Robber Barons vs. Captains of Industry
Warm Up: Complete the following to the best of your knowledge: In a capitalist economy, how are prices determined? Explain the difference between a corporation and a regular company. Why is a monopoly illegal? Define the terms Robber Baron and Captain of Industry
Terms to know Capitalism: An economic system in which industries are privately owned, and the prices, production, and distribution of goods are determined by competition on a free market. Corporation: A large company that can generate capital (money) by selling stock on the stock market. Monopoly: A situation in which one company has eliminated its competition. Trust: An alliance of companies, run by a board of trustees, that function as one company. Reduces competition Illegal if it forms a monopoly
Opposing View Points Captains of Industry Created Jobs Increased production Provided cheap products Gave money back to the community Robber Barons Exploited workers Corrupted the government Greedy
Large corporations developed in two major ways: horizontal or vertical integration Horizontal integration is the growth of a business through acquiring additional business activities in the same industry. J.D.Rockefeller s Standard Oil Vertical integration is the growth of a business through the acquisition of the materials that make the product, the factories that manufacture the products including the machines needed to produce the product, as well as the distribution channels to take the product to market. Andrew Carnegie's steel company 6
John Rockefeller and Standard Oil Trust To monopolize the oil industry he forms the Standard Oil Trust A trust is an organization of businesses designed to operate like a monopoly His corporation Standard Oil owned about 88% of the oil industry in the US in 1890
John Rockefeller and Standard Oil Recognized the potential of the oil industry Very hard worker Spent all profits from the company to improve production Philanthropy- gave over $500 million to charities Made deals with the railroads to charge competitors more Lowers prices to force other companies out of business-then raised prices Low pay for workers Sabotaged competitors Paid government officials in the Senate
Andrew Carnegie (1835-1919) Andrew Carnegie came to U.S. as a poor immigrant from Scotland in 1848 Built the Carnegie Steel Corporation through vertical consolidation Retired a millionaire and gave much of his money to education (Carnegie- Mellon University)
Cornelius Vanderbilt 1794-1877 Shipping tycoon- millionaire by 1846 Nicknamed Commodore Built the first railroad line connecting New York City and Chicago. He also built New York s Grand Central station Most historians estimate that when he died he was worth $100 million ($1.7 billion in today s dollars) Vanderbilt University Biltmore House 13
John Pierpont Morgan 1837-1913 Born into a wealthy family Made a huge amount of money by financing railroad companies that were in financial trouble In 1901, he bought Carnegie Steel. He turned that into U.S. Steel, the world's first billion-dollar corporation By the early 1900s, Morgan controlled almost all of the major industries in the U.S. and had a large stake in the financial and insurance industries The Pierpont Morgan Library in New York was donated by Morgan in 1924. 14
How rich were the robber barons compared to Microsoft founder Bill Gates? 15
Justifications for Industrialists Social Darwinism Herbert Spencer Based on Charles Darwin s theory of evolution Those who are rich are more fit, than those who are poor Attempted to use science to explain social classes Extreme Wealth Gospel of Wealth Andrew Carnegie God gave wealth to the most capable people It is the duty of the wealthy to give money to help the poor Carnegie gave millions of dollars away to establish libraries, colleges, and museums
Working Conditions Laborers were immigrants, African Americans, women, and children 12 hour days, six days a week Accidents were frequent, deaths occurred often Low wages
Anti-Trust Movement The public began to dislike trusts Prices were high on important products Trusts were responsible for a corrupt government Although Congressmen liked trusts they needed to please the public Passed the Sherman Antitrust Act Made it illegal to form a trust or monopoly Act was not effective because the act did not clearly define a trust