Chapter 4.1: Rise of the Millionaires Information

What did JP Morgan's innovative corporate restructuring and banking practices make possible?

Turn the company's debts into profits.

What did one employee say about working for Andrew Carnegie?

"work twelve hours, and sleep and eat out ten more. You can see a man don't have time for anything else. You can't see your friends or do anything but work."

Why were influential business people called robber barons?

Because they grew successful by paying low wages, taking advantage of gaps in the laws, and sometimes ignoring the laws completely.

What was Cornelius Vanderbilt's history?

Born into a poor Dutch family in New York in 1794, he worked on the Staten Island Ferry service as a young man.

As an industry leader, what was Andrew Carnegie famous for?

Breaking strikes and labor unions, lowering wages and labor costs, and demanding 12-hour workdays.

In 1859, what was Rockefeller's first partnership?

Brokering grain, meat, and agricultural goods.

In a mixed economy, who makes most of the economic decisions?

Business owners and consumers.

What did some Americans think Andrew Carnegie, as well as the other main industrialists were?

Business tycoons or robber barons.

As a result of profit motive, what happens?

Businesses produce goods and services that are demanded by consumers in the marketplace, and they refrain from producing goods and services that they are unable to sell.

After the Panic of 1893, why did the railroad companies need JP Morgan?

They needed his investments to restore financial stability.

What is the role of the government in a mixed economy?

They regulate the markets in order to provide stability, to protect national interests, or to prevent monopolies.

In a market based economy, or free enterprise economy, decisions that businesses make are often driven by what?

Profit motive.

In whose interest are economic decisions made in a command-oriented economy?

They are intended to serve the public interest.

What did businesses do to raise the money they needed?

They began to form corporations.

What is the main purpose of a holding company?

To own substantial parts of other companies through buying and selling shares of stock.

What was Rockefeller's first job after high school?

A bookkeeper.

What did the Gospel of Wealth promote?

A moral obligation to improve the standard of living for everyone in society.

What is a holding company?

A parent corporation that owns stock or assets in other companies.

What did Rockefeller invest in 1863?

A small oil refining company.

What does a holding company NOT do?

Conduct any business activities on its own, such as producing and selling goods and services.

What is common in a traditional economy?

Customs and habits from the past are commonly relied upon to resolve issues of economic production and distribution.

What did trusts have complete control over?

Entire industries, without having a single owner.

Because family household income was limited, what happened?

Families may not have enough money to attend as many movies, concerts, or ball games as they would like.

In command-oriented economies, what is another thing that the government can do?

It can often set the prices for all of these products and services, and individual economic choices are limited.

How did Morgan gain influence?

He became a member of the boards of directors of several railroad companies.

What did Andrew Carnegie believe?

He believed that God chose who got these traits and thus decided who would be successful.

What did Carnegie believe about the duty of the wealthy?

He believed that the wealthy had a moral duty to help those less fortunate than themselves.

What did Vanderbilt do that grew his business even more?

He eventually bought more boats and then sold them all to purchase steamships.

By 1902, what was JP Morgan?

He was one of the world's most powerful railroad tycoons, owning about 5,000 miles of U.S. railroad lines.

When lawmakers began to limit trusts, what did business leaders create?

Holding companies.

What activities often form the backbone of a traditional economy?

Hunting, gathering and sustenance gathering.

How did Carnegie express his ideas?

In an 1889 essay The Gospel of Wealth.

What was Vanderbilt's first ferry business known for?

Its low prices.

Who was another industrial leader of the 1800s?

John D. Rockefeller.

What did a successful business need?

Large factories filled with expensive machinery.

What kind of laws did trusts evade?

Laws designed to prevent the formation of monopolies.

What do people who say that the government's role in the economy believe?

Market-based economies work best when consumers are free to make as many of their own economic decisions as possible.

What were Rockefeller's natural talents?

Math and business.

What is Social Darwinism based on?

Naturalist Charles Darwin's biological theory of natural selection.

In what industries did Cornelius Vanderbilt build his fortune?

Shipping and railroads.

Some powerful Americans did not agree with what idea?

Social Darwinism.

What did Darwin note in his scientific studies?

Some plant and animal species were better adapted to their environments than others.

What reinforced the idea of individualism?

Stories at the time.

What do other people argue about the government's role in the economy?

Strong government regulation and oversight are necessary to ensure that all citizens are given a fair chance to succeed in a market-based economy.

What did Herbert Spencer call Darwinian evolution in the human population?

Survival of the fittest.

Over time, what did the technological advances of industrialization require?

That businesses invest more money in machines, buildings, and distribution methods than ever before.

What is the main authority in a command-oriented economy?

The central government.

What did JP Morgan oppose?

The disorderly competition between many railways in the East, so he gained control of them and reorganized them by purchasing large quantities of stock.

Throughout the nation's history, what has been a constant debate?

The extent of the government's authority in the economy.

In traditional economies, what is the role of property rules?

They are embedded in customs and habits.

In a market economy, what is driven by consumers?

The fundamental question of "what to produce".

In a command-oriented economy, infrastructure and productive machinery may be publicly or privately owned, but what role does the government play?

The government decides how they are used.

What is one belief about the government's authority in the economy?

The government's role should be minimal.

What is individualism?

The idea that each person was responsible for his or her own successes or failures in business and in life.

What is laissez-faire, which in French means "leave it alone"?

The idea that government's role in the economy should be limited.

What did Carnegie's philanthropy work against?

The ideas of Horatio Alger's individualism and survival of the fittest in Social Darwinism.

What changed the way businesses were organized?

The increased need to raise huge amounts of cash to finance rapid improvements.

What did Andrew Carnegie agree with?

The notion that certain people were born with more talents or skills.

What is oil refining?

The process of turning crude oil, which is extracted from the ground as petroleum, into useful products such as gasoline and heating oil.

Why were the industrialists called robber barons?

Their methods of getting money were unjustified.

What would people's hard work allow?

Them to improve their circumstances in life.

Even if people did not have the money, what was another limitation?

There are only so many hours of free time each day, and movie theaters, concert venues, and stadiums only have a limited number of seats.

What does scarcity mean?

There are simply not enough resources to satisfy all human wants for goods and services.

How did scarcity affect families in the Gilded Age?

They were forced to make decisions about how to spend their entertainment dollars.

Why were the industrialists called captains of industry?

They were philanthropists and helped the government in financial times of need.

What does Social Darwinism believe?

Those that were better adapted were the most likely to survive, reproduce, and perpetuate themselves.

Native to New York, when did Rockefeller move to Cleveland?

When he was in high school.

In 1882, what was the first major trust?

When the Standard Oil company combined with other oil refineries and businesses.

What did Vanderbilt do to begin a ferry business of his won?

With $100 he bought his own boat.