The
Rise
of
Big
Business
The Rise of Big Business
Objectives
• To analyze the growth of corporations
• To describe monopolies and trusts and
evaluate their effects
• To summarize the positive and negative
aspects of the Gilded Age
• To evaluate the development of the
economy of the South
Businesses Change in the Late 1800’s
Until the late 1800’s, most businesses were owned
directly by one person or by a few partners. New
technology caused business owners to want to
buy new equipment. To raise money business
operators formed corporations. A corporation is
a company that raises money by selling shares
of stock.
When a business holds stock in many companies,
often in the same industry, it’s called a trust.
Advantages Corporations Have That Smaller
Businesses Do Not Have?
1) By selling stock, a corporation can raise
large amounts of money
2) A corporation has special legal status and
continues to exist after its founders die. Banks
are more likely to lend corporations money
3) A corporation limits the risks to its investors,
who do not have to pay off the corporations
debts
BLACK GOLD
• In 1859, Edwin Drake used a
steam engine to drill for oil
• This breakthrough started an
oil boom in the Midwest and
later Texas
• At first the process was
limited to transforming the oil
into kerosene and throwing
out the gasoline -- a byproduct of the process
• Later, the gasoline was used
for cars
• John D. Rockefeller soon
started his oil business in
EDWIN DRAKE PICTURED
1863
WITH BARRELS OF OIL
Rockefeller Uses Ruthless Methods To Gain
Control of the Oil Industry
He decided to put his competitors out of
business by creating monopolies and
forming trusts.
John D. Rockefeller took a $2000 investment
in 1859 and turned it into one of the most
profitable businesses in the United States.
Rockefeller became known as a robber baron
but also gave away $500,000,000 to charity.
BUSINESS GROWTH &
CONSOLIDATION
• Mergers could result in a
monopoly (Trust)
• A monopoly is complete
control over an industry
by wiping out competition
• An example of
consolidation: In 1870,
Rockefeller’s Standard Oil
Company owned 2% of
the country’s crude oil
• By 1880 – it controlled
90% of U.S. crude oil
• That’s in 10 years!
CHICAGO’S STANDARD OIL BUILDING
IS ONE OF THE WORLD’S TALLEST
ROBBER BARONS
J.P
MORGAN
IN PHOTO
AND
CARTOON
• Alarmed at the cut-throat
tactics of industrialists,
critics began to call them
“Robber Barons”
• Famous “Robber Barons”
included Carnegie (steel),
Rockefeller (oil), Vanderbilt
(RR), Stanford (RR), J.P.
Morgan (Banking), and Jay
Gould (RR)
• Robber Barons got richer
while many Americans got
poorer
Jay Gould
Robber Baron
Jay Gould used illegal tactics like
bribing officials and selling fake stock
to amass a fortune in excess of $77
million, mostly in the railroad
industry. (Sound like Bernie Madoff?)
Bernie Madoff is a present day
robber baron
SHERMAN ANTI-TRUST ACT
• In 1890, the Sherman
Anti-Trust Act made it
illegal to form a monopoly
(Trust)
• Prosecuting companies
under the Act was not
easy – a business would
simply reorganize into
single companies to avoid
prosecution
• Seven of eight cases
brought before the
Supreme Court were
thrown out
BIG BUSINESS AND LABOR
• Andrew Carnegie was
one of the first industrial
moguls
• He entered the steel
industry in 1873
• By 1899, the Carnegie
Steel Company
manufactured more steel
than all the factories in
Great Britain combined
Carnegie’s Methods of Gaining Control of the
Steel Industry Differ From Rockefeller’s
Andrew Carnegie believed in making the best and
cheapest product. He did this by controlling all
the processes related to the manufacture of the
steel. By doing this, he was able to gain control
over the steel industry.
The Guilded Age
• The term "gilded age" was coined by Mark Twain and Charles Dudley Warner
to describe the concentration of wealth in late nineteenth-century American
society.
• During this period, industrial kingpins such as Andrew Carnegie, J.P. Morgan,
and John D. Rockefeller amassed unprecedented fortunes. Meanwhile, the
drive to accumulate wealth translated into miserable working conditions in
factories, coal mines, and oil fields.
• Violent strikes broke out throughout the country. Of the thousands of strikes that
erupted during the 1880's and 1890's, some of the most furious were the Great
Railroad Strike of 1877, the Haymarket Riot of 1886, and the Pullman strike of
1894.
Characteristics of the “Gilded Age”
Many wealthy people had gained their wealth
through inheritance and not working to obtain it.
Few actually got rich through hard work. The
number of wealthy people in America disguised
society’s problems, such as corrupt politics and
widespread poverty.
Why is its name appropriate for the era?
To gild means to coat an object with gold. It
appears that America was a nation of wealth;
however, many Americans lived in horrible
poverty.
ROBBER BARONS WERE
GENEROUS, TOO
• Despite being labeled
as greedy barons, rich
industrialists did have a
generous side
• When very rich people
give away lots of money
it is called
“Philanthropy”
• Carnegie built libraries,
Rockefeller, Leland
Stanford, and Cornelius
Vanderbilt built schools
ROCKEFELLER CHAPEL –
UNIVERSITY OF CHICAGO
The Economy of the South Grows Slowly
The South had been left in ruins following the Civil
War. It remained mostly an agricultural region
with little industry. Also, the price of cotton, the
South’s main crop, was very low.
Sharecropping is a system of agriculture
in which a landowner allows a tenant to
use the land in return for a share of the
crops produced on the land.
The Sharecropping System Affect Workers
Landowners rented their land to sharecroppers
who paid a large portion of their crops as rent.
Often they had to buy their seed and tools on
credit. Sharecroppers made little money from the
sale of cotton because of low prices. Merchants
often cheated them, increasing their debt.
Sharecropping kept poor
Americans in constant poverty.
Many never even learned to read
or write.
Match the term in the second column with the description in the first column. Write the letter
of your answer in the blank.
The Rise of
Big
Business
Assessment
______ 1. A person who gives away a great deal
of his or her money to charity.
a.
Jay Gould
______ 2. A company that raises money by selling
shares of stock.
b.
robber baron
______ 3. A business leader who became wealthy
by using dishonest methods.
c.
corporation
______ 4. A company that wipes out it competitors
and controls an industry.
d.
John D. Rockefeller
______ 5. A wealthy businessman who controlled the
oil industry.
e.
sharecropping
______ 6. A legal body created to hold stock in many
companies, often in the same industry.
f.
Andrew Carnegie
______ 7. A wealthy businessman who controlled the
steel industry.
g.
monopoly
______ 8. The era of the late 1800’s, which was a time
of fabulous wealth for a few Americans.
h.
trust
______ 9. People who got richer while most Americans got poorer
i.
philanthropist
______10. Land owners gave farm workers land, seed, and tools in
return for a part of the crops they raised.
j.
Guilded Age