This, then, is held to be the duty of the man of wealth: First, to
set an example of modest, unostentatious living, shunni...
Pioneers of Industry
OR
Robber Barons?
Were these men Captains of Industry,
without whom this country could not have taken its place as a
great industrial power,...
Andrew Carnegie • Rags to riches story
• Head of steel industry
• Always looked for better
product at lower cost
1. Hired ...
Vertical Integration
Within an industry
Raw materials
Production
Distribution
Horizontal Integration
Across an industry
mergers
• Buying part of a company
• Receive dividends (interest)
• Risky vs. Safe
Expensive to purchase
Move money quick
Unstable...
• Didn’t make steel but instead…
• Sold stock in itself (and their good reputations)
• Used that money to buy control of
c...
• Two companies combine to form one
• Retains power but reduces competition
–Why is competition important?
Other companies followed suit
Cornelius Vanderbilt
JP Morgan
JD Rockefeller
Pros of Big Business
• Raises productivity
• More efficient (no middle man)
• Better product
• Increase in product
• Creat...
Railroad Workers - first ever strike
1877
And Grange Movement involvement
And the government intervened
• Sherman Anti-trust Act
– All mergers that restrain competition are
illegal
– MONOPOLY - ob...
• Standard Oil Company
– Broke apart into comp. (Exxon, Mobile, Chevron…)
• U.S. Steel Corporation
– broke apart by region...
• Charles Darwin’s theory
– Natural Selection & Survival of the Fittest
• Used to explain success - Carnegie & Rockefeller...
Industrial era   pioneers of industry
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Industrial era pioneers of industry

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Industrial era pioneers of industry

  1. 1. This, then, is held to be the duty of the man of wealth: First, to set an example of modest, unostentatious living, shunning display or extravagance; … and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer… to produce the most beneficial results for the community—the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience and ability to administer, doing for them better than they would or could do for themselves. — From "Wealth," by Andrew Carnegie, North American Review (1889) Law? Who cares about the law. Ain't I got the power? — Comment alleged to have been made by Cornelius Vanderbilt, when warned that he might be violating the law
  2. 2. Pioneers of Industry OR Robber Barons?
  3. 3. Were these men Captains of Industry, without whom this country could not have taken its place as a great industrial power, or were they Robber Barons, limiting healthy competition and robbing from the poor to benefit the rich? Where do we draw the line between unfair business practices and competition that leads to innovation, investment, and improvement in the standard of living for everyone? Would the industrial economy have succeeded without entrepreneurs
  4. 4. Andrew Carnegie • Rags to riches story • Head of steel industry • Always looked for better product at lower cost 1. Hired people to improve steel quality 2. Undersold competitors 3. Bought out rival plants • “Integrated operation” • Carnegie Steel part of
  5. 5. Vertical Integration Within an industry Raw materials Production Distribution
  6. 6. Horizontal Integration Across an industry mergers
  7. 7. • Buying part of a company • Receive dividends (interest) • Risky vs. Safe Expensive to purchase Move money quick Unstable - Make money quick - Lose money quick Ex: Technology .coms Cheaper to purchase Long term investments Stable -Slow to make money Ex: Electric Companies Toliet Paper 
  8. 8. • Didn’t make steel but instead… • Sold stock in itself (and their good reputations) • Used that money to buy control of companies that were making steel
  9. 9. • Two companies combine to form one • Retains power but reduces competition –Why is competition important?
  10. 10. Other companies followed suit Cornelius Vanderbilt JP Morgan JD Rockefeller
  11. 11. Pros of Big Business • Raises productivity • More efficient (no middle man) • Better product • Increase in product • Creates more jobs • Funds public institutions Cons of Big Business • Reduces competition • Increases prices • Drains resources • Lives “above” law • Poor working conditions • Pays low wages
  12. 12. Railroad Workers - first ever strike 1877 And Grange Movement involvement
  13. 13. And the government intervened • Sherman Anti-trust Act – All mergers that restrain competition are illegal – MONOPOLY - objective of the game?
  14. 14. • Standard Oil Company – Broke apart into comp. (Exxon, Mobile, Chevron…) • U.S. Steel Corporation – broke apart by region (Scranton, Bethlehem, Pgh) • Movie production companies – Produce or distribute (RKO, Paramount, MGM, Universal, 20th Cent. Fox, Columbia, Warner Bros.) • Bell Telephones – By region and service: long distance, local, mobile, research, development (Bell Atlantic, Bell Pacific…)
  15. 15. • Charles Darwin’s theory – Natural Selection & Survival of the Fittest • Used to explain success - Carnegie & Rockefeller • Stated rich were rich because they were fit to live and poor were poor because they weren’t • Herbert Spencer – Gov’t to leave business alone; fittest will survive • Horatio Alger – if worked hard, could be successful…

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