New ways of doing business Aim Should the

New ways of doing business…. .

Aim: Should the American tycoons of the late 1800 s be remembered as “robber barons” or “captains of industry”? Do Now: Determine whether the statements are True or False and explain your response. A. If people are unsuccessful is because of their own fault. B. There are people that are just better than others.

§ HOW DID THE GOVERNMENT RESPOND TO THE NEW WAYS OF DOING BUSINESS?

Economic Philosophy • Laissez-Faire: This was an economic philosophy begun by Adam Smith in his book, Wealth of Nations, that stated that business and the economy would run best with no interference from the government.

§ HOW DID THE AMERICAN SOCIETY RESPOND TO THE NEW WAYS OF DOING BUSINESS?

Social Philosophy The social philosophy known as “Social Darwinism” supported laissez-faire capitalism. • Social Darwinism stated that success in society was determined by "survival of the fittest. " This interpretation of Charles Darwin's theory caused many to believe that the poor were deceitful and lazy, while the rich were honest and hard-working. This also explained how good businesses thrived while bad ones went bankrupt.

• As the rich became wealthier, and the poor more so, people began to question these philosophies, and some even attacked leading industrialists calling them Robber Barons, while others maintained that they were Captains of Industry.

“Robber Barons or Captains of Industry” “Robber Baron” • Derogatory term applied to 19 th century businessmen who people believed used corrupt or exploitative practices to amass great wealth and monopolize economic power. ✓ Tricky Stock Deals ✓ Worker Lockouts ✓ Shady Contracts ✓ Fraud “Captain of Industry” • A term originating during the British Industrial Revolution to describe business leaders whose means of amassing great wealth contributed positively to the country in some way. ✓ Increased Productivity ✓ Providing more Jobs ✓ Expansion of Markets ✓ Acts of Philanthropy

“Robber Barons vs. Captains of Industry”

Andrew Carnegie $75 Billion ■ In 1861, at the age of 26, he started up the Freedom Iron Company, and used the new Bessemer process for making steel ■ He formed all of his companies into the Carnegie Steel Company in 1899, which controlled raw materials, manufacturing, storage, and distribution for steel. He used Vertical Integration ■

Companies like Carnegie Steel used vertical integration to buy companies in order to gain materials needed to make or deliver their products

John D. Rockefeller $192 Billion ■ ■ He established one of the first oil refineries 1870—With partners, forms a business trust: Standard Oil At its peak, controls 90% of all oil companies. He used Horizontal Integration

Companies like Standard Oil used horizontal integration to buy similar companies to reduce competition

TASK: • In your groups, complete the graphic organizer • Decide and determine whether the tycoons are “Robber Barons” or “Captains of Industry” (This is in your preliminary opinion… based on what you learned about the concepts and the tycoons. You will revisit this response tomorrow!)