Big Business
A Change in Values
• The Old : handmade goods, self-sufficiency,
rural population, family is very important.
• The New: machine-made goods, interdependency (division of labor), urban
population, family is less important
New values: speed, convenience, power, profit
Free Enterprise
• Capitalism – Economic system where private
businesses run most industries.
• Free enterprise – a business that is free from
government involvement
• Entrepreneurs – people who start a new
business
– Proprietorship – One owner
– Partnership – Two or more owners
– Corporation – Many owners
The Cycle of Industry
DEMAND
CONSUMPTION
MARKETING
IDEA
PRODUCTION
Reasons for the rise of heavy industry
• 1. Natural Resources
• 2. Inventions
• 3. Investors (Entrepreneurs)
• 4. Large labor force
What allowed these four factors to
bring about HUGE profits?
• 1. New Sources of Power
– (steam, coal, oil, electricity, solar, nuclear,
?)
• 2. Transportation improvements
(railroad, automobile, planes/jets, rockets . .)
• 3. Improved Communications
(telegraph, telephone, radio, television, . . .)
Social Darwinism and Philantrhopy
• Laissez Faire Capitalism  Hands off economic
system.
• Necessary limits are still implemented
– Child labor laws, minimum wage, safe working
conditions, environmental laws
• Survival of the fittest  We know what Darwins
theory of survival of the fittest looked like, how
does it pertain to businesses?
– What did animals do to survive in their environment?
Pittsburgh at night
http://sayiamgreen.com/blog/2009/09/the-10most-polluted-cities-in-the-world/
The Anti – Trust Movement
• As corporations grew stronger, some used
their power to drive smaller competitors out
of business.
– How might a big company be able to do this?
• Monopolies
• 1890 – Sherman Antitrust Act is passed  Any
attempt to monopolize… any part of the trade
or commerce among the several states was a
crime.
Self made
millionaires
Cornelius Vanderbilt
• 1. Nicknamed “The Colossus of Roads”
• 2. The first millionaire
• 3. Established a railroad monopoly in New
York
• 4. Was worth $150,000,000 when he died in
1877
Tell a person of the opposite sex
What characteristics do
you think are necessary
to make someone a selfmade millionaire?
Andrew Carnegie
• Age 12 – earned $1.20 per week as a bobbin boy
• Won a job as a telegrapher; stayed up at night memorizing morse
code
• Invested in capital, little bits at a time ex. “Sleeping cars”
• Gained a monopoly in the steel industry:
– Vertical Integration
• Remembered for his “Rags-to-Riches” career
• Was worth $300,000,000 (today 189 Billion) when he sold Carnegie
Steel to J.P. Morgan in 1901
• Was a philanthropist – (Greek) “lover of mankind” ex. Founded
3,000 libraries, several colleges, concert halls
• Famous quotations
– “Put all your eggs in one basket.”
– “He who dies wealthy, dies disgraced.”
John D. Rockefeller
• Organized an oil monopoly in
Ohio; spread to entire East
Coast
• Remembered for his fierce
competitiveness: “Oil Wars”
– was hated by the public and
the media
• was worth 1 billion by 1892;
also a philanthropist
– First billionaire!
• showed what cost-cutting can
do ex. sealing oil drums
• Used horizontal integration
• “God gave me my money.”
http://www.jpmorgan.com/pages/jpm
organ
JP Morgan
•
•
•
•
1. American banker and financier
2. twice “bailed out” the government
3. Advisor to President Cleveland
4. Consolidated companies ex. International
Harvester, General Electric, U.S. Steel
• 5. Possessed an incredible knack for investing
in lucrative ventures
Top 10 Corporations in America Today
http://money.cnn.com/magazines/fortune/fortu
ne500/2012/full_list/