1 section 2 the growth of american big business robber barons captains of industry pools trusts...

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SECTION 2 SECTION 2 THE GROWTH OF AMERICAN THE GROWTH OF AMERICAN BIG BUSINESSBIG BUSINESS

ROBBER ROBBER BARONSBARONS

CAPTAINS CAPTAINS OF OF

INDUSTRYINDUSTRYPOOLS

TRUSTS MONOPOLIES

$$$$$$$

CORPORATION

CHARTER allows the formation of a company to sell stock that would pay dividends to shareholders

The more you own the more power you control!

The stock shares represent ownership with voting rights within the corporation. ONE SHARE EQUALS ONE VOTE!

If the price of a share goes up … you make money!!!

Shareholders may get paid a dividend for each share that

they own!

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STOCKSSTOCKSREPRESENT OWNERSHIP REPRESENT OWNERSHIP

OF THE ENTIRE OF THE ENTIRE CORPORATIONCORPORATION

BUY 1 SHARE @ $10.00 ... YOU SELL IT AT $15.00

+$5.00 PROFITBUY 1 SHARE @ $10.00 ... YOU SELL IT AT $5.00 -$5.00 LOSS

1 SHARE = $1.00 PER YEAR ... $10 SHARES = $10.00/YEAR

1000 SHARES = $1000/YEAR

A PORTION OF A CORPORATION'S EARNINGS WHICH ARE DISTRIBUTED TO SHAREHOLDERS.

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CARTELS/POOLS, TRUSTS AND OLIGOPOLIES ALL LED TO

MONOPOLIES !!!

A MONOPOLY IS THE COMPLETE CONTROL OF AN

ENTIRE INDUSTRY

A LOOSE ASSOCIATION OF BUSINESSES THAT MAKE THE SAME PRODUCT IS KNOWN AS A CARTEL

CARTELS or POOLS:CARTELS or POOLS: Several companies get together to act/behave as if they were one!!!

NORTHERN PACIFIC RR READING RR

BALTIMORE & OHIO

HELP

HELP

HE

LP

SOUTHERN PACIFIC RR

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ELIAS DERBYELIAS DERBY(1739-1799)(1739-1799)

AMERICA’S

FIRST MILLIONAIRE !!!

SALEM, MASSACHUSETTS

????????

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John John Jacob AstorJacob Astor

AND…

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JOHN D. JOHN D. ROCKEFELLERROCKEFELLER

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JOHN D ROCKEFELLERJOHN D ROCKEFELLER

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JOHN D. JOHN D. ROCKEFELLERROCKEFELLERSTANDARD OIL TRUST

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THE STANDARD OIL TRUSTIn 1863, Rockefeller built an oil refinery near Cleveland and in 1870 he formed the Standard Oil Company of Ohio.

In order to create a giant oil company he used the industrial control method known as horizontal consolidation. Thisinvolves the bringing together of many firms in the same business.

TRUSTTRUST

WHY?

GREATER DIVIDEND$SHAREHOLDERS

ENTRUST STOCK SHARESTO THE TRUST

SHAREHOLDERSENTRUST STOCK SHARES

TO THE TRUST

corporation

AJAX OIL CO. PREMIUM OIL CO. GOLDEN OIL CO. USA OIL COMPANY NITTANY OIL CO.

SHAREHOLDERS SHAREHOLDERS SHAREHOLDER

BOARD OF TRUSTEES

SHAREHOLDERS SHAREHOLDERS

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POOLS and TRUSTS ALL LED TO MONOPOLIES !!!

A MONOPOLY IS THE COMPLETE CONTROL OF AN

ENTIRE INDUSTRY

THE INTERSTATE COMMERCE ACT OF 1887 MADE POOLS ILLEGAL

THE SHERMAN ANTI-TRUST OF 1890 MADE MONOPOLIES ILLEGAL

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ANDREW CARNEGIE

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CARNEGIE STEELAndrew Carnegie established the Carnegie Steel Company in 1889.-- In order to create a giant steel company he used the industrial control method known as vertical consolidation. This means that he purchased all phases of production.

J. P. MORGANJ. P. MORGANBANKING AND FINANCE

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CORNELIUS CORNELIUS VANDERBILTVANDERBILT

SHIPPING AND RAILROADS

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JAY GOULDJAY GOULD

BANKING AND FINANCE

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JAY GOULDJAY GOULD

1)YOU BORROW 100 SHARES FROM YOUR STOCKBROKER.2)YOU SELL THOSE SHARES AT $100 PER SHARE ($10,000).

