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The Rise of Big Business

The Rise of Big Business. Social Darwinism Social Darwinism in Action Robber Baron or Captain of Industry?. Social Darwinism. Definition: society should do as little as possible to interfere with business Government policy: laissez-fair – no government regulations in economics.

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The Rise of Big Business

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  1. The Rise of Big Business Social Darwinism Social Darwinism in Action Robber Baron or Captain of Industry?

  2. Social Darwinism • Definition: society should do as little as possible to interfere with business • Government policy: laissez-fair – no government regulations in economics

  3. Social Darwinsim • Businesses Boom because: • Larger pools of capital: entrepreneurs had to invest large sums of own money or borrow from investors (sell stock) • Wider geographic span: expansion of railroads made it possible for businesses to have offices in many regions • Broader range of operations: businesses performed all stages of production • Revised role of ownership: owners could not oversee all areas of business & hired professional managers who had no stake in the business to run it • New methods of management: accounting, specialized departments

  4. Social Darwinism in Action • As big business flourished, only a few companies could compete in a given industry creating an oligopoly. • Monopoly: exclusive control of an industry • Cartel: loose association of businesses that make the same product; agree to limit supply of their products to keep prices high

  5. Robber Baron • Built their fortunes by stealing from public • Drained country of natural resources • Persuaded public officials to interpret laws in their favor

  6. Captain of Industry • Served nation in a positive way • Increased supply of goods • Raised productivity • Expanded markets thus creating jobs • Helped establish museums, libraries, universities, etc.

  7. Robber Baron or Captain of Industry? • John D. Rockefeller – formed Standard Oil Co. • Horizontal Consolidation: process of bringing together many firms in the same business to form one large company • Controlled all oil prices because he owned all refineries • Standard Oil Co.: America’s 1st oil trust in 1880s • Gave over $500 million to establish & improve charities & institutions he believed would help humanity

  8. Robber Baron orCaptain of Industry? • Andrew Carnegie – Carnegie Steel Co. • Established some of 1st steel monopolies in America in 1870s • Vertical consolidation: process of gaining control of many different businesses that make up all phases of a product’s development • Economies of Scale: phenomenon that as production increases, the cost of each item produced is often lowered • Sold company to JP Morgan in 1901 for $500 million • Preached “Gospel of Wealth” • Gave over $350 million to free public libraries, supported artistic & research institutes & set up fund to study how to abolish war.

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