U.S. History Week 12

Using your text book, define the following terms Chapter 6, Section 3 Vertical integration Horizontal integration Social Darwinism Sherman Antitrust Act

TT55 Map Questions Correct Map Test Begin 6.3 notes on board

Carnegie’s Innovations Owned Carnegie Steel Company Rags to riches Manufacture more steel than all of Great Britain

Carnegie’s Success Always looking for ways to make better products, more cheaply Incorporated new machinery and techniques Ex. Accounting systems to track precise costs Attracted talented people by offering them stock in company Encouraged competition among assistants

Attempted to control as much of steel industry as possible Vertical integration – bought out suppliers Coal fields, iron mines, ore freighters, railroad lines Control raw materials and transportation systems Horizontal integration – buy out companies making similar products Limit competition

Social Darwinism Used natural selection as explanation for Carnegie’s success Survival of the fittest Explains evolution of human society

Economists used social Darwinism to justify laisse faire “allow to do”, don’t interfere Market place should NOT be regulated Natural law William G Sumner Millionaires agreed with natural law Individual responsibility and blame

Fit in with Protestant work ethic Riches were a sign of God’s favor Poor must be lazy Poor must be inferior Deserve what you get.

Tuesday Bellwork Come up with an example of vertical integration and horizontal integration that would could occur in 2014.

Fewer Control More Mergers One corporation buys out stock of another Monopoly Control over industries wages, production, and prices

Monopoly One companies controls all areas Create a holding company Company created only to buy out others Ex. J.P. Morgan = US Steel = most successful holding company Bought Carnegie Steel in 1901 Became world’s largest business

Create trusts Ex. John D. Rockefeller = Standard Oil Company Created trust agreements with competing companies People in trust turned stock over to group of trustees Ran separate companies as one large corporation Companies entitled to dividends Trusts were not legal mergers Rockefeller used trusts to gain total control of oil industry

Rockefeller and Robber Barons Rockefeller successful Paying extremely low wages Selling oil lower than cost to make it Drove competitors out Hike prices up one control over market People upset Nicknamed them Robber Barons

Another side to Rockefeller Philanthropist Gave away $500 million plus Created medical institute that helped cure yellow fever Carnegie Donated 90% wealth over his lifetime His $ still supports arts and learning today

Sherman Antitrust Act Gov’t pass act Illegal to form a trust that interferes with free trade Hard to enforce due to working of act Companies reorganized back into single company Unsuccessful act

Business boom bypasses South South still recovering from Civil War Lack of capital Excessive transportation cost because North controlled RR High tariffs on raw materials and imported goods Lack of skilled workers Growth of forestry, mining, tobacco farming, furniture business, textile industry was hopeful North had abundant natural resources and urban resources (workers)

Activity Answer in complete sentences #5 and #6 on page 250