Big Business rises in the US

Bessemer Steel Process

The Bessemer process was developed independently by the British manufacturer Henry Bessemer and American ironmaker William Kelly around 1850.

• The Bessemer Process involves removing the carbon from the iron. After the carbon is removed from the iron it produces a lighter, more flexible, and rust-resistant metal known as steel.

• Bessemer Process makes steel!

New Uses For Steel

• Railroads! Need to transport goods that were being made• Transported goods quickly and for

small cost

• Joseph Glidden’s barbed wire helped keep cattle in on ranches

• Cyrus McCormick’s and John Deere’s farm machines helped transform farming- made easier and faster

• It made new and large construction possible.– The Brooklyn Bridge, with its steel

cables, was completed in 1883.– William Le Baron Jenney designed

the 1st skyscraper with a steel frame-the Home Insurance Building in Chicago (1884).

Thomas Alva Edison

• Edison was an American inventor, scientist, and businessman

• Edison’s inventions included the phonograph, the motion picture camera, and the long lasting practical electric light bulb.

• Edison holds 1,093 patents and was nicknamed “The Wizard of Menlo Park”.

Inventions Change Lifestyles

Thomas Edison’s light bulb provided cheap light after dark

Christopher Sholes invented the typewriter in 1867 and changed the world of work and printing.

Alexander Graham Bell invented the telephone in 1876 opened the way for a worldwide communications

network.

Learning Targets

You will explain what a corporation is and its main goals.

You will explain how a corporation is formed through vertical & horizontal integration

You will decide whether or not government intervention was necessary based on actions of corporations.

The Rise of Corporate America

Before corporations, businesses were owned and operated by one family

Corporation= A number of people take ownership of a business Many people coming together in ownership, instead of just

one family or person

Corporations became popular for expanding companies, to allow for more investment opportunities and less risk Ex: If a family farm is sued for bad meat, the family is to

blame. If a farm is a corporation and gets sued, all people take ownership and lose money.

Example of Corporation

Sam Walton has a great

idea- WALMART

Sam opens a family store in Arkansas-“Waltons”

Sam starts to expand with his

own money- makes the store

larger

Sam realizes he will need

partners to expand more-

Allows for investors to

give $$ to own part of the business

Sam starts building

Walmarts, and takes on public shareholders

Today Walmart dominates the

business world.

Sam Walton could have never done

this with just him- he needed other

partners and $$ to make it a success

Corporations as Businesses

Corporations want to maximize profits Profits: Money the company

makes – Cost of production To make the most profits

corporations cut down on cost Pay people less money to work Pay low costs for materials

Its all about how much money you can make

Creating Successful Corporations is sometimes not good business.

Some corporations became monopolies Monopoly- complete control of a

product of service Lower prices enough to run competition

out of business, then raise prices extremely high

Big businessmen of the time: Andrew Carnegie John D Rockefeller Cornelius Vanderbilt J.P. Morgan

Vertical Integration

Owning all parts of the production of a product: Ex: Carnegie Steel

Mines that produced iron/coal

Refining plant that makes iron into

steel

Ships/ railroads for transport

Horizontal Integration

Making many different businesses into the same company Ex: Rockefeller’s “Trust”

which had 41 oil companies under the control of 9 people

Created a monopoly

Trust= Business formed with the intent to monopolize an industry

Government Intervention

As businesses started to grow larger, they started to create ways to take advantage of people for higher profits Extremely low wages Asking high prices for items Bankrupting companies that people had invested

in Creating monopolies

Government started to intervene on behalf of the citizens

Early Government steps

Interstate Commerce Commission (ICC)- Created by Congress to regulate railroads Railroads had been asking unfair rates for transportation

of goods like cattle

Sherman Anti-Trust Act- Government tried to break up trusts by saying they restricted trade/commerce The government was not very strict Businessmen found ways around it

This was the start, however, of government regulation of business Trying to protect the consumer, or people who buy

products

Do Now

Answer these questions: What strategies did corporations use to decrease costs and

increase profits?

What arguments did people use to support or oppose big business?

How did the government start to regulate business?

What is Social Darwinism? Do you agree with the idea?

How did big business shape the American economy in the late 1800s and early 1900s?

THE PEOPLE WHO MADE THE BIG BUCKS DURING THE GROWTH OF BIG BUSINESS

Industrialists

Andrew Carnegie (1835-1919)

• Andrew Carnegie was a Scottish-born immigrant that excelled as an entrepreneur, businessman, and philanthropist.• Philanthropist- someone

who seeks to promote the welfare of others

• He earned most of his fortune in the steel industry.

Andrew Carnegie (1835-1919)

In the 1870’s, he founded the Carnegie Steel Company.• largest and most

profitable company in the world.

• Nickname: Prince of steel

• Used vertical integration-• Owned all phases of

production

Carnegie’s Legacy

John D. Rockefeller (1839-1937)

• John Davison Rockefeller was an American businessman.

• Rockefeller revolutionized the petroleum industry (oil).

• In 1870, he founded the Standard Oil Company and aggressively ran it until he officially retired in 1897.

John D. Rockefeller (1839-1937)As kerosene and gasoline

grew in importance, he became the world’s wealthiest man and the first American billionaire.

He was also a renowned philanthropist. Philanthropist: A person

who seeks to assist in the welfare of others

He used horizontal integration Making many businesses

into one company

Rockefeller’s Legacy

Cornelius Vanderbilt (1794-1877)

Cornelius Vanderbilt built his wealth in shipping and railroads.

Vanderbilt was known as the Commodore.

Vanderbilt gave a $1,000,000 endowment to start Vanderbilt University in 1868. Vanderbilt is located in Nashville, Tennessee. Hints the Vanderbilt

Commodores mascot

Cornelius Vanderbilt

Cornelius Vanderbilt’s grandson, George Washington Vanderbilt II, built the Biltmore Estate Mansion in Asheville, North Carolina (1889-1895).

John Pierpont Morgan (1837-1913)

John Pierpont Morgan was an American financier and banker Owned many

different companies

In 1892, J.P. Morgan arranged the merger of Edison General Electric and Thomas-Houston Electric Company to form General Electric.

JP Morgan

J.P. Morgan paid Andrew Carnegie 487 million dollars for Carnegie Steel Company in 1901. J.P. Morgan then formed United States Steel Corporation in 1901.

George Pullman

Manufactured railway cars for traveling during the industrial boom

He invented the “sleeping” car which allowed passengers to sleep at night during their travels

Lincoln’s son Robert took over Pullman’s company later on

Other industrialists

Milton Hershey- Manufactured candy in Pennsylvania, specifically chocolate

Irenee Dupont- Manufactured gunpowder for American military, and then it expanded to chemicals

Swift & Armour- Because of the invention of the refrigerated railcar, Swift & Armour were able to process meat from cattle, and ship it nationwide through railroad Worked separately- rivals They also used vertical integration

Robber Barons or Captains of Industry?

Monopolies and trusts started to come under attack It was almost impossible to be a

small business owner Raised prices too high because they

could which hurt the American public Became known as Robber Barons

Some people like these men- They create jobs Make the US powerful They called them- Captains of

Industry

Business Boom Bypasses The South

Industrial growth concentrated in the North, where natural and urban resources were plentiful.

After the war, Southerners were unwilling to invest in risky business ventures. Northern businesses already owned 90% of the stock in the most profitable southern enterprise, the railroads, thereby keeping the South in a stranglehold.

The South remained mostly agricultural, with farmers at the mercy of railroad rates.