Industrial Capitalism Notes
Reasons for American Industrialization
Three Factors:
• Immigration – increased labor supply, both _______________ (migration from farms) and foreign
(_________________ __________________)
• Resources – possession of a wealth of natural resources
• Government – ___________-_________ ________________ (hands-off) government policies that did not
place restrictions on business
- Actually gave them ______________________ ____________________
- Leads to __________________ _______________
Business Innovations
• Corporation - organization owned by many
people but treated as a single entity
• Monopoly – a company that controls most (80%)
or all of a market and limits competition by:
1. ____________ ____________ - all levels
of production owned by the same company
from resource to final product
Ex: Own oil rigs, car manufacturers, car dealership
2. ________________ _____________ –
merger of two similar companies
Ex: Own Toyota and Honda
Where Do Corporations Come From?
• The construction of the _________________
________________ after the Civil War made mass
distribution of goods possible.
– Enabled people to buy goods that weren’t always
available to them
• ________________ increased to meet the
________________
– Business need ________ (money) to increase
production
• Many corporations sell __________ (stock) to the
public
• ____________ now own part of the company
Led To:
• Urbanization & Industrialization
• Rise in a class of Industrial Capitalists
– Carnegie (_______________)
– J.P. Morgan (______________)
– Rockefeller (________)
Robber Barons or Captains of Industry?
• Captains of Industry – ___________ term for business leaders whose business practices are seen to
___________ the nation
• Robber Barons – ___________ term for business leaders who are seen as _____________ their employees
and using __________ business practice to _________ large sums of wealth
Robber Barons or Industrial Capitalists?
John D. Rockefeller
He became the richest man of his time, and indeed has a good claim to perhaps
being the richest self-made man who ever lived. John D. Rockefeller (1839–1937) was
the founder of Standard Oil. Standard Oil expanded rapidly, both horizontally by buying
up other oil refining companies, and vertically by acquiring oil wells and transportation
routes and selling products at the retail level. Standard Oil pursued a monopoly
position, pursuing many techniques—such as secret rebates from railroads and
predatory pricing. It also invented the trust form of organization in order to circumvent
out-of-date incorporation laws. By 1880, Standard Oil controlled 90% of the American
oil industry. Standard Oil Company became the first great U.S. business trust (similar to
a monopoly in that it was an unregulated company). He used fortune to fund many
philanthropic causes because “God gave me the money,” he often said.
James Duke
James Duke (1856 – 1925) was a U.S. tobacco tycoon and electric power
industrialist. He is famous for the Duke Endowment, a $40 million trust fund, and the
establishment of Duke University. Like many of his era’s industry titans, Duke sought to
limit competition. His firm joined four others in 1890 to form the American Tobacco
Company, which accounted for upwards of 90 percent of the domestic cigarette
business. Duke, who had orchestrated the merger, was at the helm of the new monopoly.
In 1911, the federal government dissolved his conglomerate under the Sherman
Antitrust Act.
During this time, Duke was planning his next enterprise: hydroelectric
development of the western Carolinas. Lasting growth and prosperity in the South
would require cheap, abundant electricity, he believed, especially in the textileproducing regions of the Carolinas. (Duke’s foresight put him a generation ahead of
government efforts to electrify the Tennessee River valley during the Great Depression.)
He bought land and built dams; he persuaded risk-averse mill owners to use the new
source of energy. By the 1920s, Duke’s Southern Power Company was the leading
electric utility in the western Carolinas. Today, the firm is known as Duke Energy.
J.P. Morgan
John Pierpont Morgan (1837-1913) began his career in 1857 as an accountant,
and worked for several New York banking firms until he became a partner in Drexel,
Morgan and Company in 1871, which was reorganized as J.P. Morgan and Company in
1895. Described as a coldly rational man, Morgan began reorganizing railroads in 1885,
becoming a board member and gaining control of large amounts of stock of many of the
rail companies he helped restructure. In 1896, Morgan embarked on consolidations in
the electric, steel (creating U.S. Steel, the world's first billion-dollar corporation, in
1901), and agricultural equipment manufacturing industries. By the early 1900s,
Morgan was the main force behind the trusts (again similar to a monopoly in that it was
an unregulated company), controlling virtually all the basic American industries. He
then looked to the financial and insurance industries, in which his banking firm also
achieved a concentration of control. During the Panic of 1873 the banker J.P. Morgan
bailed out the federal government by loaning the Treasury $65 million dollars in gold.