1. Chapter 12 Section 3

2. The Rise of Big Business Corporations – organization owned by many people but treated by the law as one person People who own part of the company own stocks

3. Consolidating Industry Pools – created an agreement to keep prices at a certain level People were suspicious of the pools Pools had no legal protection and could not be enforced in courts

4. Andrew Carnegie and Steel Andrew Carnegie –Born in Scotland to a hand weaver –Age 12 he went to wok as a bobbin boy earning $1.20 per week –Age 14 he became a messenger in a telegraph office –Later went to work as secretary to a superintendent of the railroad –Became superintendent of the railroad

5. Andrew Carnegie and Steel Railroad Supervisor –Make a lot of money investing in companies that served the railroad industry –He bought shares in iron mills –By his early 30s he was earning $50,000 a year and he decided to quit his job

6. Andrew Carnegie and Steel Traveled to Europe –Met Sir Henry Bessemer who had invented a new process for making high quality steel efficiently and cheaply –Carnegie opened up a steel company in Pittsburgh and used the Bessemer Process Vertical Integration –Steel company bout coal mines, limestone quarries, and iron ore fields

8. Rockefeller and Standard Oil Horizontal Integration – combining firms in the same business into one large corporation John D Rockefeller –Built oil refineries –Bought out his competitors and eventually controlled 90% of the oil refining industry

10. New Business Organization Monopolies –Some feared them because companies could charge whatever they wanted –Some liked them because they believed monopolies would keep prices low to discourage competitors In the late 1800s it was made illegal for one company to own stock in another company

11. Ways around the Law Trusts – legal arrangement that allows one person to manage another person’s property –Instead of buying a company Standard Oil had stockholders give their stocks to a group of Standard Oil trustees –The trustees did not own the stock they were managing the stock –The Trustees could control a group of companies as if they were one large merged company

12. Ways Around the Law Holding Companies –Owns stock of companies that produce goods Investment Banking –Companies would sell large blocks of stock to investment bankers at a discount. The bankers would then find people willing to buy the stock and sell it for a profit –J.P. Morgan Bought out Andrew Carnegie Merged Carnegie Steel with other large steel companies and became United States Steel Company US Steel became the first billion dollar company in America

13. Selling the Product N.W. Ayer and Son – first advertising company began creating large illustrated ads By 1900 retailers were spending over 90 million a year on advertising