United States History Unit 5: Industrialization and the Gilded Age

Bell Work:What is a cartel? How about a trust?What is a business cycle?What do you think the difference is between the Captain of Industry or Robber Barons?

AP US HistoryHow to make & spend a fortune!

The Growth of Big BusinessRobber Barons- individuals who exploited the American political and economic system in order to gain extraordinary amounts of wealth at the expense of workers and immigrants.

The Growth of Big BusinessCaptains of Industry- individuals who had a positive effect on the US economy by increasing the number of goods, developing more factories, and practicing philanthropic activities.

How do you make a fortune?What allowed individuals to make so much money after the Civil War?

Post Civil War ConditionsIn large part, wealth was made through exploitation of the government and workers but also through ingenious (and sometimes illegal) business practices.

Post Civil War ConditionsEssentially the first business moguls made their dough via the followingClosing of the West.Social DarwinismDeveloping of the Trust

Railroad industry- Government SubsidizedCheap Land= the governmentCheap Labor= immigrantsCheap Capital (steel)= Carnegie Cheap Loans= Morgan

Corruption begins with the railroadsCredit Mobilier Scandal- Oakes Ames (Union Pacific RR)Cornelius Vanderbilt, Leland Stanford

Corruption also found its way into the governmentWhiskey Ring Scandal- Tax Fraud (Grants Dep. Of Treasury and Orville Babcock)Bureau of Indian AffairsGold Corner- Jay Gould

Big Ones Yet, despite government corruption, these events were small change compared to the Robber Barons like Carnegie, Rockefeller, and JP Morgan.

Andrew CarnegieScottish immigrant, son of a expert weaverRags to riches (1.20 dollars an hour to a billionaire)Wealth through the Bessemer ProcessWith help of JP Morgan, starts US Steel

Andrew Carnegie

Vertical ConsolidationBuy all the items of production and corner the market.Cheaper products attack competition (economy of scale).Social Darwinism- may the best man win; apply Darwinism to business (government should encourage)

John RockefellerAt first a railroad baronInvested in black gold= oilStandard Oil- bought off legislatures, secret railroad deals, bribes, and sabotage

John Rockefeller

Horizontal ConsolidationBuy all the small companies and then monopolize the market. Undercut other business through rebates and secret deals."In a business so large as ours some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge.Illegal if crosses state lines= anti-trust lawsSamuel Dodds- Trust-Get around anti-monopoly laws, cant hold stock in another company.-Develop a board of trustees, issuing trust certificates (holding companies)Trusts keep prices artificially high due to no competition while making wages extremely low.

JP MorganBankers banker.Made millions off of the Civil War (wise investments)Controlled nearly half of all the railroads in AmericaInvested into Carnegie Steel- US Steel (party)JP Morgan

How To Spend a FortuneGospel of Wealth- people should be free to make as much money as they can. Afterwards, they should give it away- philanthropy.Carnegie $350,695,654 in his life.A man who dies rich dies disgraced

How To Spend a FortuneAndrew Carnegie- Carnegie Hall, the arts, libraries, study on how to end war (Carnegie Institute).John Rockefeller- universities, churches, anti-saloon league (10% of paychecks)JP Morgan- Yachts, art collectionsCaptains or Barons? Legacy of big business?

How to Spend a Fortune

The Homes Rocky

Carnegie- Scotland

JP Morgan