drought Anti-Irish sentiment Officially exonerated in 1997

Boss Tweed William Tweed- New York political boss who headed the organization known as Tammany Hall Personified public corruption of the day- manipulating politics, bribes and extortion Building of the New York City Courthouse was a prime example Members of Tammany Hall paid outrageous amounts for very little work Ended up costing $178 million in today’s money- almost twice as much as the purchase of Alaska in 1867 Finally exposed- public outcry- died in prison

Controversy Does wealth come from patience and hard work or exploitation? Are the wealthy free to do as they wish with their wishes, or should we be taxing them more heavily for the public good? Jot down your thoughts at the end of your notes and we will discuss it