topic 4-corporations
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U.S. Industrial Revolution
1860–1920
Topic 4: The Rise of Corporations
Topic 4: The Rise of Corporations
Industrialization in the United States in the late
19th and early 20th centuries was
characterized by the rise of corporations.
ObjectiveAnalyze how the rise of
corporations, transformed the American economy from an agrarian to an increasingly urban industrial
society.
Write the
objective in your
handout.
1. Define: Shares and Stocks
Definitions associated with corporations
Write:Shares: one of the equal fractional parts into which the stock of a corporation is divided and sold on the stock exchange. Stocks: the shares of a particular company or corporation.
Write
2. Define: Monopoly
Write: A company controls all or most of the sales of a specific good or product.
3. What is a corporation?
Corporation
OWNED BY INDIVIDUA
LS
BOARD OF DIRCTORS
makes decisions
CORPORATE OFFICERS run
day-to-day operations
ADVANTAGES
TO EXPAND the business, it can raise money by selling shares of
stock
STOCKHOLDERS can lose
only what they invest
IT CAN CONTINUE TO EXIST after its founder leaves
In the 1800s COMPETITION was fierce. To
gain dominance some companies merged to form
a trustBOARD OF
TUSTEES ran it like a single corporation
When a trust gained complete control over an
industry it held a monopoly
Monopoly had no competition. It
could raise prices or lower quality at will.
New business organization: Corporations
Write: Corporations originated during the U.S. Second Industrial Revolution
4. When did corporations originate?
TODAY’S CORPORATIONS
The Rise of Big Corporations
Definitions associated with corporationsEntrepreneursMarket Economy
laissez-faire Monopoly
Social Darwinism
5. How are heavy industries tied to
corporations?
Write: Heavy industry companies grew
so large that they evolved
into corporations.
Entrepreneurs
Write: Entrepreneurs were willing to risk large sums of money in new business, and were fiercely competitive trying to stomp out the competition. Much of the public attitude thought the competition was perfectly natural.
6. How did entrepreneurs and public attitudes help the rise of big business (corporations) in the late 1800s?
7. Define: Market EconomyWrite: A system of distributing resources based only on the interaction of market forces, such as supply and demand.
8. Define: supply and demand
Write:Supply is how much of something is available. Demand is how much of something people want.
Put the two together, and you have supply and demand. Generally speaking, the price of something will go up if the demand goes up.
9. What role does the government have in a Market Economy?
Write:A true market economy is free of governmental influence (laissez-faire) , and other external interference.
Before the Progressive Era, the United States was an example of a Market Economy.
Write:It means “hands off.” It describes the approach that government took concerning businesses. They did not interfere in the affairs of business.Prices, quality and competitive practices are solely determined by competition.
Read but do not write:This approach was advocated by the English economist Adam Smith in his work The Wealth of Nations and followed by the US government up until the late 1800’s, early 1900’s
10. Define: Laissez-Faire
Market Economy (capitalism) A system distributing resources based only on the interaction of market forces such as supply and demand—free of governmental influence
Market Economy
11. Define: Social Darwinism
Write:It is a view of society based on Charles Darwin's scientific theory of natural selectionIt is a belief that natural selection also applied to society. Stronger people, businesses, and nations would prosper. Weaker ones would fail.
Write: This theory gave business the excuse for
not providing very well for
their workers.
The Rise of Big CorporationsBig business prospered in
the late 1800s because of entrepreneurs
Started new ventures within the economic system called free
enterprise or market economy (businesses are privately owned)Laissez-faire market
economy companies operated without government interference----was used during the late 1800s tojustify unregulated business growth
Huge inequalities under market economy—entrepreneurs became very rich but their workers were
extremely poor
Some people explained inequalities by a
philosophy known as Social DarwinismSocial Darwinism:
Stronger people, businesses, and nations would prosper. Weaker people and businesses
would fail.
taking over other companies that make that same product as your company so as to reduce the competition
Rockefeller took over other refineries.
Horizontal integration
Example: Oil Monopoly
How an Oil Monopoly Was Created
How an Oil Monopoly Was Created
Acquiring companies that supply that necessary materials for production or companies that transported the materials that the company producesRockefeller acquired companies that supplied the oil business, such as pipelines and railroad cars.
vertical integrationExample: Oil Monopoly
He acquired companies that supplied the oil business and took over other oil refineries, eliminating his competition.
He eventually controlled 90% of the world oil trade=MONOPOLY.
How an Oil Monopoly Was Created
Example Oil Monopoly
In 1904 Puck published an iconic cartoon “Next!”. It shows an oil tank/octopus hybrid with the name “Standard Oil” on the Tank. The octopus has arms “wrapped around the steel, copper, and shipping industries, as well as a state house, the U.S. Capitol, and one tentacle reaching for the White House.”
How an Oil Monopoly was Created
Monopoly example: Standard Oil
Write:(1839–1937) American industrialist and philanthropist; he made a fortune in the oil business and establish a monopoly in the oil business
12. IdentifyJohn D. Rockefeller
Industrial Tycoons, who created monopolies and created corporations
Write:(1835–1919) American industrialist and humanitarian; he focused his attention on steelmaking and made a fortuneCarnegie Steel Company Monopoly--dominated the American steel industry.
13. Identify Andrew Carnegie
Industrial Tycoons, who created monopolies and created corporations
Write:(1794–1877) American business leader who controlled (had a monopoly) the New York Central Railroad and up to 4,500 miles of railroad track; he later donated $1 million to a Tennessee university.
14. Identify: Cornelius Vanderbilt
Industrial Tycoons, who created monopolies and created corporations
Write:(1831–1897) American business leader who made a fortune in the railroad business by designing and building railroad cars, including a sleeper car.
15. Identify: George Pullman
Industrial Tycoons, who created monopolies and created corporations
Write:Some Americans viewed the tycoons of the late 1800s as robber barons, who: destroyed competitors with tough tacticsDid not care for the welfare of their workersGathered huge wealth for themselves
Industrial Tycoons, who created monopolies and created corporations
16. Define: Robber Barons
Write:Some Americans viewed the tycoons of the late 1800s as robber barons, destroying competitors with tough tactics. Others, however, saw them as captains of industry, using their business skills to strengthen the economy.
17. Do you think the four industrialists discussed in the text are best described as “robber barons” or “captains of industry”? Explain your answer.
Industrial Tycoons, who created monopolies and created corporations
The Rise of Corporations
READ:The economic and political power of trusts became a concern for the American public during the late 1800s. (Trusts control many companies in an industry through a single board of directors.)
By lowering prices and fixing costs and expenditures, trusts drove many smaller companies out of business. For example, John D. Rockefeller and his associates formed the Standard Oil Company of Ohio in 1870. By 1882 the company monopolized nearly all of the U.S. oil industry.
The Rise of Corporations
The Rise of Corporations
READ:Such a concentration of wealth and economic power dramatically influenced the landscape of the United States economy. As a result, most Americans were very suspiciousof trusts. Although trusts were capable of efficient production, they usually did so at the expense of their workers who often earned just enough money for survival. In addition, by monopolizing entire segments of industry, trusts threatened to squeeze small andemerging businesses out of existence.
ObjectiveAnalyze how the rise of corporations,
heavy industry, and technological innovations transformed the American
economy from an agrarian to an increasingly urban industrial society.
Essential QuestionsDid rapid industrialization improve the lives of Americans?
Are the benefits of progress worth the costs?