Mrs. Baugh US History Pgs.319-323 Big Business Mrs. Baugh US History Pgs.319-323
Vocabulary Put these words and definitions in your Vocabulary Section. Corporations Stock Economies of Scale Pools Monopoly Trust Holding Company
Steps to Big Business Formation of corporations Stock buying and selling New incorporation laws By 1900 big business dominated the economy of the US. Corporation is an organization owned by many people but treated by law as a single person. Stockholders own corporations because they own stock in the business. Large stock issuing allows the corporation to raise money but lower risk. Before 1830, if you wanted to create a corporation you would have to have a charter from the state legislature, but after 1830 corporations were allowed to issue stocks without a charter because of new laws passed. This allowed more corporations to be formed and Big Business to boom. Economies of Scale
More Steps Free-Enterprise Advertising New business practices To stop prices from falling many corporations formed pools, or agreements to maintain prices at a certain level. Pools did not last long, and broke apart when one member broke the pool and lowered prices. By 1870 competition had reduced many industries to a few large corporations. Advertising spurred business and also became a new business. By 1900 retailers were spending $90 million/ year on advertising. They used many techniques to advertise such as: large display ads in newspapers to mail order catalogs. To help spur business, many corporations found new ways to become more efficient. They wanted to be able to produce more product with using less money. Example: Andrew Carnegie’s steel production increased threefold with reducing his workforce by 400 people because of electric machinery doing most of the work. There are also new ways of doing business…
New Business Practices Vertical Integration: used by Andrew Carnegie in the steel industry. He bought all the different businesses that his steel operation depended on to make his business more successful.
New Business Practices (Cont.) Horizontal Integration: used by John D. Rockefeller in the oil industry. Rockefeller began to buy all the other oil companies to take out the competition and make his more successful.
Impact of Rockefeller Trusts Holding companies 1882- Standard Oil formed the first trust to try to get around laws made to protect consumers from monopolies.
Andrew Carnegie Photos from Wikipedia http://en.wikipedia.org/wiki/Andrew_Carnegie http://en.wikipedia.org/wiki/Carnegie_Hall
Rockefeller Photos from Wikipedia http://en.wikipedia.org/wiki/Rockefeller_Center http://en.wikipedia.org/wiki/John_D._Rockefeller
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