Big Business Rises

Corporations

• A form of group ownership
• Number of people share ownership
• If a corporation experiences financial problems, the investors lose no more than what they invested.
• Perfect solution for expanding business
• had the same rights as an individual
• could buy and sell property, sue in the courts
• interests could be sold

Corporations are Perfect for business:

• huge amounts of capital (money)
• operated in several different areas
• This is to the railroad and telegraph
• important to industrial capitalism

"30 Rock"

• Industrialists like J.P. Morgan and John D. Rockefeller were involved in cartels.
• Cartles
• business that make the same thing agree to limit their production to keep prices high.
• Example: Rockefeller and railroads made an agreements making it difficult for his competitors to ship products

HOrizontal Integration

Horizontal Integration

• Merging competing firms into a giant company
• lower production costs
• way to gain a monopoly
• Monopoly is complete control of a product or service
• with no competition, the business can set prices
• Rockefeller was the first to use Horizontal Integration

Production Management

• management innovation
• designed to maximize the efficiency of production process
• Business owners could meet production needs with fewer workers

Ohio Law

• Says one corporation can't buy stock in another
• can create monopolies
• Rockefeller would find a way around this...

companies assign their stock to a board of trustees. then comping it into a new corporation.

Standard Oil

• Rockefeller and his Standard oil trust
• Controlled most of the oil refined in the United States

Andrew Carnegie

Verticle Integration

Vertical Integration

• gaining control of the different businesses that are involved in all stages of manufacturing.
• Example: Carnegie owned the coal mines and iron ore fields that provided raw materials for his steel, as well as the sips and railroads that brought the steel to his mills
• reduced the cost of production

Vs. Captains of Industry

small businesses vs Trusts

• squeezed out of business by joint trusts
• those smaller that joined trusts received few profits
• consumers were against high prices

backlash against trusts, monopolies, cartels

• consumers, workers, and the government being to believe business leaders had unfair advantages.
• Laissez-Faire was too hands off
• Begin to refer to these leaders as "Robber Barons"

Captains of Industry

Captains of industry

• some thought industrialists served the country positively
• Laissez faire policies allowed business to flourish
• helped free enterprise
• encouraged railroad, factories, and mills production
• developed technology
• stimulated innovation
• Carnegie, Rockefeller, and Vanderbilt were Philathropists

Captains of industry

• some thought industrialists served the country positively
• Laissez faire policies allowed business to flourish
• helped free enterprise
• encouraged railroad, factories, and mills production
• developed technology
• stimulated innovation
• Carnegie, Rockefeller, and Vanderbilt were Philathropists

Cause and effects

Professor William Graham Sumner

• Yale professor applied Darwin's evolution theory to society
• said, "wealth was A measure of one inherent value and those who had it were the most fit"
• "Survival of the fittest"
• Supporters of Laissez faire wanted government to stay out of private business
• Wrong to use public funds to help the poor
• used to fuel discrimination
• Said those in poverty were unfit

Changing Relationships

Attempts to regulate business

• Railroads were fixing rates
• And Pooling (entering into secret agreements to divide up the nation's freight(.
• Unfair to consumers

Interstate Commerce Commission (ICC)

• Icc put into place to monitor railroad shipping rates
• BUT: could only watch railroads that crossed state lines
• Could not make laws to control rR's transactions

Sherman Anti-Trust Act

• Sentate passed in 1890
• Outlawed trusts that operated to restrain trade or commerce
• law was seldom enforced
• courts favored business owners
• business said labor unions limited trade

Balance

• Gov't tried to limit powers to try and create a fair environment