Robber Barons & Business in the Gilded Age

Bell Ringer #4• Complete summary from last class if you

haven’t done so.• In your groups, discuss who had the best

shoe. Do not anything down.

Content VocabCorporationHorizontal IntegrationVertical IntegrationRobber BaronMonopolyJP MorganJ.D. RockefellerAndrew CarnegieGilded AgeGospel of WealthSocial Darwinism

Academic VocabBusinessRuthless

• In 1873 Mark Twain and Charles Warner co-wrote the novel, The Gilded Age

• The term “gilded” refers to something being gold on the outside while the inside is made of cheaper material.

• beneath the surface were corruption, poverty, and a huge difference between rich and poor.

The Gilded Age

• A strong belief during the Gilded Age was the idea of individualism.

• This is the belief that regardless of your background, you could still rise in society.

Individualism

“Rags to Riches”

http://www.youtube.com/watch?v=1eRgZOZ8o4s

• In the late 1800s, state and federal government had a laissez-faire attitude by keeping taxes and spending low and by not imposing regulations on industry.

• The government did not control wages or prices. It adopted policies to help industry.

Laissez-Faire

• By the early 1900s, American industries were larger and highly competitive.

• Many business leaders began to encourage free trade, believing they could compete internationally and succeed.

• Free enterprise: Businesses are competitive without government control

High Competition

Free Enterprise• How does free

enterprise work?• Businesses are

owned by private citizens

• Companies compete to win customers by making the best products at the lowest prices

• A corporation is an organization owned by many people but treated by law as though it was a single person.

• Stockholders, the people who own the corporation, own shares of ownership called stock.

• Issuing stock allows a corporation to raise large sums of money but spreads out the financial risk.

Corporation

• Big corporations had an advantage over small manufacturing companies.

• Big corporations could produce more cheaply, and they could continue to operate even in poor economic times by cutting prices to increase sales.

• Many small businesses with high operating costs were forced out of business.

Corporation

VS

Robber Barons• Entrepreneurs who used

ruthless tactics to build their fortune

• They wanted to get as much money as they possibly could

• What were some of these tactics?• Child Labor• Extremely low and

unfair wages• Buying out

competition

Checking for Understanding

What was Mark Twain claiming by calling this age, The Gilded Age?

Beneath the surface lays corruption

Checking for Understanding

Some business leaders were called Robber Barons because they _____________?Used ruthless tactics to build their fortune

Checking for Understanding

During the Gilded Age Industrialists liked ______________ because the government interfered as little as possible in the nation’s economy

Laissez-Faire

Checking for Understanding

What is it called when businesses are owned by private citizens and companies compete by making the best products at the lowest prices

Free Enterprice

Andrew Carnegieo Grew Rich from Shrewd

Investmentso Invested in RR Sleeping Cars

o Then Sold to George Pullman

o Plunged into Steel Making in 1872

o Built Huge Plant in Pittsburgh

o Hired Managers & Paid Them Well

o Average Workers’ Wages Kept Low

o Disliked Unions & Crushed Strikes

o Andrew Carnegie Used Vertical Integration to Build Carnegie Steel Corp. to dominate the steel industry

• A vertically integrated company owns all the different businesses it depends on for its operation. This not only saved money but also made the big company bigger.

Vert

ical in

teg

rati

on

John D Rockefeller• Dominated the

oil industry with his company Standard Oil• Create extremely

efficient techniques to save money

• In 1882 Standard Oil formed the first trust, which merged businesses without violating laws against owning other companies.

• A trust allows a person to manage another person’s property.

• Trusts were formed to eliminate competition

Standard Oil

• Business leaders also pushed for horizontal integration, combining many firms doing the same type of business into one large corporation.

• J.D. Rockefeller would do this.

Horizontal Integration

These business practices will lead to …

• A monopoly occurs when one company gains control of an entire market.

• In the late 1800s, Americans became suspicious of large corporations and feared monopolies.

Monopoly

Checking for Understanding

When a company controls all stages of production from start to finish it is called?Vertical Integration

Checking for Understanding

Which industrialist dominated the oil industry?

J.D. Rockefeller

Checking for Understanding

Which industrialist dominated the steel industry?

Andrew Carnegie

Checking for Understanding

Both horizontal and vertical integration were designed to lead to?

Monopolies

Checking for Understanding

Total Control of a type of industry by one company is called?

Monopolies

Checking for Understanding

Why were trusts formed?

Eliminate competition

• Charles Darwin’s theory of evolution and natural selection applied it to human society

• Like Darwin’s theory—that a species that cannot adapt to the environment will eventually die out— human society evolved through competition.

• Society progressed and became better because only the fittest people survived.

• Industrial leaders (Robber Barons agreed with Social Darwinism.

Social Darwinism

• Social Darwinism paralleled laissez-faire, an economic doctrine that was opposed to government interference with business.

• Robber Barons would use this theory to justify their wealth.

• Why were they rich?• They were the fittest

Social Darwinism

• Andrew Carnegie believed in Social Darwinism and laissez-faire.

• those who profited from society should give something back, so he softened Social Darwinism with his Gospel of Wealth.

• This philosophy stated that wealthy Americans were responsible and should engage in philanthropy, using great fortunes to further social progress.

Gospel of Wealth

J. Pierpont Morgan• J.P. Morgan – Head of NY

Investment House• Most Powerful Figure in

Finance• Morgan Used Trust to

Refinance RRs• Also Took Control of RR

Industry• Reorganized B&O, the Erie,

and the Northern Pacific RR

• By 1900, Morgan Dominated RR Industry

Checking for Understanding

Who believed that the rich should contribute to society through philanthropy and donating?

Andrew Carnegie

Checking for Understanding

Which theory was used by Robber Barons to justify their wealth?

Social Darwinism