2. GILDED AGE: INDUSTRIALIZATION
TOPIC 1
THE RISE OF BIG BUSINESS

3. Essential Questions
How did the concept of laissez-faire contribute to the rise of various industries in the United States during the final decades of the 19th century?
Evaluate the business practices of the major industrial leaders of the late 19th century?

4. WHAT IS BIG BUSINESS? Business (a.k.a. Industry, Corporation, Firm)
The rise of the United States as an industrial power began after the Civil War. The Industrial Revolution was promoted by cheap labor, new inventions and technology, and plentiful raw materials. By 1900 big business dominated the economy of the United States.
Define “regulation.”
New resources:
Petroleum: drilled first by Edwin Drake in 1859
Bessemer Steel: technique that made steel more efficiently

5. WHAT IS BIG BUSINESS?
By the turn of the 20th century, big businesses dominated the economy, operating vast complexes of factories, warehouses, offices, and distribution facilities.
Corporation
Monopoly
Trust
Integration/Merger
Stock Exchange

6. FREE ENTERPRISE
Laissez-Faire: relies on supply and demand rather than the government to regulate prices and wages
Advocates believed in low taxes, little government debt, and protection of private property
Northern leaders sought high tariffs to protect emerging, infant industries, as well as federal subsidies to build roads, canals, and railroads to the West
Southern leaders opposed subsidizing internal improvements, and favored low tariffs to promote trade

7. CAPTAINS OF INDUSTRY OR ROBBER BARONS?
1873 Mark Twain and Charles Warner co-wrote the novel, The Gilded Age. The term “gilded” refers to something being gold on the outside while the inside is made of cheaper material. The authors tried to point out that although this was a time of growth, beneath the surface were corruption, poverty, and a huge difference between rich and poor.
To further this uneven distribution of wealth, men like Rockefeller used questionable (but legal) practices to create vast empires; nevertheless, wages and conditions remained pitifully poor.
J.P. Morgan: banking and finance
Cornelius Vanderbilt: railroads
John D. Rockefeller: oil: Standard Oil Company
Andrew Carnegie: steel: Carnegie Steel

11. JUSTIFYING WEALTH
Social Darwinism: grew out of Charles Darwin’s theory of biological evolution (Origins of Species 1859). Herbert Spencer and others used these ideas to justify the doctrine laissez-faire. In essence, “free competition in the economy, like natural selection in the biological arena, would ensure survival of the fittest.”

12. Justifying Wealth
A strong belief during the Gilded Age was the idea of individualism. This is the belief that regardless of your background, you could still rise in society. Horatio Alger, a minister from Massachusetts, left the clergy and moved to New York where he wrote over 100 novels about rags-to-riches stories.

13. Therefore I have some responsibility.
JUSTIFYING WEALTH
Gospel of Wealth: the “flip side of wealth”: Carnegie, in particular, believed that those with money should give back to society (philanthropy).
“God gave me my riches”
Therefore I have some responsibility.

14. So are they Good or Bad? Or somewhere in between
Robber Barons:
Captains of Industry
Business leaders built fortunes by stealing from public
Drained country of natural resources
Corrupted business officials
Forced competitors out of business
Paid small wages
Forced workers to work in dangerous conditions
Business leaders served in a positive way
Increased availability of goods
Built factories
Raised productivity
Expanded markets
Provided more jobs
Built great museums, libraries, and universities (philanthropists)

15. Inventors and Innovators
George Pullman: Pullman cars
Alexander Graham Bell: the telephone (“Come here, Watson, I want you”); the Bell Telephone Company (now AT&T)
Thomas Alva Edison: Menlo Park, NJ; the Edison Electric Illuminating Company (now GE)
Thaddeus Lowe: ice making machine
Gustavus Swift: refrigerated railroad car…that’s big
Significance: mass production=standard products=lower prices for consumers

17. THE BIRTH OF ADVERTISING
The vast array of new products and competing companies led to the emergence of a new industry…ADVERTISING/ MARKETING!
Newspapers, Magazines, Posters
The Department Store: ie: the Grand Depot
Mail-Order Catalogs: Sears and Roebuck
Chain Stores: Woolworth’s

18. ESSENTIAL CONCLUSIONS
In the late 19th century, business owners were essentially given free reign in their own affairs: laissez-faire.
As the “rich got richer, and the poor got poorer,” the federal government tried to turn a blind eye to the growing tensions between owners and workers.
Although captains of industry often used questionable techniques (ie: rebates), they were not usually breaking any laws.