Growth of Industry and Big Business

Essential Question How did Big Business affect society and the economy in the late 1800’s / early 1900’s?

Rise of Industry and Innovation Before: Run by families thus pretty small This era: Biz grows VERY large

Why the Change? 1. Era of scientific research and new inventions Ex: railroads, mills, and factories

Why the Change? 2. Lots of resources Oil and Coal Trains = transportation from coast to coast

Why the Change? People moved from RURAL areas to URBAN big cities 2. Lots of resources available (CONT): People moved from RURAL areas to URBAN big cities Lots of IMMIGRANTS= lots of people= lots of workers

Rise of Industry and Innovation (cont.) 3. Govt helped by practicing laissez-faire (hands-off approach): no environment laws, tax cuts for industry, stopped labor unions

Types of Businesses 1. Corporations Benefits- Def: Group ownership of a business Benefits- Less risk if you lose money Big profits which lead to more new tech and new industry Production costs low by paying workers low wages and pay low raw material prices

2. Monopoly Def: Complete control of a product of service How: bought out competitors or drove them out of business Benefit: no competitors so they can set your own prices.

3. Cartel Def: Businesses making same product agree to limit their production and keep prices high

4. Trust Def: A method where companies assigns their stocks to a board of trustees who manage them. Benefits: Made the head of the board wealthy Killed off competitors not in the trust EX: This was used by Rockefeller, and helped him become extremely wealthy. It was also used in creating monopolies.

Discussion: Why do you think the practices we just talked about are now illegal?

New Business Organization Types Vertical integration – owning all levels of production, from raw materials to sales of product(s). Goal: efficiency and economy; eliminating the “middle men”

New Business Organization Types Horizontal Integration- buy similar companies to control market Ex: Rockefeller’s Standard Oil

Gilded Age: The tactics & methods introduced led to an age with lots of wealth but for only a few businessmen: Carnegie, Rockefeller, Vanderbilt.

Robber Baron v. Captains of Industry Robber Barron: -negative viewpoint -Greedy business owners who took advantage of workers and swindled the poor. Captains of Industry: -positive viewpoint -provided jobs and opportunity, developed technology and infrastructure

What do you think this cartoon represents? What is happening in the arena? In the background? Would it be easier to replace a craftsman who makes goods by hand or an industrial laborer? Why? monopoloy labor

1.What is the message of this cartoon? 2. What images prove this?

Social Darwinism Def: Evolutionary idea that only strongest and best businesses in a market survive. “Pull yourself up by your own bootstraps”