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joensf Level 77
Answered 3 years ago
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They created monopolies

Vertical integration
From Wikipedia, the free encyclopedia

In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration.

Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly, although it might be more appropriate to speak of this as some form of cartel.

Nineteenth century steel tycoon Andrew Carnegie introduced the idea of vertical integration. This led other businesspeople to use the system to promote better financial growth and efficiency in their companies and businesses.

http://en.wikipedia.org/wiki/Vertical_in...

Vertical integration was Carnegie's method of owning the industries (coke, iron & railroad) that supported his steel industry. This way, he paid less to make his steel, and was able to sell his steel for less. So, the majority of people bought his steel.

Carnegie didn't pay his workers much. And when they organized for better pay and working conditions, he locked them out and replaced them, he also had hired guns (Pinkertons) intimidate the workers. These strategies stopped organized labor in the U.S. for many years.

http://library.thinkquest.org/J003298F/p...
Additional Details added 3 years ago
John D. Rockefeller was born in 1839, and died in 1937. He was an industrialist and a philanthropist, and he created the Standard Oil Company, and the American petroleum industry. In 1859, the first successful oil drilling took place in western Pennsylvania. That event made Rockefeller realize that Cleveland was a good place for oil drilling, and in 1863 he built his first refinery in partnership with others. The early oil business was dangerous. Rockefeller, Henry Flagler, and others created the Standard Oil Company. In 1870, Rockefeller owned 26.7% of the stock. Back then, railroad rebates and predatory pricing were legal, so the Standard Oil Company used those to increase its hold over the American oil industry, until it controlled 90% of it in 1880.

http://library.thinkquest.org/J003298F/p...
Additional Details added 3 years ago
Matthew Josephson called them "Robber Barons". He wanted readers to think back to their European history classes, back to thugs with spears on horses who did nothing save fight each other and loot merchant caravans that passed under the walls of their castles. He judged that their wealth was in no sense of their own creation, but was like a tax levied upon the productive workers and craftsmen of the American economy. Many others agreed: President Theodore Roosevelt--the Republican Roosevelt, president in the first decade of this century--spoke of the "malefactors of great wealth" and embraced a public, political role for the government in "anti-trust": controlling, curbing, and breaking up large private concentrations of economic power.

http://econ161.berkeley.edu/Econ_Article...
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