Robber Barons
Vertical Integration
Andrew Carnegie
• Andrew made his money from stock in the
Pennsylvania Railroad. In 1873 he saw the railroad’s
need for steel and got into the steel industry.
• By 1899 Carnegie Steel Company made more steel
than all the factories in Great Britain.
• Started new business Practices:
• To control as much of the steel industry as he could, Carnegie
bought out his suppliers
• Coal fields, iron mines, ore freighters, & railroad lines.
• He controlled the raw materials and the transportation systems.
– Making a better product cheaper
– Used new technology
– Used new techniques:
• Accounting practices that allowed his to keep precise records
of costs
• He also attracted the best assistants by offering stock in the
company.
Horizontal Integration
• John D. Rockefeller
• Standard Oil
• Gained control of the
competition by buying up other
oil companies.
Social Darwinism
• Natural Selection
• Weeded out less suited individuals and enabled
the best adapted to survive.
• Used to justify the doctrine of laissez-faire (the
idea that government should stay out of private
industry)
Sherman Antitrust Act
• 1890
• Government worried big business would stifle
free competition.
• Made it illegal to form antitrust that interfered
with free trade between states or with other
countries.
• Was hard to enforce because companies would
restructure and continue to grow.
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