Overview
This lecture covers how key inventions after the Civil War spurred rapid industrial growth in the U.S., focusing on influential business leaders known as "robber barons" and their methods.
Robber Barons and Big Business
- "Robber baron" refers to powerful, ultra-wealthy business leaders who exploited workers to build their fortunes during the Gilded Age.
- Railroads were the first "big business" in America, connecting and influencing other industries.
- The rise of railroads was fueled by private investment and large government loans and subsidies.
- Jay Gould and Cornelius Vanderbilt were major railroad robber barons; Gould was notorious for price gouging, especially exploiting farmers.
- Once established in a region, a railroad company could set high prices with little competition.
Major Industrial Leaders
- Andrew Carnegie, an immigrant from Scotland, rose from poverty to dominate the steel industry, producing about 80% of U.S. steel.
- John D. Rockefeller built Standard Oil by controlling the oil refining process, eventually holding a near-monopoly.
- J.P. Morgan was a banker who acquired and consolidated businesses, including Carnegie Steel (renamed U.S. Steel), creating the first billion-dollar company.
Business Strategies and Monopolies
- Rockefeller used horizontal integration (controlling all refining) and later vertical integration (control over drilling, refining, and sales).
- Rockefeller created trusts and holding companies to circumvent monopoly laws and maintain control over multiple companies.
- The Sherman Antitrust Act (1890) aimed to break up monopolies but was initially weak and ineffective.
Ideology and Justification
- Social Darwinism, developed by Herbert Spencer, justified the wealth and power of robber barons as "survival of the fittest."
- The "rags-to-riches" ideal, popularized by Horatio Alger books, reinforced the notion anyone could achieve wealth through hard work.
- Carnegie promoted philanthropy, arguing the rich had a duty to give back to society ("Gospel of Wealth").
Key Terms & Definitions
- Robber Baron — A negative term for powerful, wealthy business leaders who built fortunes by exploiting others.
- Philanthropy — The desire to promote the welfare of others, often through charitable donations.
- Social Darwinism — The application of Darwin's ideas to society, claiming the most "fit" people become wealthy.
- Horizontal Integration — Controlling one step in the production process across an industry.
- Vertical Integration — Controlling all steps of production, from raw materials to sales.
- Trust — A legal entity that owns multiple businesses, often curbing competition.
- Holding Company — A company created to own shares in other companies.
- Monopoly — Complete control of an industry by a single company.
- Sherman Antitrust Act — 1890 law intended to limit monopolies; initially weak.
Action Items / Next Steps
- Review examples of horizontal and vertical integration.
- Read about the Sherman Antitrust Act and its later enforcement.
- Prepare for a quiz on major industrial leaders and their business practices.