AMERICAN HISTORY
 ENTREPRENEURS—risk
takers who use
their money and talents to launch new
ventures
 BELIEF
IN FREE MARKETS
 CAPITALISM—an economic system in
which private businesses run most
industries. Competition determines
prices and wages
 Late
1800s, most business leaders
believed in LAISSEZ-FAIRE (to let do)
capitalism
 Companies to conduct business without
government intervention
 Business leaders believed that
government regulation would destroy
individual self-reliance, reduce, profits,
and harm the economy
 SOCIAL
DARWINISM
 There were inequalities under capitalism
 Adapted the ideas of British scientist
Charles Darwin applied them to human
society
 Darwin said members of a species
compete for survival
 Social Darwinists believed that stronger
people, nations, and businesses would
survive
 Weaker
ones would fail
 “Survival of the fittest”
 There was opposition to any interference
 Late
1800s—industrialization continues
 Businesses became larger and more
complex
 PROPRIETORSHIPS
AND PARTNERSHIPS
 Proprietorship—business run by a
individual
 Partnership—business owned by 2 or
more individuals
 Owners
were responsible for all debts
and obligations of the business
 CORPORATIONS
A
business with the legal status of an
individual
 It is owned by STOCKHOLDERS (people
who buy shares in the company)
 Major business decisions are made by a
board of directors
 The
board hires corporate executives to
run the day-to-day operations
 Corporation Advantages:
 1) raise large sums of money through
stock sales
 2) stock money used to expand the
business
 3) stockholders have limited
responsibility for the corporate debt
 4)
Stockholders can only lose what they
have invested
 Corporations continue on long after the
original founders leave
 TRUSTS
AND MONOPOLIES
 Companies agreed to merge and turn
over their separate stocks to a board of
directors
 MONOPOLY—A
company has no
competition so it would have complete
control of the market—prices, supply, etc.
 Late
1800s, many corporate leaders
amassed staggering fortunes
 ROCKEFELLER
AND OIL
 John D. Rockefeller entered oil business
in 1863 with Standard Oil Company
 VERTICAL INTEGRATION—acquiring
companies that supplied his business
 Barrel
factories, oil fields, oil-storage
facilities, pipelines, railroad cars
 This allowed low cost and high profits
 HORIZONTAL INTEGRATION—take over
other companies producing the same
product
 Rockefeller bought other oil refineries
 1879—Standard Oil was refining 90% of
all oil in the USA
 Rockefeller
limited competition in other
ways
 Special deals with railroads and shipping
companies for the lowest shipping price
 Forced other companies out of business
 Fortune worth $900,000,000
 More than half donated to worthy causes
 >$80,000,000 donated to the University of
Chicago
 Millions more into education through his
Rockefeller foundation
 CARNEGIE
AND STEEL
 Andrew Carnegie--Born in Scotland
 Immigrated to the USA at age 12
 Began investing in iron, oil, railroad,
telegraph
 Founded his own steel business
 Carnegie held costs down through
vertical integration
 Buy supplies in bulk, producing items in
large quantities
 End
of 1800s Carnegie Steel Company
dominated the industry
 1901—Carnegie sold the company to
banker J.P. Morgan for $480,000,000
 After retiring, he devoted time to
philanthropy and charity work
 Gave away >$350,000,000 to support
education
 He built public libraries, financed scientific
work, and established Carnegie Mellon
University in Pittsburgh
 He
also built Carnegie Hall, the famous
concert site, in New York City
 Carnegie believed that wealthy people had
a duty to society
 RAILROAD
TYCOONS
 Cornelius Vanderbilt invested in railroads
during the civil war
 1872—owned New York Central Railroad
 He controlled 4,500 miles of railroad track
 Vanderbilt
didn’t do much charitable
work
 Greatest donation was $1,000,000 to
Central University in Tennessee, which
was later renamed Vanderbilt University
 1877-Vanderbilt died leaving an estate of
$100,000,000
 GEORGE PULLMAN made his fortune
designing and building railroad cars
 His
company, Pullman Palace Car
Company (Chicago 1887) created
sleeper cars for comfortable long
distance travel
 1881—he built an entire town south of
Chicago for his employees
 The town of Pullman had comfortable
homes with indoor plumbing, shops, a
church, and a library
 No
local government and no local
newspapers
 People that criticized the company might
be evicted from their house
A
MIXED LEGACY
 Some tycoons viewed as “robber barons”
 Critics say they squeezed out
competition
 Other
people saw them as “captains of
industry”
 They used business skills to make the
American economy more productive
 Rockefeller and Carnegie won praise for
generous donations
 Retailers
were looking for ways to
maximize their profits
 Companies that advertised started
targeting ads toward women
 Food companies used wholesome farm
images to convey a sense of purity
 Clever brand names were developed to
help people remember a product
“Uneeda Biscuit Crackers”
 The
department store was created to
make it easier to shop
 One-stop shopping
 Stores that bought in bulk passed savings
on to customers
 Rural people could purchase items from
mail-order companies
 1895—Sears, Roebuck, Co. produced a
507-page catalog
 1904—Montgomery Ward
catalog
weighed 4 pounds and was mailed to
about 4 million homes
 THE
END