The Rise of Big Business

Chapter 13.2

The Rise of the Corporation

Corporation

is when a number of people share ownership of a business. Corporations have the same rights as individuals.

Structure of a Corporation
Public Board

Shareholders of Directors

Managers Employees

Corporate Tactics
Advertising
Build

up an interest in a product; reach out to new prospective customers

Corporate Tactics
Monopoly
Complete

control of a product or service by one corporation.

Corporate Tactics
Cartel
Businesses

that make one product agree to limit their production which keeps prices high.

Captains of Industry
John
Oil

D. Rockefeller

Tycoon Owned Standard Oil

Andrew
Owner

Carnegie
of Carnegie Steel Corp.

Corporate Integration
Horizontal
When

Integration (Rockefeller)

one corporation buys out all of their competitors. Once horizontally integrated, the owner of the industry can set their own price.

Corporate Integration
Vertical

Integration (Carnegie)

Buying

out all the businesses that make up the supply chain of a corporation. This reduces costs, maximizes profit for the corporation manufacturing the finished product.

Another Corporate Tactic

Trusts
Because

the govt blocked corporations from owning the stock of the competition, trusts were formed. In a trust, companies assign their stock to a board of trustees, who combine them into a new organization.

Robber Barons
Trusts,

cartels, and monopolies gave powerful businessmen an unfair advantage. Consumers were hurt by high prices set by the monopolies and cartels.

Captains of Industry
Factories,

Mills, and Railroads provided decent paying jobs to millions of Americans. Industrialists support for technological innovation benefited the nation as a whole.

Captains of Industry
Carnegie,

Vanderbilt, and Rockefeller were important philanthropists made it possible for the disadvantaged to rise to wealth.

Social Darwinism
Darwin

said that animals evolved by a process of natural selection. Businessmen argued that they became wealthy through a similar process of natural selection.

Social Darwinism
Social

Darwinism was used to justify the Lassez-faire economic system to interfere would interrupt the natural selection that occurs in the economy. Social Darwinists pointed to the povertystricken condition of many minorities as evidence of their unfitness.

The Government Imposes Regulations

The

power of the business leaders worried many Americans. The power of the railroad industry was particularly worrisome to many Americans. These worries prompted the government to act legislatively.

The Government Imposes Regulations

Interstate
Created

Commerce Commission

in 1887 and charged with overseeing American business operations. Contained very little powers which the Commission could use to enforce the Act.

The Government Imposes Regulations

Sherman

Antitrust Act

Outlawed

trusts Often used as a method to block unionization of industry.

This

began a trend towards greater legislative action by Congress towards regulation of the nations industry.