Monopolies ESWBAT: Draw conclusions regarding 3 effects monopolies had on business in the u.s. in the early 1900s by analyzing and discussing in groups documents depicting the Companies power. Do now: After watching the video clip think and jot down possible positive and negatives you think to having monopolies in the u.s.

Capitalism aka “Free Enterprise System” Businesses are owned by private individuals 2 types of businesses Private & Corporations Business owners decide What to make How much to produce What to charge Where to sell items

Steel Industry Steel much stronger than iron Bessemer Process made steel affordable Mostly used for RR tracks and skyscrapers. Pittsburgh became the steel capital. Caused environmental problems.

Andrew Carnegie Bought out competition Had Vertical Integration of steel Able to charge cheaper prices Believed in the “Gospel of Wealth”

Oil Industry John D. Rockefeller Bought out competition Created the Standard Oil Company Eventually led to a monopoly of the oil industry

Are trusts/monopolies good or bad? Competition ruined business Put people out of work Giant businesses brought lower prices to consumers Eliminated competition High prices/poor products Few rich & many poor

Banks + Corporations What did J.P Morgan do? Big factories were replacing small town factories (cheaper prices) Railroad boom helped distribute goods nationally Big factories needed capital ($) to cover their costs Created corporations (business owned by investors) See next slide Banks loaned businesses $

Private v. Corporations One person Controls all finances High risk/high reward Corporation Group of people Sell stocks (called shares) Pay dividends to investors

Corporation Business owned by investors Investors buy stocks (small share of the company) Investors hope to receive dividends (only if the company is doing well) Company uses $ from investors to run the company Corporations have less risk than private business

Word Definition Paraphrase Network System of connected railroad lines. Gauge Width of a train track Corporation Business that is owned by investors Stock Share of ownership in a corporation Dividend Share of a corporations profit Trust Group of corporations run by a single board of directors Monopoly One company has control over an entire industry Patent License for a new invention Sweatshop Workplace where people work in poor condition for low pay Sherman Anti-Trust Act 1890 – law banned trusts and monopolies in the US

VERTICAL AND HORIZONTAL INTEGRATION Vertical Integration You control all phases of production from the raw material to the finished product Coke fields Iron ore deposits Steel mills Ships Railroads purchased by Carnegie Coke fields Iron ore deposits Steel mills purchased by Carnegie Coke fields Iron ore deposits Steel mills Ships purchased by Carnegie Coke fields Iron ore deposits purchased by Carnegie Coke fields purchased by Carnegie Horizontal Integration Buy out your competition until you have control of a single area of industry MONOPOLY

Sherman Anti-Trust Act Passed in 1890 Outlawed all trusts and monopolies Difficult to prove

Changes in Daily Life Life in the 1860s Life in the 1900s No indoor electric lights No refrigeration No indoor plumbing Kerosene or wood to heat Wood stoves to cook with Horse and buggy In 1860, most mail from the East Coast took ten days to reach the Midwest and three weeks to get to the West Coast. A letter from Europe to a person on the frontier could take several months to reach its destination. Life in the 1900s US Govt issued 500,000 patents—electricity Refrigerated railroad cars Sewer systems and sanitation Increased productivity made live easier and comfortable. Power stations, electricity for lamps, fans, printing presses, appliances, typewriters, etc. New York to San Francisco to 10 days using railroad. 1.5 million telephones in use all over the country Western Union Telegraph was sending thousands of messages daily throughout the country.