Chapter 19, Section 2 Big Business

1. Chapter 19, Section 2Big Business

2. Corporations • Corporations – businesses that sell portions of ownership • Stockholders in a corporation get a % of the profits • Limited liability – if a corporation fails, stockholders lose only the money they invested • Corporations encouraged more investment in business which made them more profitable New York City Stock Exchange ca. 1900

3. Andrew Carnegie • Who? – poor Scottish immigrant who grew up working in the railroad business • What? – built up a huge steel mill business and became the world’s riches man when he sold his company • When? – late 1800s • Where? – US (Pennsylvania) • Why Important? –

4. Vertical integration • Who? – businessmen like Andrew Carnegie • What? – ownership of businesses involved in each step of a manufacturing process (example: Carnegie bought iron ore mines, coal fields, and railroads to lower his costs) • When? – late 1800s • Where? – US • Why Important? –

5. John D. Rockefeller • Who? – businessman who started an oil-refining company at age 21 • What? – his Standard Oil Company became the country’s largest oil refinery company and slowly took control of the whole industry • When? – late 1800s • Where? – US • Why Important? –

6. Horizontal integration • Who? – businessmen like John D. Rockefeller • What? – owning or controlling all businesses in a certain field (as a trust or monopoly) (example: Rockefeller’s company controlled 90% of the oil-refining business in his Standard Oil Trust) • When? – late 1800s • Where? – US • Why Important? –

7. Leland Stanford • Who? – important business leader and politician • What? – became Governor of California, was one of the founders of the Central Pacific which helped build the transcontinental railroad, and founded Stanford University • When? – late 1800s • Where? – US • Why Important? –

8. Social Darwinism • Who? – business leaders • What? – a view on society based on scientist Charles Darwin’s theory of natural selection that applies Darwin’s “survival of the fittest” theory to justify how some humans succeeded in business and others did not • When? – late 1800s • Where? – US • Why Important? –

9. Criticisms of Big Business • Child labor • Low wages • Poor working conditions • wiped out competition • Drove out smaller competitors to their businesses • Too much of the nation’s money in the hands of too few people

10. Robber Barons or Captains of Industry? • Philanthropy – giving money to charities • Robber Barons – nickname for the rich industrialists who greatly profited off of unfair or corrupt business practices and off the labor of their poorly treated workers • Captains of Industry – the same people but viewed positively as those who helped our nation’s economy and production grow and who gave a lot of money to charities Carnegie Hall

11. Differences between Trusts and Monopolies • Trusts – a legal arrangement grouping together a number of companies under a single board of directors (or trustees) • Monopolies – total ownership of an industry, product, or service by a single company

12. Sherman Antitrust Act • Who? – passed by members of Congress • What? – a law that made it illegal to create monopolies or trusts that restrained trade • When? – 1890 • Where? – US • Why Important? – though it tried to reduce the influence of trusts it didn’t define a trust in legal terms and was hard to enforce; it was an important first step though