The Growth of Big Business Chapter 13 Section2 The Growth of Big Business

Social Darwinism Survival of the fittest Believed in little government interference

How did the theory of social Darwinism affect the government’s relationship to big business? It encouraged government to take a hands-off approach to big business

Oligopoly Occurs when to cost of starting a certain type of business is high

Monopoly When a business gains complete control of a product or service

Cartel A loose association of businesses that make the same product

Andrew Carnegie Founded first plants to use Bessemer Process to produce steel

Gospel of Wealth A personal philosophy of Andrew Carnegie Became a movement of the early 20th century

Gospel of Wealth Carnegie donated money to build 3,000 libraries Supported art and research institutes

Vertical Consolidation Business tactic of Andrew Carnegie

Economies of Scale As production increases, the cost of each item produced is lower

John D. Rockefeller Founded Standard Oil in 1870

Horizontal Consolidation Business tactic of Rockefeller Bringing together many firms in the same business (taking over your competitors)

How did methods such as vertical and horizontal consolidation, and factors such as economies of scale help companies dominate their markets? Through horizontal consolidation, companies purchased competing companies Through vertical consolidation and economies of scale, companies lowered production costs so much that other companies could not compete

Trust Different firms in the same business (oil for example) being run as one company by a board of trustees

Sherman Antitrust Act Outlawed any combination of companies that restrained interstate trade or commerce

Why did the Sherman Antitrust Act seek to stop big business from forming trusts? Trusts threatened fair competition in industry Trusts may cause prices to rise due to lack of competition

What were some features of the new big businesses? Large amounts of capital Wider geographic span Broader range of operations (they make more than one thing)