American History
Chapter 6: The
Expansion of American
Industry
II. The Growth of Big Business
Objectives of Lesson:
Key Concepts
• Read to find out why American industrialists
of the late 1800s were called both “robber
barons” and “captains of industry”.
• Discover how social Darwinism affected
Americans’ views on big business.
• Analyze the ways in which big businesses
differed from smaller businesses.
• Learn how industrialists gained a competitive
edge over their rivals.
Attention Getter
• What is the difference between a “mom
and pop” business and “big business”?
Recall Prior Knowledge
• What are some reasons why this period
in history saw the birth and rapid
growth of many different types of big
business?
Setting the Scene
• Changes in the late nineteenth century
business brought both great wealth and
great hardship to the country.
• New technology after the Civil War
would set the stage for this growth, but
it would also take smart and aggressive
business people to make it happen.
A) Robber Barons or
Captains of Industry?
• Were these business peoples Robber Barons or
Captians of Industry?
• If they are Robber Barons, it implies that the
business leaders built their fortunes by stealing from
the public
• They Drained natural resources, paid officials,
destroyed competitors, and paid workers nothing
• If you think they are Captains of Industry, it suggests
that these people served the nation in a positive way
– built factories, raised productivity, expanded
markets
B) Social Darwinism
•
•
6)
•
•
Charles Darwin theory on evolution say the fittest will survive
– “natural selection”
Robber Barons wanted 2 things – cheap labor and no
government interference. They used Darwin’s theory of
natural selection and applied it to the business world.
Social Darwinism: extended Darwin’s concept to human
society
Robber Barons would argue that it was only natural that the
strong became rich business leaders and the weak became
poor workers.
Government should not interfere with business – businesses
that were the most fit would prosper
C) Business on a Larger
Scale
•
1)
2)
3)
4)
5)
5 factors that combined to create new big business
in the US
Larger pools of capital – high start up costs limited
industry
Wider geographic span – railroads and telegraph –
factories in different parts of US
Broader Range of Operations – responsible for all
stages of production
Revised Role of Ownership – companies so big
owner did not run it – managers
New Methods of Management – accounting –
specialized departments
D) Gaining a Competitive
Edge
7) Oligopoly – market structure which is
dominated by a few large profitable
firms – cereals and cars
8) Monopoly – complete control of a
product or service
9) Cartels – loose association of
businesses that make the same product
• Limit supply to keep prices high
a) Carnegie Steel
•
Carnegie built first steel plants to use the
Bessemer process
•
Bought out all phases of steel industry – mines,
furnaces, shipping and rail lines
10) Vertical consolidation: gaining control of many
different businesses that make up all phases of
a products development
11) Economies of scale: as production increases,
the cost of each item goes down
•
Since he owned everything – he could charge less
and drive the competitor out of business
b) The Standard Oil Trust
•
John D. Rockefeller – started the Standard Oil
Company in 1870
•
Started buying his competitors oil refinery
12) Horizontal consolidation: bringing together of
many firms in the same business
13) Trust – A group of separate companies that are
placed under the control of a single managing
board
14) Sherman Antitrust Act – tried to limit trusts –
did not work – helped limit unions though.
Summarize and Review
• Why were American industrialists of the late
1800s called both “robber barons” and
“captains of industry?”
• How did social Darwinism affect Americans’
views on big business?
• How did industrialists gain a competitive
edge over their rivals?
• In what ways did big business differ from
smaller businesses?
Process Information
• Do you think that people like Carnegie
and Rockefeller were Robber Barons or
Captains of Industry? Why?
Finished Section 6.2
• Once you finish, go back to the web-page
and download and print quiz 6.2. After
completing the quiz, send an e-mail to me
with your answers. In the subject line put
(your first and last name – quiz 6.2)
• When you finish with that – check with the
syllabus to find out when section 6.3 needs
to be completed
• Good Luck!