Big Business Emerges!!!

1. Chapter 14 Section 3 Big Business Emerges!!!

2. A series of new management techniques were developed. • Vertical integration • Horizontal integration • These techniques lead to… MONOPOLIES

3. Monopolies/Types of Businesses Trust

4. Monopolies/Types of Businesses Pool

5. Monopolies/Types of Businesses Holding Company

6. Monopolies/Types of Businesses Conglomerate

7. Monopolies/Types of Businesses Corporation

8. VERTICAL INTEGRATION • When a company buys each stage of the production process. • This • Lowers production costs • Gives a company control over the process • Improves quality • Improves availability • But… limits competition.

9. Y Ore company Ore company $5 $2 Y Rail cars Rail cars $5 $2 STEEL Y Rail Company Rail Lines $5 $2 Cost Reduced To $10 Total Additional Cost $25 Y Shipping Company Shipping company $5 $2 Y Steel Mills Steel mills $5 $2

10. Andrew Carnegie Carnegie Steel Who Did it?

11. Horizontal Integration • When companies making similar products merge in order to have more control over the market. • Results- • Lowers costs by eliminating competition. • Keeps control of prices in the hands of a few men. • Price fixing • (Laws of Supply and Demand)

12. Competition keeps prices low Removing competition allows companies to increase profits by raising prices. Trust/ Holding Company Company A Company B Company C

13. Who did it? • John D. Rockefeller • 1870- Standard Oil was • 23% of US Oil processing. • 1890- 90% • Created TRUSTS.

15. 3 Really Important Ideas • The Law of Supply and Demand • Social Darwinism • Laissez Faire Economics

16. If demand is low the price is… Low. If demand is high the price is… High. If supply is low the price is… High If supply is high the price is… Low. The Law of Supply and Demand

17. Social Darwinism • A perversion of Charles Darwin’s “On the Origin of Species” • His ideas were applied to business. (It wasn’t what • he had in mind.) • The Moth story • 2 key ideas • Survival of the fittest • Natural Selection

18. Moths

19. Darwin onBreeding Animals. • Thus the weak members of civilized societies propagate their kind. No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man. It is surprising how soon a want of care, or care wrongly directed, leads to the degeneration of a domestic race; but excepting in the case of man himself, hardly any one is so ignorant as to allow his worst animals to breed. This gets twisted into something different.

20. Social Darwinism was developed some thirty years after Darwin’s famous book by a social thinker named Herbert Spencer. Extending Darwin into a realm Darwin never intended, Spencer and his followers saw society as a competitive struggle where only those with the strongest moral character should survive, or else the society would weaken. It was Spencer, not Darwin, who coined the phrase "survival of the fittest.“ Social Darwinism thereby offered a perfect moral justification for America’s Gilded Age, when robber barons controlled much of American industry, the gap between rich and poor turned into a chasm, urban slums festered, and politicians were bought off by the wealthy. It allowed John D. Rockefeller, for example, to claim that the fortune he accumulated through the giant Standard Oil Trust was "merely a survival of the fittest, ... the working out of a law of nature and a law of God." Herbert Spencer

21. Social Darwinism provided a justification for: • The more exploitative forms of capitalism in which workers were paid sometimes pennies a day for long hours of backbreaking labor. • Social Darwinism also justified big business' refusal to acknowledge labor unions and similar organizations, • and implied that the rich need not donate money to the poor or less fortunate, since such people were less fit anyway. In its most extreme forms, Social Darwinism has been used to justify eugenics programs aimed at weeding "undesirable" genes from the population; such programs were sometimes accompanied by sterilization laws directed against "unfit" individuals. The American eugenics movement was relatively popular between about 1910-1930, during which 24 states passed sterilization laws and Congress passed a law restricting immigration from certain areas deemed to be unfit. Social Darwinist ideas, though in different forms, were also applied by the Nazi party in Germany to justify their eugenics programs.

