BusinessGrowsinSizeandInfluence
ThomasJeffersonhaddreamedofanAmericaoffarmersand
craftsmenworkingforthemselves,whileAlexanderHamilton’sdream
wasanationofcities,business,andindustry.UntiltheCivilWar,
Jefferson’sviewhadruled;butafterthewarHamilton’sdreambegan
todevelopasthenation’sfuture.Afewlargemanufacturershad
existedintheUnitedStatespriortothewar;butafterthewarbig
businessmenwerebetterknownthanthenation’spoliticalleaders–
everyoneknewthenamesandreputationsofRockefeller,Carnegie,
Vanderbilt,Gould,Swift,Pillsbury,andArmour.
Thereweremanyreasonsforthechange.Amongthemwereraw
materials,newinventions,acheaplaborforce,aneagerconsumer
market,government’slaissezfaire(leavebusinessalone)philosophy,
andanenterprisingbusinesscommunitywillingandabletoexploit
newopportunities.
AndrewCarnegie
Americahadabundantsuppliesofmostresourcesneededto
becomeanindustrialgiant:coal,ironore,petroleum,andcopper,alongwithagriculturalproductslike
corn,wheat,cotton,andwool.Technologydevelopedtomakethesegoodsintonewandusefulproducts.
SteelbegantoreplaceironwiththedevelopmentoftheBessemerProcess,andtheevolutionoftheopen
hearth.CommunicationsimprovedwithanewAtlanticcable,expansionofthetelegraph,andAlexander
GrahamBell’sinventionofthetelephone.Eventhoughmanypeoplesawnoneedforhisproduct,Edwin
DrakesunkthefirstoilwellintheUnitedStatesin1859.Withinafewyears,kerosenelampswouldreplace
whaleoillampsandeveryonewouldbeusingthem.Eventhefoodindustrywasbeingmodernized.
CharlesPillsburyfoundabetterwaytomillflourandtherefrigeratortraincarmademeatpackingamajor
industryandmenlikePhilipArmourandGustavusSwiftprominent.
ImmigrationincreasedaftertheCivilWar,andeventhoughmanyofthenewcomerscouldnotspeakor
readEnglish,theywereabletofillunskilledlaborjobsatlowwages.Assteamshiplinesreachedmore
distantports,immigrantscameinlargernumbers.Immigrationexceeded10,000forthefirsttimefrom
Scandinavia(Denmark,Sweden,Norway)in1866,Italyin1880,Russiain1882,andPolandin1890.
ImmigrantsnotonlyproducedAmericangoods,theywerealsomajorconsumersoftheirproducts.Many
whocametotheUnitedStatesremainedpoor;butatitsworst,lifeinAmericawasusuallyseenasmuch
betterthanithadbeenintheirhomeland.
Withgoodsbeingmassproducedacheaplaborforce,pricesdropped,andconsumerswerealways
lookingforbargains.DepartmentstoresfirstappearedbeforetheCivilWar,butbecamecommonplacein
citiesafterthefightingended.SearsRoebuckandMontgomeryWardsoperatedretailstoresoutofChicago,
butinpeoplelivinginruralareaslookedforwardtoreceivingtheircatalogstobuythesameclothesand
suppliesavailabletothepeopleinthecity.
TheUnitedStateshadnoexperiencewithlargecorporations;soatfirst,governmentsawnoneedto
interferewiththewaytheyconductedbusiness.Assomecorporationsgotlarger,theybegantowipeout
theircompetitionandexpand.Americanstookprideintheirindustrialprogressandadmiredthe
achievementsofthebigbusinessowners,butsomepeoplefeltthatbusinessesweregrowingoutofhand
andneededcontrols.
LordActononcewrotethat“powertendstocorruptandabsolutepowercorruptsabsolutely.”During
thistimeperiod,powerwasnotinthehandsofthemanonthestreetoreveninthehandsoftheelected
officials.PowerwassquarelyinthehandsofAmericanbusinessleaders.JayGouldoncewenttoAlbany
withablackbagfullofmoneytobribetheNewYorkgovernment.CorneliusVanderbiltsaid:“WhatdoI
careaboutthelaw?Ain’t Igotthepower?”
MostofAmerica’s“captainsofindustry”startedoutverypoor.
