1. 6.3 Big Business & Labor

2. Andrew Carnegie Who was Andrew Carnegie? Born in Scotland
Parents were poor
Moved to US in 1848, 12 years old
By age of 14 he was well positioned in the railroad business in Pennsylvania
Given chance to buy stock in the company
Made a fortune from his investment
Became huge supporter of charities

3. Carnegie’s Innovations
Entered steel business in 1873
Founded Carnegie Steel
By 1899, produced more steel than all of Great Britain
Business Strategies
1. Searched for ways to make better products more cheaply
2. Attracted the best people by offering them stock

4. Vertical & Horizontal Integration
VERTICAL INTEGRATION
HORIZONTAL INTEGRATION
Carnegie bought out his suppliers
Coal mines
Iron mines
Ore freighters
Railroad lines
Goal: Gain complete control over the raw materials and transportation systems
Carnegie bought out his competition
Companies producing similar products merge together
1901: Carnegie’s companies produced the largest portion of the nation’s steel

5. Vertical & Horizontal Integration Continued
Manufacturing
Resources
Distribution

6. Social Darwinism & Business
Based on theory of Evolution (Darwin)
States that some individuals flourish, some do not
“natural selection” weeded out individuals not able to survive
Economists used this theory to justify “Laissez-faire “ Economics
Marketplace should not be regulated
Success & failure in business are governed by natural law

7. A New Definition for Success
Post-Civil War: USA had about 4,000 millionaires
According to Social Darwinism:
Individual is responsible for success
Individual is to blame for failure
Appealed to many Protestants, saw riches as a sign of God’s favor
Conclusion: The Poor must be lazy, deserved their suffering