1. An Age of Big Business Stocks, Monopolies, and Trust-Busting

2. The Stock Market

3. Corporations A corporation is a company that sells shares, or stock, of its business to the public.

4. Corporations If a company wants to grow—maybe build more factories, hire more people, or develop new products— it needs money. It could get a loan from a bank. But then it would owe money in interest. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow.

5. The Stock Market The word stock simply refers to a supply. You may have a stock of T-shirts in your closet, or a stock of pencils in your locker. In the financial market, stock refers to the supply of money that a company has raised. This supply comes from people who have given the company money in the hope that the company will make their money grow.

6. The Stock Market When you buy stock, you purchase a share of ownership in a company. If you imagine the ownership of a company divided into 100 pieces, then each of those pieces is a stock in that company. Stockholders (shareholders) hope the company will earn money as it grows. If a company earns money, the stockholders share the profits. Over time, people usually earn more from owning stock than from leaving money in the bank, buying bonds, or making other investments.

7. The Stock Market Stockholders in a company usually have voting rights. They vote on such issues as who will be elected to the board of directors—the group of people who oversee company decisions— and whether to buy other companies. Stockholders typically have one vote for each share they own. Every vote counts, but a stockholder with 5,000 shares will have more influence on the company than someone with only one share.

8. The Stock Market There are two ways of making money through owning stock. First, because a stock represents ownership of a piece of a company, when the company makes a profit, that means stockholders get part of that profit. If G.W. Boomerang Co. made a profit of $1 million, then Kirby Smith's 35 shares of stock would earn him $350,000. This is called a dividend, and it is one of the main reasons ownership of a money-making company is valuable.

9. The Stock Market The other way of making money on the stock market is to sell stocks for more than you bought them for. Kirby Smith bought his stocks at $100 per share. However, now that the G.W. Boomerang Co. is doing so well, and so many people want to buy the stock, those shares are worth $200. He paid $3,500 for his 35 shares, but if he sells them, he will make $7,000. Generally, people decide to buy or sell based upon the past performance of the company or the anticipated future performance.

10. The Stock Market A market is a public place where things are traded, bought, and sold. The term "stock market" refers to the business of buying and selling stock. In the United States, there are two major ways to accomplish stock trading: through the New York Stock Exchange, which is a physical building where this trading is done and an internet site. The other is the NASDAQ, which is entirely on the Internet.

11. The Stock Market Unlike going to the store, where there is a fixed price for everything, the price of stocks varies according to how “in demand” it is at any giving time. A stock that looks like a good investment--one from a prosperous, money-making company--is more in demand than one that isn't.

12. The Stock Market If, for example, the G.W. Boomerang Company is making money and it looks like they will keep on making money in the future, that stock becomes popular and people want to buy it. Let's say the G.W. Boomerang Company has 100 shares of stock on the market, and 35 of them are owned by Mr. Kirby Smith. There will be many people trying to buy Smith's stock in the G.W. Boomerang Company, so the price will go up.

13. The Stock Market Meanwhile, the Wonderful Widgit Corporation has reported big losses. This makes people wonder if the company is such a good investment, and some owners of Wonderful Widgit Corporation stock will want to sell their shares. The problem is that because Wonderful Widgit is losing money, there are not many buyers. That means the price of Wonderful Widgit stock will go down.

14. Monopolies

15. Monopoly Key Terms Commodity Anything that is bought and sold Currency money

16. Monopoly Key Terms Supply and Demand If there are a lot of product available and the demand for it is low, then the price of the product is low. BUT, if the supply of the prodcut is low, and the demand high, then the price will be high. The amount of the product or commodity on the market The amount that people need or want the product or commodity.

17. Large Supply + Small Demand = Cheap Price ++ = Expensive Small Supply + Large Demand

18. Monopoly Think about the game Monopoly. The object of the game is to buy and control everything on the board.

19. The Age of Big Business At the turn of the century, big businessmen revolutionized American business by developing industries like coal and steel, helping to bring America to prominence and creating new technologies. At the same time they created monopolies.

20. Key Terms Competitive Market Consumers may buy goods from a variety of companies. Companies must compete to earn their customers’ business. Trust A group of companies managed by the same board of directors. Monopoly One company having almost total control of the production and price of some commodity. Merger The combination of companies.

21. The Age of Big Business Rockefeller used horizontal integration to build his oil empire. He bought most of the oil refineries in Cleveland and many other cities. He combined these previously competing companies into one corporation.

22. The Age of Big Business Andrew Carnegie used vertical integration to build his steel empire. He bought the companies that provided the equipment and services he needed to make and sell steel. He bought iron and coal mines, warehouses, ore ships, and railroads.

23. Benefits These giant corporations (U.S. Steel and Standard Oil) were responsible for economic growth ($). They made money and products efficiently.

24. Draw-backs Some argued a lack of competition hurt consumers. When there is no competition, it gives too much power to one person or corporation. Without competition, they had to reason to keep their prices low or to improve upon their goods and services. They tended to neglect the safety and welfare of their employees in order to maximize their profit.

25. Government Regulation Trust-Busters were those who helped to create and enact laws that broke up trusts and monopolies. Teddy Roosevelt was often called a trust-buster. President Theodore Roosevelt ordered Congress to enforce the Sherman Anti- Trust Act and many other acts to reform business practices.

26. Government Regulation Sherman Anti-Trust Act (1890) First act passed by Congress to prevent monopolies and trusts. Clayton Anti-Trust Act (1914) Re-enforced the Sherman Anti-Trust Act and also aided labor unions in their efforts to protect workers.

27. The Monopoly Simulation

28. The Monopoly Simulation Round 1 Producers… How many pencils did you sell? How much money did you raise? Was it difficult to sell your pencils? What strategies did you use to sell your pencils? Did they work? Why or why not? Does it make a difference that other vendors are selling the same product? Consumers… Why did you buy your pencils from the vendor that you chose? Do you feel you got a good deal for your pencils? What happened after the pencil dealers (primary market)had no pencils left? What did you do? How much did you pay for a pencil on the secondary market?

29. The Monopoly Simulation Round 2 Vendor… Did you change your sales strategy? Why or why not? Customers… Was it easy or difficult to buy your pencils this time? Did the vendor change his/her sales strategy? If so, how? How did that affect the purchase of your pencils?