CorneliusVanderbilt’sfatherekedoutalivingfarmingandrunninga
smallboatbetweenStatenIslandandNewYorkCity.JayGould’s
fatherwasapoorfarmer.JohnD.Rockefeller’sfatherwasa
travelingsalesmanwholeftthefamily,andAndrewCarnegie’s
parentswerepoorScottishimmigrantswhosenthimtoworkina
textilemillasayoungmanfor$1.25aweek.Gustavus Swiftstarted
inbusinessattheageof16withonly$20inborrowedmoneyinhis
pocket.Eventually,VanderbiltandGouldbecamemulti-millionaires
inrailroading,Rockefellerwithoil,andCarnegieinsteel.
Asagroup,thesemenseemedtoenjoytheirnewwealthless
thantheyenjoyedbusinessitself.Inmanyways,theywerevery
frugalanddidnotwastemoneyonthingsthattheyfeltwere
unnecessary.Vanderbiltdecidedthatpaintinglocomotivesinbright
colorswastoocostly,soNewYorkCentralpaintedalloftheblack.
Rockefellerwatchedovereverystepoftheoilrefiningprocess
JohnDRockefeller
(downtocountingthenumberofweldsontheStandardOil
barrels).PhilipArmour’s packingplantsusedtheentirecarcassofthecow(exceptthehooves)forthe
meat.Carnegiecontrolledeveryaspectofsteelmakingfromminingtheoretosellingthefinishedproduct.
Theirgoalwastocreateamonopoly(gainingcontroloveraproduct/serviceandeliminatingall
competition).Rockefellertoldhissalesmen:“Sellall theoilinyourdistrict.”Vanderbiltlovedafight,and
hewantedtotalvictory– hisopponentbeatenintothedustandhispropertywearingtheVanderbiltlabel.
Sometimesthesebattleswereextremelyfierce
Businesswasaroughgame,andatfirst,therewereveryfewrulestocontrolit.Theydidmanythings
thatwouldlaterbecomeillegalpractices.Theypaidverylowwages,disregardedworkersafety,bribed
judgesandlegislatures,andboughtelections.
Despitetheirhard-hittingbusinesstactics,manyofthemlivedbyatotallydifferentstandardawayfrom
work.Intheirminds,theyjustifiedtheirgreatwealthintwoways.Onewasthe“gospelofwealth,”which
AndrewCarnegiesupported.Itsaidthattherichshouldusetheirwealthforthegoodofthepublic.Many
goodcauseswouldbeendowedbyCarnegieandotherrichAmericansbaseduponthisphilosophy.
Theotherphilosophywasbasedon“socialDarwinism”andDarwin’sdoctrineofsurvivalofthefittestinthe
animalkingdom.RockefellerwentsofarastocomparebusinesstotheAmericanBeautyrose:inorderto
achievethemostbeautifulfloweratthetop,theotherbloomshadtobecutoff..
ManyAmericanscametoresentthetacticsandphilosophyofCarnegieandotherrichAmericans.
Althoughafewsawthemas“captainsofindustry”buildingastrongeconomy,othersviewedthemas
robbers,stealingfromthepublicfortheirownselfishness.
VanderbiltGouldSwiftArmour
Pillsbury
Name___________________________
Challenges
1) WhatfactorsledbusinessmentobecomethemostpowerfulandinfluentialmenintheUnitedStates
aftertheCivilWar?(2points)
2)WhatweresomekeynaturalresourcesthathelpedbuildtheAmericaneconomy?
3)Howwassteelproductionincreased?
4)Whoinventedthetelephone?Giveanexampleofhowatelephonewouldhavehelpedimprovea
business?
5)Beforethedevelopmentoftheautomobile,whatwasmainuseofpetroleum?
6)WheredidmanyoftheimmigrantscomefromaftertheCivilWar?
7)HowdidmanyoftheimmigrantsfeelabouttheirnewlifeinAmerica?
8)Whatkindofjobsdidimmigrantsusuallyfill?
9)Whatwerethe2largestdepartmentstores?Whydidpeopleintheruralareaslikethem?
10)Whydidthegovernmentinitiallyholdalaissezfaire philosophywithbigbusiness?
11)Whatdoesthelaissezfairephilosophymean?
12)Whattypeofbackgrounddidmostofthebigbusinessmencomefrom?
13)Whatwastheirbusiness:
Rockefeller–
Carnegie–
Swift&Armour –
Vanderbilt&Gould–
Pillsbury–
14)Howwouldyoudescribetheirviewonspendingmoneytoruntheirbusinesses?
15)Whatweresomethingstheydidtohurttheirworkers?
16)WhatweresomethingstheydidtohurttheAmericanjusticesystem?
17)WhatdoctrinebyCharlesDarwinisthebasisfor“socialDarwinism?”Explainhowthisphilosophywould
applytothebusinessworld?
18)Whatwastheideaof“gospelofwealth?”