Transcript Rise of Corporations

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Rise of the Corporation
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The Need For Cash
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Until 1880, most businesses owned by person or partnership
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Solution was the corporation
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A group that is authorized by law to carry on as a business
enterprise with the rights of a single individual
Entrepreneur takes advantage of new innovations and
manage the 3 Factors of Production
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The Entrepreneurs
John Rockefeller
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Builds 1st oil drill in 1859 (Titusville, PA.)
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Establishes 1st oil refinery in 1863
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Creates “horizontal” integration
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Controls key phase of process (refining oil)
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Build oil “trust” to control 90% of oil refinery business
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Used “rebates” from R.R. to control competitors
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The Entrpreneurs
Andrew Carnegie
Invests in building steel mills
Uses “vertical integration”
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Controls all phases of industry
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Bought iron ore mines in Minnesota
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Used his own shipping line to transport materials to
Pittsburgh steel mills
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IMPACT OF BIG BUSINESS
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Richest 1% earn more than poorest 50%
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40% in US live below the poverty line (make $1.50 / day)
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By 1880 45% of workers barely earn above $500 / yr.
(poverty line)
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One-half of families live w/o property
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The Philanthropists
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Andrew Carnegie
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Began work as a bobbin boy for $1.20/week
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Used fortune to build 3000 libraries
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Carnegie-Mellon University
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Carnegie Hall for the Performing Arts
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Carnegie Institute for Research
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Donated total of $300 million dollars by 1919 ($64 Billion in
today’s $$)
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The Philanthropists
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John Rockefeller
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In his first job as bookkeeper: he earned 50 cents a day
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Net Worth $663 Billion (2008 figure)
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Donated a total of $550 million over his lifetime
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Funded universities (Univ, of Chicago; Spellman, Yale)
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Funded medical research through Foundation (attacked
yellow fever)