Bell Work: What is a cartel? How about a trust? What is a business cycle? What do you think the difference is between the “Captain of Industry” or “Robber Barons”? United States History How to make and spend a fortune?
Basic Economics Expansion Bull Contraction Recession Bear Peak Trough- Bust Recovery
The Growth of Big Business Robber Barons- individuals who exploited the American political and economic system in order to gain extraordinary amounts of wealth at the expense of workers and immigrants.
The Growth of Big Business Captains of Industry- individuals who had a positive effect on the US economy by increasing the number of goods, developing more factories, and practicing philanthropic activities.
Lecture Outline- Growth of Big Business Robber Barons Captains of Industry How the tycoons made their money? What were examples of corruption with the government during the Grant administration? Andrew Carnegie Vertical Consolidation Social Darwinism John Rockefeller Horizontal Consolidation Samuel Dodds J. P. Morgan Gospel of Wealth Philanthropy
How do you make a fortune? What allowed individuals to make so much money after the Civil War?
Post Civil War Conditions In large part, wealth was made through exploitation of the government and workers but also through ingenious (and sometimes illegal) business practices.
Post Civil War Conditions Essentially the first business moguls made their dough via the following… Closing of the West. Social Darwinism Developing of the Trust
Railroad industry- Government Subsidized Cheap Land= the government Cheap Labor= immigrants Cheap Capital (steel)= Carnegie Cheap Loans= Morgan
Corruption begins with the railroads… Credit Mobilier Scandal- Oakes Ames (Union Pacific RR) Cornelius Vanderbilt, Leland Stanford
Corruption also found its way into the government Whiskey Ring Scandal- Tax Fraud (Grant’s Dep. Of Treasury and Orville Babcock) Bureau of Indian Affairs Gold Corner- Jay Gould
Big Ones… Yet, despite government corruption, these events were small change compared to the Robber Barons like Carnegie, Rockefeller, and JP Morgan.
Andrew Carnegie Scottish immigrant, son of a expert weaver Rags to riches (1.20 dollars an hour to a billionaire) Wealth through the Bessemer Process With help of JP Morgan, starts US Steel
Andrew Carnegie
Vertical Consolidation Buy all the items of production and corner the market. Cheaper products attack competition (economy of scale). Social Darwinism- may the best man win; apply Darwinism to business (government should encourage)
John Rockefeller At first a railroad baron Invested in black gold= oil Standard Oil- bought off legislatures, secret railroad deals, bribes, and sabotage
John Rockefeller
Horizontal Consolidation Buy all the small companies and then monopolize the market. Undercut other business through rebates and secret deals. "In a business so large as ours … some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge.” Illegal if crosses state lines= anti-trust laws
Samuel Dodds- Trust -Get around anti-monopoly laws, can’t hold stock in another company. -Develop a board of trustees, issuing trust certificates (holding companies) Trusts keep prices artificially high due to no competition while making wages extremely low.
JP Morgan Banker’s banker. Made millions off of the Civil War (wise investments) Controlled nearly half of all the railroads in America Invested into Carnegie Steel- US Steel (party)
JP Morgan
How To Spend a Fortune Gospel of Wealth- people should be free to make as much money as they can. Afterwards, they should give it away- philanthropy. Carnegie… $350,695,654 in his life. “A man who dies rich dies disgraced”
How To Spend a Fortune Andrew Carnegie- Carnegie Hall, the arts, libraries, study on how to end war (Carnegie Institute). John Rockefeller- universities, churches, anti-saloon league (10% of paychecks) JP Morgan- Yachts, art collections Captains or Barons? Legacy of big business?
How to Spend a Fortune
The Homes… Rocky…
Carnegie- Scotland
JP Morgan