Big business

Quick Check #1 What/when was the 2nd industrial revolution? A period of great growth in the late 1800s with the US becoming the leading industrial power

Quick Check #2 What was steel used for to revolutionize the US? Railroads, bridges, machinery, and skyscrapers

What is a patent? Legal rights to make or sell an invention Quick Check #3 What is a patent? Legal rights to make or sell an invention

The Growth of Big Business FREE ENTERPRISE (business that is free from government involvement) + NEW TECHNOLOGICAL DEVELOPMENTS + NEW FORMS OF BUSINESS ORGANIZATION = INDUSTRIES’ PRODUCTIVITY & PROFITS

capitalism Private ownership of businesses with little or no government intervention AKA Free Enterprise “Laissez-Faire”- let it be… no government interference

entrepreneur A person who starts their own business or creates a new idea for products/businesses

The Assembly Line Used by Henry Ford Produced the Model-T Ford 1st to mass produce with interchangeable parts “You can have any color, as long as it’s black” https://www.youtube.com/watch?v=AgL1ZL_sh08

Types of Businesses Proprietorship – small businesses owned by individuals or families Partnerships – businesses owned by two or more people

Types of Businesses Corporation business organization that is distinct from its owners Approved and chartered by state governments Raises the money needed to run the company by selling shares of stock

stocks Share in ownership of the company – allows for companies to raise enormous sums of money Stockholders sometimes receive a dividend or percentage of the company profit based on how much stock they own Do not run its day-to-day affairs – elect board of directors

Corporation Benefits Stockholders not personally responsible for the debts of the business If corporation fails – stockholders lose on the money that they invested

Trust group of companies turn their control over to a Board of Directors Board runs the companies as a single enterprise A trust can turn into a monopoly when a trust gains total control over an industry

monopoly When one business controls an entire industry Example - if Ford were the only car company ???? Why is that bad for the economy????

Horizontal integration When a company buys out all of their competition Ex- if Coke bought Pepsi and all other cola companies, if Verizon bought out all cell companies

Horizontal Integration Owning all the businesses in a particular field Barrels Storage Facilities Standard Oil Controlled 90% of U.S. Refining Business Pipelines Tank Cars

John d. rockefeller Started Standard Oil in Cleveland (1870) Owned 90% of all oil refineries (1877) The first billionaire in the world (1916) maxing out at $1.4 Billion By today’s values he would be worth over $345 billion!! Bill gates - $82 billion

Vertical integration When one business controls all of the means of producing a product Example - if BP owned the oil wells and drills, the pipelines, the refinery, the trucks and the gas station

Vertical Integration Improve efficiency by making supplies more reliable, controlling the quality of the product at all stages of production, and eliminate middlemen’s fees To lower cost of production, purchase iron ore mines, coal mines, railroads & shipping, and steel mills

U.S. Steel By turn of century, U.S. Steel produced more steel than all of Great Britain ¼ of all steel in the United States Estimated worth in 1901 without income taxes: $250 million (today: $100.5 billion)                                                                                  

Andrew Carnegie Leader in the production of Steel Second wealthiest American during this time Worth $310 billion Gave away more than $350 Million to various schools, libraries and charities

New Techniques for Selling Products Developed new methods of marketing products Brightly colored packaging Distinctive logos Advertising – newspapers, magazines, roadside billboards New kinds of stores Department Stores: Marshall Fields, Macy’s Offered shoppers all types of items under one roof Mail-order companies: Sears, Montgomery Wards

philanthropy Giving away massive amounts of money for charitable organizations such as schools, hospitals, libraries etc.

Social darwinism Based on Charles Darwin’s theory of natural selection Those that are best suited for business will survive… others will fail Used theory as foundation of promoting the virtues of free- market capitalism “Survival of the Fittest”

Philosophy Others argued divine providence was responsible for winners and losers in society God granted wealth as He had given grace for material and spiritual salvation of the select few Those who stayed poor must be lazy and lacking in enterprise

Philosophy Carnegie’s Gospel of Wealth Justified uneven distribution of wealth by industrialists Stated money should be given away for public good but not to individuals in want