US History
Industry and Business
Late 19th Century
Expansion of Industry
 Government actions and changes in factors of
production fostered industrial growth.
 These factors included a 1. wealth of natural resources, 2.
government support for businesses and a 3. growing
population that provided cheap labor and a market for new
goods/services.
 5 factors of production:
 Land- natural resources
 Labor- workers
 Capital-money, machinery, tools
 Technology- new inventions
 Entrepreneurs- risk-takers that start new businesses
New Industries
1. Technological innovations.
 Bessemer and open hearth process (ways

to produce steel cheaply)
Typewriter-1867
 Christopher Sholes
 Telephone-1876
 Alexander Graham Bell
 Edison
o “Wizard of Menlo Park”
o light bulb-1880, phonograph,
motion pictures.
New Industries
2. The Railroad fueled the growing US economy:
 First big business in the US.
 A magnet for financial investment.
 The key to opening the West= Transcontinental
 Aided the development of other industries.
 Brought new settlers
 Developed a national market
Business vocabulary
1.
2.
3.
4.
5.
Corporation- form of business organization that is recognized as a
legal entity
Stock- ownership certificates in a firm
Stockholders- person who owns stock in a corporation (investor)
Dividend- check representing portion of earnings
Monopoly- complete control over its industry’s production, wages
and prices
 Create a monopoly in 2 ways:
 Set up a holding company: corporation does nothing but buy out stocks of another
company ex: J.P. Morgan
 Create trust agreements: participants in a trust turn over their stocks to a group of
trustees (people who run separate companies as a one corporation) in return the
companies get dividends on profits earned by the trust
Vertical and Horizontal Integration
Big Business
 Entrepreneurs used new technologies and new business tactics to
create large corporations that controlled their industry.
 Andrew Carnegie
 Rise from rags to riches story
 Carnegie steel company
 Controlled the steel industry through vertical integration-
process of buying out suppliers
 Controlled the entire steel industry = monopoly
Big Business continued
 John D. Rockefeller
 Standard Oil Company
 Used a variety of tactics in his struggle for control of the oil
industry
 Also used horizontal integration- process of companies
producing similar products merge
 Used a trust to gain total control
 Reaped huge profits:
 Paid his employees low wages
 Sold his oil at a lower price until he drove out
competitors then raised the
price
 Known for horizontal integration
all his
raised the
Standard Oil Company
Robber Barons….
….or Philanthropists?
Andrew Carnegie donated 90%
of his wealth.
John D. Rockefeller gave away
over 500 million dollars.
C. Vanderbilt gave money for
Vanderbilt University and to the
Church of the Strangers in New
York City
Sherman Antitrust Act
 Unfettered competition led to economic uncertainty and eventually
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


led to the public for government regulation of industry.
Fear was that expanding corporations would stifle free
competition.
Government answered the call with the Sherman Antitrust Act
Sherman Antitrust Act made it illegal to form a trust that interfered with free
trade between states or with other countries.
Unfortunately the government did very little to enforce this act and
business consolidation continued. Ex: Rockefeller turned Standard
oil from a trust to a holding company
‘Bosses’ of the Senate
Justification for cutthroat business practices
 Principles of Social Darwinism
 Based off of Charles Darwin’s theory of Natural Selection
 Herbert Spencer applied the theory to the evolution of
human society-- why one person does better than enough
 This supported the economic doctrine of laissez faire (French
meaning allow to do). The market place should not be
regulated.
 The success and failure of a business were governed by
natural law and no one had the right to intervene.
 Everything was individual responsibility and blame.
Justification for cutthroat business practices
 Gospel of Wealth
 Riches were a sign of God’s favor
 The poor were lazy and inferior
 Inequality is inevitable and good
 ‘Rags to Riches’ literature
 Horatio Alger wrote stories of “rags to riches”
success
 Supported the myth that anyone could make it
if they work hard enough
Social Darwinism
political cartoon
Andrew Carnegie
Books by
Horatio Alger