Andrew Carnegie created the Carnegie Steel Company in 1873, which manufactured more steel than all of Britain through practices like vertical and horizontal integration. Vertical integration involved buying out suppliers to control raw materials and transportation, while horizontal integration meant acquiring companies making similar products to limit competition. The success or failure of businesses, according to the philosophy of social Darwinism, was governed by natural laws and intervention in the market was unacceptable. Figures like John D. Rockefeller and his Standard Oil Company merged with competitors through trusts that centralized control like a single large corporation. By 1880, Rockefeller controlled 90% of oil refining by undercutting competitors and buying them out, earning the title of "robber baron," though he also established philanthropic organizations.

1. Big Business and LaborCh. 6 Section 3

2. Andrew CarnegieOne of the first “rags to riches” stories in the Industrial AgeCreated Carnegie Steel Company 1873Manufactured more steel than all of BritainCreated new management practicesVertical integration: bought out his suppliers to control raw materials and transportationHorizontal integration: bought out companies making similar products to limit competition

3. Integration Clarification

4. Social Darwinism and BusinessPhilosopher Herbert Spencer used Darwin’s theories to explain the evolution of societyThe success or failure of a business is governed by natural law and no one had the right to intervene (market should not be regulated)Riches were a sign of God’s favor, therefore poor people were lazy or inferior who deserved their lot in life

5. Growth and ConsolidationMergers were a popular form of horizontal consolidationOne corp. bought the stock from anotherHolding Company: A corporation that bought out other companies- created monopoliesUS Steel headed by J.P. MorganJohn D Rockefeller- Standard Oil Company- Joined with competing companies in Trust agreementsMembers turned their stock over to trustees (people who ran separate companies like one large corporation) and were entitled to dividends on profits earned by the trust

6. “Robber Barons”Rockefeller’s oil company controlled 90% of oil refining business by 1880Paid low wages and drove his competitors out of business by selling oil at low pricesWhen he controlled the market, he hiked prices far above original prices earning the title “robber baron”Rockefeller also established the Rockefeller FoundationProvided funds to found the University of Chicago and created a medical institute that helped find a cure for yellow fever