1. The Rise of American Big Business
Industrialization
The Rise of American Big Business
Industrialization
Urbanization

2. New Tools of Industrialization
Before the Civil War, most American businesses were owned by a single person or a partnership
After the Civil War, industry (mills, factories, railroads, mines) now needed more capital (money) for investment than one person or a few partners could raise.
What’s the solution???

3. $$$ CORPORATIONS Purpose To raise capital (money $$)
It is a business in which many investors own shares called stocks
In exchange for their investment, each stockholder receives a dividend, or part of the corporation’s profits
This limits investor losses
If a corporation fails, each investor only loses his or her investment
Limited Liability

4. Wall Street $$

5. MONOPOLY
Purpose
Company or small group of companies that has complete control over a particular industry
A monopoly often allowed a company to raise prices to almost any level it desired
OUTCOMES:
Competitors forced out of business
Government tried to control them

6. What do you see?
What do you think the cartoon is saying about these men?

7. TRUSTS Standard Oil Trust Purpose
To get around government regulation of monopolies, companies combined their management into trusts
Shareholders in the corporations received dividends from the trust but lost any say in its operation
A way to get around laws regulating monopolies

8. Who were the industrial leaders?
Andrew Carnegie – Steel
J.P. Morgan – Finance (Investment Banker)

9. Who were the industrial leaders?
Cornelius Vanderbilt - Railroads
John D. Rockefeller – Oil

10. How did they get so powerful?
Maximized profits
Controlled entire industries
Got rid of competitors
Controlled prices
Minimized costs
Kept worker pay very low with long hours
Controlled suppliers and transportation costs (they owned all parts of their industry)
Had no government interference!

12. LAISSEZ-FAIRE Government should not interfere with business
FREE-ENTERPRISE SYSTEM – private individuals make the economic decisions
Government is hands-off

14. SOCIAL DARWINISM Based on Charles Darwin's theory of evolution
Social Darwinists thought life was a struggle for the “survival of the fittest”
Free-enterprise competition (laissez-faire) would lead to the strongest businesses surviving – that’s good.
Government regulation would let the weak survive, so it was bad.
Government programs to aid the poor or workers would let the weak survive, so they were bad.

15. How laissez-faire was it really?
Govt Policy towards business – Was it really “laissez-faire”?
Land grants to railroads
No limits on immigration (at first)
Supported business owners during strikes

16. ROBBER BARONS?
Those who got rich at the expense of the poor and the working class
Fancy lifestyles of the rich – mansions, show off their wealth

18. Carnegie’s Mansion in NYC

19. Vanderbilt Mansion, NY

20. Rockefeller Mansion

23. or Philanthropists?
But the Robber Barons also used their money to help society (philanthropy):
Can you think of places/things with the names Rockefeller, Carnegie, Vanderbilt?

24. Gov’t Regulates Monopolies
1st try: Sherman Anti-Trust Act (1890)
Tried to prohibit monopolies and trusts. It prevented any business structure that “restrained trade”
Problem: It was too vague. Corporations got around the act by forming other types of companies.
2nd try: Clayton Anti-Trust Act (1914)
“Fixed” the Sherman Anti-Trust Act
This one worked.