The Rise of Industry

(Adam) Smith was among the first to make a clear and convincing case that when individuals follow their own self-interest, it automatically works to the benefit of society as a whole. As individual competitors pursue their own maximum profit, they are thus forced to be more efficient.

This results in cheaper goods in the long run. Free competition in all markets and with all goods and services is thus to be encouraged; government intervention serves only to make operations less efficient and is thus to be avoided. The same principles apply to international trade. There should be a minimum of government interference in the way of duties, quotas and tariffs. Smith’s is the classical argument in support of free trade.

Gerald Cavanagh, American Business Values in Transition(Englewood Cliffs, NJ.: Prentice Hall. 1976). 42-43

Document B

Herbert Spencer proposed a harsh “survival of the fittest” philosophy. The bright and able contribute most to society, and so are to be encouraged and rewarded. The poor, the weak, and the handicapped demand more than they contribute, and so should not be supported but rather allowed to die a natural death. Contact with harsh and demanding reality is a maturing experience that should not be diluted by well-intentioned but in reality destructive charities and handouts.

If “natural” principles were followed, evolution and the survival of the fittest in the competition of human life would be the result. Spencer did not set out to examine any particular society and its values: rather, his critique was proposed as “culture free.” According to Spencer, it applied to all people for it was derived from basic, organic principles of growth and development. Spencer appliedto society the same principles that Charles Darwin saw in biological life – hence the name, Social Darwinism.

Gerald Cavanagh, American Business Values in Transition

Document C

This, then, is held to be the duty of the man of Wealth: First, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community – the man of wealth thus becoming the mere agent and trustee for his poor brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing them better than they would or could do for themselves…

Andrew Carnegie, “Wealth.” North American Review.CXLVIII (June, 1889). 661-662.

Summarize in a sentence or two the philosophy of each of the following: Laissez-faire capitalism

Social Darwinism

Gospel of Wealth

How does Social Darwinism reinforce laissez-faire?

How does the Gospel of Wealth help to justify the philosophy of Social Darwinism?

Part II: The Industrialists – Using your book, or information from ABC-Clio, fill in the following chart.

|Name |Industry |Background |Strategies for Business |Wealth/Accomplishments | |John D. | | | | | |Rockefeller | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |Andrew | | | | | |Carnegie | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |J.P. | | | | | |Morgan | | | | | | | | | || | | | | | | | | | | | | | | | | | |

Part III: The Rise of Industry – Answer the following.

Identify each of the following and explain its significance to the building of the Transcontinental Railroad: Union Pacific

Central Pacific

The “Big Four”

Golden Spike

How were the railroads aided by the government? How did this lead to scandal?

In what ways did the growth of railroads affect the nation? Be sure to include both positive and negative issues.

What are “trusts”? What actions did they take to limit competition?

Differentiate between “horizontal” and “vertical” integration.

Identify and assess the impact of the following:The Bessemer Process

Alexander Graham Bell (be sure to address the impact of his invention)

Thomas Edison (be sure to address the impact of his inventions)

Part IV: Analysis – Answer ONE of the following questions in the online forum on the American Studies MyPISD page.

In what ways is the business climate of today and the last few years similar to that of the 19th Century? Have we learned anything from the experiences of the Gilded Age?

Historians often describe 19th Century businessmen in two contradictory ways: Captains of Industry, who should be celebrated as ingenious and industrious capitalists who transformed the American economy and built an industrial giant. Robber Barons, who deserve to be condemned as immoral, greedy, can corrupt businessmen who used bribery, illegal business practices, and cruel treatment of workers to limit opportunities for their competitors and build their own wealth at the expense of the working class.

Which of these is the more accurate characterization of these men? Explain your answer.

The businessmen of the 19th century were truly captains of industry, who should be celebrated, instead of beingcalled Robber Barons. Most who use the term “robber barons” are confused about the role of capitalism in the American economy. In some cases, of course, the entrepreneurs commonly labeled “robber barons” did indeed profit by exploiting American customers, but these were not market entrepreneurs.