Robber Barons vs. Captains of Industry · Robber Barons vs. Captains of Industry Author: emyers Created Date: 1/26/2016 10:55:10 AM ...

Robber Barons vs. Captains of Industry

Warm Up:

Complete the following to the best of your knowledge:

In a capitalist economy, how are prices determined?

Explain the difference between a corporation and a regular company.

Why is a monopoly illegal?

Define the terms “Robber Baron” and “Captain of Industry”

Terms to know

Capitalism: An economic system in which industries are privately owned, and the prices, production, and distribution of goods are determined by competition on a free market.

Corporation: A large company that can generate capital (money) by selling stock on the stock market.

Monopoly: A situation in which one company has eliminated its competition.

Trust: An alliance of companies, run by a board of trustees, that function as one company.

Reduces competition

Illegal if it forms a monopoly

Opposing View Points

Captains of Industry

Created Jobs

Increased production

Provided cheap products

Gave money back to the community

Robber Barons

Exploited workers

Corrupted the government

Greedy

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Large corporations developed in two major ways: horizontal or vertical integration

Horizontal integration is the growth of a business through acquiring additional business activities in the same industry.

J.D.Rockefeller’s Standard Oil

Vertical integration is the growth of a business through the acquisition of the materials that make the product, the factories that manufacture the products including the machines needed to produce the product, as well as the distribution channels to take the product to market.

Andrew Carnegie's steel company

John Rockefeller and Standard Oil Trust

To monopolize the oil industry he forms the Standard Oil Trust

A trust is an organization of businesses designed to operate like a monopoly

His corporation Standard Oil owned about 88% of the oil industry in the US in 1890

John Rockefeller and Standard Oil

Recognized the potential of the oil industry

Very hard worker

Spent all profits from the company to improve production

Philanthropy- gave over $500 million to charities

Made deals with the railroads to charge competitors more

Lowers prices to force other companies out of business-then raised prices

Low pay for workers

Sabotaged competitors

Paid government officials in the Senate

Andrew Carnegie (1835-1919)

Andrew Carnegie came to U.S. as a poor immigrant from Scotland in 1848

Built the Carnegie Steel Corporation through vertical consolidation

Retired a millionaire and gave much of his money to education (Carnegie-Mellon University)

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Shipping tycoon- millionaire by 1846

Nicknamed “Commodore”

Built the first railroad line connecting New York City and Chicago. He also built New York’s Grand Central station

Most historians estimate that when he died he was worth $100 million ($1.7 billion in today’s dollars)

Vanderbilt University

Biltmore House

Cornelius Vanderbilt 1794-1877

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John Pierpont Morgan 1837-1913

Born into a wealthy family

Made a huge amount of money by financing railroad companies that were in financial trouble

In 1901, he bought Carnegie Steel. He turned that into U.S. Steel, the world's first billion-dollar corporation

By the early 1900s, Morgan controlled almost all of the major industries in the U.S. and had a large stake in the financial and insurance industries

The Pierpont Morgan Library in New York was donated by Morgan in 1924.

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How rich were the “robber barons” compared to Microsoft founder Bill Gates?

Justifications for Industrialists’ Extreme Wealth

Social Darwinism

Herbert Spencer

Based on Charles Darwin’s theory of evolution

Those who are rich are more fit, than those who are poor

Attempted to use science to explain social classes

Gospel of Wealth

Andrew Carnegie

God gave wealth to the most capable people

It is the duty of the wealthy to give money to help the poor

Carnegie gave millions of dollars away to establish libraries, colleges, and museums

Working Conditions

Laborers were immigrants, African Americans, women, and children

12 hour days, six days a week

Accidents were frequent, deaths occurred often

Low wages

Anti-Trust Movement

The public began to dislike trusts

Prices were high on important products

Trusts were responsible for a corrupt government

Although Congressmen liked trusts they needed to please the public

Passed the Sherman Antitrust Act

Made it illegal to form a trust or monopoly

Act was not effective because the act did not clearly define a trust