1. The Rise of Big Business
Chapter 14
Section 2
The Second Industrial Revolution
Riddlebarger

2. Capitalism
An economic system in which private businesses run most industries.
Competition determines prices and wages.

3. Age of Big Business
The period of invention after the Civil War sets the stage for great industrial growth
Huge amounts of capital ($$)needed, along with human labor and natural resources

4. Robber Barons/ Captain of Industry Powerful Industrialists of late 1800’s
ｷ perception of stealing from public
ｷ ruin competition, bribe public officials, pay low wages, unhealthy workplace
Captain of Industry
ｷ Perception of serving nation in positive way
ｷ Creating jobs, donating money, increase public supply of goods and jobs

5. Robber Baron or Captain of Industry???
Morgan
Carnegie
Vanderbilt
Rockefeller

6. Social Darwinism Who is most likely to advocate Social Darwinism?
A. idea popular in late 1800’s
B. Government shouldn’t interfere with people’s success; if so, the most “fit” would succeed and become rich
Society would benefit from success of fit & weeding out of unfit
C. Most Americans agree at the time that government should not interfere with private business
Who is most likely to advocate Social Darwinism?
Industrialists or Workers?

7. What Is a Monopoly?

8. Monopoly & Cartels
A. Many industrialists use whatever means necessary to gain competitive edge
B. monopoly- controlling entire industry or product
Buy them or drive them out, then you can charge any price you like
C. cartel- loose association of businesses that make the same product
Members agree to limit production and keep prices high

9. Trusts A group of companies
placed under the control of a single managing board

10. Growth of Big Business (2 strategies)
Vertical
Consolidation
∙ Gaining control of many businesses that make up all phases of product’s production
Railroads
Carnegie Steel
Company
Owns all phases
of production
Coke Fields
Iron Ore
Deposits
Steel
Mills
Ships

11. Growth of Big Business (2 strategies)
What problems might a business face that must compete against a company with a vertical monopoly?
Railroads
Carnegie Steel
Company
Owns all phases
of production
Coke Fields
Iron Ore
Deposits
Steel
Mills
Ships

12. Growth of Big Business (2 strategies)
Horizontal Consolidation
Joining competing firms in the same business
Example: Standard Oil
Standard Oil
Company
Purchased by
Rockefeller
Independent Oil
Refineries

13. Growth of Big Business (2 strategies)
Why were companies at a disadvantage when facing a company with horizontal consolidation?
Standard Oil
Company
Purchased by
Rockefeller
Independent Oil
Refineries

14. Growth of Big Business
Economies of Scale- As production increases, the cost of each additional item produced is lower
D. Effects of big business on American Society
Few like trusts or other large businesses
Politicians don’t crack down- continue to allow industrialists to operate at will
Disparity in wealth (gap between rich & poor grows)
Boom & bust-good times followed by bad
Business Cycle

16. Standard Oil Company John D. Rockefeller
Built oil refinery in Cleveland (1863)
Forms Standard Oil (1870)
Persuades railroads to give refunds on shipping- Allows him to lower prices
Over $2 billion fortune
B. The Trust
Law prevents buying out competition
Allows them to get around the law
Control of most of nations oil refining

17. Sherman Anti-Trust Act
Outlaws any combination of companies (monopolies)
Rarely enforced

18. Andrew Carnegie
Made millions in steel industry by bringing Bessemer Process to America.
Scottish immigrant
Sold his company for $492 million to JP Morgan in 1900.
Paid low wages to workers
Donated millions to charity.

19. US Steel Industry

21. Looking Ahead
What effects did the growth of big business have on workers?