AIM: THE RISE OF BIG BUSINESS

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Cornelius VanderbiltVanderbilt built the railroads

• Majority of railway lines were owned by a few powerful men

• Offered secret deals to factories and industries

Railroads

I. John D. Rockefeller

Multimillionaire who dominated the oil industry

VI. The Oil Industry

• 1859 Oil discovered• Oil boom followed

A. Rockefeller and Standard Oil

• Son of a humble, New York peddler

• Thought competition was wasteful

• Standard Oil Company; Rockefeller’s oil monopoly

• Rockefeller drove competitors out of business

B. Creating a Trust

• Trust:– A group of corporations

run by a single board of directors

• Monopoly:– Controls all or nearly all

of an industry

• Standard Oil controlled 95% of oil industry

Corporation A Corporation B Corporation C

Board of Directors

II. Growth of the American Steel Company

• Railroads fueled the growth of industry

• Steel became the ideal material

A. A new way to make steel

• Bessemer Process: – Method to produce

strong and cheap steel

• More products being made of steel– Nails, screws, needles,

skyscrapers

B. Steel Mills spring up

• Sprang out throughout the Mid-West

Positive:Created Jobs

Negative:Pollution

III. Andrew Carnegie

• Scottish Immigrant• Went to England and

saw the Bessemer process

• Built a steel mill and created relationships with railroads

B. Controlling the Steel Industry

• Used $ to buy out rivals, iron mines, railroads, steamships and warehouses

• Vertical Integration:– Owning all phases of an

industry

• Carnegie combined all businesses to create Carnegie Steel Co.

C. Gospel of Wealth

• Carnegie thought the rich should help the poor

• Donated $60 million to build libraries

IV. Rise of Big Corporations

• Big factories out produced small ones

• Small factories were forced to close

• Factory owners need ways to build capital

• Corporation:– Business owned by

investors

• Stock:– Share in a corporation

• Dividends:– Share in profits

V. Banks and Industry

• Corporations borrowed $ from banks

• JP Morgan: Powerful banker

• Invested in troubled corporations and turned a profit

• Took profits and invested in other industries (railroads and steel)

VII. Big Business: Two viewpoints

A. Opposition– Reduced Competition– Too much political

influence– Led to poor working

conditions. – Sherman Antitrust Act:

• Outlawed the formation of trusts and monopolies

B. Support• Too much competition

ruined business; put people out of work

• Lowered production costs, lower prices,

• By 1900…Americans enjoyed the highest standard of living

Free Enterprise System: Business are owned by private citizens