The Triumph of Industry (1865-1914) The Rise of Big Business Fighting for Profits Before mid-1800s, businesses could grow no bigger than one family’s ability to invest in or run it Industrialization and railroad growth provided businesses raw materials and customers from all over the US Carnegie Steel Homestead Site

The Triumph of Industry (1865-1914) The Rise of Big Business Fighting for Profits Lured by profit, businesses expand by combining capital (money) and resources The Carnegie Steel Homestead Works were the largest steel plant in the United States. The mills churned out their products 24 hours a day, 365 days a year. By the mid 1880s, Carnegie Steel controlled 90% of all US steel production

The Triumph of Industry (1865-1914) Development of Corporations Corporation - institution that is a separate legal entity having its own privileges/liabilities distinct from those of its members If corporation fails, individual shareholders loose only the amount of original investment Corporations had sufficient money to invest in new technology, enter new industries and markets, and expand beyond that of smaller companies

The Triumph of Industry (1865-1914) Corporations (Cont.) Competitive Edge Decreased cost of goods or services by paying workers lowest wages possible Used size leverage to buy raw materials for lowest cost possible Financed research laboratories with inventors that experimented with products or methods that could bring future profits

The Triumph of Industry (1865-1914) Corporations (Cont.) Monopoly – complete control of a product, service , or industry with little or no competition for customers or profits Corporations either buy out competitors or force them out of the business With competition destroyed, consumers had no choice of products or services and were forced to pay whatever price surviving corporation charged Cartel – agreement between surviving businesses (if no monopoly existed) in an industry to limit production in order to keep supply low and prices high

The Triumph of Industry (1865-1914) Corporations (Cont.) Mergers- combining several competing firms under one large corporation Depression of 1870s cause loss of 47,000 businesses Unpredictable markets seen as biggest problem Mergers seen as way to produce orderly, predictable markets

The Triumph of Industry (1865-1914) Trust – group of separate companies placed under control of a single, managing board in form of a monopoly

The Triumph of Industry (1865-1914) The “Robber Barons” (Cont.) Robber Barons – name given to rich industrialists such as Carnegie, Rockefeller, and J. P. Morgan who many businesses, the government, and consumes believed were exploiting the poor and skirting laws only for their own profits Belief that trusts, monopolies, and cartels eliminated competition, exploited workers, and hut consumers with high prices Industrialists would turn to philanthropy (charitable contributions and good community works to repair image) Modern example…Bill Gates (Microsoft)

The Triumph of Industry (1865-1914) “Robber Barons” (Cont.) John D. Rockefeller (1870s-1880s)- oil industry (Late 1870s) Pioneer of nineteenth-century merger movement Controls most all of Ohio’s oil industry (1882) forms Standard Oil Company and begins major takeover of other oil companies nationwide (1890) His 40 companies control 90% of all oil pipelines and 84% of all refining in US Demands rail shipping rate of 10 cents/barrel (other pay 35 cents) (1911) Personal fortune exceeds $1 billion (worth $45 billion in today)

The Triumph of Industry (1865-1914) “WHAT A FUNNY LITTLE GOVERNMENT.” Horace Taylor drew this political cartoon of John D. Rockefeller holding the White House and Treasury department in the palm of his hand for the September 25, 1899 issue of The Verdict. Notice the smoke from the United States Capitol in the background? It has essentially become an oil refinery, itself demonstrating the power big business held over government.

The Triumph of Industry (1865-1914) “Robber Barons” (Cont.) Horizontal Integration - merging of competing companies in one area of business (Rockefeller) Clark, Paine & Company., OH Hanna, Basslington & Company, OH Atlantic Refining Company, OH Purchased by Rockefeller Standard Oil Company Charles Pratt & Company, OH Imperial Refining Company, PA Chess, Carley & Company, KY

The Triumph of Industry (1865-1914) “Robber Barons” (Cont.) Vertical Integration - Firm tries to control all aspects of production in a single industry (Carnegie- Steel) Rockefeller did this once he controlled oil production Oil Wells & Pipelines Refineries Tank Cars/Railroads Purchased by Rockefeller Standard Oil Company Retail Service Station

The Triumph of Industry (1865-1914) “Robber Barons” (Cont.) John Pierpont “J. P.” Morgan - American financier and banker and who dominated corporate finance and industrial consolidation during most of the industrial period (1892) Morgan arranged the merger of Edison Electric and Thomson-Houston Electric Companies to form General Electric (1901) Financed buyout of Carnegie Steel and other steel and iron businesses to form United States Steel Corporation World’s first billion-dollar corporation, it controlled 95% of US and 60% of the world’s of steel industry (1913) At his death, controlled 112 corporations world-wide worth $22 billion ($310 billion in today’s dollars) “The man who dies with the most toys…wins!”

The Triumph of Industry (1865-1914) Robber Barons and Social Darwinism Social Darwinism – loosely based on Charles Darwin’s Theory of Natural Selection (Evolution), it tries to apply that concept to human economic and social conditions arguing those with the most inherent wealth most fit or able to manage/administer it First attributed to English anthropologist Herbert Spencer (1859) who argues for “Survival of the Fittest” Darwin Spencer

The Triumph of Industry (1865-1914) Social Darwinism (Cont.) Few ideas of Social Darwinism supported Darwin or his research (Darwin would definitely disapprove) Social Darwinism extends Darwin’s ideas to explain concept of humans in relation to social groups, classes, nations and civilizations (Superiority vs. Inferiority) [John Rockefeller’s] importance lies not so much in the fact that he is the richest individual in the world, with the control of property that entails; it lies in the fact that his wealth, and the power springing from it, appeal to the most universal and powerful passion in this country -- the passion for money. John D. Rockefeller, measured by our national ambition, is the most successful man in the world--the man who has got the most of what men most want. IDA TARBULL (1901)

The Triumph of Industry (1865-1914) Social Darwinism (Cont.) Social Darwinism used to support social reform/nationalism/ revolution Justify competition in the marketplace and between nations “as a mechanism of evolution” (Nationalism) Explain dominance of Europeans over “colored” peoples of the world; Kipling’s “White Man’s Burden” (Imperialism) Justify men's dominance over women (Sexism) Most extreme argument proposes complete subjugation of inferior races (Racism) or extermination (Naziism in 1930s-1940s)

The Triumph of Industry (1865-1914) Social Darwinism (Cont.) American Social Darwinists William G. Sumner - “If we do not like survival of the fittest, we have only one possible alternative , and that is survival of the unfittest.” American Industrialists Carnegie, Rockefeller, Morgan all believe ideas Feel theories justify aggressive business practices and attempts to eliminate weak competitors Believe government interference in marketplace to protect weak companies only holds back social/economic progress