1. CH. 14-2 THE RISE OF BIG BUSINESS
AMERICAN HISTORY

2. A FAVORABLE BUSINESS CLIMATE
ENTREPRENEURS—risk takers who use their money and talents to launch new ventures
BELIEF IN FREE MARKETS
CAPITALISM—an economic system in which private businesses run most industries. Competition determines prices and wages

3. Late 1800s, most business leaders believed in LAISSEZ-FAIRE (to let do) capitalism
Companies to conduct business without government intervention
Business leaders believed that government regulation would destroy individual self-reliance, reduce, profits, and harm the economy

4. SOCIAL DARWINISM
There were inequalities under capitalism
Adapted the ideas of British scientist Charles Darwin applied them to human society
Darwin said members of a species compete for survival
Social Darwinists believed that stronger people, nations, and businesses would survive

5. Weaker ones would fail
“Survival of the fittest”
There was opposition to any interference

6. BUSINESS STRUCTURES CHANGE
Late 1800s—industrialization continues
Businesses became larger and more complex
PROPRIETORSHIPS AND PARTNERSHIPS
Proprietorship—business run by a individual
Partnership—business owned by 2 or more individuals

7. Owners were responsible for all debts and obligations of the business
CORPORATIONS
A business with the legal status of an individual
It is owned by STOCKHOLDERS (people who buy shares in the company)
Major business decisions are made by a board of directors

8. The board hires corporate executives to run the day-to-day operations
Corporation Advantages:
1) raise large sums of money through stock sales
2) stock money used to expand the business
3) stockholders have limited responsibility for the corporate debt

9. 4) Stockholders can only lose what they have invested
Corporations continue on long after the original founders leave
TRUSTS AND MONOPOLIES
Companies agreed to merge and turn over their separate stocks to a board of directors

10. MONOPOLY—A company has no competition so it would have complete control of the market—prices, supply, etc.

11. INDUSTRIAL TYCOONS
Late 1800s, many corporate leaders amassed staggering fortunes
ROCKEFELLER AND OIL
John D. Rockefeller entered oil business in 1863 with Standard Oil Company
VERTICAL INTEGRATION—acquiring companies that supplied his business

12. Barrel factories, oil fields, oil-storage facilities, pipelines, railroad cars
This allowed low cost and high profits
HORIZONTAL INTEGRATION—take over other companies producing the same product
Rockefeller bought other oil refineries
1879—Standard Oil was refining 90% of all oil in the USA

13. Rockefeller limited competition in other ways
Special deals with railroads and shipping companies for the lowest shipping price
Forced other companies out of business
Fortune worth $900,000,000
More than half donated to worthy causes
>$80,000,000 donated to the University of Chicago
Millions more into education through his Rockefeller foundation

14. CARNEGIE AND STEEL
Andrew Carnegie--Born in Scotland
Immigrated to the USA at age 12
Began investing in iron, oil, railroad, telegraph
Founded his own steel business
Carnegie held costs down through vertical integration
Buy supplies in bulk, producing items in large quantities

15. End of 1800s Carnegie Steel Company dominated the industry
1901—Carnegie sold the company to banker J.P. Morgan for $480,000,000
After retiring, he devoted time to philanthropy and charity work
Gave away >$350,000,000 to support education
He built public libraries, financed scientific work, and established Carnegie Mellon University in Pittsburgh

16. He also built Carnegie Hall, the famous concert site, in New York City
Carnegie believed that wealthy people had a duty to society
RAILROAD TYCOONS
Cornelius Vanderbilt invested in railroads during the civil war
1872—owned New York Central Railroad
He controlled 4,500 miles of railroad track

17. Vanderbilt didn’t do much charitable work
Greatest donation was $1,000,000 to Central University in Tennessee, which was later renamed Vanderbilt University
1877-Vanderbilt died leaving an estate of $100,000,000
GEORGE PULLMAN made his fortune designing and building railroad cars

18. His company, Pullman Palace Car Company (Chicago 1887) created sleeper cars for comfortable long distance travel
1881—he built an entire town south of Chicago for his employees
The town of Pullman had comfortable homes with indoor plumbing, shops, a church, and a library

19. No local government and no local newspapers
People that criticized the company might be evicted from their house
A MIXED LEGACY
Some tycoons viewed as “robber barons”
Critics say they squeezed out competition

20. Other people saw them as “captains of industry”
They used business skills to make the American economy more productive
Rockefeller and Carnegie won praise for generous donations

21. MASS MARKETING
Retailers were looking for ways to maximize their profits
Companies that advertised started targeting ads toward women
Food companies used wholesome farm images to convey a sense of purity
Clever brand names were developed to help people remember a product “Uneeda Biscuit Crackers”

22. The department store was created to make it easier to shop
One-stop shopping
Stores that bought in bulk passed savings on to customers
Rural people could purchase items from mail-order companies
1895—Sears, Roebuck, Co. produced a 507-page catalog

23. 1904—Montgomery Ward catalog weighed 4 pounds and was mailed to about 4 million homes
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