14-3: Big Business emerges –What is it? –Andrew Carnegie- Tycoon or Robber Baron?

Vertical integration The process by which a company buys out all of its suppliers Gave a company total power over the quality and cost of its product Helped to create a monopoly Example: Carnegie buys out his suppliers by owning the iron mines, coal mines and railroads needed for his steel company

Horizontal Consolidation The process in which a company buys out, or merges with, its competitors Gave a company control over its competition Helps to create a monopoly Rockefeller’s Standard Oil company used this technique to gain control of the oil industry in the U.S.

Social Darwinism An economic theory based on Darwin’s theory of evolution; it asserted that strong businesses will survive and weak businesses will fail It glorified big business and tycoons and discouraged government interference and regulations for big business in favor of free competition

Monopoly Complete control over an industry’s production, quality, wages, and prices Eliminated a company’s competition allowing it to increase profits

Holding Company A corporation that does nothing but buy out the stock of other companies and take over control of the business This technique helped to create monopolies

Trust A large corporation made up of many companies that receive certificates entitling stockholders dividends on profits earned by all the companies combined Helped to create monopolies

Robber Barons The perception that tycoons, or “Captain’s of Industry” and their businesses obtained their wealth on the back of their workers and by taking unfair advantage of consumers political cartoonpolitical cartoon Negative public opinion will lead to government regulation of big business

Sherman Antitrust Act Made trusts (and monopolies) illegal in interstate and international trade Made it possible (but not easy) to prosecute companies