2. This, then, is held to be the duty of the man of wealth: First, to
set an example of modest, unostentatious living, shunning
display or extravagance; … and, after doing so, to consider all
surplus revenues which come to him simply as trust funds,
which he is called upon to administer… to produce the most
beneficial results for the community—the man of wealth thus
becoming the mere trustee and agent for his poorer brethren,
bringing to their service his superior wisdom, experience and
ability to administer, doing for them better than they would or
could do for themselves.
— From "Wealth," by Andrew Carnegie, North American Review (1889)
Law? Who cares about the law. Ain't I got the power?
— Comment alleged to have been made by Cornelius Vanderbilt, when
warned that he might be violating the law

3. Pioneers of Industry
OR
Robber Barons?

4. Were these men Captains of Industry,
without whom this country could not have taken its place as a
great industrial power, or
were they Robber Barons, limiting healthy competition and robbing
from the poor to benefit the rich?
Where do we draw the line between unfair
business practices and competition that leads
to innovation, investment, and
improvement in the standard of living for
everyone?
Would the industrial economy have succeeded
without entrepreneurs

5. Andrew Carnegie • Rags to riches story
• Head of steel industry
• Always looked for better
product at lower cost
1. Hired people to
improve steel quality
2. Undersold
competitors
3. Bought out rival
plants
• “Integrated operation”
• Carnegie Steel part of

6. Vertical Integration
Within an industry
Raw materials
Production
Distribution

7. Horizontal Integration
Across an industry
mergers

8. • Buying part of a company
• Receive dividends (interest)
• Risky vs. Safe
Expensive to purchase
Move money quick
Unstable
- Make money quick
- Lose money quick
Ex: Technology
.coms
Cheaper to purchase
Long term investments
Stable
-Slow to make money
Ex: Electric Companies
Toliet Paper 

9. • Didn’t make steel but instead…
• Sold stock in itself (and their good reputations)
• Used that money to buy control of
companies that were making steel

10. • Two companies combine to form one
• Retains power but reduces competition
–Why is competition important?

11. Other companies followed suit
Cornelius Vanderbilt
JP Morgan
JD Rockefeller

12. Pros of Big Business
• Raises productivity
• More efficient (no middle man)
• Better product
• Increase in product
• Creates more jobs
• Funds public institutions
Cons of Big Business
• Reduces competition
• Increases prices
• Drains resources
• Lives “above” law
• Poor working conditions
• Pays low wages

13. Railroad Workers - first ever strike
1877
And Grange Movement involvement

14. And the government intervened
• Sherman Anti-trust Act
– All mergers that restrain competition are
illegal
– MONOPOLY - objective of the game?

15. • Standard Oil Company
– Broke apart into comp. (Exxon, Mobile, Chevron…)
• U.S. Steel Corporation
– broke apart by region (Scranton, Bethlehem, Pgh)
• Movie production companies
– Produce or distribute (RKO, Paramount, MGM,
Universal, 20th
Cent. Fox, Columbia, Warner Bros.)
• Bell Telephones
– By region and service: long distance, local, mobile,
research, development (Bell Atlantic, Bell Pacific…)

16. • Charles Darwin’s theory
– Natural Selection & Survival of the Fittest
• Used to explain success - Carnegie & Rockefeller
• Stated rich were rich because they were fit to
live and poor were poor because they weren’t
• Herbert Spencer
– Gov’t to leave business alone; fittest will
survive
• Horatio Alger
– if worked hard, could be successful…