U.S. History / Unit 5: Industrialization, Immigration and the Gilded Age
5.2 Big Business and the Gilded Age
Notes
Mark Twain called the era the Gilded Age: shiny on the surface, with corruption and poverty underneath.
- Andrew Carnegie (steel) used vertical integration: owning every stage of production, from iron mines to railroads.
- John D. Rockefeller (Standard Oil) used horizontal integration: buying up competitors in the same business.
- A monopoly controls an entire industry. A trust combines companies under one board.
- Supporters called these men captains of industry for building the economy; critics called them robber barons for crushing rivals and underpaying workers.
- Social Darwinism misapplied evolution to society, claiming the rich succeeded because they were "fittest." Carnegie's Gospel of Wealth said the rich had a duty to give back; he funded thousands of libraries.
- The Sherman Antitrust Act (1890) banned trusts that restrained trade, but it was weakly enforced at first.
| Strategy | Meaning | Example |
|---|---|---|
| Vertical integration | control all steps of making a product | Carnegie Steel |
| Horizontal integration | merge with or buy rivals | Standard Oil |
Practice
A company owns iron mines, coal fields, ships, railroads and steel mills. This strategy is called:
Controlling every step of production is vertical integration.
By 1880 Standard Oil controlled about 90 percent of U.S. oil refining by buying out rival refineries. This is an example of:
Buying competitors in the same industry is horizontal integration.
Which was the purpose of the Sherman Antitrust Act of 1890?
It was the first federal law against monopolies, though early courts often used it against unions instead.
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