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The Rise of Big Business

The Rise of Big Business. Chapter 20: Section 3. Growth of Corporations . Until late 1800’s, businesses owned by individual Advances in technology pushed the need for new equipment. Corporation: business owned by investors who buy part of the company through shares of stock. .

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The Rise of Big Business

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  1. The Rise of Big Business Chapter 20: Section 3

  2. Growth of Corporations • Until late 1800’s, businesses owned by individual • Advances in technology pushed the need for new equipment. • Corporation: business owned by investors who buy part of the company through shares of stock.

  3. Corporate Advantages Over Private Business: • Sell stock to raise money • Exists after founder dies or leaves (banks more willing to lend) • Minimizes investor risk, who do not have to pay corporation’s debts.

  4. How Stocks Work • Company X wants to invest in capital. • Company X issues stocks. • Investor Y now buys stock from Company X. • Investor Y is now a shareholder. • Company X invests the money (from stock purchases) from Investor Y. • Investor Y is now entitled to earnings and profits from Company X.

  5. Monopolies • Company that wipes out competitors • Develop in late 1800’s due to little regulation • Develop within the oil and steel industries

  6. John D. Rockefeller • Has monopoly over oil industry • Colludes with RR companies to carry oil at lower price • Purchased his own pipelines.

  7. Trust (1882) • Legal body created to hold stock in many companies. • Rockefeller’s Standard Oil Trust owned 95% of all oil in US by 1880. • Consumers were faced to pay high price.

  8. Andrew Carnegie • Uses same tactics as Rockefeller to control steel industry. • Controls means to production and transportation of steel.

  9. Philanthropy • Both Rockefeller and Carnegie gave away large sums of money to charity.

  10. The “Rags to Riches” Myth • Most who made millions came from upper class families. • The Gilded Age is born.

  11. Geography of Industry

  12. The Agricultural South • Southern economy grew very slowly after the Civil War. • Many remained in poverty. • Industry grew in very few areas.

  13. The Sharecroppers Dilemma • Sharecroppers had to buy seed and tool on credit. • Price of cotton was very low. • Low cotton prices produced little profit, leaving sharecroppers in debt. • With little education, landowners could cheat the sharecroppers, further increasing their debt.

  14. Political Cartoons

  15. Standard Oil

  16. Andrew Carnegie

  17. Review: Section 3 • Name two advantages corporations have over privately owned businesses. • Name the two dominated industries and the two men who dominated them. • True or False: Most men who made millions during the Gilded Age, came from poverty and lower class backgrounds.

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