Aim: What were the biggest industries found in the United States after the Civil War?

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Aim What were the biggest industries found in
the United States after the Civil War?

• Do Now
• Read pages 435-439.
• Answer the questions on the note sheet.
• Turn in your HW.
• Look at HW board for tonights assignment.

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Objectives

• By the end of the lesson, you, the student,
  should be able to
• Tell how big business affected the American
  economy.
• Distinguish among corporations, pools and trusts.
• Name and describe the philosophy of big business
  leaders.

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Lets Discuss

• Today, we are going to discuss the big business
  leaders of the late 1800s.
• In our discussion right now, I am going to give
  you a list of big business leaders of todays
  society. You tell me the company/organization
  they run.
• Bill Gates (Computers)
• George Steinbrenner (Sports)
• The Walton Family (Department Store)
• Jay-Z (Music)

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Bill Gates
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Warren Buffett-2nd Richest Man in the United
States
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Sam Walton-Founder of Wal-Mart
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George Steinbrenner
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Fred and Jeff Wilpon
These are the fools that ruined the Mets!!!!!
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Russell Simmons
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Even this guy is rich.
Jay-Z with all he does, now owns part of the
Nets!!!!!
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Introduction

• Many American business leaders were ready to take
  the role of organizing new and bigger companies.
• With an increase in company size came the rise of
  industrial giants in the railroad, oil refining,
  steel and meat packing industries.
• The leaders of these industries controlled a
  large part of the American economy.

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2. The Rise of Industrial Giants

• What industry was the first to become a big
  business?
• Railroads expanded in the late 1800s.
• As the first American industry to expand, they
  served as models for the development of big
  business in the United States.
• Heads of the railways were the first to find ways
  to find ways of running large-scale businesses.

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• From 1860 to 1900, the railroad network grew
  rapidly.
• In 1860, there were 30,000 miles of track and by
  1900, there was 193,000 miles of track.
• Railroads were organized and built in every area
  of the United States.
• Transcontinental railroads were built all over
  the United States. In 1867, the first
  transcontinental railroad connected the Union and
  Central Pacific Railroads. In 1883, the Northern
  Pacific railroad was completed. In 1889, the
  Santa Fe Railroad was completed and in 1893, the
  Great Northern was completed.
• Many smaller railroads were organized into giant
  systems. It made trading and traveling a little
  easier because all the railroads were running on
  the same track. Such railroads include the New
  York Central, the Pennsylvania, Louisville and
  Nashville.
• Railroads were plagued with certain problems.
• 2) What problems did the railroads have?

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• The first major problem was that there were
  thousands of railroads running at all times of
  the day.
• Railroads had to buy cars, rails and locomotives.
• Railroad companies had to hire crews fix the
  track as well as crews to run the trains.
• Railroads needed capital to run. Few companies
  had the capital to run successfully.
• To handle the problems, railroad companies hired
  managers to look at spending. Their job was to
  run the company using the best methods possible.
  These managers then worked in other industries
  using these strategies.

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Building the Transcontinental Railroads
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Completion of First Transcontinental Railroad
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Transcontinental Railroads
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Transcontinental Railroad Map 2
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Cornelius Vanderbilt
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Vanderbilts Dominance of the Railroad Industry
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Leland Stanford
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Builders of the Central Pacific Railroads
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2.2 Rockefeller and Oil Refining

• Oil refining, under John Rockefeller, used the
  same methods and operating techniques used in the
  railroads.
• Rockefeller, at the end of the Civil War,
  established the first refinery in Cleveland.
• As a result of the oil boom, people were building
  refineries.
• In 1867, Rockefeller established Standard Oil.
  Within a few years, Rockefeller had bought nearly
  all the refineries in Cleveland.
• 3) What did Rockefeller do in the oil industry?

