Big Business Models and Mentality

1. Big Business Models and Mentality

2. After this lesson, you will be able to… • Identify new business practices that aided in the rise of big business in the late 1800s • Identify the most noted benefactors of these new models • Analyze the terms Captains of Industry and Robber Barons • Explain how the rise of big business forced new ideas about wealth in the American culture • Evaluate the differing philosophies related to wealth prior to the Progressive era

3. Main Idea- New Business Models helped grow markets and wealth over a short period of time The Corporation Managers, hired by the board of directors run the company Entrepreneurship expands with growing markets The Business is its own entity, not an individual Investors buy shares in a company Helped Expand Markets Instead of an owner boards of directors make decisions Small businesses become large businesses

4. Main Idea- Captains of Industry pioneered new business tactics by trying to maximize profits and minimize cost Rockefeller Carnegie Swift

5. Cornering the Market Oil company B Oil company A Oil market Oil market Monopoly Trust Oil company A Trust Oil market Oil market Oil company C Oil company D Stockholders of several competing corporations turn in their stock to trustees in exchange for a trust certificate entitling them to a dividend. A business model where a Single firm controls 90% or More of any market

6. The Benefactors of Big Business The Backer: John Pierpont Morgan The man of steel: Andrew Carnegie The Transporter: Cornelius Vanderbilt The Oil man: John D. Rockefeller (worth $240 billion)

7. Were these men Captains of Industry or Robber Barons? “In 1870, when Rockefeller founded Standard Oil, kerosene was 30 cents a gallon. Twenty years later, Rockefeller had almost a 90 percent market share and kerosene was only eight cents a gallon. Customers were the real winners here, because Rockefeller’s size allowed him to cut costs…”- Burton W. Folsom, Jr. “To organize and exploit the resources of a nation upon a gigantic scale…and to do this only in the name of an uncontrolled appetite for private profit- here surely is the great inherent contradiction whence so much disaster outrage and misery has flowed.”- Matthew Josephson Captain of Industry- one who’s vision and work ethic creates wealth for all! Robber Baron- one who’s obsession with gaining wealth used their power to swindling the poor and cheat their competitors

8. US History Quizdom Choose which of the following statements best describes the political cartoon to the right? This cartoon shows the social benefits of vertical integration This cartoon is meant to criticize John Rockefeller’s business tactics This cartoon illustrates the importance of steel to American industry This cartoon shows the control Cornelius Vanderbilt had over the railroads

9. US History Quizdom Which of the following captains of industry was so successful in transportation of goods, he was actually known as “The Commodore” Rockefeller Ford Morgan Vanderbilt

10. US History Quizdom The clues to the right point to… JP Morgan Cornelius Vanderbilt John D Rockefeller Henry Ford Investment banker Entrepreneur who backed other capitalists like Thomas Edison Bought out Carnegie steel

11. US History Quizdom The quote to the right is… Condemning the business practices of the Robber Barons Calling for greater regulation on fuel prices Promoting the benefits of “big business” Proposing laissez faire, and more socialism “In 1870, when Rockefeller founded Standard Oil, kerosene was 30 cents a gallon. Twenty years later, Rockefeller had almost a 90 percent market share and kerosene was only eight cents a gallon. Customers were the real winners here, because Rockefeller’s size allowed him to cut costs…”- Burton W. Folsom, Jr.

12. Main Idea- Big Business success challenged the cultural and moral views of Americans vs Social Darwinism The Gospel of Wealth

13. Social Darwinism • Individuals must have absolute freedom to struggle, succeed or fail. • Therefore, state intervention to reward society and the economy is futile! William Graham SumnerFolkways (1906)

14. The Gospel of Wealth: • Definition- the idea that wealth is a blessing to be used to better all lives . • Viewed wealth as a sign of God’s approval. • Christian duty to accumulate wealth. Russell H. Conwell

15. “On Wealth” by Andrew Carnegie • Backed the idea of the “Gospel of Wealth” • The Wealthy should act as “trustees” for their “poorer brethren.” • Started the trend of philanthropy- giving excess wealth to charitable causes or projects Andrew Carnegie

16. Wall Street – 1867 & 1900 Wall Street – 1867 & 1900

17. U. S. Corporate Mergers

18. 1887Interstate Commerce Commission- created an agency to investigate “unfair” rates on railroads 1890 Sherman Antitrust Act- outlawed “bad trusts” or trusts that operated in restraint of commerce or trade among the states”- (can you say LOOP HOLE??) Main Idea- A new movement known as “progressivism” or the era of “reform” forced government to take token steps to regulate trusts

19. Government Aids Big Business and immigration Homestead Act 1862 Government Loans and Subsidies Protective Tariffs

20. US History Quizdom Which of the following represented the greatest contribution corporations made to expanding businesses? They offered access to huge amounts of capital They offered an opportunity at creating cartels They linked business and government directly They limited businesses to specialize in one industry alone

21. US History Quizdom The description to the right is describing… A corporation A Trust A cartel A monopoly Chris Kanmore, wishing to not seem too tyrannical, buys a majority stock in multiple firms, forces those firms to turn their stock over to a board of trustees

22. US History Quizdom Social Darwinism… Championed the idea that those who are blessed with wealth are care-takers of the poor Promoted government intervention to protect consumers Proposed that there are those who are meant to be wealthy and those who were not Rallied many to fight back against unfair trusts

23. US History Quizdom Which movement is most related to the idea of the “gospel of wealth” Philanthropy Socialism Anarchism Laissez faire

24. US History Quizdom What did the Interstate Commerce Commission and the Sherman Anti-Trust Act have in common? Both were specifically aimed at railroads Both promoted monopolies amongst industrialists Neither were strong enough to effectively regulate big corporations In the case of Munn v. Illinois, the Supreme court declared both laws unconstitutional

25. US History Quizdom Who is the likely source of the quote to the right? John D. Rockefeller Cornellius Vanderbilt Andrew Carnegie Frederick Taylor • “Individualism will continue, but the millionaire will be but a trustee for the poor; instrusted for a season with a great part of the increased wealth of the community, but administrating it for the community far better than it could or would have done for itself.”

26. US History Quizdom The quote to the right reflects the ideas of… William Graham Sumner Benjamin Franklin Andrew Carnegie Nelley y’all • “Everyone in society has the absolute freedom to succeed or fail in accordance to their own struggles. Some are destined to succeed and some will inevitably fail according to natural selection. Any government intervention is useless given that this is a matter of nature.”

27. US History Quizdom The Business model to the right most closely reflects which business model? Corporations Cartels The Gospel of Wealth Monopolies

28. US History Quizdom Which of the following would be the best heading for the table above? The Gospel of Wealth c. Social Darwinism Corporate Strategies d. Vertical Integration ???????????????

29. US History Quizdom Which of the following WAS NOT an ideology relating to the growth of big business? Those who gain wealth deserve to keep it because they are products of “natural selection” The attainment of wealth means we have an obligation to give to those less fortunate Business is a matter of cutting costs, maximizing profits and looking into new products for future growth Big Business should be owned by state and federal governments Investors Board of directors Managers Employees

30. US History Quizdom Which of the following best describes the author’s likely intent for the cartoon above? To promote the benefits of corporations To promote increased government regulation of big businesses To criticize the philosophy of Social Darwinism To criticize “Robber Barons”