The Rise of Big Business and it's Impact on the Economy 2

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  • The Rise of Big Business and it's Impact on the Economy 2
    • American Industrial Barons
      • A new class of super-rich industrialist and financiers emerged after 1890
      • Made their fortune in steel, railways and oil
      • Criticised for exploiting workers and eliminating competition
        • Known as 'Robber Barrons'
          • Took from the poor to enrich themselves
        • Took from the poor to enrich themselves
      • Lack of regulations by state produced a 'vacuum' encouraging explotation and freedom of action by the risk takers and ambitious
        • used ruthless methods to defeat competition. 1890 Congress passes Sherman Act in attempt to limit the power of the big new monopolies e.g Rockefeller's  Standard OIl
          • Impact of the act was patchy and monopolies continued to grow.
      • Commonly combined companies in to vast corporations for example linking manufacturing, railroads and shipping.
      • Rapid expansion of banking and finance
        • J. Peirpoint Morgan was the most famous of the new breed of big financiers who provided capital for instrualisation
      • Key Profiles
        • Andrew Carnegie
          • 1835-1919 founders of Carnegie Steel Company, forerunner of US Steel, and one of the richest and most powerful of the big industrialist. He sold out to j. Pierpoint Morgan 1901 and spent his final years as a philanthropist, spending his fortune on good causes
        • John D. Rockefeller
          • Founder of Standard OIl Company in 1870, becoming world's richest man and the first US dollar Billionaire
        • Cornelius Vanderbilt
          • A transport pioneer who founded many early ferries and railroads. By the time of his death, Vanderbilt controlled 16 major railroad companies including the New York Central
        • J. Pierpoint Morgan
          • Banker and financer who made his fortune in reorganising American railroad companies
      • The rich also wield massive political influence, especially the Republican party.
    • Political Impact
      • Industrialisation made the USA into a more urban society and created the new elite wealthy 'Barons'.
        • These men able to gain direct political influence especially within Republican party and over emerging mass newspapers
    • Americans advantages over other countries during industrialisation
      • A thriving transport system linking settlements east to west
      • A unified peaceful nation which thought it was different to 'old Europe'
      • No external threats to security so no need for expensive navy/army
      • A willingness to be innovative in contrast innovation was fading in European nations
      • Large scale immigration providing workers for growing industries
      • A growing demand for goods from a young population and growing middle class
      • As well as  industrialisation they had
        • An expansion of 'white collar' jobs in administration and service industries, aided by machinery e.g. type writers
        • Geographical mobility of workers meant consumers ready to accept standardised products and not rely on local goods
        • Profits providing capital for further investment
        • Opportunities for women to work in a variety of jobs
        • Wages rising for all workers as prices eventually fell, meaning more disposable income
        • increasing wealth gave greater power in political and economic competition with other nations
    • How did corporations make money
      • Sold stock to investors but kept daily admin with managers
      • Supreme court ruled they had protections under the law and the gov was willing to tax imports
        • meaning less outside competition and higher profits for american manufactures and consumers had to continue paying high prices
      • Huge amounts of products controlled by monopolies e.g. sewage pipers, lamps, pottery, glass and sugar. Combinations of companies controlled railways and freight companies--> essential for distribution of goods
      • To continue making money they need...
        • Congress to tax foreign mports more expensively than domestici
        • to maintain the same price to be charged by all producers
        • Pay low wages, demand long working days
    • Negative effects of industrialisation
      • Railroad overbuilding lead to unstable railroad financing set off a series of bank failures
      • US dollar value pegged on silver and gold, too much silver and insufficient gold which decreased the value of the dollar
      • State of economy worsened 1893 people rushed to withdraw money from banks--> bankruptcy
      • Housing market crashed house abandoned and left unfinished
      • Many businesses failed unemployment rose
      • Govt. policy was to not get involved 'laissez fair'
      • FInancial Panic 1893


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