lesson 20.3: the rise of big business today we will learn how business leaders guided industrial...
TRANSCRIPT
Lesson 20.3: The Rise of Big Business
Lesson 20.3: The Rise of Big Business
Today we will learn how business leaders guided
industrial expansion and
created new ways of doing business.
Today we will learn how business leaders guided
industrial expansion and
created new ways of doing business.
Vocabulary • robber baron – a business leader who
became wealthy through dishonest methods• monopoly – a company that wipes out its
competitors and controls an industry• trust – a legal body created to hold stock in
many companies • philanthropists – people who give large sums
of money to charity • vertical – straight up and down, like the
school flagpole• horizontal – level, like the line where the sky
meets the ocean
Check for Understanding
• What are going to do today?
• If you had the opportunity, would you be a philanthropist?
• Why is a monopoly bad for the public?
• When people sleep in their beds, are they vertical or horizontal?
What We Already Know
The Bessemer process for making steel cheaply and Drake’s new oil well-drilling
technology helped spark a new revolution in American industry.
The Bessemer process for making steel cheaply and Drake’s new oil well-drilling
technology helped spark a new revolution in American industry.
What We Already Know
In the North, the Civil War led to the rapid growth of industry and a new class of
wealthy industrialists emerged.
What We Already Know
After the Civil War, many poor
Southerners, both black and white,
had to turn to sharecropping as
a way to make their living.
The Growth of CorporationsThe Growth of Corporations
• Until the late 1800s, Until the late 1800s, most businesses most businesses were small and were small and owned by one owned by one person. person.
• Because of new Because of new technology, many technology, many business owners business owners wanted to buy new wanted to buy new equipment, which equipment, which often was very often was very expensive.expensive.
• Until the late 1800s, Until the late 1800s, most businesses most businesses were small and were small and owned by one owned by one person. person.
• Because of new Because of new technology, many technology, many business owners business owners wanted to buy new wanted to buy new equipment, which equipment, which often was very often was very expensive.expensive.
One way to raise the money to do so was to turn
their businesses into corporations.
• A corporation is a business that is owned by many people.
• They buy a small part of the company through shares of stock.
• A corporation is a business that is owned by many people.
• They buy a small part of the company through shares of stock.
Corporations have strengths that small businesses do not have.
• By selling stock, corporations can raise a lot of money.
• Corporations do not end even after their founders die, so banks are more likely to lend them money.
• Also, corporations are less of a risk to investors, because the investors do not have to pay off the corporation’s debts.
Advantages of a Corporation
• In the late 1800s, few laws controlled what corporations did.
• This led to the growth of a few giant corporations that dominated U.S. industry.
Get your whiteboards and markers ready!
What advantages do corporations have over small businesses?
• They can raise large amounts of money.
• They are more likely to receive loans from banks.
• They are less of a risk for investors.
The Oil and Steel Industries
• The oil and steel industries grew dramatically in the late 1800s.
• John D. Rockefeller led the oil industry. • Andrew Carnegie led the steel industry.
• Rockefeller gained control of the oil industry by putting his competitors out of business.
• He realized he could do this by controlling one critical phase of the oil industry: refining.
• Rockefeller began by buying other refineries.
• Ultimately, almost all petroleum refining was done at his plants.
• This business model is known as horizontal integration.
In the horizontal integration horizontal integration model, a corporation tries to gain control of one critical gain control of one critical
step step of the manufacturing process.
Rockefeller also made secret deals
with railroads.
• They agreed to carry his oil at a lower rate than other companies’ oil.
• By spending less on shipping, he could sell his oil for less than his competitors.
One by one, Rockefeller drove them out of business, until he had created a monopoly.
What is a monopoly?
Rockefeller also reduced competition by creating a business arrangement known
as a trust in 1882, and persuading his remaining competitors to join it.
Standard Oil TrustStandard Oil Trust(Holds other oil
companies’ stock and shares profits from all
the oil companies)
Oil Co. A Oil Co.
B
Oil Co. C
Stock Stock
Stock
Profits
ProfitsProfits
By 1880, the Standard Oil Trust controlled 95% of U.S. oil refining.
The trust set a high price for oil, and the
public had to pay that price because they
could not buy oil from anyone else.
The trust set a high price for oil, and the
public had to pay that price because they
could not buy oil from anyone else.
By 1880, the Standard Oil Trust controlled 95% of U.S. oil refining.
Rockefeller’s actions caused the public to view him as a ruthless robber baron.
Rockefeller’s actions caused the public to view him as a ruthless robber baron.
