1. Industrialization
Big Business

2. Big Business 19th century = the “heyday” of the big business
One of the 1st big businessmen = Andrew Carnegie
Born in Scotland to penniless parents
Got his start at the Pennsylvania Railroad
Entered the steel business in 1873
1899 – Carnegie Steel Company was out-
producing Britain
His “rags to riches” story made him a
model of American success

3. Carnegie’s Key to Success
New Business Strategies
1) Searched for ways to make better products more cheaply
New machines, techniques etc.
2) Attracted talented people
By offering stock in the company
3) Sought to control as much of the steel industry as he could
Via vertical integration and horizontal integration

5. Carnegie’s Success Social Darwinism
Late 19th cent. philosophers said Carnegie’s success could be explained via Social Darwinism
Social Darwinism
Some species flourish & pass their traits to the next generation; some do not
“Natural Selection”
Social Darwinism when applied to business meant
Success and failure in business were governed by natural law

6. Fewer Control More While Social Darwinism and “natural
law” were accepted in theory, in
practice, businessmen wanted to “curve”
their competition
This meant
Mergers
Occurs when one company buys out the stock of another
Can lead to monopolies
A firm that bought out all of its competitors
Complete control over an industry’s production, wages and prices
Trusts
Participants turned their stock over to a group of trustees – people who ran the separate company finances together
In return, they received shares of profit earned by the trust

7. Fewer Control More John Rockefeller Established Standard Oil Company
Used a trust to gain total control of the oil industry
1880-Standard Oil controlled 90 % of the refining business
Had a conflicting reputation as a “robber baron” and a philanthropist

8. Carnegie Steel Company
Fewer Control More
By 1890, an estimated 10% of the population held 75% of the nation’s wealth
The industrial tycoons below were some of that 10%
John D Rockefeller
Standard Oil
$600 Billion
Andrew Carnegie
Carnegie Steel Company
$200 Billion
Cornelius Vanderbilt
Railroads
$143 Billion

9. Results of Big Business
Sherman Antitrust Act
1890-makes it illegal to form a trust that interfered with free trade
Not easily enforced
Business boom bypasses south
South still recovering – unwilling to riskily invest
South remains agricultural