Business in the Gilded Age

1. Business in the Gilded Age Chapter 17

2. Why was Twain’s reference to this period being the “Gilded Age” appropriate? Why was this the “perfect storm” of industrialism? How did entrepreneurs seize the potential of the time period? What are the factors of production, which enable the production of goods? How do we label these entrepreneurs – robber barons or philanthropists?

3. From Fourth to First! • Technological advances transformed the U.S. - innovations made in the first industrial revolution are built on and improve: • Transportation • Communication • Consumer Products • Business creates new strategies – Govt provides freedom • Rural agricultural economy to urban industrialism • Industry transformed by innovation

4. The “Gilded Age” • "Gilded Age” -coined by Mark Twain • Refers to end of Reconstruction thru turn of the century (about 1870 to 1900). • Unprecedented industrial growth • Wave of immigration. • Govt & Politics – corruption • Congress for sale? • Health of democracy is questioned • PERFECT STORM!

5. "What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must."-- Mark Twain, 1871 • Pioneers of new business strategies: • Jay Gould • Andrew Carnegie • John D. Rockefeller • J.P. Morgan

6. Jay Gould • Railroad entrepreneur • Example of greedy & unscrupulous "robber baron” • Bought failing RR – turned around for a profit • Stock speculator (bribery & inside stock manipulation) • Considered himself most hated man • Brutal strikebreaker • Major achievement -helping Western Union dominate in the telegraph industry.

7. J.P. Morgan • JP Morgan - influential and powerful figure in the financial world. • Goal: to replace cutthroat competition with economic stability • Consolidated railroad and other industries, forming colossal corporations - US Steel and General Electric. Morgan preferred not to be photographed!

8. Ingenuity that changes an industry • America's emergence as an industrial power • oil • Iron

9. J.D. Rockefeller • Oil refinery business • annihilate competitors • negotiating exclusive deals with railroad companies (Rebates) • Used vertical and horizontal • TRUST: legal entity that can hold title to property for the benefit of one or more other persons or entities • Over $500 million in philanthropic donations.

10. New Type of Business Entities

11. Standard Oil

12. “Monopoly” - few trusts and individuals thrived and amassed fortunes while many Americans lived in poverty -lost personal autonomy to the corporate machine.

13. Andrew Carnegie • Manufacturing “I wished to make something tangible” • “Cut prices, scoop the market, run the mills full; watch the costs & profits will take care of themselves.” • sold steel company to JP Morgan (who integrated it into US Steel) • He famously wrote, "the man who dies rich, dies disgraced.”

14. Carnegie's steel mills set new standards strategies to increase efficiency cut costs vertically integrate invest in new technology. Steel was produced at reduced prices (Bessemer Process) Enabled engineering innovation - bridges and tall buildings more affordable. Cutting costs translated to low wages and dangerous working conditions for laborers. The Steel Industry

15. Gospel of Wealth • After reading Gospel of Wealth handout – what is the MAIN theme Carnegie conveys? • What are 2 “responsibilities” for a man of wealth? • What should a man of wealth leave as a legacy? Maple Leaf Rag by Scott Joplin (at turn of the century): http://www.youtube.com/watch?v=pMAtL7n_-rc

16. Andrew Carnegie ~ The Gospel of Wealth • Rationalized by the belief that they were doing good for society. Carnegie, one of the most generous philanthropists of his day, wrote in defense of the successful man who acquires a vast fortune: “Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; … administering [wealth] for the community far better than it could or would have done for itself. … the man who dies leaving behind him millions of available wealth, which was his to administer during life, will pass away ‘unwept, unhonored, and unsung… Of such as these the public verdict will then be: "The man who dies thus rich dies disgraced.’ ” http://historymatters.gmu.edu/d/5766

17. Justification for racism Exploited idea of survival of the fittest Natural, normal, and proper for the strong to thrive at the expense of the weak. Justification for numerous policy decisions of questionable moral value (colonialism & imperialism) Social Darwinism Herbert Spencer

18. Why was Rockefeller “the symbol of the heartless monopoly” & Carnegie loved? • Carnegie: • Capitalizes on innovation of steel • Controls via vertical integration (mining ore to transport to production) • fostered competition among managers (Trump?) • Rockeller: • Rebates to control transportation • Trusts to Holding Companies • Ida M. Tarbell, “History of the Standard Oil Company”

19. "Robber Barons" or "Captains of Industry"?

20. 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 willing to take competition to its extremes?

21. Compare & Contrast PART I -JANUS PROJECT: Determine qualities shared and those that were exclusive to only Carnegie & Rockefeller Part II: 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?

22. If Time… Evolution of health & Wealth -Globalization of Countries (Hans Rosling): http://www.youtube.com/watch?v=jbkSRLYSojo