Andrew Carnegie Dominated the Steel Industry
• Carnegie rose to power by making the best Carnegie rose to power by making the best and cheapest product. and cheapest product.
• To do so, he tried to control all the steps that To do so, he tried to control all the steps that went into making steel. went into making steel.
• In this way, he could avoid paying profits to In this way, he could avoid paying profits to others at various stages of production.others at various stages of production.
• Carnegie rose to power by making the best Carnegie rose to power by making the best and cheapest product. and cheapest product.
• To do so, he tried to control all the steps that To do so, he tried to control all the steps that went into making steel. went into making steel.
• In this way, he could avoid paying profits to In this way, he could avoid paying profits to others at various stages of production.others at various stages of production.
Carnegie Steel Homestead Works
Andrew Carnegie Dominated the Steel Industry
• He bought the mines that supplied iron ore.
• He also bought the railroads that carried the ore to his mills.
• He owned the mills that converted the ore to high-quality steel.
This business model is known as
vertical integration.
In the vertical integration vertical integration model, a corporation tries to control all steps control all steps of the
manufacturing process.
Carnegie and Rockefeller earned hundreds of millions of dollars.
• They both became philanthropists. They both became philanthropists. • These are people who give large These are people who give large
sums of money to charity.sums of money to charity.
• They both became philanthropists. They both became philanthropists. • These are people who give large These are people who give large
sums of money to charity.sums of money to charity.
Rockefeller gave away more than $500 million to universities.
Rockefeller gave away more than $500 million to universities.
The University of ChicagoThe University of Chicago
Carnegie gave more than $350 million, much of it to universities and to build
hundreds of public libraries.
Get your whiteboards and markers ready!
Who controlled the steel industry?
A. Jay Gould
B. John D. Rockefeller
C. Horatio Alger
D. J.P. Morgan
E. Cornelius Vanderbilt
F. Andrew Carnegie
Who controlled the oil industry?
A. Jay Gould
B. John D. Rockefeller
C. Horatio Alger
D. J.P. Morgan
E. Cornelius Vanderbilt
How did Rockefeller gain control of the oil industry?
A. He used vertical integration to control the refining phase of the oil business.
B. He made secret deals with railroads to get rates lower than his competitors.
C. He wiped out competitors by driving them out of business, then buying them.
D. He reduced competition by avoiding participation in trusts.
Choose all that are true!
How did Carnegie gain control of the steel industry?
A. He tried to make the best and cheapest steel.B. He reduced costs by using vertical
integration.C. He made secret deals with railroads to get
rates lower than his competitors.D. He tried to control all the steps that went into
making steel.E. He created a giant trust to help reduce
competition.
Choose all that are true!
What is a philanthropist?
A. Someone who becomes wealthy through dishonest methods
B. A business leader who wipes out his competitors and controls an industry
C. A legal body created to hold stock in many companies
D. Someone who gives large sums of money to charity
The Gilded Age• Rockefeller and
Carnegie had risen from poverty to become rich.
• This caused many other Americans to believe that anyone, even themselves, could become rich through talent and hard work.
But most people who made millions in the late 1800s did not start out poor.
• Many were from families that Many were from families that already were wealthy. already were wealthy.
• And many had gone to college, And many had gone to college, and they began their careers and they began their careers with the advantage of money or with the advantage of money or family connections.family connections.
• Many were from families that Many were from families that already were wealthy. already were wealthy.
• And many had gone to college, And many had gone to college, and they began their careers and they began their careers with the advantage of money or with the advantage of money or family connections.family connections.
The Gilded AgeThe Gilded Age
• The Gilded Age was a time The Gilded Age was a time when the rich enjoyed when the rich enjoyed great wealth while many in great wealth while many in society lived in poverty. society lived in poverty.
• To gild is to coat an object To gild is to coat an object with gold-leaf in order to with gold-leaf in order to make it look better. make it look better.
• Gilded objects were Gilded objects were popular in homes. popular in homes.
• The Gilded Age was a time The Gilded Age was a time when the rich enjoyed when the rich enjoyed great wealth while many in great wealth while many in society lived in poverty. society lived in poverty.
• To gild is to coat an object To gild is to coat an object with gold-leaf in order to with gold-leaf in order to make it look better. make it look better.
• Gilded objects were Gilded objects were popular in homes. popular in homes.
• But the term Gilded Age also referred to the false appearance of society.
• A small group of rich people made U.S. society look beautiful, but below this rich surface were problems that included corrupt politics and widespread poverty.
Why is this period often referred to as the Gilded Age?
