Lesson 3: Captains of Industry

Lesson Focus

Explore how John D. Rockefeller and Andrew Carnegie built vast oil and steel empires. Their ruthless efficiency and ambition embodied the American Dream, transforming industry and defining an era of 'big business' in America.

People to Know

John D. Rockefeller, Andrew Carnegie

Learning Objectives

• Compare the methods Carnegie and Rockefeller used to dominate their industries and achieve incredible success.
• Explain Social Darwinism and the Gospel of Wealth, the philosophies that justified their immense fortunes and business practices.

The oil industry was chaotic, so John D. Rockefeller saw a chance for profit and order. He used horizontal consolidation, creating the Standard Oil Company. By securing secret rebates from railroads, he drove competitors out of business.

In 1882, he formed the Standard Oil Trust, combining 40 companies under a single management.

This gave him a near-monopoly on oil refining, but his brutal methods, exposed by journalist Ida Tarbell, made him widely disliked.

Andrew Carnegie foresaw that railroad expansion would create a huge demand for steel. He built the world's most modern steel mill in 1873, using the new Bessemer process and open-hearth process to make steel cheaply.

Note that unlike Rockefeller, he used vertical combination, controlling every step from mining ore to shipping the final product.

This efficiency made him the world's top steelmaker, though he crushed unions and kept worker wages low.

The huge wealth gap between industrialists and workers led to questions about fairness. To justify their success, business leaders adopted the philosophy of social Darwinism.
They applied Charles Darwin's

The huge wealth gap between industrialists and workers led to questions about fairness. To justify their success, business leaders adopted the philosophy of social Darwinism.

They applied Charles Darwin's theory of "survival of the fittest" to human society, arguing that their wealth was a natural result of being the most 'fit' in a competitive world. This view suggested that success and poverty were natural outcomes, not social problems.

Building on social Darwinism, Andrew Carnegie believed the wealthy had a duty to society. He created his "Gospel of Wealth," arguing that surplus money should be used for the community's benefit.

He practiced philanthropy, which are actions benefiting society, by funding projects like libraries to help people improve themselves.

As a result, Carnegie and Rockefeller donated hundreds of millions, establishing a new model for large-scale charitable giving by the rich.

Public anger over the power of trusts forced the government to act. In 1890, Congress passed the Sherman Antitrust Act, which made monopolies and combinations that restrained trade illegal.

However, the law was vaguely worded and weakly enforced.

In the 1895 United States v. E. C. Knight Company case, the Supreme Court sided with business, making the act ineffective and leading to even more business consolidation.