STEEL The growth of the railroads after the Civil War fueled the growth of the steel industry Originally trains ran on iron tracks, however those wore out quickly Steel would be much stronger however it was much more costly

In the 1850s William Kelly in the United States and Henry Bassemer in England discovered a new way to make steel which enable steel makers to make stronger steel at lower costs As a result railroads began to lay steel rails Manufacturers also began to make steel nails, screws, needles and steel girders were used to support the great weight of the new skyscrapers

Andrew Carnegie Carnegie was the richest man in the steel industry When he was younger Carnegie worked for the Pennsylvania Railroad When he traveled to England in the 1870s he visited a factory that used the new steel production method When he returned to the United States he built a steel mill south of Pittsburg, Pennsylvania and used his friendships with railroad owners to win him contracts to supply the steel for the railroads

With the huge profits from his steel mill Carnegie bought out his rivals Carnegie also bought iron mines, railroad and steamship lines and warehouses Carnegie soon controlled all phases of the steel industry from mining to shipping In 1892 Carnegie combined all his businesses into the Carnegie Steel Company

Banks In the years after the Civil War corporations attracted large amounts of capital from American investors Corporations also borrowed millions of dollars from banks These loans helped American industry grow at a rapid pace and at the same time banks made huge profits

J. Pierpont Morgan J.P. Morgan was the most powerful banker in the late 1800s He used his banking profits to gain control of major corporations During hard economic time Morgan and other bankers invested in the stock of troubled corporations As large stock holders they won seats on the boards of directors and adopted policies that reduced competition and ensured big profits

From 1894 to 1898 Morgan gained control of most of the nations major rail lines He also began to buy up steel companies including Carnegie Steel By 1901 Morgan was the head of the United States Steel Company which was the first American business worth more than 1 billion dollars

OIL In 1859 Americans discovered oil Drillers in Pennsylvania made the nations first oil strike Hundreds of people rushed to western Pennsylvania to drill wells in search of oil John D. Rockefeller was among those who came to Pennsylvania

John D. Rockefeller Rockefeller knew that oil was not worth much unless it was refined or purified to make kerosene which was used as a fuel in stoves and lamps Rockefeller moved his family from New York to Ohio and invested in his first oil refinery Rockefeller believed competition was wasteful and used his profits to buy up other refineries He combined these companies to be the Standard Oil Company of Ohio

Rockefeller did anything to get rid of his competitors including slashing prices, and pressuring its customers not to deal with other companies To tighten his control over the oil industry Rockefeller created the Standard Oil trust

Trust A trust is a group of corporations run by a single board of directors Stockholders in smaller companies turned over their stock to Standard Oil and in return they got stock in the Standard Oil trust The board of Standard Oil headed by Rockefeller managed all the companies which had previously been rivals

Monopoly The Standard Oil trust created a monopoly on the oil industry A monopoly controls nearly all the business of an industry The Standard Oil trust controlled 95% of all oil refining in the United States By the late 1890s others followed Rockefellers lead in creating trusts to enable monopolies and monopolies controlled some of the nations most important industries

Monopolies and Trusts… Both Sides Some Americans believed the leaders of giant corporations were abusing the free enterprise system In a free enterprise system businesses are owned by private citizens, owners decide what to produce, how much to produce, where to sell products and what price to charge. In this system companies compete to win customers by making the best product at the lowest price

People felt monopolies and trusts reduced competition and without competition companies would have no reason to keep prices low or to improve their products It was also hard for new companies to start and compete against powerful trusts Workers often felt that the larger corporations treated them badly

This was the first time in American history that leaders of big business were this rich and people worried that millionaires would use their money to buy favors from elected officials

Business leaders defended trusts arguing that the growth of giant corporations brought lower production costs, lower prices, higher wages and a better quality of life for millions of Americans By 1900 Americans had the highest standard of living in the world These innovative business leaders helped to bring in a new age of technology and invention that revolutionized American life

Sherman Antitrust Act In 1890 the government reacted to the public concerns and slowly moved toward controlling giant corporations The act banned the formation of trusts and monopolies, however it was too weak to be effective Corporations usually sidestepped any regulations or laws passed to regulate business