The Growth of Big Business The Rise of Big Business.

The Growth of Big Business

The Rise of Big Business

Warm Up

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.


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

Robber Barons or Captains of Industry

• Robber Barons – negative view of big business

• As cruel and ruthless • Would stop at nothing

to achieve great wealth



• Captain of Industry – view that the same men were ingenious and industrial leaders

• Transformed the American economy

• Praised for their charity


Social Darwinism

• 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

• Free Competition in the economy, like natural selection, would ensure survival of the fittest

• Society should do as little as possible to interfere with people’s pursuit of success


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• 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

• Arrive in American as a penniless Scottish immigrant

• Began to work to assist his family

• 1865 Andrew Carnegie was making $50,000


Carnegie Steel

• 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 nation’s steel


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• 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


Vertical Integration

• Controlling all steps to change raw materials into finished products


Vertical Integration

• Own iron and coal mines

• Bought railroads, trucking and shipping lines

• Bought warehouses


Horizontal Consolidation

• Buy out competitors• Companies making

similar products merge


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Growth and Consolidation

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


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Holding Company

• J.P. Morgan very successful banker

• Bought Carnegie Steel in 1901 for $500 million

• Changed name to US Steel

• Became the largest business organization


Standard Oil Trust

• Established by John D. Rockefeller

• Was able to undersell his competitors by charging less

• Purchased oil refineries and created horizontal consolidation


Standard Oil Trust

• Drove competitors out of business by selling oil lower than cost to make it

• After competitor are driven out

• prices skyrocketed to recoup loss


John D. Rockefeller

• Rockefeller gave away $500 million

• Founded the University of Chicago which found cure for yellow fever

• Land for United Nations


Standard Oil Trust

• Rockefeller was so successful at his death his personal fortune was estimated at

• $815,647,796


The Government Response

• 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


The Growth of Big Business The Rise of Big Business.

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