Quickwrite

1. Quickwrite • At the turn of the century, several new innovations and inventions were developing to improve and create modern America. Which of the inventions do you believe has had the greatest impact on our society? Why?

2. Chapter 6 Section 2 Rise of Big Business

3. New Capitalist Spirit • Capitalism– private ownership of most industries • Competition determines price of goods and wages • By late 1800’s businesspeople looked to gain wealth by taking advantage of technological advances

4. Horatio Alger • Wrote books describing idea of self reliant individiualism • 1869 Luck and Pluck series– based on a rags to riches theme

5. Laissez-Faire Capitalism • No government intervention in economy • Literal translation “hands off” • Businesses would let competition determine prices and wages • Free enterprise system– supply and demand, profit margin determine what and how much to produce

6. Critics Respond • Rapid industrialization is harmful and unjust to the working class • Karl Marx– German philosopher • Proposes a system that removes inequities of wealth • Communism proposes that individual ownership of property not be allowed • Property and production are owned by the community and it provides for needs of all • “capitalism allowed bourgeoisie to take advantage of proletariat”

7. Social Darwinism • Adapted Charles Darwin’s theory on natural selection and Evolution • Society progresses through natural selection • The “fittest” would and should rise to positions of wealth and power • The “unfit” would fail • Any attempt to assist poor or less capable would slow social progress • Religious leaders echoed support– wealth became a sign of Christian virtue

8. Chapter 6 Section 2 Rise of Big Business

9. Social Darwinism • Adapted Charles Darwin’s theory on natural selection and Evolution • Society progresses through natural selection • The “fittest” would and should rise to positions of wealth and power • The “unfit” would fail • Any attempt to assist poor or less capable would slow social progress • Religious leaders echoed support– wealth became a sign of Christian virtue

10. Social Critics • Factory life and poor working conditions harmed workers • All citizens should own all means of production • Government assistance would prevent thebest businesses from rising to the top • Business Leaders • Individuals should be self-reliant • Businesses would prosper in the absence of government interference • Government interference would reduce self-reliance ARGUMENTS REGARDING GOVERNMENT’S ROLE IN BUSINESS Using pp. 201-202

11. “Nature’s cure for most social and political diseases is better than man’s” Nicholas Murray Butler

12. Corporations • At close of Civil War businesses are owned by individuals, families or partnerships • Not enough capital to manage new industries • Definition • Organizers raise money by selling shares of stock in company • Stockholders receive % of profits– called dividends • Stockholders had little or no part of daily operations

13. Advantages of corporations • Could raise large sums of money • Stockholders held limited liability– not responsible for corporations debt • Stable organization– not dependent on owner for its existence • Problems– where competition was fierce, prices and profits fluctuate

14. Jay Gould • Worked as grocery clerk • Invested in railroad stock and earned $77 million

15. Trusts • Corporations band together to form trusts • Turn control of business over to board of trustees • Trustees run business as one large company • Limits overproduction by reducing competition • Develops monopolies or complete control over price and quality of product

16. Chapter 6 Section 2 Rise of Big Business

17. Andrew Carnegie • Born in 1835 in Scotland • Immigrated to United States in 1848 at age of 12 • Worked in cotton mills for $1.20/week in 1848 • At 17 became private Secretary to railroad superintendent

18. Carnegie Steel • Began investing to raise money which he used to get into steel industry • Began empire in 1860’s • Knew nothing about production but hired experts to run company

19. Vertical Integration • Own the companies that provide materials and services you depend on • Iron and coal mines for ore • Steamships and railroads to transport products • By 1899 Carnegie organizes Carnegie Steel Company • Sold it to J.P. Morgan in 1901 for $500 million

20. Gospel of Wealth • “Rich are morally obligated to benefit their fellow citizens” • Donated $350 million to charities across the country

21. Vertical Integration • Turn to a partner and explain “Vertical Integration” in your own words • How did Carnegie utilize this strategy?

22. John D. Rockefeller • Ran Standard Oil Company • Started in 1863 at beginning of oil boom • Practiced vertical integration like Carnegie • Set out to control the oil industry • “Competition was inefficient”

23. Horizontal Integration • Control of other companies producing oil • Drove others out of business by making deals with suppliers/transportation at cheaper rates than others • Became first trust in U.S. in 1899 • By 1880 controlled 90% of all oil production • Like Carnegie– donated vast sums to charity • $530 million total

24. Horizontal Integration • Turn to a neighbor and explain “Horizontal Integration” in your own words. • How did Rockefeller utilize this strategy? • What is the difference between “Vertical” and “Horizontal” integrations?

25. Chapter 6 Section 2 Rise of Big Business

26. Review • What business did Carnegie invest and become rich in? • What is “vertical integration”? • How did Rockefeller become rich? • What is “horizontal integration”?

27. Cornelius Vanderbilt • Prior to Railroad– operated shipping business • By 1869 gained control of New York Central and 2 others that connected New York City • Soon controlled lines between Chicago, Cleveland, New York, and Toledo • Provided more efficient service by combining small railroads • By 1877 controlled 4,500 miles of track • Personal fortune of $100 million

28. George Westinghouse • 1869 at age of 23 established Westinghouse Air Brake Company • After public demonstration of effectiveness of air brake his business grew • By 1874 air brake was on 7,000 passenger cars

29. George Pullman • Built Railroad cars to make travel more comfortable • Built company town south of Chicago in 1880 • Hoped to encourage educated, healthy, peaceful and virtuous workers • Provided homes, stores, church, library, theatre, medical offices and athletic fields strictly controlled daily life in company town

30. Mass Marketing • Persuade consumers to purchase products • Brand names– name recognition • “Standard Oil”– implies standard for industry • Packaging to set products apart • Helped create consumer culture • Montgomery Ward and Sears, Roebuck and Company– develop mail order catalogs

31. Department Store • Variety of products under one store • Buy in bulk and set cheap prices • Marshall Field– Chicago • R.H. Macy– New York • John Wanamaker– Philadelphia • Becomes domain of women • Hired as workers • Enticed to shop

32. Chain Stores • Branch stores in many cities • Woolworths– Frank Woolworth in 1879 • By 1900 had 59 stores around country