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AP US History How to make… & spend… a fortune!. Bell Work: What is a cartel? How about a trust? What is a business cycle? What do you think the difference is between the “Captain of Industry” or “Robber Barons”?. The Growth of Big Business.
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AP US HistoryHow to make… & spend… a fortune! Bell Work: What is a cartel? How about a trust? What is a business cycle? What do you think the difference is between the “Captain of Industry” or “Robber Barons”?
The Growth of Big Business • Robber Barons- individuals who exploited the American political and economic system in order to gain extraordinary amounts of wealth at the expense of workers and immigrants.
The Growth of Big Business • Captains of Industry- individuals who had a positive effect on the US economy by increasing the number of goods, developing more factories, and practicing philanthropic activities.
How do you make a fortune? • What allowed individuals to make so much money after the Civil War?
Post Civil War Conditions • In large part, wealth was made through exploitation of the government and workers but also through ingenious (and sometimes illegal) business practices.
Post Civil War Conditions • Essentially the first business moguls made their dough via the following… • Closing of the West. • Social Darwinism • Developing of the Trust
Railroad industry- Government Subsidized • Cheap Land= the government • Cheap Labor= immigrants • Cheap Capital (steel)= Carnegie • Cheap Loans= Morgan
Corruption begins with the railroads… • Credit Mobilier Scandal- Oakes Ames (Union Pacific RR) • Cornelius Vanderbilt, Leland Stanford
Corruption also found its way into the government • Whiskey Ring Scandal- Tax Fraud (Grant’s Dep. Of Treasury and Orville Babcock) • Bureau of Indian Affairs • Gold Corner- Jay Gould
Big Ones… • Yet, despite government corruption, these events were small change compared to the Robber Barons like Carnegie, Rockefeller, and JP Morgan.
Andrew Carnegie • Scottish immigrant, son of a expert weaver • Rags to riches (1.20 dollars an hour to a billionaire) • Wealth through the Bessemer Process • With help of JP Morgan, starts US Steel
Vertical Consolidation • Buy all the items of production and corner the market. • Cheaper products attack competition (economy of scale). • Social Darwinism- may the best man win; apply Darwinism to business (government should encourage)
John Rockefeller • At first a railroad baron • Invested in black gold= oil • Standard Oil- bought off legislatures, secret railroad deals, bribes, and sabotage
Horizontal Consolidation • Buy all the small companies and then monopolize the market. Undercut other business through rebates and secret deals. • "In a business so large as ours … some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge.” • Illegal if crosses state lines= anti-trust laws
Samuel Dodds- Trust • -Get around anti-monopoly laws, can’t hold stock in another company. • -Develop a board of trustees, issuing trust certificates (holding companies) • Trusts keep prices artificially high due to no competition while making wages extremely low.
JP Morgan • Banker’s banker. • Made millions off of the Civil War (wise investments) • Controlled nearly half of all the railroads in America • Invested into Carnegie Steel- US Steel (party)
How To Spend a Fortune • Gospel of Wealth- people should be free to make as much money as they can. Afterwards, they should give it away- philanthropy. • Carnegie… $350,695,654 in his life. • “A man who dies rich dies disgraced”
How To Spend a Fortune • Andrew Carnegie- Carnegie Hall, the arts, libraries, study on how to end war (Carnegie Institute). • John Rockefeller- universities, churches, anti-saloon league (10% of paychecks) • JP Morgan- Yachts, art collections • Captains or Barons? Legacy of big business?
