The Rise of Big Business. Chapter 14 Section 2 The Second Industrial Revolution Riddlebarger

Transcription

1 The Rise of Big Business Chapter 14 Section 2 The Second Industrial Revolution Riddlebarger

2 Capitalism An economic system in which private businesses run most industries. Competition determines prices and wages. Laissez-faire: no government interference in business activities.

3 Age of Big Business The period of invention after the Civil War sets the stage for great industrial growth Huge amounts of capital ($$)needed, along with human labor and natural resources

4 Robber Barons/ Captain of Industry Powerful Industrialists of late 1800 s Robber Baron ｷperception of stealing from public ｷruin competition, bribe public officials, pay low wages, unhealthy workplace Captain of Industry ｷPerception of serving nation in positive way ｷCreating jobs, donating money, increase public supply of goods and jobs

5 Robber Baron or Captain of Industry??? Morgan Carnegie Vanderbilt Rockefeller

6 Social Darwinism A. idea popular in late 1800 s B. Government shouldn t interfere with people s success; if so, the most fit would succeed and become rich» Society would benefit from success of fit & weeding out of unfit C. Most Americans agree at the time that government should not interfere with private business Who is most likely to advocate Social Darwinism? Industrialists or Workers?

7 What Is a Monopoly?

8 Monopoly & Cartels A. Many industrialists use whatever means necessary to gain competitive edge B. monopoly- controlling entire industry or product»buy them or drive them out, then you can charge any price you like C. cartel- loose association of businesses that make the same product»members agree to limit production and keep prices high

9 Trusts A group of companies placed under the control of a single managing board

10 Growth of Big Business Vertical Consolidation (2 strategies) Gaining control of many businesses that make up all phases of product s production Railroads Coke Fields Iron Ore Deposits Steel Mills Ships Carnegie Steel Company Owns all phases of production

11 Growth of Big Business (2 strategies) What problems might a business face that must compete against a company with a vertical monopoly? Railroad s Coke Fields Iron Ore Deposits Steel Mills Ships Carnegie Steel Company Owns all phases of production

12 Horizontal Consolidation Joining competing firms in the same business Example: Standard Oil Growth of Big Business (2 strategies) Standard Oil Company Purchased by Rockefeller Independent Oil Refineries

13 Growth of Big Business Why were companies at a (2 strategies) disadvantage when facing a company with horizontal consolidation? Purchased by Rockefeller Independent Oil Refineries Standard Oil Company

14 Growth of Big Business Economies of Scale- As production increases, the cost of each additional item produced is lower D.Effects of big business on American Society Few like trusts or other large businesses Politicians don t crack down-continue to allow industrialists to operate at will Disparity in wealth (gap between rich & poor grows) Boom & bust-good times followed by bad Business Cycle

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16 Standard Oil Company John D. Rockefeller Built oil refinery in Cleveland (1863) Forms Standard Oil (1870) Persuades railroads to give refunds on shippingallows him to lower prices Over $2 billion fortune B. The Trust Law prevents buying out competition Allows them to get around the law Control of most of nations oil refining

17 Andrew Carnegie Made millions in steel industry by bringing Bessemer Process to America. Scottish immigrant Sold his company for $492 million to JP Morgan in Paid low wages to workers Donated millions to charity.

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21 Mass Marketing Retailers also look for new ways to maximize profits May new approaches used to win customers Department Stores in urban areas One-stop shopping; lower prices Mail-order catalogs in rural areas Now any American has access to wide range of goods

22 Looking Ahead What effects did the growth of big business have on workers?