Robber Barons and Monopolies

advertisement

AIM

How did Robber Barons gain so much wealth during the gilded age?

A long time ago in the United States of America…

Businessmen saw an opportunity to make lots of money and concentrate their power and influence over the nations economy.

New inventions and new production techniques made it possible to reduce manufacturing costs and transportation costs.

The country was changing, changing fast. Unfortunately the laws regulating business practices weren’t changing at the same pace…

The “Gilded Age” as it came to be known is named for the extreme wealth that some men built for themselves on the backs of the workers and using ruthlessly competitive practices.

Goals of a Gilded Age

Business Owner

Step 1 = create a product

Step 2 = reduce manufacturing costs

Step 3 = crush the competition

Step 4 = become a monopoly

Three ways to create a

MONOPOLY?

1. Horizontal Integration

2. Vertical Integration

3. Conglomeration

Horizontal Integration

Combining Several Competing

Companies in the Same Industry

Oil Company A Oil Company B Oil Company C

Vertical Integration

MARKET

WIRE FACTORY

When one business controls various elements of the production & distribution process

STEEL MILL

IRON FURNACE

IRON MINE COAL MINE

Rockefeller’s Problem: NJ Law Prohibited

Corporations from Owning Other

Corporations

Trusts

A smaller corporation allows a larger corporation to control (but not own) its stock “ in trust.

Co. A

STANDARD OIL

Co. B

HELD IN TRUST

Co. C Co. D Co. E

Interlocking Directorates

When the same people serve on the Board of

Directors of Corporations in the same industry

Board of Directors

Co. A Co. B Co. C Co. D Co. E

Conglomerate Companies

Also called “Holding Companies”

Holding Companies

In 1888 NJ law changed to allow corporations to actually own (not just control) stock in other corporations.

Holding Company: When a one corporation owns a controlling percentage of another corporation stock

STANDARD OIL

’ s

Co. A Co. B

OWNERSHIP

Co. C Co. D Co. E

Holding Companies

Example from Today

Philip Morris

(Tobacco Company)

OWNERSHIP

Kraft

Foods

Nabisco

Miller

Brewing

Altria

Capital

Various

Wineries

Download