“Robber Baron” or Captain of Industry? Business is Business “Robber Baron” or Captain of Industry?

Large-scale, corporate-controlled, financial or business activities. “Big Business” Large-scale, corporate-controlled, financial or business activities. Generally the problem with “Big Business” over the years has been the fear of Monopoly: “Complete control over an industry’s production, wages, and prices” An important aspect of America’s Capitalist economic system is the belief that the nation’s economy is strongest when there is true competition between businesses.

“Free and unfettered competition breeds the best product at the lowest price.” -Monopolies are bad in an economy. -However, too many laws, tariffs, and regulation choke business. -Therefore it is up to the government to ensure that monopolies do not exist, but not interfere too much into the economy.

How does Business get “BIG?” Consolidation through “Merger” Stock Market buyout of a public business Use of intimidation or shady business tactics to ruin the business of a private company Sometimes Mergers are executed by “Holding Companies” –a company whose sole purpose is to purchase stock in other companies

Consolidation through formation of “Trusts” How does business get “BIG?” Consolidation through formation of “Trusts” -Participating companies would turn their stock over to a group of “trustees” (people who ran the separate companies as one large corporation) -Each company would then split the profits made by the entire Trust.

Robber Barons Negative term for Businessmen and bankers who: Dominated their respective industries Obtained huge personal fortunes, as a direct result of unfair business practices or undue government influence. How to be a “Robber Baron” -Achieving great Personal wealth -Changing the economic landscape by creating and using new technology -Conflict with the government over unfair monopolies (anti-trust suits) -Optional Fourth Criteria: Sell your company and become a Philanthropist Political Cartoon Critical of Andrew Carnegie’s Philanthropy

Questionable Methods Vertical integration Horizontal Integration Buying out suppliers, shipping, and distribution in order to control all facets of a business Horizontal Integration Definition: companies producing similar products CONSOLIDATE. Paying employees extremely low wages; Dangerous conditions Driving competitors out of business by selling at a lower price than it costs to produce. After control of the market is achieved, hiking prices up above original levels

Efforts to Fight “Robber Barons” Labor Movement If business leaders could consolidate to become more powerful, why shouldn’t workers? Common abuses by employers: (NO labor laws at this time) 6 & 7 Day work week 12 or more hours a day No sick leave, no reimbursement for injuries sustained on the job, no protection against being unduly fired In 1882 average of 675 workers KILLED EACH WEEK! This is why UNIONS form: workers organize to act as one: Boycott, Arbitration, Strike

Efforts to Fight “Robber Barons” Sherman Anti-Trust Act Public Opinion demands that government finally do something about the abusive tactics of big business Law made it illegal to “Interfere with free trade between states or with other countries…” Basically this law was useless in preventing monopolies because it was too vague: Didn’t even use the word “Trust” or attempt to define it. USED AGAINST LABOR UNIONS Many conservative judges allowed businessmen and their lawyers to use the Sherman Anti-Trust act to attack Labor Unions These Judges would issue “injunctions” against strikes citing that they were interfering with “interstate commerce” Penn. State Militia Break up the Homestead Steel Strike. 1892

Is “Big Business” good or bad? The social consequences of the concentration of economic power in the hands of those persons controlling "big business" has been a constant concern both of economists and of politicians since the end of the 19th century. Various attempts have been made to investigate the effects of "bigness" upon labor, consumers and investors, as well as upon prices and competition. "Big business" has been accused of a wide variety of misdeeds that range from the exploitation of the working class to the corruption of politicians and the fomenting of war.