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• Rockefeller built their own barrels, warehouses
  and system of pipelines.
• Rockefeller made deals with the railroad
  companies to ship his oil.
• Since Rockefeller was a leading supplier of
  business to the railroads, he was able to ship
  his oil for far less than others.
• Since Rockefeller had a large share of the
  market, he was able to drive smaller companies
  out of business.
• Rockefeller was able to control 90 of the oil
  business in the United States

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John Rockefeller
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Standard Oil Company
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2.3 Carnegie and the Steel Industry

• The steel industry, under the leadership of
  Andrew Carnegie, also became a major American
  industry.
• Carnegie was a success because he used the latest
  equipment and techniques to make steel.
• Carnegie bought large areas of the Mesabi Range
  for their iron ore deposits.
• He also bought shipping and railroad companies to
  help move iron to his factories.
• Because of his actions, other smaller companies
  could not compete and Carnegie was able to
  control the steel industry.
• Carnegie retired from his business in 1901.

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• Carnegie sold his business to J.P. Morgan in
  1901.
• 4) Who formed the United States Steel Corporation?

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J.P. MorganThe U.S. First Billionaire
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Andrew Carnegie
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Morgan Stanley Bank Logo
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Morgan Stanley Bank Purchased Chase BankThis is
where both banks rank in terms of monetary assets.
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2.4 Meat Packing Industry

• The meat packing industry was also changing.
• Before 1860, cattle had been shipped by rail to
  cities in the United States.
• When the cattle arrived in the cities, they were
  slaughtered and sold.
• To save , leaders believed that the cattle
  should be slaughtered closer to the place they
  were found, then in the cities.
• Problem was how to preserve the meat after the
  slaughter.

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• 5) Which invention helped to preserve meat? Who
  invented this invention?
• The slaughterhouse also was developed. Before
  long, this invention helped to keep meat fresh
  and allowed meat to leave the west and arrive in
  the east in fresh condition. Soon after, other
  meat packing companies followed the lead of Swift.

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Gustavus Swift
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Refrigerated Railroad Car A diagram of the
inside
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Phillip Armour
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of Billionaires in 1900
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of Billionaires in 1918
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The Major Industrialists
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2.5 Business Organization

• As business grew, new forms of business
  organization appeared.
• This was because smaller companies, such as
  individual ownership and partnerships, were no
  longer adequate to handle the changes.
• Most small businesses were started with money
  from one persons savings. Now businesses needed
  millions of dollars.

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• The first new business organization was a
  corporation.
• 6) What is a corporation?
• In a corporation, stockholders receive dividends.
• 7) What is a dividend?
• If a corporation fails, the stockholders only
  lose their money they paid for their shares.
• If a corporation fails, the stockholders are not
  responsible for business debts.
• The stockholders do not have a say in the daily
  affairs of the business. They appoint and
  nominate a board of directors.
• 8) How is a corporation different from other
  businesses?

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• As a result of the growth of big business, many
  smaller businesses consolidated in an attempt to
  survive.
• 9) What does the word consolidate mean?
• 10) What was one of the problems faced by
  business?

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• Problem between many businesses was competition.
• Competition was designed to attract many
  consumers to buy their products at a cheaper
  cost. They did this by lowering their prices.
• When too many companies competed against one
  another, more goods were made that were not
  necessary.
• This resulted in costs so low, that they did not
  make any profit.

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• To handle this problem, Rockefeller and other
  refining companies joined together to form a
  pool.
• 11) What did pools try to do?
• Pools were illegal, but were difficult to prove
  their existence. They also did not work, because
  the members could not make every company join.
• Pools had the problem of breaking agreements.
  This led to Rockefeller to use other methods to
  control competition.
• 12) What is a trust? How did a trust differ from
  other forms of competition?

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Standard Oil Trust
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Cornelius Vanderbilts Dominance
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New Type of Business Entities

1. Pool 1887? Interstate Commerce Act ?
   Interstate Commerce Commission
   created.
2. Trust ? John D. Rockefeller

• Standard Oil Co.

