The Rise of Big Business
The Growth of Big Business
The Rise of Big Business
Warm Up
1. Imagine you are Bill Gates – What would
you do with your money? Write it down on
a separate sheet of paper.
2. Read the “Gospel of Wealth” and answer
the 3 questions.
3. Compare your response to question 1 and
question 2. Would Carnegie approve of
your decisions??? Why or why not.
Robber Baron or
Captains of Industry
Robber Baron
1: an American capitalist of the latter part of the 19th
century who became wealthy through exploitation
(as of natural resources, governmental influence, or
low wage scales)
2: a business owner or executive who acquires
wealth through ethically questionable tactics
Captain of Industry
: the head of a great industrial enterprise
The Rise of Big Business
Robber Barons or Captains of
Industry
• Robber Barons –
negative view of big
business
• As cruel and ruthless
• Would stop at nothing
to achieve great wealth
The Rise of Big Business
Robber Barons or Captains of
Industry
• Captain of Industry –
view that the same
men were ingenious
and industrial leaders
• Transformed the
American economy
• Praised for their
charity
The Rise of Big Business
The Rise of Big Business
Social Darwinism
• Origins of Species
1859
• Charles Darwin
• All animal life had
evolved by a process
of Natural Selection
• Only the strong
survive to reproduce
The Rise of Big Business
Social Darwinism
• Free Competition in
the economy, like
natural selection,
would ensure survival
of the fittest
• Society should do as
little as possible to
interfere with people’s
pursuit of success
The Rise of Big Business
Robber Barons or Captains of
Industry
• Andrew Carnegie
• Gospel of Wealth –
people should be free to
make as much money as
they can. However, after
they make it, they should
give it away
The Rise of Big Business
Carnegie Steel
• Arrive in American as
a penniless Scottish
immigrant
• Began to work to
assist his family
• 1865 Andrew
Carnegie was making
$50,000
The Rise of Big Business
Carnegie Steel
• Entered steel business
• Stole Bessemer Process
from Brits
• 1889 Established Carnegie
Steel Company
• Controlled suppliers and
competition
• 1899 Carnegie Steel
produced more than Great
Britain
• Carnegie Steel produced
80% of nation’s steel
The Rise of Big Business
Robber Barons or Captains of
Industry
• Carnegie once stated, “I
entered this life poor and I
wish to leave it the same.”
• Gave away $325 million =
90% of his wealth
• Carnegie Hall in NY City
• Carnegie Foundation
• 3,000 libraries across the
US
The Rise of Big Business
Vertical Integration
• Controlling all steps to
change raw materials
into finished products
The Rise of Big Business
Vertical Integration
• Own iron and coal
mines
• Bought railroads,
trucking and shipping
lines
• Bought warehouses
The Rise of Big Business
Horizontal Consolidation
• Buy out competitors
• Companies making
similar products merge
The Rise of Big Business
Growth and Consolidation
• Monopoly- complete
control over
production, quality,
wages, and prices
The Rise of Big Business
Holding Company
• J.P. Morgan very
successful banker
• Bought Carnegie Steel
in 1901 for $500
million
• Changed name to US
Steel
• Became the largest
business organization
The Rise of Big Business
Standard Oil Trust
• Established by John D.
Rockefeller
• Was able to undersell
his competitors by
charging less
• Purchased oil
refineries and created
horizontal
consolidation
The Rise of Big Business
Standard Oil Trust
• Drove competitors out
of business by selling
oil lower than cost to
make it
• After competitor are
driven out
• prices skyrocketed to
recoup loss
The Rise of Big Business
John D. Rockefeller
• Rockefeller gave away
$500 million
• Founded the
University of Chicago
which found cure for
yellow fever
• Land for United
Nations
The Rise of Big Business
Standard Oil Trust
• Rockefeller was so
successful at his death
his personal fortune
was estimated at
• $815,647,796
The Rise of Big Business
The Government Response
• 1890 Sherman Antitrust
Act
• Outlawed any
combination of
companies that restrained
interstate trade
• Was not effective against
trusts
• Pro business courts had
to interpret law