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The Rise of Big Business 20-2

Explore the growth of steel and railroad industries, the strategies of Carnegie, Vanderbilt, Rockefeller, and Morgan, and the impact of vertical and horizontal integration. Understand the complexities of business monopolies and the importance of competition in the free enterprise system.

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The Rise of Big Business 20-2

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  1. The Rise of Big Business20-2 Carnegie Vanderbilt Rockefeller Morgan

  2. Business Methods • Horizontal Integration- Buying up all competition in the same industry • Vertical Integration- Owning all steps of a business in order to take a product from raw material to finished product

  3. Vertical Horizontal

  4. Growth of Steel Industry • Growth of RR industry, led to the growth of the steel industry • Henry Bessemer created the Bessemer Process • Enabled steel makers to produce strong steel at a lower cost much faster.

  5. Steel Mills Thrive • Pittsburg, PA becomes one of the leaders in steel production • The boom in the industry brought jobs and prosperity to the cities • Negative effects • Air and water pollution

  6. Stop and Think • What is horizontal and vertical integration? • How did the Bessemer Process improve the steel industry? • Explain the positives and negatives of the steel industry growth in cities.

  7. Andrew Carnegie • Dominated the Steel Industry • Began buying up all phases of the steel industry • Iron mines, railroad and steamship lines, and warehouses • Vertical integration

  8. Andrew Carnegie continued… • “Gospel of Wealth” • Carnegie believed in giving to those who were less fortunate. • Sold his steel empire in 1901 and spent the rest of his life helping people and donating to charity

  9. Stop and Think • What industry did Andrew Carnegie lead? • How did he use vertical integration? • What was the “gospel of wealth”?

  10. J.P. Morgan • Most powerful banker and investor of industrial age. • Used his banking profits to gain control of other major corporations. • Gained control of most of the nation’s RR’s. • Became head of U.S. Steel Co. which was the first American business worth over $1 billion. • “I like competition, but I like combination more.”

  11. John D. Rockefeller • Rockefeller built oil refineries when everyone else was drilling for oil. • He bought up all competition. • Used horizontal integration • He started his own large company called Standard Oil. • Eliminated competition by forming trusts • Trust- a group of corporations run by a single board of directors

  12. Rockefeller • He slashed prices to undercut competition. • Forced RR companies to grant rebates and lower shipping costs to keep his business • The Standard Oil trust allowed Rockefeller to call the shots for all the companies that he overtook.

  13. Stop and Think • What was J.P. Morgan? How did this help him become such a dominant businessman? • What industry did John D. Rockefeller work in? • Explain how Rockefeller capitalized on the oil industry.

  14. The Case Against Trusts • Many Americans felt that trusts and monopolies went against the free enterprise system. • Free enterprise system- businesses are owned by private citizens. • They felt that it eliminated competition and without competition there was no reason for companies to keep prices low or improve

  15. Homework • Continue working on your graffiti books! • Due Thursday 11/20/14.

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