Big Business Emerges

Questions Define Social Darwinism What is vertical integration? What is horizontal consolidation? How did Carnegie change the way people did business? What effect did Lasissez faire have on business? What business was John Rockefeller in? What was a trust? Why were they formed? Analyze the cartoon? Who are the big people, who are they standing behind, What was the Sherman Antitrust Act?

Carnegie's Innovations By 1899, Carnegie Company manufactured more steel than all of Britain. Management Techniques: 1. Make better products more cheaply. 2. Attract talented people. 3. Encouraged competition among employees. 2. Horizontal Consolidation By 1901, Carnegie was producing 80% of the US’s steel. Business Strategies: 1. Vertical Integration Drops prices & forces competition out of business. Buys Buys transportation coal Iron ore

Social Darwinism Carnegie’s achievements could be explained by this new theory. It implied Darwin’s theory to business; survival of the fittest. These new robber barons of business promoted laissez faire, an absence of government in the market economy.

New Business Terms Oligopoly: A market controlled by a few sellers. Monopoly: The complete control over an industry’s production, Quality, wages, and prices. Holding Company: A corporation that buys out the stock of other companies.

John Rockefeller He created Standard Oil Company in 1870. He used the same practices that Carnegie used. He introduced the concept of trust, a parent company that ran smaller companies as though it were one company. By 1890, he controlled 90% of the oil refining business in America. Standard Oil

Sherman Antitrust Act The act was designed to attack the robber barons’ monopolies. The act stated that any attempt to interfere with free trade among the states or internationally, by forming a trust, was illegal. However, the act failed to define what a “trust” was.

Northern Business & the South The North owned 90% of all profitable Southern businesses after the Civil War. Most profitable Southern industries dealt with resources: mining, tobacco, forestry, furniture, & textile mills.