1. The Rise of Big Business
APUSH

2. The “Gilded Age” was coined by Samuel Clemens in his book of the same name.
Explored political and economic corruption in the United States.
The central characters were tied together in a government railroad bribery scheme.
Depicted an American society that, despite its appearance of promise and prosperity, was riddled with corruption and scandal.

3. Causes of Rapid Industrialization
More advanced machinery
Quicker Production
First big business in the U.S.
Great opportunity for financial investment
Aided development of other industries
1. Steam Revolution of the 1830’s-1850’s
2. The Railroad fueled the growing U.S. economy

4. Cause 3: Technological Innovations
The Bessemer Process of purifying steel helped to make America the top producer of steel, and transformed the U.S. into a modern industrial economy
Construction companies could build bigger bridges and taller buildings
The low cost of steel made ordinary items affordable

5. Cause 3: Technological Innovations
Refrigerated Railroad Cars
Thomas Edison
- “Wizard of Menlo Park”
- light-bulb, phonograph,
motion pictures

6. Cause 3: Technological Innovations
Alexander Graham Bell
- Telephone (1876)
George Westinghouse
- Alternating Current

7. Cause 3: Technological Innovations
The Airplane
Wilbur Wright
Orville Wright
Kitty Hawk, NC – December 7, 1903

8. Cause 3: Technological Innovations
Henry Ford:
Model T Automobile

9. U. S. Patents Granted 1790s  276 patents issued.

10. Causes of Rapid Industrialization
Unskilled & semi-skilled labor in abundance.
Abundant capital.
New, talented group of businessmen [entrepreneurs] and advisors.
Market growing as US population increased.
Government willing to help at all levels to stimulate economic growth.
Abundant natural resources.

11. Causes of Rapid Industrialization
# 10- Oil Industry Begins
Oil was a key commodity as a fuel
Edwin Drake drilled the first commercial oil well
Oil prospectors or Wildcatters looked for oil in other regions
Major sources of energy from oil fueled a revolution in transportation and industry

12. A favorable climate for business
1- Free markets
With capitalism, competition determines prices and wages, and most industries are run by private businesses.
In the 1800s, business leaders believed in laissez-faire capitalism with no government intervention.
They believed government regulation would destroy self-reliance, reduce profits, and harm the economy.
2- Social Darwinism
Many thinkers believed that inequalities were part of the natural order.
Charles Darwin believed that members of a species complete for survival in a natural selection process.
Applied to society, stronger people, businesses, and nations would prosper, and weaker ones would fail in a “survival of the fittest.”

13. New Business Culture: “The American Dream?”
Protestant (Puritan) “Work Ethic”
Horatio Alger [100+ novels]
Is the idea of the “self-made man” a MYTH??

14. Changing business structure
The way business were organized was changing rapidly
Proprietorships and
Partnerships
Small business run by individuals or partnerships
Owners personally responsible for business debt
Corporations
As companies grew, structure of ownership changed
Owned by stockholders, decisions made by board of directors
Investors only are bound by the amount of the investment
Trusts and Monopolies
Some companies merged and turned their stocks over to a board of trustees who ran the group of companies as one giant entity
Some became monopolies, which meant they could raise/lower prices at will

15. How were corporations able to form monopolies?
Let’s Use
McDonald’s
as an example

16. Beef Cheese Lettuce Onion Sauce Bread Sesame Seeds Pickles
What Ingredients are necessary to make a big mac?
Beef
Cheese
Lettuce
Onion
Sauce
Bread
Sesame Seeds
Pickles
How does McDonald’s get all of their ingredients?
Do they own their own lettuce farms?
Do they own their own cattle ranches?
Do they own their own bakery?

17. NO!!
They pay other companies to grow their produce, raise the cattle, bake the bread, and produce all of the other ingredients they need
The price McDonald’s charges is driven, in part, by what they have to pay these companies
And… in part by the need to attract customers who might, go to the competition instead

18. What companies does McDonald's compete with?
How can McDonald’s attract customers who might go to the competition?
1. Make a better product
2. Lower the price

19. What can McDonald's do to attract customers?
Use cheaper ingredients
Operate at a loss
Cut down on costs

20. If McDonald’s was going to cut down on costs without sacrificing product or service, what could they do?
Buy up all the other companies they deal with, giving McDonald’s control of the entire process of making and delivering hamburgers

21. * Buy up all the cattle ranches * Buy up the transport companies
* Buy up the farms
* Buy up the bakeries
* Buy up the transport companies
Result?
Lower Long-Term Costs

22. With Lower Costs, McDonald's can lower their prices
If they lower their prices enough, what will happen to the competition?

23. With no competition, what can McDonald's do to prices?

24. With high prices, consumers lose
Monopoly
With high prices, consumers lose
When one company takes control of the entire market, it is called a monopoly

25. New Type of Business Entities
How Trusts Work:
Horizontal Integration  John D Rockefeller
Vertical Integration:
Gustavus Swift  Meat-packing
Andrew Carnegie  U. S. Steel

27. John D. Rockefeller Industrial Tycoons
By 1879, had captured 90% of all US Oil refinery business
“Standard Oil”
Gave over half of fortune away to charity

28. Andrew Carnegie Industrial Tycoons
Used profits from business investments to found own company
“Carnegie Steel”
Dominated Steel Industry
After retiring, devoted time and money to support education and build public libraries

29. Cornelius Vanderbilt Industrial Tycoons
Began investing in railroads during the Civil War
By 1872, owned the New York Central Railroad
Supported few charities but gave money for what would become Vanderbilt University
Died leaving a $100 million estate

30. JP Morgan Industrial Tycoons Financier
Created General Electric in 1891
Consolidated Steel Industry (United States Steel)
Controlled over 100 corporations

31. George Pullman Industrial Tycoons
Designed sleeper cars that made long distance travel more comfortable
Built a town south of Chicago to house workers
Controlled aspects of life in the town, and criticism was not tolerated

32. Vs. Critics saw tycoons as “robber barons”
Cons
Pros
Critics saw tycoons as “robber barons”
Profited unfairly by squeezing out competitors
Lived lavish life-styles at the expense of the American people
Supporters saw as “Captains of Industry”
Used their business skills to make the American economy more productive
This made the economy stronger

33. % of Billionaires in 1900

34. % of Billionaires in 1918

35. The Protectors of Our Industries

36. The ‘Bosses’ of the Senate

37. The ‘Robber Barons’ of the Past

38. The Gospel of Wealth: Religion in the Era of Industrialization
Wealth no longer looked upon as bad.
Viewed as a sign of God’s approval.
Christian duty to accumulate wealth.
Should not help the poor.
Russell H. Conwell

39. The Gospel of wealth The Anglo-Saxon race is superior.
Inequality is inevitable and good.
Wealthy should act as “trustees” for their “poorer brethren.”
Andrew Carnegie