From Invention to Industrial Growth

Review Questions

Which of the following “robber barons” was notable for the exploitative way he made his fortune in railroads?

  1. Jay Gould
  2. Cornelius Vanderbilt
  3. Andrew Carnegie
  4. J. Pierpont Morgan

Hint:

A

Which of the following does not represent one of the management strategies that John D. Rockefeller used in building his empire?

  1. horizontal integration
  2. vertical integration
  3. social Darwinism
  4. the holding company model

Hint:

C

Why was Rockefeller’s use of horizontal integration such an effective business tool at this time? Were his choices legal? Why or why not?

Hint:

Horizontal integration enabled Rockefeller to gain tremendous control over the oil industry and use that power to influence vendors and competitors. For example, he could pressure railroads into giving him lower rates because of the volume of his products. He undercut competitors, forcing them to set their prices so low that they could barely stay in business—at which point he could buy them out. Through horizontal integration, he was able to create a virtual monopoly and set the terms for business. While his business model of a holding company was technically legal, it held as much power as a monopoly and did not allow for other businesses to grow and compete.

What differentiated a “robber baron” from other “captains of industry” in late nineteenth-century America?

Hint:

“Captains of industry” (such as Carnegie or Rockefeller) are noted for their new business models, entrepreneurial approaches, and, to varying degrees, philanthropic efforts, all of which transformed late nineteenth-century America. “Robber barons” (such as Gould) are noted for their self-centered drive for profit at the expense of workers and the general public, who seldom benefitted to any great degree. The terms, however, remain a gray area, as one could characterize the ruthless business practices of Rockefeller, or some of Carnegie’s tactics with regard to workers’ efforts to organize, as similar to the methods of robber barons. Nevertheless, “captains of industry” are noted for contributions that fundamentally changed and typically improved the nation, whereas “robber barons” can seldom point to such concrete contributions.