Chapter 19: Big Business

​Chapter 19: Section Two: Big Business

​Carnegie's Innovations

• ​By 1865, Andre Carnegie had made so much money from the Pennsylvania Railroad that he left the company

  • ​ After touring a British steel company Carnegie wanted to be part of the business

    • By 1899, Carnegie Steel Company manufactured more steel than Great Britain

• ​Carnegie's business success came from his management practices

  • his goal was to search for ways to make better products cheaper

    • ​ he incorporated new machinery & techniques like accounting systems to track costs

  • ​Carnegie brought in talented workers by offering stock in the company

    • ​He encouraged competition between his employees

​Carnegie Creates a Monopoly

• Carnegie wanted to control the steel industry

  • ​ Carnegie accomplished this by practicing vertical and horizontal integration

    • ​ He controlled almost all of the steel industry by the time he sold the company in 1901

​Vertical Integration: a company's taking over its suppliers & distributors & transportation systems to gain control over the quality & cost of its product.

​Horizontal Integration: the merging of companies that make a similar product.

​Oil Industry Begins

​In the 1850s, it was discovered that you could burn petroleum to make heat and and use oil for lubricating machinery.

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​Suddenly oil was valuable.

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​Edwin Drake made the first oil well in Titusville, Pennsylvania

​Carnegie and Rockefeller as philanthropy

• ​They used their fortunes to found schools, universities, libraries.

• ​Carnegie built Carnegie hall- a world famous concert hall in New York City.

• ​Rockefeller established the University of Chicago in 1890.

• ​New York's Rockefeller Institute for Medical Research.

​Robber Barons

​These two industrialists were considered Robber barons.

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​Robber barons were monopolist who gained control of industries and drove out competitors.

Business Leaders

• John D. Rockefeller - focused on the oil refinery industry.

• Rockefeller's Standard Oil Company was the country's largest oil refiner.

• Used vertical and horizontal integration.

• Horizontal integration- owning all businesses in a certain filed.

• Trust - legal arrangement grouping together a number of companies under a single board of directors.

Business Leaders

• Leland Stanford: made his fortune selling equipment to miners.

• One of the founders of the Central Pacific Railroad and founded Stanford University.

• Stanford argued that industries should be owned and managed cooperatively by workers.

​https://www.youtube.com/watch?v=U359tchfOPA

Social Darwinism

• A view of society based on scientist Charles Darwin's theory of natural selection.

• "Survival of the Fittest" decided which human beings would succeeded in business and in life in general.

• Others believe rich had the duty to aid the poor and give money through charity.

An Antitrust Movement

• 1880s : People began to criticize the practices of big business.

• Large corporations drove smaller competitors out of business.

• Owners of small businesses wanted the government to help control monopolies (total ownership of a product or service).

Sherman Antitrust Act

• July 1890 Congress passed a law that made it illegal to create monopolies or trusts that restrain trade.

• The act did not clearly define a trust in legal terms.

• Antitrust laws were difficult to enforce and corporations and trusts kept growing in size and power.