1876 and the Rise of Big Business Late 19th century

Reconstruction Ends Election 1876 Rutherford Hayes-R Samuel Tilden-D (wins popular vote) Election given to Hayes-Dems reaction Compromise 1877 The removal of all U.S. military forces from the former Confederate states. U.S. troops remained in only Louisiana, South Carolina, and Florida, but the Compromise finalized the process. The appointment of at least one Southern Democrat to Hayes's cabinet. (David M. Key of Tennessee became Postmaster General.) The construction of another transcontinental railroad using the Texas and Pacific in the South (this had been part of the "Scott Plan," proposed by Thomas A. Scott, which initiated the process that led to the final compromise). Legislation to help industrialize the South and get them back on their feet after the loss during the Civil War.

The ‘Robber Barons’ of the Past

Iron & Steel Production

U. S. Corporate Mergers

Causes of Rapid Industrialization Steam Revolution of the 1830s-1850s. The Railroad fueled the growing US economy: First big business in the US. A magnet for financial investment. The key to opening the West. Aided the development of other industries. Middle Management

Causes of Rapid Industrialization Unskilled & semi-skilled labor in abundance. Abundant capital. New, talented group of businessmen [entrepreneurs] and advisors. Market growing as US population increased. Government willing to help at all levels to stimulate economic growth. Abundant natural resources.

New Business Culture Laissez Faire  the ideology of the Industrial Age. Individual as a moral and economic ideal. Individuals should compete freely in the marketplace. The market was not man-made or invented. No room for government in the market!

2. Social Darwinism British economist. Advocate of laissez-faire. Adapted Darwin’s ideas from the “Origin of Species” to humans. Notion of “Survival of the Fittest.” Herbert Spencer

New Business Culture: “The American Dream?” Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels] Is the idea of the “self-made man” a MYTH??

2. Andrew Carnegie “Man of Steel” a. Management techniques i. Hired talented workers Offered stock Competition = increased production/lower costs ii. Better products cheaper b. “Winning” Strategy i. Vertical integration 1. Buy out all of your suppliers 2. Control quality and costs

3. John D. “Slick” Rockefeller Standard Oil Company Owned 90% of refining business Treated employees poorly “anything goes”/bend the rules Winning Strategy i. Horizontal consolidation Merging of companies with similar products; oil companies

New Financial Businessman The Broker: J. Pierpont Morgan

% of Billionaires in 1900

% of Billionaires in 1918

Relative Share of World Manufacturing

Regulating the Trusts 1877  Munn. v. IL 1886  Wabash, St. Louis & Pacific Railroad Company v. IL 1890  Sherman Antitrust Act in “restraint of trade” “rule of reason” loophole 1895  US v. E. C. Knight Co.

1. John D. Rockefeller—336 billion 2. Andrew Carnegie-309 billion 3.Bioll Gates (peak : 136 billion)