Objectives:
1. Identify Management and business strategies that
contributed to the success of business tycoons such
as Andrew Carnegie.
2. Explain Social Darwinism and its effects on society.
3. Cite methods used by ruthless businessmen to
eliminate free competition.
4. Describe the reasons for the slow industrialization of
the south.
Chapter 14 Sect. 3
1
Map: Industrial Production, 1919
2
Tycoons
1.
Profiteering from the Civil War gives rise to millionaire
class
2.
Millionaires capitalize on Transcontinental railroad,
mechanization, industrialization, & expansion of
markets
3.
Surplus of raw materials, cheap labor, foreign
investment ENCOURAGE CAPITALISM
4.
Inventions  Industrialization 
More Inventions  More Industrialization
ALL OF THIS GIVES RISE TO TYCOONS
3
The Manufacture of Iron
The Manufacture of Iron
Manufacturing iron was a hot and
strenuous process, requiring
workers to spend longs hours
stoking hot blast furnaces.
(Library of Congress)
http://www.tiscali.co.uk/reference/encyclopaedia/hutchinson/images/c05312.jpg
Bessemer Process =
process to convert iron to steel
4
Copyright © Houghton Mifflin Company. All rights reserved.
Andrew Carnegie = Steel Kingpin

Steel is King : US pouring out 1/3 of world’s steel by
1890’s

“bootstrap” story: poor immigrant to tycoon

Carnegie uses vertical integration to make more
profit


Controls all means of production, eliminates
middle man
Also uses horizontal consolidation to eliminate
competition.

Sells to JP Morgan for 400 million

Becomes a philanthropist
5
How do horizontal
consolidation and
vertical integration
help business??
J P Morgan – Banker’s Banker

Builds financial empire through
railroads, banks, and holding
companies

Buys out Carnegie and enters steel
business

Uses trusts and holding companies
to consolidate wealth and power


What are trusts and holding
companies?
Forms US Steel Corporation – 1st
ever corporation worth more than
$1 billion!
6
Rockefeller – Standard Oil Corp.

Kerosene and then Automobiles
drive up US oil consumption

Rockefeller ruthlessly uses
horizontal consolidation to
create largest monopoly

1877 controls 95% of US’s oil
refineries

7
Robber
Baron’s Baron
Standard Oil Monopoly
Standard Oil Monopoly
Believing that Rockefeller's Standard Oil monopoly was exercising dangerous
power, this political cartoonist depicts the trust as a greedy octopus whose sprawling
tentacles already ensnare Congress, state legislatures, and the taxpayer, and are
reaching for the White House. (Library of Congress)
8
Copyright © Houghton Mifflin Company. All rights reserved.
HOW MUCH WOULD THEY BE WORTH TODAY??

J.P. Morgan - $139 BILLION

Andrew Carnegie - $189.6 BILLION

John D. Rockefeller - $262 BILLION
 COMPARE:
Bill Gates - $76 BILLION

9

Monopoly = a firm that completely controls an industry

Vertical integration = combining all phases of
manufacturing in to one organization (Carnegie)

Horizontal consolidation = allying with competitors to
monopolize a market (Rockefeller)

Trust = a board of directors/stockholders that coordinates
companies within an industry to avoid competition

Holding company = a corporation composed of various
competing enterprises within one industry (JP Morgan’s US
Steel)
10
Compare the lives and beliefs
of Carnegie and Rockefeller
using a Venn Diagram
11
Justifications for Big Business

Old Rich displaced by rule of the “new rich”

Gospel of Wealth – discourages helping the poor by
state

Laissez faire = “let it be”

Justified by Social Darwinism – survival of the
fittest

Poor are poor due to lack of initiative
12
Taking on the Trusts

Trusts and robber barons defended by 14th amendment’s due
process clause

Constitution’s “interstate commerce” clause inhibits states
from controlling trusts

Sherman Anti-Trust Act of 1890

Largely ineffective
13
Industry and the South

1900: less manufacturing than before Civil War

South acts primarily as source of raw materials

Northerners control stock in Southern industry, discourage
industrialization

Shift in cotton mills from NE to S in 1880’s

Cheap labor (virtually sharecropping) brings rural white
southerners to mill towns, and then traps them there
14
TERMS









Andrew Carnegie
Vertical integration
Horizontal consolidation
Social Darwinism
Monopoly
Holding company
John D. Rockefeller
Trust
Sherman Antitrust Act

1.
2.
3.
4.
15
Objectives:
Identify Management and
business strategies that
contributed to the success
of business tycoons such as
Andrew Carnegie.
Explain Social Darwinism
and its effects on society.
Cite methods used by
ruthless businessmen to
eliminate free competition.
Describe the reasons for
the slow industrialization
of the south.