The Rise of “Big Business”1870-1900

What led to the growth of corporations and monopolies in the late 19th century?

Who were major industrialists during this period? How did these businesses affect American economics,

politics, and social relationships?

The Gild

Breakers of the Vanderbilt Family

The Astor Family

The Boldt Castle

The Mount of Edith Wharton

Lockwood-Mathews Mansion

“Big Business”•Monopolies (trusts): Companies that

controlled the majority of one industry:– Rockefeller’s

Standard Oil– Carnegie’s

U.S. Steel– Vanderbilt’s

railroads

•Trusts -A group of separate companies placed under the control of a single managing board

•Critics called these practices unfair and the business leaders “Robber Barons”

Rationalizing Big Business• Social Darwinism

– Used Darwin’s theory to explain business, promoted by Harvard professor William Graham Sumner

– Natural Selection, Survival of the Fittest

– Laissez-faire -policy that US had followed since inception to not allow govt. to interfere with business

• Govt. should not interfere• Sherman Anti-Trust Act

of 1890– Law outlawing a

combination of companies that restrained interstate trade or commerce; important to prevent monopolies. Not initially enforced properly.

• Gospel of Wealth -belief that the wealthy are “chosen by God” to be successful and were therefore responsible to look out for the well being of those less fortunate. Many Industrialist shared wealth although rarely through direct welfare. Started museums, etc.– Captains of Industry: a

positive idea that industrial leaders worked hard and deserved their wealth

Andrew Carnegie• A Scottish immigrant, Andrew

Carnegie helped build the American steel industry—Carnegie Steel Co. (originally started as an ironworks foundry)

• 1900 Carnegie Steel produced more of the metal than all of Great Britain – Richest man in the world at the

time

• One of the first philanthropists, gave his collected fortune away to cultural, educational and scientific institutions for "the improvement of mankind." (Gospel of Wealth)– Carnegie Hall, NYC– Carnegie-Mellon University– Over 2,500 public libraries– $350 million by the time he died

Carnegie was unusual because he preached for the rights of laborers to unionize and to protect their jobs.

• However, Carnegie's steel workers were often pushed to long hours and low wages-- Homestead Strike of 1892

Building a monopolyBuilding a monopoly(as described by Andrew Carnegie)(as described by Andrew Carnegie)

• Vertical IntegrationVertical Integration– A process in which a A process in which a

company buys out all of company buys out all of the suppliers. (Ex. coal the suppliers. (Ex. coal and iron mines, ore and iron mines, ore freighters, RR lines)freighters, RR lines)

• Horizontal ConsolidationHorizontal Consolidation

-A process in which a -A process in which a company buys out or company buys out or merges with all merges with all competing companies competing companies (JP Morgan bought out (JP Morgan bought out Carnegie steel and Carnegie steel and other companies)other companies)

The Steel Industry’s Impact on The Steel Industry’s Impact on AmericaAmerica

• Bessemer Process-Bessemer Process- developed around 1850 developed around 1850 injected air into molten injected air into molten iron to remove iron to remove impurities and make impurities and make steel-a lighter, more steel-a lighter, more flexible, rust resistant flexible, rust resistant metalmetal

• Steel is used in Steel is used in railroads, farm railroads, farm equipment, canned equipment, canned goodsgoods

• Engineers use steel to Engineers use steel to create skyscrapers and create skyscrapers and longer bridges longer bridges (Brooklyn Bridge)(Brooklyn Bridge)

View Steel Industry Video

J.P. Morgan

• Industrialist and Industrialist and financier who financier who started U.S. Steel started U.S. Steel from Carnegie from Carnegie Steel and other Steel and other companiescompanies

• Became 1Became 1stst billion- billion- dollar corporationdollar corporation

• Bailed out the U.S. Bailed out the U.S. economy on more economy on more than one occasionthan one occasion

John D. Rockefeller

• He was a co-founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust

• As kerosene and gasoline grew in importance, became the world's richest man and the first American worth more than a billion dollars– Often cited as the richest person in

history • Like Carnegie, was a philanthropist

under the Gospel of Wealth:– An abolitionist– Creator of Spelman College– Major donator to the University of

Chicago and other major medical universities

– Owned a large portion of real estate in Manhattan, NYC

Cornelius (“The Commodore”) and W.H. Vanderbilt

• Originally a steamboat entrepreneur, C. Vanderbilt became a railroad magnate

• Initially did not think his son was fit for the job– W.H. became president of Central

and Hudson River Railroad, Lake Shore and Michigan Southern Railway, the Canada Southern Railway, and the Michigan Central Railroad

• An active philanthropist, giving extensively to a number of philanthropic causes:– Funded the Metropolitan Opera– Funded College of Physicians and

Surgeons at Columbia University. – In 1880, he provided the money for

Vanderbilt University in Nashville, Tennessee

"The Great Race for the Western Stakes, 1870," Cornelius Vanderbilt versus James Fisk

Thomas Edison(“The Wizard of Menlo Park”)

• An American inventor and businessman. He developed many devices that greatly influenced life around the world, including:– Phonograph– motion picture camera– Long-lasting electric light bulb. one

of the first inventors to apply the principles of mass production and large-scale teamwork to the process of invention, and because of that, he is often credited with the creation of the first industrial research laboratory.

• One of the first to apply the mass production and large-scale teamwork to the process of invention

• Created the first industrial research laboratory – Later electrical genius Nicola Tesla

worked for Edison and is (unofficially) credited with many of his inventions

• 1,093 US patents in his name• Inventions established major new

industries world-wide:– electric light/power, power

utilities– sound recording, motion pictures – Telecommunications: stock

ticker, mechanical vote recorder, battery for an electric car, recorded music device

Videos

• The Gilded Age

• “Traits of a Titan” from the History Channel’s The Men Who Built America

• Captains of Industry (biography.com)