Business tycoon

7/29/2019 Business tycoon

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Business Tycoons

of the Gilded Age


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Andrew Carnegie (1835-1919)

Born in Scotland to poor parents

He entered the steel industry and started his

own company Carnegie used good management practices

and used the latest machinery to make betterproducts for less

He offered his employees stock in thecompany and encouraged competitionbetween his assistants


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Andrew Carnegie

Essay titled The Gospel of Wealthin 1889:

the accumulation of wealth was beneficial to

society government should not interfere.

Carnegie believed the rich were trustees of

their money, holding it until proper public

uses could be discovered. Spent his last years giving away his vast fortune.

Carnegie wrote, The man who dies rich dies

disgraced.
http://images.google.com/imgres?imgurl=http://www.sciencemasters.cpst.org/images/carnegie_photo1.jpg&imgrefurl=http://www.sciencemasters.cpst.org/proginfo.cfm%3Fprogkey%3D91%26ytables%3D51&h=220&w=275&sz=21&tbnid=pK4r2VQ1NAcJ:&tbnh=87&tbnw=108&start=47&prev=/images%3Fq%3Dcarnegie-mellon%26start%3D40%26hl%3Den%26lr%3D%26sa%3DN


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John D. Rockefeller

(1839-1937) Rockefeller started his first business at age 7-

he raised turkeys.

By 1880, the Standard Oil Co. controlled 90%of the refining business.

He paid his employees very low wages and

sold his oil at lower prices to drive out the

competition.

Then when he controlled the market, he raised

prices.


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Rockefellers Philanthropies

Rockefeller founded the University of

Chicago in 1890, the Rockefeller

Institute for Medical Research (nowRockefeller University), the General

Education Board, the Rockefeller

Foundation, and other charities.


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Robber Barons

Critics began to call industrialists

robber barons

men who would stop at nothing to achievegreat wealth

Accused of exploiting workers and treating

them unfairly in poor working conditions.


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Vertical Integration

A company takes over its suppliers and

distributors and transportation systems to

gain total control over the quality andcost of its product.

Carnegie bought out the coal fields, iron

mines.


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Horizontal Integration

The merging of companies that make

similar products.

Carnegie bought competing steelcompanies

With control over the suppliers and the

competition, Carnegie controlled almostthe entire steel industry.


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Social Darwinism

New theory used by

philosophers to explain

Carnegies success.

Grew out of Charles Darwin and

his book On the Origin ofSpecies(1859).

Some people succeed and pass

along their traits, while otherslack them.

Natural selection weeds out the

losers and the best-adapted

survive.
http://images.google.com/imgres?imgurl=http://www.geo.arizona.edu/Antevs/nats104/darwin.gif&imgrefurl=http://www.geo.arizona.edu/Antevs/nats104/00lect11.html&h=427&w=308&sz=35&tbnid=nPGEFjmfZaIJ:&tbnh=122&tbnw=88&start=18&prev=/images%3Fq%3Ddarwin%26hl%3Den%26lr%3D


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Adam Smith and Laissez-faire

economics Scottish economist Adam Smith wrote the Wealth of

Nationsin 1776.

Along with Social Darwinism, many 19th century

businessmen agreed with Laissez-faireeconomics (letit be)

The main argument: People are naturally selfish. Theyare in business to gain wealth and/or power. Thisshould not be interfered with because their activity isgood for all of society. More goods they make ortrade=more goods people will have. Increasedcompetition=even more goods and probably lower

prices. Creates jobs and spreads wealth.


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Terms

Merger: one corporation buys out the

stock of another

Holding company: one corporation thatdoes nothing except buy out the stock

of other companies

(US Steel headed by banker J.P. Morgan-later bought Carnegie Steel and was the

worlds largest business).
http://images.google.com/imgres?imgurl=http://academic.evergreen.edu/k/kenmic21/monopoly.gif&imgrefurl=http://academic.evergreen.edu/k/kenmic21/mikehome.htm&h=181&w=194&sz=4&tbnid=T7JjFwub4CIJ:&tbnh=91&tbnw=97&start=8&prev=/images%3Fq%3Dmonopoly%26hl%3Den%26lr%3Dhttp://images.google.com/imgres?imgurl=http://academic.evergreen.edu/k/kenmic21/monopoly.gif&imgrefurl=http://academic.evergreen.edu/k/kenmic21/mikehome.htm&h=181&w=194&sz=4&tbnid=T7JjFwub4CIJ:&tbnh=91&tbnw=97&start=8&prev=/images%3Fq%3Dmonopoly%26hl%3Den%26lr%3D


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Terms, cont

Mergers and holding companies lead tomonopolies

Monopoly: a firm with complete controlover its industrys production, wages, andprices.

Trust: hold the stock, run by trustees.

Companies make money on dividends. Used to take control of industries (like

Rockefeller)
http://images.google.com/imgres?imgurl=http://academic.evergreen.edu/k/kenmic21/monopoly.gif&imgrefurl=http://academic.evergreen.edu/k/kenmic21/mikehome.htm&h=181&w=194&sz=4&tbnid=T7JjFwub4CIJ:&tbnh=91&tbnw=97&start=8&prev=/images%3Fq%3Dmonopoly%26hl%3Den%26lr%3D

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Business tycoon