3)THE PRICE OF THE SHARES DROP TO $50 PER SHARE.4)YOU BUY THEM BACK AT $50 PER SHARE (COST = $5000)

5)YOU RETURN THE BORROWED SHARES.

YOU JUST MADE $5000!

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JAY GOULD & JIM FISKJAY GOULD & JIM FISKThe Barnum of Wall StreetThe Wizard of Wall Street

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29Biltmore Estate

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WILLIAM R. HEARST

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Why didn’t the government •Stop the Robber Barons from creating pools, cartels and monopolies?

•Use the Sherman Anti-Trust Act,1890 and the Interstate Commerce Act, 1887

•Get involved with workers rights and the conditions in the factories, plants, mines and mills?

•Protect common citizens?

??????????? …………..

SOCIAL SOCIAL DARWINISMDARWINISM According to Charles Darwin all

animal life had evolved by “natural selection,” a process in which only the fittest survived to reproduce.

Social Darwinism held that society and government should stay out of affairs of business.

THEORY THEORY OF OF EVOLUTIOEVOLUTIONNthe “Laissez Faire” approach!

Only the strongest businesses should survive!!!

CHARLES DARWIN

A A TESTTEST ON SECTIONS 1 AND 2 ON SECTIONS 1 AND 2 IS COMING!!!!!! IS COMING!!!!!!

Sections 3Sections 3INDUSTRIALIZATION AND INDUSTRIALIZATION AND

WORKERSWORKERS

MASS PRODUCTIONMASS PRODUCTION

INDUSTRIALIZATIONINDUSTRIALIZATION

ROBBER BARONSROBBER BARONS

CORPORATIONCORPORATION

TRUSTSTRUSTS

FACTORIES FACTORIES

WORKERSWORKERS

WORKERS ?????????

40WIACEK = WHITE, WILLIAMS

YOUSITIS = YOUNG

SCHMIDT = SMITH

14 million immigrants 1860-1900

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Frederick Winslow Taylor Frederick Winslow Taylor Frederick Winslow Frederick Winslow

TaylorTaylor was an was an American engineer American engineer who sought to who sought to improve industrial improve industrial efficiency. A efficiency. A management management consultant in his later consultant in his later years, he is sometimes years, he is sometimes called "The Father of called "The Father of Scientific Scientific Management."Management."

INCREASING EFFICIENCY

His ideas would lead to acceptance of the divisiondivision of labor and specializationof labor and specialization in the workplace.

Felt workers were stupid!!!

ONLY 21.5

LBS.!!!

HENRY FORD

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HENRY FORDHENRY FORD

HENRY FORDHENRY FORD

EARLY ASSEMBLY “TEAM”

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Division of Labor and Specialization • Division of labor and specialization

can improve productivity.

– Division of labor takes place when work is arranged so that individual workers do fewer tasks than before.

– Specialization takes place when workers perform tasks that can be done more efficiently than others.

YOU INSTALL 1ST AND 2ND GEARS

uses ...

TRANSMISSION DEPARTMENT

ProductivityCars/day Fixed costs Cost\cars

per day

1 $100,000 $100,000

2

5

10

$100,000

$100,000

$100,000

$50,000

$20,000

$10,000

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BORING !!!!!!!

IS IT TIME TO GO HOME YET?

ONLY 10 HOURS TO

GO!

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AN AUTOMOBILE FOR EVERYONE!!!!

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DAIMLER-BENZDAIMLER-BENZ

MERCEDES

JELLINEK

Gottlieb Daimler

Karl Benz

WILHELM MAYERBACH1886

DMG

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BERKS COUNTY AUTOMOBILES

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Workplaces were not always Workplaces were not always safesafe

Factory workers were: ruled by the clock, subject to strict discipline, fined for talking, being late or refusing to do a task.

Noisy, poor lighting and ventilation, frequent fires and accidents, children became stunted!

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Working FamiliesWorking FamiliesBy the end of the 1800’s, nearly one in five children between the ages of ten and sixteen were employed. As a result, children often left school at age 12 or 13 to work. Sometimes children as young as 6 or 7 had to bring home the cash.