The Growth of Big Business

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The Growth of Big Business
The Rise of Big Business
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Warm Up
The Rise of Big Business

1. Imagine you are Bill Gates What would you do
   with your money? Write it down on a separate
   sheet of paper.
2. Read the Gospel of Wealth and answer the 3
   questions.
3. Compare your response to question 1 and question
   2. Would Carnegie approve of your decisions???
   Why or why not.

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Robber Baron or Captains of Industry

• Robber Baron
• 1 an American capitalist of the latter part of
  the 19th century who became wealthy through
  exploitation (as of natural resources,
  governmental influence, or low wage scales)
• 2 a business owner or executive who acquires
  wealth through ethically questionable tactics
• Captain of Industry
• the head of a great industrial enterprise

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Robber Barons or Captains of Industry
The Rise of Big Business

• Robber Barons negative view of big business
• As cruel and ruthless
• Would stop at nothing to achieve great wealth

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Robber Barons or Captains of Industry
The Rise of Big Business

• Captain of Industry view that the same men were
  ingenious and industrial leaders
• Transformed the American economy
• Praised for their charity

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The Rise of Big Business
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Social Darwinism
The Rise of Big Business

• Origins of Species 1859
• Charles Darwin
• All animal life had evolved by a process of
  Natural Selection
• Only the strong survive to reproduce

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Social Darwinism
The Rise of Big Business

• Free Competition in the economy, like natural
  selection, would ensure survival of the fittest
• Society should do as little as possible to
  interfere with peoples pursuit of success

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Robber Barons or Captains of Industry
The Rise of Big Business

• Andrew Carnegie
• Gospel of Wealth people should be free to make
  as much money as they can. However, after they
  make it, they should give it away

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Carnegie Steel
The Rise of Big Business

• Arrive in American as a penniless Scottish
  immigrant
• Began to work to assist his family
• 1865 Andrew Carnegie was making 50,000

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Carnegie Steel
The Rise of Big Business

• Entered steel business
• Stole Bessemer Process from Brits
• 1889 Established Carnegie Steel Company
• Controlled suppliers and competition
• 1899 Carnegie Steel produced more than Great
  Britain
• Carnegie Steel produced 80 of nations steel

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Robber Barons or Captains of Industry
The Rise of Big Business

• Carnegie once stated, I entered this life poor
  and I wish to leave it the same.
• Gave away 325 million 90 of his wealth
• Carnegie Hall in NY City
• Carnegie Foundation
• 3,000 libraries across the US

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Vertical Integration
The Rise of Big Business

• Controlling all steps to change raw materials
  into finished products

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Vertical Integration
The Rise of Big Business

• Own iron and coal mines
• Bought railroads, trucking and shipping lines
• Bought warehouses

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Horizontal Consolidation
The Rise of Big Business

• Buy out competitors
• Companies making similar products merge

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Growth and Consolidation
The Rise of Big Business

• Monopoly- complete control over production,
  quality, wages, and prices

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Holding Company
The Rise of Big Business

• J.P. Morgan very successful banker
• Bought Carnegie Steel in 1901 for 500 million
• Changed name to US Steel
• Became the largest business organization

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Standard Oil Trust
The Rise of Big Business

• Established by John D. Rockefeller
• Was able to undersell his competitors by charging
  less
• Purchased oil refineries and created horizontal
  consolidation

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Standard Oil Trust
The Rise of Big Business

• Drove competitors out of business by selling oil
  lower than cost to make it
• After competitor are driven out
• prices skyrocketed to recoup loss

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John D. Rockefeller
The Rise of Big Business

• Rockefeller gave away 500 million
• Founded the University of Chicago which found
  cure for yellow fever
• Land for United Nations

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Standard Oil Trust
The Rise of Big Business

• Rockefeller was so successful at his death his
  personal fortune was estimated at
• 815,647,796

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The Government Response
The Rise of Big Business

• 1890 Sherman Antitrust Act
• Outlawed any combination of companies that
  restrained interstate trade
• Was not effective against trusts
• Pro business courts had to interpret law