1. The Triumph of Industry
The Rise of Big Business

2. Corporations Develop
Corporation- A number of people share the ownership of a business.
If a corporation experiences economic problems, the investors lose no more money than what they had originally put into the business.
Corporations access to large amounts of money, funded new technology, entered new industries and run large plants across the country.

3. Gaining a Competitive Edge
Corporations tried to maximize profits in several ways:
Paying workers less wages
Advertising products
Gaining a Monopoly
Monopoly- Complete control of a product.
Cartel- businesses making the same product would agree to limit their production and keep the prices high for that particular item.
Trusts- Companies assign their stock to a board of trustees, who combine them into a new organization. The trustees run the organization, paying themselves dividends on profits.

4. CORPORATION FORMATION OWNERSHIP CONTROL AND MANAGEMENT NET PROFITS
Organized by associates and legalized through state charter
OWNERSHIP
Stockholders, according to number of shares
CONTROL AND MANAGEMENT
Through Board of Directors, elected by the stockholders (usually one vote per share of stock held)
NET PROFITS
AND LOSSES
Dividends: to stockholders = profits
Lose: only the amount invested by stockholders according to number of shares
LIMITED LIABILITY

5. BUSINESS ORGANIZATIONS
Trusts or Monopoly
Companies in related fields combine under the direction of a single board of trustees.
Shareholders had no say.
Outlawed today.

6. BIGGER IS BETTER A trust or monopoly controls an entire industry
TRUSTS AND MONOPOLIES
BIGGER IS BETTER
A trust or monopoly controls an entire industry
make product cheaper
lower prices to customer

7. MONOPOLIES AND TRUSTS

8. VERTICAL AND HORIZONTAL INTEGRATION
Vertical Integration You control all phases of production from the raw material to the finished product
Coke fields
Iron ore deposits
Steel mills
purchased by Carnegie
Coke fields
Iron ore deposits
Steel mills
Ships
Railroads
purchased by Carnegie
Coke fields
Iron ore deposits
Steel mills
Ships
purchased by Carnegie
Coke fields
Iron ore deposits
purchased by Carnegie
Coke fields
purchased by Carnegie
Horizontal Integration Buy out your competition until you have control of a single area of industry
MONOPOLY

9. Modern Day Example of Vertical Integration
Ford Motor company
What goes in an automobile?
Why is it an advantage for a company to own/control all production?
Vertical Integration
You control all phases of production from the raw material to the finished product

10. Advantages Vertical Integration
You are always in control of supply of the products you need
In control of labor cost, land/resources
Always in control of the cost
Schedule your production of autos because you are in control of all factors

11. Other Vertical Integrations
Boeing
Swift & Company (Meat Producers)
Anheuser-Busch: all grown by own producers
McDonald’s: own cattle ranches
AOL Time Warner

12. Horizontal Integration
Examples
Standard Oil
United Fruit Company: bananas
Dole Pineapple
Horizontal Integration Buy out your competition until you have control of a single area of industry

13. Modern Day Examples of Horizontal Integration
PG & E
Comcast
Starbucks
Google

14. Formed the first modern corporations in the oil industry Standard Oil
JOHN ROCKEFELLER
Formed the first modern corporations in the oil industry Standard Oil
Was the first billionaire in the U.S. by 1900.
Used Vertical Integration and Horizontal Integration to gain a monopoly in the oil business.
Cartoon Rockefeller

15. Rebates: discount or refund on “freight charges”
robber
Extortion: Forced against your will
Rebates: discount or refund on “freight charges”
Drawbacks / Kickbacks: Standard Oil gave certain railroads all its shipping business if it agreed to charge Standard Oil 25% to 50% less than its competitors
Buyouts: Larger corporations forced smaller businesses to sell out
Congress was “bought out” by the monopolies
Spies: Stealing your competitor's ideas
Small businesses complained “monopolies” eliminated fair competition

16. Captain of Industry ANDREW CARNEGIE Monopolized the steel industry
Rags to riches story---came from Scotland very poor.
Used scientific ideas (Bessemer Process) to develop a better way to produce steel and sell a quality a product for an inexpensive price.
Used Veritcal integration.
Carneige Picture

17. Was called “Rock a Fellow” by many
JOHN ROCKEFELLER
Controlled the railroad by forcing them to pay him rebates because of the volume of business he gave them.
Was called “Rock a Fellow” by many
Ruthless business man: “Pay no man a profit”
Cartoon Rockefeller

18. Rockefeller/Control Govt
Rockefeller was so wealthy, he dictated to the U.S. Government to protect big business---- laissez faire
Rockefeller/Control Govt

19. Rockefeller would be hated by many because he had too much control over the oil industry and the government as viewed by the common man-----Some believed he was corrupt because he took away the right to compete---free enterprise