Robber Barons or
Captains of
Industry?
11.2.5 Discuss corporate mergers that
produced trusts and cartels and the economic
and political policies of industrial leaders.
Homework


Read and take STAR Notes on sections 14.1
& 14.2 to prepare for an activity Tuesday.
Make sure to summarize the section at the
bottom of your notes.
HOT ROC:

Do billionaires have a responsibility to help
the poor?


*HW Check


Do millionaires?
Organizational Categories for your project.
Project Reminder:

Essay outline with a thesis statement for the
project is due on Friday
Who are the billionaires (Robber Barons)
of today?
Who are the billionaires?
Forbes 2011
Rank
Name
Worth
Age
Source
Country
1
Carlos Slim Helu & family
$74 B
71
telecom
Mexico
2
Bill Gates
$56 B
55
Microsoft
USA
3
Warren Buffett
$50 B
81
Berkshire Hathaway
USA
4
Bernard Arnault
$41 B
62
LVMH
France
5
Larry Ellison
$39.5 B
67
Oracle
USA
6
Lakshmi Mittal
$31.1 B
61
Steel
India
7
Amancio Ortega
$31 B
75
Zara
Spain
8
Eike Batista
$30 B
54
mining, oil
Brazil
9
Mukesh Ambani
$27 B
54
petrochemicals, oil &
gas
India
10
Christy Walton & family
$26.5 B
56
Walmart
USA
3 New Vocabulary words…

Monopoly: A company that
completely dominates a
particular industry

Trust: a set of companies
managed by a small group
known as trustees, who can
prevent companies in the trust
from competing with each other

Corporation: A company
recognized by law to exist
independently from its owners,
with the ability to own property,
borrow money, sue or be sued
Corporate Monopolies

Horizontal
and
Vertical
Integration

Textbook,
page 171
Andrew Carnegie
$75 Billion

Andrew Carnegie came from Scotland
with his parents in 1848.

In 1861, at the age of 26, he started
up the Freedom Iron Company, and
used the new Bessemer process for
making steel

He formed all of his companies into
the Carnegie Steel Company in 1899,
which controlled raw materials,
manufacturing, storage, and
distribution for steel.

Vertical Integration
John D. Rockefeller
$192 Billion





Born in 1839
His working life started as a
bookkeeper
He established one of the first oil
refineries
1870—With partners, forms a
business trust: Standard Oil
At its peak, controls 90% of all oil
companies

Horizontal Integration
Big Business and the Government:
POV
Leave Business Alone
 Laissez-faire
 Social Darwinism
Limit Business

Sherman Anti-Trust Act
 1911--Splits
Rockefeller’s Standard
Oil into 34 companies

(A U.S. Court of Appeals
found in 2001 that Microsoft
violated the Sherman Act
antitrust law.)
The Gilded Age…1870s-1900


Where was the most money
made?
Was this positive or negative for
America?
Steel
Production
1870
1900
77,000
tons
11 million
tons
Oil production 5 million
barrels
63 million
barrels
Railroad track 53,000
miles
200,000
miles
Simulation




Business A
 3 volunteers (owner)
Business B
 5 volunteers (shareholders)
Step 1 (August):
 Business A, set the price for
t-shirts
Step 2 (September):
 Business B opens up a store
across the street, set the
price for t-shirts at store B
 Class: Which store will you
shop at?
Simulation



Step 3 (October):

Business A, respond to the t-shirt price of Business
B

Class: Which store will you shop at?
Step 4 (November):

Business B, respond to the t-shirt price of Business
A

Class: Which store will you shop at?
Step 5 (December)

Repeat process

Class: Which store will you shop at?






Business Person A
You own a successful t-shirt shop on
Castro Street. You are just one shop
but you’ve managed to stay in
business because you are the only tshirt shop on Castro Street.
Recently, a t-shirt shop opened up
across the street and it’s part of the
national chain, Shirt Me Up, that has
stores all over the nation. You are
worried about losing some of your
customers to them but you are willing
to cut prices and offer sales if it will
keep you in business.
Basics – t-shirts cost $6 to
manufacture and you currently sell
them for $12.
You need to make at least a $2 profit
on each t-shirt in order cover the cost
of your rent and pay your employees.
If you lose money for more than a
month then you will not be able to
pay for your rent.
Task: Respond to the sales ideas
from Person B in competitive ways in
order to stay open.


Business Person B
You are a local manager for the national t-shirt
company, Shirt Me Up, that has stores all over the
nation. You are currently managing the new store
that just opened up on Castro Street. There is a tshirt shop already on Castro Street, but you are
pretty confident you can drive them out of business
since you can draw on money from the national
office.

Basics – t-shirts cost $6 to manufacture and your
competitor currently sells them for $12. They need to
make at least $2 profit on each t-shirt to cover the
cost of rent and employees. This is true for you also,
but you can lose money for several months in a row
because your national office will cover your costs.

Task: Start the competition by telling the shoppers in
your group that you are willing to offer t-shirts for $10
and ask if they will shop at your store instead. No
matter what your competitor does, respond by
offering your t-shirts for less money. It doesn’t
matter if you lose money, because eventually they’ll
go bankrupt and then you won’t have to compete
with them anymore. When they go out of business,
raise your prices to $20 a t-shirt.
What would Rockefeller say…


Monopolies are good
because we can
produce goods at a
lower cost to
consumers!
Now everyone can
have cheap oil and gas.
What would the Populists (poor farmers)
say?



Monopolies are bad
because they control
the whole industry and
there is no competition
over prices.
We have to pay high
prices to ship our wheat
on the trains!
And these companies
pay low wages to their
workers!