Big Business

Factors Supporting Industrialization: Western Mining Immigration Government subsidies and tax concession to railroad Advances in communication Corporation Charters Laissez faire attitude of government Bessemer process High tariffs Entrepreneurs Vertical and horizontal integration National markets Civil War profits and foreign investment

Industrialism and Big Business Industrial expansion changed American after the Civil War. HUGE businesses formed Railroads, Oil and Steel Industrialists (owners) bought up small companies and merged them into large corporations. These business owners became known as Robber Barons.

Captains of Industry or Robber Barons? Wealthy industrialists who used ruthless business tactics to drive competitors out and get rich. Paid low wages Did not allow strikes Secret agreements Big 4 Robber Barons: Vanderbilt Andrew Carnegie John D. Rockefeller J.P. Morgan

Robber Baron #1: Vanderbilt Remember the transcontinental railroad? Railroads Lowered prices to drive people out of business …then raised prices!

Robber Baron #2: Carnegie Andrew Carnegie was a poor Scottish Immigrant who struck it rich! Forms U.S. Steel Company New machines made products more cheaply Bessemer Process – mass production of steel Horizontal and Vertical Integration Buy out all of your competition

Companies like Carnegie Steel used vertical integration to buy companies in order to gain materials needed to make or deliver their products

Companies like Standard Oil used horizontal integration to buy similar companies to reduce competition

Gospel of Wealth Andrew Carnegie wanted to give back to the people and wrote the “Gospel of Wealth” It is the duty of rich people to give away their wealth Gave away 90% of his money to the poor. Set up schools, libraries, art centers.

Robber Baron #3: Rockefeller Standard Oil Company Unified many oil refineries in Cleveland Gained control of 90% of the industry How did he do it?

Rockefeller’s Riches Created Trusts -Group of people who ran separate companies in one large corporation Low wages for workers Low prices drove competitors out of business raise prices

Oil 1859 Edwin Drake invented the oil well. 1859 produced 2,000 barrels of oil a year By 1900 produced 64 million barrels of oil a year. “Black Gold” By 1880s US had surpassed Britain economically

Robber Baron #4: Morgan J.P. Morgan Investment Banking Large corporations needed money to finance their growth. “Holding companies” would buy up stock of other businesses to get their profits

Corporations became a more common business structure Industrialists like Vanderbilt, Carnegie, Rockefeller changed the way businesses were organized Businesses hired professional managers to oversee employees, improve efficiency, and manage finances Corporations became a more common business structure Corporations used boards of trustees (“trusts”) to manage the company… Holding Company Company A Company D Company E Company B Company F Company C Company G Company H Board of Trustees Company Manager Employees …and holding companies to manage other subsidiary companies

Corporations used mergers to increase profits

Monopolies! Robber Barons created monopolies. Rockefeller was criticized for being a monopolist. Monopoly - Corporation that is so powerful it can block competition. What are the advantages of being a monopoly? Total Control!! Set prices!!

Differences in Society The Robber Barons were becoming VERY wealthy. But, most people worked in mills and factories. To justify the difference between the rich and poor, they turned to... VS

Darwin Darwin's Theory of Evolution - “Survival of the Fittest” Social Darwinism Whoever got rich deserved it Poor people are lazy and undeserving Wanted “laissez faire” government

Monopolists justified their wealth in a variety of ways The “Gospel of Wealth” argued that it is God's will for some men to gain great wealth so they could serve the public Social Darwinism taught that natural competition weeds out the weak and allows the strong to survive The government used laissez faire policies toward big business… …the lack of regulation allowed businesses to become very powerful and exploitive

Government Position Usually supported businesses Protective tariff to help business grow and develop Gave money and land to support railroad growth Unlimited immigration Made sure there was a cheap labor supply

Government eventually responded Sherman Anti-Trust Act Tried to break up monopolies and trusts to increase competition -out lawed monopolies -Vague and unclear -Generally unsuccessful -But does lay ground work for first attempt by gov’t to do something about monopolies and restrictions on free trade

Conclusions America was changed by the Industrial Revolution: The United States led the world in industry, innovation, and wealth Laissez-faire gov’t policies and new business tactics led to monopolies But the gap between the wealthy monopolists and their poor immigrant workers grew wider

“Robber Barons” of the Gilded Age Were the industrial capitalists of the Gilded Age “robber barons” or “captains of industry”? Weigh their positive and negative effects The “Robber Barons” of the Past

Political Cartoon Analysis For each cartoon answer the following questions: What imagery is used to display power? Who are the victims and how are they portrayed? Then answer this overall question: Why do they use the octopus? Make sure to write the cartoon number near the answer to each question Make sure to look at all labels in the cartoon

Why an octopus? What symbols are used to show power? What is the overall message?