Rise of Big Business

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The Rise of Big Business and its Impact
on the Economy
The Gilded Age (1877-1901)
The period of time between the end of the Radical Reconstruction and the beginning of the Progressive
era
It was a brassy, flamboyant age, dominated by big business values, political corruption and extremes of
wealth and poverty
America changed from rural to urban
The Second Industrial Revolution
Surplus of unskilled and semi-skilled workers due to mass immigration to America
The US government was eager to help and support this rise in industry
America had an abundance of natural resources
The US also saw a sudden development in technology, new inventions, an adequate labour supply, and a
growing domestic market
By 1890, the value of industrial goods and services, for the first time, exceeded that of agricultural
products
By 1900, two-thirds of all manufactured goods were being produced by giant corporations
Theory Behind the Growth of the US Economy and Business
Laissez Faire
No intervention
Look after yourself
The ideology of the industrial revolution
Interest in personal gain only
Social Darwinism
Individuals must have absolute freedom to struggle, succeed or fail
State intervention to reward society and the economy is futile
Free Market
Trade freely with other countries
You put no taxes on, so they put no taxes on goods
Government doesn't intervene
The Gospel of Wealth
The religion in the era of industrialisation
Wealth no longer seen as bad but viewed as a sign of God's approval
Christian duty to accumulate wealth
Government
Corporate Personhood
o Gave trusts the same legal rights and responsibilities as an individual
Supported big business
Urbanisation
o Focused on profit and industry, instead of agriculture
Companies had power and control over government and could improve their own economy
New Methods of Business organisation
Horizontal Consolidation

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Control of the market for a single product by a single company
A process in which a company buys out or merges with all competing companies
Creates a monopoly corporation, which can fix prices
Method used by Robber Barons
Vertical Consolidation
One company controls every step of production
This meant the owner had complete control of the product
No middle-man, which minimises cost
This method was taken up by Captains of Industry
Why was the USA
so economically
successful after 1895?
Natural Resources
With huge…read more

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Business Trusts and Robber Barons
In the late 1890s, some large businesses, know as trusts, became so powerful that they threatened to
establish monopolies in particular industries
This meant they could fix prices without there being any competitions
Robber Baron- capitalist that regularly exploits the work force, providing poor working conditions and
low pay, to maximise their own personal profits
Rockefeller (1839-1937)
First billionaire
Owner of Standard Oil
o Founded in 1870
o Dominated oil industry
Monopoly in oil
o Could charge what he liked…read more

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The Problems of Big Business
Problem of monopoly
Very few Americans questioned capitalism, but many began to question monopolies
People began to blame monopolies for;
o Creating artificially high prices
o The absence of competition
o Unstable economy depression of 1893
1% of all families in America controlled 8% of the wealth, most were afraid to flaunt it
Standard of living was rising
But the gap between rich and poor was growing
Political problems- the sources of labour weakness
Summary of labour upon the entrance…read more

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Harsh farming conditions
o Rising railroad rates and mortgages
o Declining grain and cotton prices
o Government deflation policies
Farmers lashed out at banks, merchants, railroads and the US monetary system (gold standard)
Worldwide agricultural economy caused great fluctuations in supply and demand
Farmers complains
o Lowered prices for crop
o Rose the railroad rates and difficult mortgages
Conditions of farmers varied by region
General feeling of depression, and resentment
The currency debate
Grants decision to reduce the number of greenbacks, deflated the post-war money…read more

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External factors
Europe recovered from the depression before US
Increase in European demand for wheat
European wheat crops were reduced by 1/3 in 1897
European industries could not keep up with the product demand
US began to export goods to Europe
More work for US industries and workers
European money flows into the US
By 1900 prosperity had returned
Positives and negatives of Big Business
Positive negative
Increase in immigration Less competition
Meant labour force grew Prices increased
Construction industry Robber barons
boomed The new…read more

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