A. Nearly everyone had money.
B. It was the golden age of American inventions.
C. Society's problems were hidden by the wealth of a few people.
D. Nearly everyone who was wealthy got rich by unlawful methods.
What problems in society were hidden by the visible wealth of a
small group during the Gilded Age?
A. Corrupt politics
B. Widespread poverty
C. Shortage of skilled labor
D. Improper business practices
E. High federal income taxes
Choose all that are true!
The South Remains Agricultural
• One region that knew great poverty was One region that knew great poverty was the South. the South.
• Left in ruins by the Civil War, the South Left in ruins by the Civil War, the South was slow to recover.was slow to recover.
• One region that knew great poverty was One region that knew great poverty was the South. the South.
• Left in ruins by the Civil War, the South Left in ruins by the Civil War, the South was slow to recover.was slow to recover.
In some Southern areas, industry did grow.
But compared with the Northern economy, the Southern economy grew very slowly.
Most of the South remained agricultural.
• The sharecropping system was used through-The sharecropping system was used through-out much of the region. out much of the region.
• Under this system, landowners rented their Under this system, landowners rented their land to sharecroppers who paid a large portion land to sharecroppers who paid a large portion of their crops as rent. of their crops as rent.
• They also often had to buy their seed and tools They also often had to buy their seed and tools on credit.on credit.
• The sharecropping system was used through-The sharecropping system was used through-out much of the region. out much of the region.
• Under this system, landowners rented their Under this system, landowners rented their land to sharecroppers who paid a large portion land to sharecroppers who paid a large portion of their crops as rent. of their crops as rent.
• They also often had to buy their seed and tools They also often had to buy their seed and tools on credit.on credit.
Most of the South remained agricultural.
• Although the South’s main crop continued to Although the South’s main crop continued to be cotton, the price of cotton was low in the be cotton, the price of cotton was low in the years after the Civil War. years after the Civil War.
• As a result, many sharecroppers made little As a result, many sharecroppers made little money selling cotton and had a hard time money selling cotton and had a hard time buying what they needed. buying what they needed.
• And since most sharecroppers had little And since most sharecroppers had little education, merchants cheated them, education, merchants cheated them, increasing their debt.increasing their debt.
• Although the South’s main crop continued to Although the South’s main crop continued to be cotton, the price of cotton was low in the be cotton, the price of cotton was low in the years after the Civil War. years after the Civil War.
• As a result, many sharecroppers made little As a result, many sharecroppers made little money selling cotton and had a hard time money selling cotton and had a hard time buying what they needed. buying what they needed.
• And since most sharecroppers had little And since most sharecroppers had little education, merchants cheated them, education, merchants cheated them, increasing their debt.increasing their debt.
Get your whiteboards and markers ready!
Why was the South so much less industrial than the North?
A. The Civil War had left the South in ruins.B. All the important industrialists had left the
South in 1861, just after secession began.C. Much of the land was given over to share-
cropping and other agricultural pursuits.D. Congress was unwilling to give Southern
farmers cash subsidies, as it had to Northern farmers.
E. Southerners were still making so much money from cotton that industry seemed unnecessary.
Choose all that are true!
Why were so many Southerners poor?A. Many poor Southerners were sharecroppers,
who had to pay a large portion of their crops as rent.
B. The price of cotton was low, so many had a hard time buying what they needed.
C. The sharecroppers often were cheated by their landlords.
D. They were heavily taxed by state governments who had large war debts to pay off.
E. Southerners were not well-educated, and so they could only qualify for low-paying jobs.
Choose all that are true!
Class Notes Class Notes 20.320.31.1. Any person who gives away a great deal of his or her Any person who gives away a great deal of his or her
money to charity is amoney to charity is a2.2. A company that raises money by selling shares of stock A company that raises money by selling shares of stock 3.3. Any business leader who became wealthy by using Any business leader who became wealthy by using
dishonest methods is calleddishonest methods is called4.4. A company that wipes out its competitors and controls A company that wipes out its competitors and controls
an industry is calledan industry is called5.5. The wealthy businessman who controlled the oil The wealthy businessman who controlled the oil
industry wasindustry was6.6. A legal body created to hold stock in many companies, A legal body created to hold stock in many companies,
often in the same industry is calledoften in the same industry is called7.7. The wealthy businessman who controlled the steel The wealthy businessman who controlled the steel
industry was industry was 8.8. The era of the late 1800s, which was a time of fabulous The era of the late 1800s, which was a time of fabulous
wealth for a few Americans was calledwealth for a few Americans was called9.9. The robber baron who made most of his money dealing The robber baron who made most of his money dealing
in railroad stock was in railroad stock was 10.10. An industrial plant that purifies oil is called An industrial plant that purifies oil is called