1. The Gilded Age Rise of Big Business

2. Capitalism What is capitalism? Answer: An economic system in which the means of production and distribution are privately or corporately owned. A free market exists and the goal is to accumulate wealth.

3. Big Business Emerges By the late 1800’s business structures were changing. How?… Evolving into modern forms…Corporations formed, stock sold to investors Board of Directors CEO Stockholders

4. The “Capitalists” Other terms- moguls, magnates, tycoons, “Captains of Industry”- or, more negatively…. “The Robber Barons” Jay Gould Andrew Carnegie JD Rockefeller JP Morgan Cornelius Vanderbilt

5. Their Methods Monopoly Monopolies are also known as Trusts ( a merger of many companies with the goal of controlling some aspect of the economy) Interlocking Directorates (Multiple companies share the same board of directors) Holding Companies (many companies, but all stock held by big investors)

6. Integration/Consolidation Vertical Integration- when one company/owner controls all aspects of producing and distributing a product Steel Mills Transportation Resources(iron ore,coal, mines) Giant Steel Company

7. Integration/Consolidation Horizontal Integration- When one company/owner controls all producers of a common product. “Independent Steel Producers” Are purchased by the competition Giant Steel Company

8. Review: What is wrong with a monopoly? Capitalist theory says that the free market should control the economy otherwise... Individuals will lose power. Competition is decreased and this could lead to… …lower quality, lack of innovation, higher prices

9. Railroads as an example: They were the only method of long distance transportation Consolidated into large companies. Little competition (from other transportation) created monopolies (7 RR controlled nearly 2/3rds of the tracks by 1893) How did they gain their wealth and power…..? Government land grants Price fixing- Different prices for big vs small customers (Should a corporation be able to charge what it wants for a “necessary” product?) They were seen as the “enemies” of the farmers.

10. Credit Mobilier Scandal One of the many scandals that would rock the President Grant administration and hurt the Republican Party. Railroad stockholders formed a construction company (Credit Mobilier) that charged themselves many times the actual cost of building the new railroad lines. (Company bills the RR’s, RR’s bill the government, RR owners get rich) Several members of Congress were involved by receiving donated shares of stock.

11. Andrew Carnegie “Robber Baron” “Get in my way and I will crush you.”

12. J.P. Morgan- “Robber Baron” Investment Broker "I don't want a lawyer to tell me what I cannot do; I hire him to tell me how to do what I want to do." J.P. Morgan

13. Reporter’s question to Vanderbilt: “… Don't you run (your RR company) in some (ways) to benefit the public?" "The public be damned!" "What does the public care for the railroads, only to get as much as possible out of them. I don't take any stock in this nonsense about working for anybody's good but our own - for we don't."

14. What Would a Psychologist Say About The Robber Baron’s Corporations? A Study of Anti-Social Behavior

15. What is good about the growth of monopolies and their owners? They fostered efficiency They were the only way to produce the materials and move the products that helped America grow Hard work and excellence should be rewarded They are not “Robber Barons” BUT “Captains of Industry”

16. Principles of Capitalist Success Q: Social Darwinism. What does this mean? A: applying Darwinian natural selection to society as a whole  An economic system of unrestricted competition will ensure “the survival of the fittest”  Weed out the weaker individuals and enable the strongest to survive to pass on their traits  Individual responsibility and individual blame Horatio Alger (dime novel author) reinforced this idea“Luck + pluck= success” and “Successful people create their own luck.”

17. Give back to society by choice, NOT by being forced to give up money through taxes. Philanthropy: What is it? Carnegie and “The Gospel of Wealth”- The rich should distribute their money not just turn it over to their heirs. Carnegie and Rockefeller gave away $830 million Carnegie donated 90 percent of his wealth Carnegie Hall in NYC/Carnegie Foundation, over 3000 libraries nationwide Rockefeller- $80 million to University of Chicago, Rockefeller Foundation Their donations still support the arts and learning today

19. Regulating Monopolies: Sherman Anti-Trust Act The government was worried that expanding corporations would get in the way of free trade This law was enacted in 1890, it was intended to prevent the creation of monopolies by making it illegal to establish trusts that interfere with free trade Despite Carnegie defending the millionaires, the US government took a stand against monopolies HOWEVER -It was almost impossible to enforce because the country generally wanted Capitalism

20. Robber Barons or Captains of Industry of the 21st Century Warren Buffet - Berkshire Hathaway Corp (Nebraska Furniture Mart, among many others) Bill Gates - Microsoft Buffett and Gates have forged an endowment that will give away virtually their entire fortunes. Charles Koch - Koch Corp in Wichita is one of America’s largest private corporations. The Koch brothers provide $ support anti-tax groups such as Americans For Prosperity