GROWTH OF BIG BUSINESS

3 KEY FACTORS Increase is SUPPLY- New inventions made manufacturing easier, faster, cheaper Increase in DEMAND- the growth of RR made Demand go from local needs to NATIONAL needs New Business methods/ models- corporation, integration, monopoly

Growth of Big Business- RAILROADS! STANDARD GAUGE (width) - Prior to the Civil War, train gauges were different sizes. After the Civil War, the south will adopt the north gauge. This will help transport goods faster and cheaper- they no longer needed to transferred from one train to another.

RAILWAYS NETWORK - SYSTEM OF CONNECTED LINES HELP UNITE THE NATION CONSOLIDATE- Rail companies started to consolidate (combine) their lines- Pennsylvania RR consolidated 73 companies into its system

Inventions improve Rail Service  AIR BRAKE- George Westinghouse. Allowed the engineer to stop all of the trains at once TELEGRAPH- Helped communication between trains and made rail travel faster and safer.

VANDERBILT BUILT UP A RAILWAY EMPIRE CONNECTED LINES BETWEEN NY AND CHICAGO

ELIMINATING THE COMPETITION REBATES- Railway Companies granted secret discounts to their biggest costumers - forced many small companies out of business and hurt small shippers (such as farmers) POOL- several railway companies agreed to divide up the business in an area. They often FIXED PRICES at a high level- eliminates competition.

New Business Models

HORIZONTAL INTERGRATION- Own many of the same industry OIL REFINERY

VERTICAL INTEGRATION- A MANUFACTURER CONTROLS ALL OF THE STEPS USED TO CHANGE RAW MATERIALS INTO FINISHED PRODUCTS Drill for oil Refinery Trucks to transport Gas Stations

RISE OF THE CORPORATION Corporation- a business owned by investors ◦ A corporation sells STOCKS, or shares in a business to investors known as stockholders ◦ The corporation may use the money invested to buy a new factory or equipment ◦ Stockholders hope to receive DIVIDENDS or shares of a companies profits ◦ Less risky for investors than a private business, can raise more CAPITOL ($)

MONOPOLIES AND TRUSTS MONOPOLY- Controls all or nearly all the business in an industry.

TRUST A TRUST- is a group of corporations run by a single board of directors

SHERMAN ANTI-TRUST ACT Many saw trusts and monopolies as harmful to America- reduced competition and could potentially keep prices high and quality low Congress responded with the 1890 SHERMAN ANTI-TRUST ACT which banned monopolies and trusts Not very effective; in fact it’s first used against striking workers!