22. Results Wealth is deserved = Good Poverty is deserved = Bad Where have we seen this before?

23. Social Darwinism as it applies to… • Workers and Owners • Rich and Poor • The U.S. and other countries. • History: The Native Americans

24. Social Darwinism as it applies to “Factory Towns”

25. The “Gospel of Wealth • "The Gospel of Wealth" was an essay written by industrialist Andrew Carnegie in 1889. Carnegie professed the virtues of a Laissez-faire system in which the government did not interfere with a corporation's right to do as it pleased. Carnegie made it clear that the wealthy were responsible for the recirculation of their money back into society where it could be used to support the greater good. Carnegie himself practiced this procedure, and in his later years gave money to establish public libraries, schools and swimming pools. Raises the question WHY?

26. Laissez Faire Economics • HANDS OFF • The idea that the government should leave business alone. The Strong will survive the weak will perish. • This is how “NATURE” works.

28. Other important facts • Robber Barons • Business in the South

29. Horatio Alger – a partial list • Abraham Lincoln: the Backwoods Boy; or, How A Young Rail-Splitter Became President (1883) • Adrift in New York; or, Tom and Florence Braving the World (1904) • Adrift in the City; or, Oliver Conrad's Plucky Fight (1902) • Andy Gordon; or, The Fortunes of a Young Janitor (1909) • Andy Grant's Pluck (1902) • Ben Bruce. Scenes in the Life of a Bowery Newsboy (1901) • Ben Logan's Triumph; or, The Boys of Boxwood Academy (1908) • Ben's Nugget; or, A Boy's Search for Fortune (1882) • Ben The Luggage Boy; or, Among the Wharves (1870) • Bernard Brooks' Adventures. The Story of a Brave Boy's Trials (1903) • Bertha's Christmas Vision. An Autumn Sheaf (1856) • Bob Burton; or, The Young Ranchman of the Missouri (1888) • Bound to Rise; or, Up the Ladder (1873) • A Boy's Fortune; or, The Strange Adventures of Ben Baker (1898) • Brave and Bold; or, The Fortunes of Robert Rushton (1874) • The Cash Boy(1887

30. One day a handsome carriage drove up to the door. From it descended our hero, elegantly attired. He knocked at the door. Mrs. Chase, who was impressed by wealth, came to the door in a flutter of respect, induced by the handsome carriage. ``What do you wish, sir?'' she asked, not recognizing Frank. ``Miss Grace Fowler!'' repeated Mrs. Chase, almost paralyzed at Grace being called for by such stylish acquaintances ``Yes, my sister Grace.'' ``What! are you Frank Fowler?'' ``Yes. I have come to take Grace away.'' ``I don't know as I have the right to let her go,'' said Mrs. Chase, cautiously, regretting that Grace was likely to escape her clutches. ``Here is an order from Deacon Pinkerton, chairman of the overseers of the poor.'' ``That is sufficient. She can go. You look as if you had prospered in the city,'' she added, with curiosity. ``Yes. I have found my grandfather, who is very wealthy.'' ``You don't say!'' exclaimed Mrs. Chase. ``I'll tell Grace at once.'' Grace at work in the kitchen had not heard of the arrival. What was her surprise when Mrs. Chase, entering the room, said, graciously: ``Go up at once, Grace, and change your clothes. Your brother has come for you. He is going to take you away.'' Grace almost gasped for breath. ``Is it true?'' ``It is indeed. Your brother looks remarkably well. He is rich. He has found a rich grandfather, and has come for you in a carriage.'' In amazed bewilderment Grace went upstairs and put on her best dress, poor enough in comparison with her brother's clothes, and was soon happy in his embrace. ``I am glad to see you, my dear child,'' said Mr. Wharton, who had accompanied Frank. ``Will you come to the city and live with me and your brother?'' ``Oh, sir, I shall be glad to be wherever Frank is.'' ``Good-bye, my dear child,'' sand Mrs. Chase, whose feelings were very much changed, now that Grace was a rich young lady. ``Come and see me some time.'' ``Thank you, Mrs. Chase. Good-bye!'' The carriage rolled on.

31. A few words only remain. Our hero was placed at a classical school, and in due time entered college, where he acquitted himself with distinction. He is now making a tour of Europe. Grace was also placed at an excellent school, and has developed into a handsome and accomplished young lady.