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Big Business rises in the US. Bessemer Steel Process. The Bessemer process was developed independently by the British manufacturer Henry Bessemer and American ironmaker William Kelly around 1850.
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Bessemer Steel Process • The Bessemer processwas developed independently by the British manufacturer Henry Bessemer and American ironmaker William Kellyaround 1850. • The Bessemer Process involves removing the carbon from the iron. After the carbon is removed from the iron it produces a lighter, more flexible, and rust-resistant metal known as steel. • Bessemer Process makes steel!
New Uses For Steel • Railroads! Need to transport goods that were being made • Transported goods quickly and for small cost • Joseph Glidden’s barbed wire helped keep cattle in on ranches • Cyrus McCormick’sand John Deere’s farm machines helped transform farming- made easier and faster • It made new and large construction possible. • The Brooklyn Bridge, with its steel cables, was completed in 1883. • William Le Baron Jenney designed the 1st skyscraper with a steel frame-the Home Insurance Building in Chicago (1884).
Thomas Alva Edison • Edison was an American inventor, scientist, and businessman • Edison’s inventions included the phonograph, the motion picture camera, and the long lasting practical electric light bulb. • Edison holds 1,093 patents and was nicknamed “The Wizard of Menlo Park”.
Inventions Change Lifestyles • Thomas Edison’s light bulb provided cheap light after dark • Christopher Sholesinvented the typewriter in 1867 and changed the world of work and printing. • Alexander Graham Bell invented the telephone in 1876 • opened the way for a worldwide communications network.
Learning Targets • You will explain what a corporation is and its main goals. • You will explain how a corporation is formed through vertical & horizontal integration • You will decide whether or not government intervention was necessary based on actions of corporations.
The Rise of Corporate America • Before corporations, businesses were owned and operated by one family • Corporation= A number of people take ownership of a business • Many people coming together in ownership, instead of just one family or person • Corporations became popular for expanding companies, to allow for moreinvestmentopportunities and less risk • Ex: If a family farm is sued for bad meat, the family is to blame. If a farm is a corporation and gets sued, all people take ownership and lose money.
Example of Corporation Sam Walton has a great idea- WALMART Sam opens a family store in Arkansas- “Waltons” Sam starts to expand with his own money- makes the store larger Today Walmart dominates the business world. Sam Walton could have never done this with just him- he needed other partners and $$ to make it a success Sam realizes he will need partners to expand more- Allows for investors to give $$ to own part of the business Sam starts building Walmarts, and takes on public shareholders
Corporations as Businesses • Corporations want to maximize profits • Profits: Money the company makes – Cost of production • To make the most profits corporations cut down on cost • Pay people less money to work • Pay low costs for materials • Its all about how much money you can make
Creating Successful Corporations is sometimes not good business. • Some corporations became monopolies • Monopoly- complete control of a product of service • Lower prices enough to run competition out of business, then raise prices extremely high • Big businessmen of the time: • Andrew Carnegie • John D Rockefeller • Cornelius Vanderbilt • J.P. Morgan
Vertical Integration • Owning all parts of the production of a product: • Ex: Carnegie Steel Mines that produced iron/coal Refining plant that makes iron into steel Ships/ railroads for transport
Horizontal Integration • Making many different businesses into the same company • Ex: Rockefeller’s “Trust” which had 41 oil companies under the control of 9 people • Created a monopoly • Trust= Business formed with the intent to monopolize an industry
Government Intervention • As businesses started to grow larger, they started to create ways to take advantage of peoplefor higher profits • Extremely low wages • Asking high prices for items • Bankrupting companies that people had invested in • Creating monopolies • Government started to intervene on behalf of the citizens
Early Government steps • Interstate Commerce Commission (ICC)- Created by Congress to regulate railroads • Railroads had been asking unfair rates for transportation of goods like cattle • Sherman Anti-Trust Act-Government tried to break up trusts by saying they restricted trade/commerce • The government was not very strict • Businessmen found ways around it • This was the start, however, of government regulation of business • Trying to protect the consumer, or people who buy products
Do Now • Answer these questions: • What strategies did corporations use to decrease costs and increase profits? • What arguments did people use to support or oppose big business? • How did the government start to regulate business? • What is Social Darwinism? Do you agree with the idea? • How did big business shape the American economy in the late 1800s and early 1900s?
Industrialists The people who made the big bucks during the growth of big business
Andrew Carnegie (1835-1919) • Andrew Carnegie was a Scottish-born immigrant that excelled as anentrepreneur, businessman, and philanthropist. • Philanthropist- someone who seeks to promote the welfare of others • He earned most of his fortune in the steel industry.
Andrew Carnegie (1835-1919) • In the 1870’s, he founded the Carnegie Steel Company. • largest and most profitable company in the world. • Nickname: Prince of steel • Used vertical integration- • Owned all phases of production
John D. Rockefeller (1839-1937) • John Davison Rockefeller was an American businessman. • Rockefeller revolutionized the petroleum industry (oil). • In 1870, he founded the Standard Oil Company and aggressively ran it until he officially retired in 1897.
John D. Rockefeller (1839-1937) • As kerosene and gasoline grew in importance, he became the world’s wealthiest man and the first American billionaire. • He was also a renowned philanthropist. • Philanthropist: A person who seeks to assist in the welfare of others • He used horizontal integration • Making many businesses into one company
Cornelius Vanderbilt (1794-1877) • Cornelius Vanderbilt built his wealth in shipping and railroads. • Vanderbilt was known as the Commodore. • Vanderbilt gave a $1,000,000 endowment to start VanderbiltUniversity in 1868. Vanderbilt is located in Nashville, Tennessee. • Hints the Vanderbilt Commodores mascot
Cornelius Vanderbilt Cornelius Vanderbilt’s grandson, George Washington Vanderbilt II, built the Biltmore Estate Mansion in Asheville, North Carolina (1889-1895).
John Pierpont Morgan (1837-1913) • John Pierpont Morgan was an American financier and banker • Owned many different companies • In 1892, J.P. Morgan arranged the merger of Edison General Electric and Thomas-Houston Electric Company to form General Electric.
JP Morgan • J.P. Morgan paid Andrew Carnegie 487 million dollars forCarnegie Steel Company in 1901. J.P. Morgan then formed United States Steel Corporation in 1901.
George Pullman • Manufactured railway cars for traveling during the industrial boom • He invented the “sleeping” car which allowed passengers to sleep at night during their travels • Lincoln’s son Robert took over Pullman’s company later on
Other industrialists • Milton Hershey- Manufactured candy in Pennsylvania, specifically chocolate • IreneeDupont- Manufactured gunpowder for American military, and then it expanded to chemicals • Swift & Armour- Because of the invention of the refrigerated railcar, Swift & Armour were able to process meat from cattle, and ship it nationwide through railroad • Worked separately- rivals • They also used vertical integration
Robber Barons or Captains of Industry? • Monopolies and trusts started to come under attack • It was almost impossible to be a small business owner • Raised prices too high because they could which hurt the American public • Became known as Robber Barons • Some people like these men- • They create jobs • Make the US powerful • They called them- Captains of Industry
Business Boom Bypasses The South • Industrial growth concentrated in the North, where natural and urban resources were plentiful. • After the war, Southerners were unwilling to invest in risky business ventures. Northern businesses already owned 90% of the stock in the most profitable southern enterprise, the railroads, thereby keeping the South in a stranglehold. • The South remained mostly agricultural, with farmers at the mercy of railroad rates.
