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The Growth of Big Business

The Growth of Big Business. The Good and The Bad. Robber Barons. Business leader who made fortune by stealing from public. Drained natural resources, paid low wages to workers, required long hours of employees. They persuaded public officials to interpret laws in their favor .

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The Growth of Big Business

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  1. The Growth of Big Business The Good and The Bad

  2. Robber Barons • Business leader who made fortune by stealing from public. • Drained natural resources, paid low wages to workers, required long hours of employees

  3. They persuaded public officials to interpret laws in their favor. They ruthlessly drove theircompetitors to ruin. • Paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.

  4. “Robber Barons”

  5. Captains of Industry • The business leaders served their nation in a positive way. • Increased the supply of goods by building factories. • Raised productivity and expanded markets.

  6. Created jobs that enabled many Americans to buy new goods and raise their standard of living. • Also created museums, libraries, and universities, many of which still serve the public today. Carnegie Hall

  7. Robber Baron versusCaptain of Industry • Robber Baron – negative • Captain of Industry – positive

  8. Andrew Carnegie

  9. Andrew Carnegie • Scottish Immigrant • Captain of Industry for steel production in Pittsburgh • Used Bessemer Process to produce stronger steel • Utilized vertical integration or consolidation

  10. Carnegie as a Philanthropist • A Philanthropist uses wealth to improve society • Carnegie funded the building of libraries, education facilities, and music/arts facilities

  11. “Gospel of Wealth” • Carnegie’s philosophy - A person should be able to make as much money as they can, BUT they should also use their wealth to improve society.

  12. Monopoly vs. Cartel • Monopoly – one company with complete control of a product or a service • Cartel – a loose association of businesses in a similar field or that make the same product and agree to limit supply to drive up prices (OPEC)

  13. John D. Rockefeller • Formed Standard Oil Company

  14. John D. Rockefeller and the Standard Oil Company • Wealthy individual who saw the oil industry as a way to get richer • Made illegal deals with railroads to transport oil cheaper, thus weakening other refineries that he would eventually buy • Utilized horizontal integration or consolidation for business purposes

  15. Also important re: Standard Oil ... Trusts • A group of separate companies that are placed under the control of a single managing board (Board of Directors) • Trusts limit competition and cause prices to rise

  16. Which Led to the Sherman Antitrust Act • Enacted in 1890 • Effort by Congress to end trusts • Ineffective due to lack of enforcement • More about it in future units

  17. Vertical Integration/Consolidation • Controlling businesses related to various phases of production for a product • Own all elements of a business • Carnegie Steel/Andrew Carnegie

  18. Controlling the Market Using Vertical Integration, Bob could control the Pizza market in town by controlling many of the costs associated with making his pizza! Bob’s Pizza Bob’s Trucking Company Bob’s Cheese Factory Bob’s Farm

  19. Horizontal Integration/Consolidation • When all of your competitors have been bought out • Think MONOPOLY • Standard Oil Company/John D. Rockefeller

  20. Controlling the Market Bob’s Pizza Delaware Pizza Happy Time Pizza Pizza Pizza Using Horizontal Integration, Bob could control the Pizza market in town by buying the other Pizza shops! Bob’s Pizza Bob’s Pizza Bob’s Pizza Bob’s Pizza

  21. Business Cycle growth peak recession depression • The growth and contraction of a nation’s economy – New Problem in the late 1800s

  22. Industrial Revolution Working Conditions

  23. Growing Work Force Immigrants Former Farm Families Women and Children Does not include African Americans

  24. Survival Guide for Poor Families (aka, immigrants!) Force children to leave school for work Send children as young as age 6 to work Ask for aid from a private charity (church, etc.) Government Welfare is non-existent at this time!

  25. Workday Length Typically 12 hours/day, 6 days/week

  26. Division of Labor Changes Manufacturing When someone completes one task as part of the job Positive: MASS PRODUCTION – it increases business productivity • Negative: workers no longer take pride in work and removes creativity

  27. Think About Making Shoes as an Example of This Concept! He may never work on shoes!

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