CAPTAINS OF AMERICA  Objective: I can explain how business leaders sought to limit competition and maximize profits in the late 19th century.  Preview: Define…A Monopoly is…  Process: Guided notes  On Your Own: Political cartoons activity.

CAPITAL  Remember from Economics class, human made goods used to make other goods.  Could be money or machines. “It will be a great mistake for the community to shoot the millionaires, for they are the bees that make the most honey, and contribute most to the hive even after they have gorged themselves full.” ~Andrew Carnegie

ENTREPRENEURS  A person who organizes and operates a business, taking on a greater than normal financial risk in order to so.  Will put the resources, connections, and technology together to create tremendous effects on the United States  The growth of railroads-  higher demand for iron, coal, steel, lumber, and glass-  growth of towns  new markets  rich opportunities for entrepreneurs looking for a profit.

INDUSTRIALISTS  Rockefeller – oil (Standard Oil Company)  Carnegie – steel (Carnegie Steel)  J.P. Morgan – banking/financing (J.P. Morgan (Chase))  Cornelius Vanderbilt – Railroads

ANDREW CARNEGIE  Rags to riches story—from Scotland by poor parents.  One of the first industrial moguls to make his own fortune.  Passion for supporting charities.  Entered the steel business—Carnegie Steel Company—manufactured more steel than all the factories in Great Britain combined.  Attempted to control as much of the steel industry as he could.

VERTICAL & HORIZONTAL INTEGRATION  Carnegie used two processes to make mad cash:  Vertical integration: process in which he bought out his suppliers so to control all raw materials and transportation.  Coal fields  Iron mines  Ore freighters  Railroad lines  Horizontal integration: buying out his competition.  Companies producing similar products merge together.

“GOSPEL OF WEALTH” ESSAY WRITTEN BY CARNEGIE “This, then, is held to be the duty of the man of wealth: To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent on him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community--the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.”

“GOSPEL OF WEALTH”  Carnegie’s message was that the wealthy bore the responsibility of philanthropy, which is using a person’s great fortune to further social progress. People should be able to make as much money as they can, and should give it away. He gave $350 million to libraries, schools, peace movement.  Was this justification for how he made his money?

SOCIAL DARWINISM  Charles Darwin’s theory of evolution.  Natural selection: weed out less- suited individuals.  Survival of the fittest became those who were the wealthiest and most successful  The poor then, must be lazy or inferior.

LAISSEZ-FAIRE CAPITALISM  Private ownership of the factors of production and very little government intervention.  So, those who could take advantage of others, did.  Led to: o Poor distribution of wealth o Harsh treatment of workers o Disregard for consumer safety o Spread of monopolies

MONOPOLIES  When a company buys out all of its competitors.  Complete control over its industry’s production, wages, and prices.  Several ways:  Set up a holding company: a corporation that did nothing but buy out the stock of other companies.  Merger – one corporation would buy out the stock of another; “If you can’t beat ‘em, join ‘em”  Form a Trust – group of separate companies placed under the control of a single managing board  Start a Cartel – loose association of businesses that make the same product – work together to maintain prices

JOHN D. ROCKEFELLER  Set up a TRUST to gain total control of the oil industry in America.  Standard Oil Company of Ohio  In 1870, processed 2-3% of the country’s oil.  Ten years later, 90%  Gained huge profits and yet paid his workers extremely low wages  drove competitors out of business by selling oil at a lower price than it cost to produce it, then when he controlled the market, jacked those prices sky high.  Critics began calling industrialists “robber barons”

CORNELIUS VANDERBILT  He gained control of a number of railway lines operating between Chicago and New York  Vanderbilt constructed Manhattan’s Grand Central Depot, which opened in  The station eventually was torn down and replaced by present- day Grand Central Terminal, which opened in  Did not give away mass amounts of wealth. Then again, didn’t own many fancy things either.  The only substantial philanthropic donation he made was in 1873, when he gave $1 million to build Vanderbilt University in Nashville, Tennessee.

JOHN PIERPONT MORGAN  One of the most powerful bankers of his era  financed railroads and helped organize U.S. Steel, General Electric and other major corporations  used his influence to help stabilize American financial markets during several economic crises  Loaned the government money and bailed out failing financial institutions.  Criticism that he had too much power and was accused of manipulating the nation’s financial system for his own gain  Spent a significant portion of his wealth amassing a vast art collection.

CAPTAINS OF INDUSTRY VS. ROBBER BARONS Captains of Industry 1.Increases availability of goods by building factories 2.Raises productivity 3.Expands markets 4.Creates more jobs 5.Funds many of the nation’s public institutions: practices philanthropy- (giving generously to charitable causes) 6.Organizes the factors of production efficiently Robber Barons 1.Drains the country of its natural resources 2.Corrupts public officials to interpret laws in their favor 3.Drives competitors to ruin 4.Pays poor wages 5.Forces workers to toil under dangerous and unhealthy conditions 6.Exploits the factors of production

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