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New Type of Business Entities

• Trust
• Horizontal Integration ? John D.
  Rockefeller

• Vertical Integration
• Gustavus Swift ? Meat-packing
• Andrew Carnegie ? U. S. Steel

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U.S Corporate Mergers
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2.6 The Philosophy of Business

• Certain ideas taken together formed the
  philosophy of big business.
• One of these ideas was known as laissez faire.
• 13) What does laissez faire economics mean?
• The theory of laissez faire was liked by John
  Rockefeller and Andrew Carnegie because they did
  not want government to limit their activities.
• Carnegie also believed that the wealthier people
  should use their to help society. This was
  called the gospel of wealth.
• Business leaders also believed that the business
  system was democratic and your background did not
  determine your success.
• Other business leaders believed in social
  Darwinism, meaning the strongest survived.

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• To prove that their ideas were sound, leaders in
  business pointed to their achievements.
• Between 1860 and 1890, capital invested in
  business grew from one billion dollars to ten
  billion dollars.
• By 1900, the United States was a large industrial
  nation.

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New Business Culture

1. Laissez Faire ? the ideology of the
   Industrial Age.

• Individual as a moral and economic ideal.
• Individuals should compete freely in the
  marketplace.
• The market was not man-made or invented.
• No room for government in the market!

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2. Social Darwinism

• British economist.
• Advocate of laissez-faire.
• Adapted Darwins ideas from the Origin of
  Species to humans.
• Notion of Survival of the Fittest.

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2. Social Darwinism in America

• Individuals must have absolute freedom to
  struggle, succeed or fail.
• Therefore, state intervention to reward society
  and the economy is futile!

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New Business CultureThe American Dream?

• Protestant (Puritan) Work Ethic
• Horatio Alger 100 novels

Is the idea of the self-made man a MYTH??
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Examples of the Gospel of Wealth Rockefeller
Center
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Example of the Gospel of Wealth Carnegie-Mellon
University
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Example of the Gospel of Wealth Carnegie Hall,
New York City
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Example of the Gospel of Wealth Vanderbilt
University
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What Do You Know?

• John Rockefeller was a captain of industry with
  his company, Standard Oil, for all of the
  following reasons, EXCEPT
• Cost-cutting measures to increase revenue.
• Dominating the oil industry with his company
  controlling 90 of the industry.
• New agreements with the labor unions.
• Maintaining control over oil wells, oil
  refineries, distribution, sales and advertising.

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• As a result of the growth of corporations in the
  United States, _______________
• Huge amounts of capital were invested and many
  technological advances were made.
• Labor unions were able to achieve better
  conditions for their workers.
• Companies could be held libel for their actions.
• Wealth was shared equally in the workplace.

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• The economic term, laissez faire, symbolizes
  economics where
• Business leaders wanting an economy with very
  little government interference.
• The growth of government regulation on big
  business.
• Regulating markets and controlling competition is
  normal.
• The lack of competition.

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• Andrew Carnegie was seen as a rags-to-riches
  story because
• He began as a poor Scottish immigrant who worked
  his way up through the American economic system.
• Became a multi-millionaire due to his hard work
  and wise investments.
• Enhanced his image by donating huge amounts of
  his money to charity.
• All three choices.

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• Social Darwinism argued that
• Competition in the business world was a bad
  thing.
• Competition in business was the best way to
  promote a healthy economy.
• The stronger businesses will succeed while the
  weaker ones will fade away.
• B and C are correct.

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• As part of the Gospel of Wealth and philanthropic
  (charity) tasks
• Andrew Carnegie donated millions to establish
  libraries, several universities and other
  interests for the public good.
• Rockefeller donated money to establish the
  University of Chicago and the Rockefeller
  Institute for Medical Research.
• Cornelius Vanderbilt responded with the phrase
  the public be damned when a reporter asked him
  whether railroads should be run for the public
  benefit.
• A, B and C