Transcript The Rise of Big Business

The Rise of Big Business
Objectives:
- Define the terms corporation, stock, limited liability
- Explain how a corporation works
- Identify the largest industries & the leader of the
Gilded Age
- Determine whether these people were “Robber
Barons” or “Captains of Industry”
- Define monopoly: Explain the different forms that
the took
- Explain how the government reacted to these
developments
Free Enterprise Philosophy
Laissez-Faire: Let alone
Social Darwinism: Strong survive
Self-Made Man: Rugged Individualism
Rise of American Industry
Organization
owned by several
people
– 1st step in the
industrial process
Stock: Shares of
ownership
Limited Liability:
People can only
lose what they put
in
Corporation
Big Business
 Monopoly:
Total control of a
market
Goal: Increase profits
by cutting costs and
eliminating “ruinous
competition”
Vertical Integration vs Horizontal Integration
Vertical Integration
Changing company efficiency by controlling
operation factors (monopolizing production
process)
Raw Materials
Manufacturing /
Processing
Consumers
Vertical Integration
Cheese
Pizza
Speedy
Delivery
Service
Scott’s Cheesy and Speedy Pizza Delivery
Horizontal Integration
Cooperation / merger of firms who
produce the same product
Eliminate “Ruinous Competition”
Horizontal Integration
=
Pepsi
Coke
Pokepsi
Pool
Division of business profits among
the firms
Growth of Industry
Railroad
Steel Industry
Oil Industry:
Banks
Growth of Industry
Business Leaders
Robber Baron: Negative term
created by farmers in regard to
big business leaders.
Business Leaders
Captains of
Industry: Positive
view of
industrialist.
Transformed
American economy
Donated large
sums of money to
charity.
Government Response
1887: Interstate Commerce Act: 1st federal
law regulating monopolies power. Deemed
pools illegal
Congress: Sherman Anti-Trust Act (1890):
“conspiracy in restraint of
trade is illegal”
Bans the creation of trust device