rise of big business objective 5.02. monopolies and trusts late 1800s—americans become suspicious...
TRANSCRIPT
Rise of Big Rise of Big BusinessBusiness
Objective 5.02
Monopolies and TrustsMonopolies and Trusts
•Late 1800s—Americans Late 1800s—Americans become suspicious of large become suspicious of large corporationscorporations
•Power of Power of monopoliesmonopolies feared feared•Wanted to prevent Wanted to prevent horizontal integrationhorizontal integration
Horizontal Integration
• Own all of the industry at the same level.- buy up all the competition.
• Example: Own all the gas stations or telephone companies, discounts stores.
•1882—first trust was formed by the Standard Oil Company–Trust = a coalition of organizations formed to limit competition by controlling the production and distribution of a product or service–Enabled trustees to control a group of companies as if they were one large merged company
New IndustriesNew Industries•RailroadsRailroads–Union Pacific—started in Union Pacific—started in Nebraska; headed westNebraska; headed west•Built by Civil War Veterans Built by Civil War Veterans and Irish Immigrantsand Irish Immigrants
–Central Pacific—started in Central Pacific—started in California; headed eastCalifornia; headed east•Built mostly by Chinese Built mostly by Chinese ImmigrantsImmigrants
•Cornelius VanderbiltCornelius Vanderbilt (1794-1877)(1794-1877)–Began a RR empire by Began a RR empire by merging popular lines in merging popular lines in NY to form the New York NY to form the New York Central and Hudson River Central and Hudson River RRRR
•Improvements for Improvements for TrainsTrains–George George WestinghouseWestinghouse developed the developed the new air brake new air brake system for trains system for trains in 1868 using in 1868 using compressed air compressed air after viewing a after viewing a collisioncollision
Steel IndustrySteel Industry•Andrew CarnegieAndrew Carnegie (1835-1919) (1835-1919)–Began in RRBegan in RR–Met Sir Met Sir Henry BessemerHenry Bessemer who who invented a new process of invented a new process of making high quality steel—now making high quality steel—now called the called the Bessemer ProcessBessemer Process
–He decided to get into the He decided to get into the steel business and opened a steel business and opened a company in Pittsburgh in 1875company in Pittsburgh in 1875
•Success brought by the Success brought by the Carnegie Steel Company Carnegie Steel Company cemented Carnegie as a cemented Carnegie as a ““Captain of Industry”Captain of Industry”
•By the 1890s, his company By the 1890s, his company was the largest and most was the largest and most profitable enterprise in the profitable enterprise in the worldworld
Vertical Integration
• Buy up the raw materials, transportation, production/manufacturing, retail/sales.
• Control every step of the product.
• J.P. MorganJ.P. Morgan (1837-1913) (1837-1913)–1901—Carnegie decided to sell 1901—Carnegie decided to sell his steel company to Morganhis steel company to Morgan
–He and Elbert Gary then He and Elbert Gary then merged Carnegie’s steel with merged Carnegie’s steel with their holdings in the Federal their holdings in the Federal Steel Company to form Steel Company to form U.S. U.S. SteelSteel
–At one time was the largest At one time was the largest producer of steel in the world, producer of steel in the world, now produces less than 10%now produces less than 10%
Oil IndustryOil Industry•Edwin DrakeEdwin Drake (1819-1880) (1819-1880)–1859—drilled first oil in 1859—drilled first oil in U.S. near Titusville, PAU.S. near Titusville, PA–Caused major expansion Caused major expansion of oil businessof oil business–By 1900 oil fields from PA By 1900 oil fields from PA to TX had been openedto TX had been opened
•John D.RockefellerJohn D.Rockefeller (1839- (1839-1937)1937)–Organized the Organized the Standard Oil Standard Oil CompanyCompany–By 1880s—controlled more By 1880s—controlled more than than 90%90% of oil refining in of oil refining in the U.S.the U.S.–Used Used horizontal integrationhorizontal integration to buy out smaller refinersto buy out smaller refiners
What is the problem with what Rockefeller was doing?
•1911—Government found his 1911—Government found his company to be a company to be a monopolymonopoly and forced it to be divided and forced it to be divided into 34 companies includinginto 34 companies including–AmocoAmoco–ChevronChevron–SonocoSonoco–ExxonExxon–MobilMobil
Take out a sheet of paper to be put in Goal 5 of portfolio.
• Create your own vertical integration- pick a business and show the process.
• EX: Pork- own feed mill feed mill, own the farms hogs are raised- own processing plants, distribution, grocery store.
• Create your own horizontal integration- pick an industry and show how it work.
• EX:- Carolinas Medical Center- buys out the other hospitals.
Ideas of the Gilded Ideas of the Gilded AgeAge
Objective 5.02Objective 5.02
The Gilded AgeThe Gilded Age•Coined by Mark TwainCoined by Mark Twain•Era of U.S. 1876-1900Era of U.S. 1876-1900•Period of rapid Period of rapid industrializationindustrialization
•Characterized by ruthless Characterized by ruthless pursuit of profit and pursuit of profit and government corruptiongovernment corruption
IndividualismIndividualism•No matter how humble a persons No matter how humble a persons
origins, they could rise in society origins, they could rise in society and go as far as their talents and and go as far as their talents and commitment would take themcommitment would take them
•Horatio AlgerHoratio Alger —expressed —expressed individualism through numerous individualism through numerous “rags-to-riches” novels involving “rags-to-riches” novels involving the poor going to the big city the poor going to the big city and becoming successfuland becoming successful
Social DarwinismSocial Darwinism•Reinforced idea of Reinforced idea of
individualismindividualism•Proposed by Proposed by Herbert SpencerHerbert Spencer, ,
English philosopherEnglish philosopher•Applied Darwin’s theory of Applied Darwin’s theory of
evolution and natural selection evolution and natural selection to human societyto human society
•Argued that society progressed Argued that society progressed and became better because and became better because only the only the fittest were successfulfittest were successful
Gospel of WealthGospel of Wealth•Those who were wealthy, such Those who were wealthy, such
as Carnegie, attempted to as Carnegie, attempted to extend and soften the harsh extend and soften the harsh philosophy of Social Darwinism philosophy of Social Darwinism through philanthropythrough philanthropy
•Believed that those who Believed that those who profited from society owed it profited from society owed it something in returnsomething in return
•Used their great fortunes to Used their great fortunes to further social progressfurther social progress
“Capitan’s of Industry” vs. “Robber Barons”
• How would you view them? Create a T-Chart to compare the two terms. Use your notes and your knowledge to answer!
• Examine the Pros and Cons