Big Business What is a corporation? Businesses that sell portions of ownership called stock shares (or stocks) What role do stockholders play in a corporation? Individuals invest money through the purchase of stock This makes them a part owner The money allows the company to engage in business, and hopefully, generate profit Stockholders then receive a portion of the profit as a return on their investment Why are corporations advantageous for stockholders? They can only lose the amount of money that they invest, no more They are free to sell their stock to whomever they want

Corporate Leaders Andrew Carnegie John D. Rockefeller Leland Stanford Worked in a railroad company and worked his way up Turned to steelmaking…created the U.S. Steel Corp. Used vertical integration to control every step of process John D. Rockefeller Consolidated businesses using horizontal integration Standard Oil Company owned 90 percent Formed a trust that grouped many companies under one board of directors The first billionaire in the world Leland Stanford Made money selling equipment to miners Governor of California Founded Central Pacific Railroad Believed that workers should be part of the ownership process All three gave back to charitable causes later in life (although Rockefeller gave less and later in life)

Vertical and Horizontal Integration Several companies that do the same thing owned by the same group

Vertical and Horizontal Integration Several companies that do the same thing owned by the same group Example – a monopoly – Standard Oil owned several companies that all produced oil. Store #1 Wal-Mart Store #2

Vertical and Horizontal Integration Several companies that do the same thing owned by the same group Example – a monopoly – Standard Oil owned several companies that all produced oil. A company owns several steps in the production process.

Vertical and Horizontal Integration Several companies that do the same thing owned by the same group Example – a monopoly – Standard Oil owned several companies that all produced oil. A company owns several steps in the production process. Example – take a car company…if they own a rubber company for tires, an engine building company, steel producing company, and a shipping company, they own several steps in the production process and can earn money at every level. The Car Company Car Factory Shipping Company Engine Company Tire Company Rubber Tree Plantation

Social Darwinism Define social Darwinism. The view that Darwin’s “survival of the fittest” theory determines who would succeed in business and in life Why did some business leaders give money to charity? They felt that the rich had a duty to aid the poor

The Antitrust Movement Why did critics oppose the practices of big business? They believed that big business used unfair practices like driving smaller competitors out of business and creating monopolies How did concerns about trusts lead to the Sherman Antitrust Act? Voters were concerned about the political power of trusts and wanted the government to control monopolies and trusts Was the Sherman Antitrust Act successful in curbing the power of wealthy trusts? No Why (or why not)? It did not legally define what a trust was and was too difficult to enforce