The Growth of Big Business

1
The Growth of Big Business
2
During the late 1800s the nations experienced a
boom in industrial output and profits

• Why?
• Better capital products- machines, inventions and
  technologies which help workers produce more.
• Better management and entrepreneurs- the captains
  of industry although considered by many to be
  ruthless they organized production more cost
  effective.
• Better Labor- workers to use the new machines and
  work in the new factories.

3
Robber Barons
4
Robber Barons

• implies business leaders built fortunes by
  stealing from the public
• -depleted country of natural resources and
  persuaded legislatures to make laws in their
  favor
• -employees were paid less and treated more
  unfairly

5
(No Transcript)
6
Captains of Industry

• suggest that business leaders served their
  nation in a positive way.
• building factories, increasing supply of goods,
  raising productivity, expanding markets
• created jobs, allowed many Americans to raise
  standard of living
• created museums, libraries, universities, etc

7
John D. Rockefeller

• Standard Oil Company
• Philanthropist University of Chicago,
  Rockefeller Foundation
• by end of his life had given away more than 500
  million to charity

8
Andrew Carnegie

• Gospel of Wealth People should be free to
  make lots of money, then give back as much as
  they can afford
• by his death had given more than 350 Million to
  charity

9
(No Transcript)
10
Social Darwinism

• People/Government should do little to interfere
  with peoples pursuit of happiness/money
• most people, including government officials,
  believed in this principle so the government did
  not tax business profits or regulate their
  relationships with workers.

11
Business on a Larger Scale

• Bigger, stronger, more money, more workers, more
  products than ever before.

12
Differences from Early American Business

• Larger pools of capital
• -more money was needed to run these gigantic
  businesses so money was either invested from
  personal money or borrowed from investors
• never before was this done on a large scale

13
Wider Geographic Span

• -Railroads, communication, etc made widespread
  business operations more feasible

14
Broader Range of Operations

• combined multiple operations no longer as
  limited and specialized in one or two areas

15
Revised Role of Ownership

• owners often hired managers to run businesses

16
New Methods of Management

• -accounting, financing, etc. could now be done
  within the company

17
New Market Structures

• Oligopoly
• Monopoly
• Cartel
• Vertical Consolidation
• Economics of Scale
• Horizontal Consolidation
• Trust

18
New Market Structures

• Oligopoly -market controlled by only a few large,
  profitable firms
• -most people wanted
• to get into some sort of
• business or another,
• but not everyone had
• the means to do so

19
New Market Structures

• Monopoly- company that has complete control over
  the market
• accomplished by driving others out of business

20
New Market Structures

• Cartel -agreement by firms in the same field to
  keep prices high
• companies were always looking for new ways to
  stay ahead of the game and control the market
  because monopolies and cartels were not
  fool-proof

21
New Market Structures

• Vertical Consolidation -
• when a company owes all the
• phases of a products development
• Ex-Andrew Carnegies steel
• operations of production

22
New Market Structures

• Economics of Scale --allowed him (Andrew
  Carnegie) to lower prices and drive people out
  of business because he sold a cheaper product
  that others could not compete with

23
New Market Structures

• Horizontal Consolidation-combined multiple
  operations

no longer as limited and specialized in one or
two areas
24
New Market Structures

• Trust -board of trusties from various companies
  manages them as one

25
Sherman Antitrust Act

• nations first attempt to limit the control that
  an industry has over the market
• passed because of fears about big business
• not regularly enforced because of pro-big
  business judges