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Reading 6.6
Rise of Industrial Capitalism
| Term | Definition |
|---|---|
| Nation’s First Big Business | Railroad companies became the first companies to grow so large that they could dictate national economics and politics. |
| American Railroad Association | Organization that divided the country into four time zones for the simplification of transportation, which resulted in railroad time becoming standard time for all Americans. |
| Time Zones | Geographical areas that observe a uniform standard time for legal, commercial and social purposes, which was started by the American Railroad Association in the United States. |
| Consolidation | Absorption of competing companies into one larger company, such as competing railroads being integrated into one trunk line between major cities. |
| Cornelius Vanderbilt | Businessman who amassed a fortune modernizing railroad lines by converting them to common gauge steel rails and creating linkages of major cities in the East and Midwest. |
| Jay Gould | Railroad speculator who made millions by selling off assets and watering stock and later attempted to control the gold market through a scheme involving President Ulysses S. Grant. |
| Watering Stock | Inflating the value of a corporation’s assets and profits before selling its stock to the public, which is one of the tactics utilized by Jay Gould to amass his fortune. |
| Rebates | Discounts and kickbacks railroads offered to favored shippers in an attempt to survive, which resulted in much higher costs for smaller customers such as farmers. |
| Pools | Competing companies agreed to secretly fix rates and share traffic, which was a tactic utilized by railroad companies to increase profits. |
| Bankruptcy | Legal process of being declared unable to meet legitimate financial obligations or debts, therefore requiring special supervision by the courts. |
| J. Pierpont Morgan | Wall Street banker and financier who consolidated many bankrupt railroads, bought Carnegie Steel and turned it into the world’s first billion-dollar corporation, U.S. Steel Corporation. |
| Interlocking Directorates | Same directors running competing companies, which allowed wealthy business leaders to create regional railroad monopolies. |
| Andrew Carnegie | Poor Scottish immigrant who eventually became an investor, entrepreneur and industrialist who founded Carnegie Steel and donated more than $300 million to charity during his lifetime. |
| United States Steel | Company created by J. P. Morgan after he bought Carnegie Steel for more than $400 million, which he turned into the first billion-dollar company in the world. |
| John D. Rockefeller | Founder and Chairman of the Standard Oil Trust, which grew to control nearly all American oil production and distribution and formulated the horizontal integration business tactic. |
| Standard Oil | Oil company and trust founded by John D. Rockefeller, which grew to control nearly all American oil production and distribution and formulated the horizontal integration business tactic. |
| Monopoly | Company that dominates a market so much that it faces little to no competition from other companies and can artificially increase and/or lower prices, such as Standard Oil. |
| Trust | Organization or board that manages the assets of other companies, which can be used to form a monopoly, such as Standard Oil. |
| Horizontal Integration | Process through which one company builds a monopoly by taking control of all its former competitors in a specific industry, such as Standard Oil and the oil refining industry. |
| Vertical Integration | Process through which one company builds a monopoly by taking control of all stages of making a product, such as Carnegie Steel and the steel industry. |
| Holding Company | Business created to own and control diverse companies, such as J. P. Morgan and his business interests in banking, railroads and steel. |
| Laissez-Faire | Economic theory that business should be regulated by the "invisible hand" of the law of supply and demand and not by government. |
| Adam Smith | Economist credited with the creation of the theory of capitalism and who argued in favor of laissez-faire economics in his book The Wealth of Nations. |
| Social Darwinism | Belief that Charles Darwin’s ideas of natural selection and survival of the fittest should be applied to humanity and the marketplace, which justified the widening gap between the rich and the poor. |
| Survival of the Fittest | Charles Darwin’s theory that in nature, living things best suited to their environment thrive, which William Graham Sumner applied to society to justify the wealth gap between classes. |
| William Graham Sumner | Social Darwinist at Yale who argued that help for the poor was misguided because it interfered with the laws of nature and weakened the evolution of humans by preserving the unfit. |
| Protestant Work Ethic | Idea that material success was a sign of God’s favor and a just reward for hard work, which John D. Rockefeller used to justify his massive wealth compared to the average worker. |
| Self-Made Men | People who came from humble beginnings, but built great wealth through massive business empires such as Andrew Carnegie, which gave people hope for upward social mobility. |
| Horatio Alger | Author who promoted the idea of “self-made men” in his novels and real life examples did exist, but the rags-to-riches career was unusual and extremely rare. |
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