The Growth of Big Business

Robber Barons vs. Captains of

Industry?

Both terms are used to describe the rich in America.

These terms were used to describe the same people

depending on what you thought of them.

Captains of Industry- Created jobs, increased the

amount of goods available and gave charitable

donations helping the public.

Robber Barons- The rich got rich by taking

advantage of the poor. They stole from the

public, drove competitors to ruin and put

people in poor working conditions.

The Big 4

Cornelius Vanderbilt “The

Commodore”

Made his fortune in the railroad and shipping

business.

Owned over 40% of the Railroads in the U.S

Known for his ruthless hostile takeovers

Built Grand Central Station and today Vanderbilt

University is name after him.

John D. Rockefeller Made his fortunes in the Oil industry

After a near death experience he believed God

wanted him to be successful.

Decided to buy all of his competitors in what is called

horizontal consolidation.

To get around the law he set up a trust (where he

gives other powers who actually report to him).

Gave over 500 million dollars to charity.

Andrew Carnegie Made his fortune in U.S Steel investing in

the Bessemer Process

He bought every company that was involved

in steel giving him vertical consolidation.

This allowed him to have lower costs allowing

him to sell for less and undercut the competition.

Wrote the Gospel of Wealth that stated people should

be free to make as much money as they could but after

they make it they should give it away.

Gave 80% of his money away to fund education.

J.P Morgan J.P Morgan was born into wealth

in CT. While originally involved in

banking Morgan got into the

electricity business.

J.P Morgan teamed with Thomas

Edison to take over the electricity

industry.

Today J.P Morgan bank is named

after him.

Social Darwinism and Laissez-

Faire

Belief that the strongest will survive and those

doing well should be left alone.

Government should not interfere with business.

The rich were the most “fit” to rule and should

dictate to the poor. This included things such as:

working conditions, hours and pay.

The More Money the Better

It is very expensive and difficult to start a new

business so only a select few make it through

leading too a..

Cartel- group of businesses agree to work

together set prices where they want them

Monopoly- One person controls an entire market.

How to get a Monopoly?

Buy out your competition or putting them out of

business.

If you can sell your product for less than your

competitor they will buy from you. To do this you

need to make it cheaper for you to make and sell

your product. To do this you can use:

Vertical Consolidation-One owner buys every

aspect of a business from gathering the raw

material to delivering the final product.

Horizontal Consolidation- Owning 90% or more

off all the manufactures of your product.

Trust in the Law

The Government made it illegal to have a

Monopoly but John Rockefeller found a way

around it by creating a Trust.

Rockefeller turned over control of parts of his

company to a board of 9 trustees. The trustees

together worked for Rockefeller and became a

trust.

Government responds to Trusts

People were skeptical of trusts and quickly

realized what they were trying to do.

The government was hesitant to get involved

because the credited big business for the strong

economy the country had.

They passed the Sherman Antitrust Act which

outlawed trusts but the law was unsuccessful.