The Positives and Negatives of Big Business

Captains of Industry or Robber Baron? Characteristics of a Captain of Industry Characteristics of a Robber Baron 1. Increases availability of goods by building factories. 1. Drains the country of its natural resource. 2. Raises productivity. 2. Corrupts public officials to interpret laws in their favor. 3. Expands the markets. 3. Drives competitors to ruin. 4. Creates more jobs. 4. Pays poor wages. 5. Funds many of the nation’s public institutions: practices philanthropy. 5. Forces workers to toil under dangerous and unhealthy conditions. 6. Organizes the factors of production efficiently. 6. Exploits the factors of production.

New Ways of Doing Business Corporation business owned by investor. Stock shares in the businesses. Dividends a share of the corporation’s profit. Trust group of corporations run by a single board of directors. Monopoly a company that controls all or nearly all the business of an industry.

Standard Oil – Horizontal Integration

Standard Oil Co.

Big Business: Good or Bad? Many Americans said these leaders were abusing the free enterprise system business owned by private citizens. The free enterprise system increases competition between companies. Companies compete to make the best product at the lowest prices.

Arguments for Trusts & Monopolies Carnegie published articles that said competition ruined businesses and put people out of work. Supporters said that large corporations made goods cheaply and this helped the consumer. Some monopolies benefit the public (cable TV, utilities, power, garbage?).

Arguments Against Trusts & Monopolies Trusts and monopolies often put an end to competition. Workers felt they were treated badly by large corporations. Difficult for new companies to start up and compete with powerful trusts. People worried that millionaires were using their wealth to buy favors from elected officials.

Government Reaction Sherman Antitrust Act 1890 Banned the formation of trusts and monopolies. At first too weak to be effective. Standard Oil vs. US (1911). Break-up of the trust actually made Rockefeller richer! 1911