1. The Rise of Big Businesses aka Monopolies AKA Trusts

2. Development of Big Businesses
Until 1900’s families owned small businesses that were local
After 1900 corporations form that are owned by many people instead of one man
Corporations increase their profits by:
Paying low wages…upsets workers
Broadened their advertising base
Invested in inventors
Many corporations formed monopolies in which they controlled the entire market (no competition)
These corporations are allowed to get away with this because the government is practicing laissez-faire (government doesn’t regulate businesses/economy)

3. Two Ways to Create a Monopoly/Trust
Horizontal Integration:
Consolidating many businesses into one large firm
One company buys out all of its competitors…creates monopolies that will later be banned by the federal government
This practice was used by Rockefeller in oil company
Vertical Integration:
Buying up all the businesses that contribute to a final product
Example: Steel company owned by Carnegie
Owned iron mines
Owned RR that transported the iron to factories
Owned the coal mines that extracted the coal to power his steel mills and railroads

4. “Captains of Industry”
“Robber Barons”
“Captains of Industry”
Entrepreneurs who built monopolies that were unfair to consumers and ruthless with their competitors
Hard on their workers
Bought out competitors
Seen as bad for the economy
Rockefeller
Entrepreneurs that were seen as serving the nation in a positive way
Creating jobs
Stimulated innovation
Were philanthropists
Carnegie

5. Social Darwinism “Survival of the fittest” promoted by Charles Darwin
Suggested that only the wealthy were the most fit and therefore should survive
Only the wealthy should rise to the top
Don’t use public funds to help the poor
Said that the impoverished were unfit to reproduce
Complete opposite of Gospel of Wealth (rich should donate riches to help the nation and needy)

6. Horatio Alger
In his books, Alger told stories of young men who won wealth and fame by being honest and hardworking
Advised Americans to seek success based on values
Success through the strengths of their own efforts

7. John D. Rockefeller oil tycoon
Established the Standard Oil Company which held a monopoly on the oil industry
Bought up smaller oil companies to create his own company (horizontal integration)

8. Andrew Carnegie Steel tycoon
Used the Bessemer process (purifying iron into steel so that it was lightweight but still strong) to mass produce steel
With so many skyscrapers going up steel is in huge demand

9. Other Entrepreneurs Cornelius Vanderbilt: George Westinghouse:
Made millions from the shipping and railroad business
Became a symbol of the excesses during the Gilded Age
George Westinghouse:
Developed air brakes and a device that allowed trains to switch from one track to another
J.P. Morgan:
Dealt with finances
Helped Carnegie become the steel tycoon

10. Gilded Age
A term coined by Mark Twain that describes the last decade of the 19th century
Said that America had a rotten core but was covered with gold paint (gilded)
Describes how on the outside America looked wealthy and prosperous(gold paint) but there was poverty and despair (rotten core) underneath all the wealth
Emphasizes that the gap between the rich and the poor was too wide

11. Government Regulation of Big Business
Laissez-faire: little government interference in the economy
An American tradition
But the stronghold that these capitalists had on the economy worried the government
Sherman Antitrust Act outlawed monopolies and trusts (companies owned by stockholders)…but not really enforced