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Warm-up. In a paragraph, describe the concept behind the game of Monopoly. Captains of Industry or Robber Barons. Entrepreneurs. John D. Rockefeller –Standard Oil (oil refiner who took advantage of the Pennsylvania oil rush of the 1860s)
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Warm-up • In a paragraph, describe the concept behind the game of Monopoly.
Entrepreneurs • John D. Rockefeller –Standard Oil (oil refiner who took advantage of the Pennsylvania oil rush of the 1860s) • By 1879, he controlled 90 to 95 percent of oil refined throughout the country (Horizontal growth) • Used vertical integration so that he would not have to depend on the middlemen. • Made its own barrels, cans, and whatever else it needed. “Pay nobody a profit” • Rockefeller made a fortune, but also became a leading philanthropist donating more than $500 million during his 98 year-life.
Entrepreneurs • Andrew Carnegie • Made his fortune in the steel industry. • Used economic depressions to buyout his competitors and expand. • Used vertical integration to own everything from beginning to end • “Success of wealthy industrialists helped the entire nation” • Became a philanthropist and gave away $350 million dollars to charity
The Corporation • The growing scale of enterprise led to the use of the corporation, which was a form of ownership. • A corporation could raise large sums quickly by selling “stock certificates” or shares in its business. • It could also outlive its owners. • It limited liability – owners were no longer responsible for corporate debts. • Professional managers now operated complex businesses because owners were no longer responsible for day-to-day management of the company.
The Monopoly • Some corporations formed trusts, turning control of their stock over to a common board of trustees who ran all the companies as a single business. • Limited overproduction and reduced competition • When a trust gained complete control over an industry they formed a monopoly that has complete control over the price and quality of a product • Standard Oil considered a monopoly
Finance Capital • As national wealth increased, people began to save and invest more of their money. • The New York Stock Exchange (around since 1792) linked eager investors with money-hungry firms. • By the end of the 19th century the stock market had established itself as the basic means of making capital available to industry.
The Growth of Big Business • J.P. Morgan – financier (investment banker) – bought up railroads during the Panic of 1893 • Merger movement - bought out Carnegie’s steel holdings for $500 million and created United States Steel Corporation (1st billion-dollar corporation) • Richard Sears and Alvah Roebuck dominated the mail- order industry and helped create a truly national market (1890s) The catalog (6 million distributed per year) became second most read book in the nation (Bible was 1st)
The Growth of Big Business • Corporate Defenders • The Gospel of Wealth - “super wealthy demonstrated the superiority of the free enterprise system” • Social Darwinism and “survival of fittest” • Rising standard of living for most • Corporate Critics - Working conditions • Average workweek: 59 hours. (6 – 10 hour workdays). Many worked 12 hours a day, 7 days a week. • Poor health and safety conditions in factories. • 1913 – 25,000 factory fatalities & 700,000 injuries that required at least a month’s disability. • Wealthy got wealthy “robbing” the people they employed & consumers who bought their products
