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Business Tycoons
of the Gilded Age
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Andrew Carnegie (1835-1919)
Born in Scotland to poor parents
He entered the steel industry and started his
own company Carnegie used good management practices
and used the latest machinery to make betterproducts for less
He offered his employees stock in thecompany and encouraged competitionbetween his assistants
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Andrew Carnegie
Essay titled The Gospel of Wealthin 1889:
the accumulation of wealth was beneficial to
society government should not interfere.
Carnegie believed the rich were trustees of
their money, holding it until proper public
uses could be discovered. Spent his last years giving away his vast fortune.
Carnegie wrote, The man who dies rich dies
disgraced.
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John D. Rockefeller
(1839-1937) Rockefeller started his first business at age 7-
he raised turkeys.
By 1880, the Standard Oil Co. controlled 90%of the refining business.
He paid his employees very low wages and
sold his oil at lower prices to drive out the
competition.
Then when he controlled the market, he raised
prices.
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Rockefellers Philanthropies
Rockefeller founded the University of
Chicago in 1890, the Rockefeller
Institute for Medical Research (nowRockefeller University), the General
Education Board, the Rockefeller
Foundation, and other charities.
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Robber Barons
Critics began to call industrialists
robber barons
men who would stop at nothing to achievegreat wealth
Accused of exploiting workers and treating
them unfairly in poor working conditions.
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Vertical Integration
A company takes over its suppliers and
distributors and transportation systems to
gain total control over the quality andcost of its product.
Carnegie bought out the coal fields, iron
mines.
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Horizontal Integration
The merging of companies that make
similar products.
Carnegie bought competing steelcompanies
With control over the suppliers and the
competition, Carnegie controlled almostthe entire steel industry.
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Social Darwinism
New theory used by
philosophers to explain
Carnegies success.
Grew out of Charles Darwin and
his book On the Origin ofSpecies(1859).
Some people succeed and pass
along their traits, while otherslack them.
Natural selection weeds out the
losers and the best-adapted
survive.
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Adam Smith and Laissez-faire
economics Scottish economist Adam Smith wrote the Wealth of
Nationsin 1776.
Along with Social Darwinism, many 19th century
businessmen agreed with Laissez-faireeconomics (letit be)
The main argument: People are naturally selfish. Theyare in business to gain wealth and/or power. Thisshould not be interfered with because their activity isgood for all of society. More goods they make ortrade=more goods people will have. Increasedcompetition=even more goods and probably lower
prices. Creates jobs and spreads wealth.
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Terms
Merger: one corporation buys out the
stock of another
Holding company: one corporation thatdoes nothing except buy out the stock
of other companies
(US Steel headed by banker J.P. Morgan-later bought Carnegie Steel and was the
worlds largest business).
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Terms, cont
Mergers and holding companies lead tomonopolies
Monopoly: a firm with complete controlover its industrys production, wages, andprices.
Trust: hold the stock, run by trustees.
Companies make money on dividends. Used to take control of industries (like
Rockefeller)
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