DUP Industrial Revolution - The Evolution of Business in the US - Lect

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Slide1:

Learning Goals Students will explain key business terms (e.g. vertical integration, horizontal integration, social Darwinism, mergers, trusts, and monopolies). Students will catalogue the abuses of robber barons and industrialists and correlate the resulting regulations passed to correct them. The evolution of American industry and changing the role of the U.S. Government

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Companies were combined in several new ways Merger: Combines 2 companies into 1 new company. Trust: A contract used to combine several large businesses to exert control over a market. A trust is not a legal entity. Developed by John D. Rockefeller. Holding Company: A company that does nothing except own other companies. Can be used to create a monopoly. (Example: J.P. Morgan and United States Steel) Monopoly: A company that controls such a large percentage of a market that they have control over the industry’s production, wages, prices. (Example: Rockefeller’s Standard Oil Company)

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Social Darwinism : The idea that there is an economic/social type of natural selection for humans resulting in survival of the fittest. Social Darwinists argued that government should not interfere with human competition by attempting to regulate the economy or cure social ills like poverty and pollution. They advocate a laissez-faire (free enterprise) political and economic system that favors competition and self-interest. Discussion Question: What if Social Darwinism was implemented at Savanna High School?

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Robber Baron: Term used to describe powerful 19 th century industrialists who got rich by exploiting workers and engaging in unethical business practices.

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John D. Rockefeller Paid very low wages to his workers. Formed trust with other oil producers. Drove competitors out of business by selling below cost. Once he had a monopoly, he increased prices far above costs. John Astor Held monopoly on fur trade for 30 years. Cheated Native Americans. Paid off politicians. H ad his henchmen use violence against his enemies George M. Pullman Built a company town to house his workers. Many rules. Newspapers, town meetings, and alcohol were prohibited. Only Protestant churches were allowed. Inspectors entered workers’ homes to check for cleanliness Lowered workers’ pay but refused to lower rents. Led to a strike. Three of America’s most notorious Robber Barons Starting with the Sherman Antitrust Act of 1890, the U.S. Government passed laws to outlaw trusts and prevent monopolies

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Andrew Carnegie pioneered new business strategies Vertical Integration: Purchase of suppliers or competitors Horizontal Integration: Purchase of competitors in the same business Discussion Questions: How would vertical integration be valuable to a business? How would horizontal integration be valuable to a business? Which do you think would be the easiest to implement?

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Abuses in the Railroad Industry lead to government regulation Abuses: Sold govt. land grants to businesses instead of settlers as intended Engaged in price fixing Charged higher prices for routes with no competition Granger Laws : Laws passed to regulate railroad pricing Farmers (Grangers) became politically active Sponsored candidates and pressed for laws to protect farmers The railroads sued Supreme Court established the federal government’s right to regulate private industry when it is in the best interest of the American public. Interstate Commerce Commission Established in 1887 to regulate the railroad industry Full-time regulators and staff had no ties to the railroad industry Served as a model for other regulatory bodies

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In his 1906 book, The Jungle , Upton Sinclair detailed the horrific conditions in the meat packing industry Listen to excerpt ↑ The U.S. Government passed the Pure Food and Drug Act in 1906

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The Cuyahoga River (Ohio) was so polluted with industrial waste that it caught fire 13 times between 1868 and 1969 Play Video ↑ The U.S. Government passed the Clean Water Act in 1972

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Government Regulations come of age As industrialization grew, so did the federal government’s role. Federal regulatory agencies were established. Examples: 1849 Dept. of the Interior 1862 Dept. of Agriculture 1870 Dept. of Justice New regulations were established. Examples: 1914 Clayton Antitrust Act outlawed practices that that could damage to consumers and the competitive market. 1899 Rivers and Harbors Appropriations Act required authorization to dump refuse in waterways, build dams. Discussion Question: At what point do you think federal regulations go to far?

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