Big Business and Labor

1. Vertical integration

A. Vertical integration is buying out all the companies that control the various parts of whatever industry you’re in in order facilitate moneymaking in the industry.


B. In the case of Andrew Carnegie, he bought the producers of the raw supplies for steel and the trains that distributed it. This allowed Carnegie to produce and distribute steel much more efficiently and make more money from it.

2. Horizontal integration

A. Horizontal integration is the process of buying out other companies that produce the same or similar products in order to gain more control in the industry.


B. Andrew Carnegie bought most of the other companies that produced steel, reducing his competition. This allowed him to control the prices of steel and make much more money from the manufacturing.


3. Social Darwinism

A. Social Darwinism is a theory of the evolution of society and industry based on Charles Darwin’s theory of natural selection. This was used as justification for “laissez faire”, meaning we should just let the marketplace go unregulated, and the strongest companies will survive while weaker ones will fail.


B. This justification allowed Andrew Carnegie to do pretty much whatever he wanted in his industry without being interrupted by regulations stepping in. He was able to buy up weaker companies and continue to grow his strong ones, referencing survival of the fittest the whole time.


4. Monopoly

A. A monopoly is when one organization has complete control over an industry’s prices, wages, and, production.


B. When a company such as Carnegie Steel held a monopoly over its industry, they could control every aspect of the industry and make as much money possible. They were able to transport and distribute supplies in a cheaper way, and then sell them for higher prices as they had gotten rid of the competition. This meant more profit.


5. Holding company

A. A holding company was a corporation that only bought out the stock of other companies.


B. These companies allowed for business owners to gain a monopoly much more easily. Making the sole purpose of the company buying out other companies streamlined the process of gaining a monopoly. These holding companies used other company’s success to grow their monopoly.


6. Trust

A. Trust agreements are when two companies put their stock into a board of trustees, who then control the two corporations as if they were one large one.


B. Trusts allowed corporations to make money off of their mergers simply by making an agreement. They also helped companies like Standard Oil to gain a monopoly, when John D. Rockefeller used a system of trusts to gain control of almost all the oil in America.  


7. The perception of tycoons as “robber barons”

C. How did it harm businesses such as Standard Oil and tycoons like John D. Rockefeller?
  As Rockefeller and other tycoons began to use questionable methods to gain more and more control over their industries,  they began to be accused of being robber barons. John D. Rockefeller and others began having to show the public that they were not money hungry villains. So, Rockefeller started the Rockefeller Foundation. He gave away over $500 million through this foundation for charity, as well as funding part of the University of Chicago. He created a very important medical institute as well. These contributions were good for society, but took away from Rockefeller’s personal fortune.

8. Sherman Antitrust Act

C. How did it harm businesses such as Standard Oil and tycoons like John D. Rockefeller?
   The Sherman Antitrust Act made it illegal to make a trust that limited free trade. This Act affected John D. Rockefeller because he had built his entire corporation and monopoly on trusts. Other companies as well, were forced to shift their organization and become one large corporation, but this cost money to do. The negative effects ended up being pretty limited, since the federal government had a very difficult time enforcing this law.