6 - Big Business PWPT (2012)

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Big Business 18-2 View 2 video clips: Industrial Revolution Gives Rise to Wealthy Class Robber Barons Create New Wealthy Class

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Companies in America used to be pretty small and dealt with a small, local area. But by the late 1800s, some businesses are being run very differently. Some began selling products nation-wide, and eliminating any smaller competitors. the times are changing... Big Business Small competitors

New Ways of Doing Business : 

New Ways of Doing Business = businesses owned by lots of investors. These investors temporarily give money to the corporation by buying stock. In return, stockholders will get some of the profits that a company makes. *Advantage of corporation = investors don’t have to risk their life savings! Banks also began lending huge amounts of money to corporations J.P. MORGAN Corporation

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The major business leaders ended up creating monopolies in their industries. Monopoly = a company that controls most or all business in a particular industry Andrew Carnegie John D. Rockefeller (“Wreck-a-fellow”) Business Leaders Can someone explain the board game Monopoly to me? What is a monopoly?

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In 1899, produced 1/4 of American steel **Was a major Philanthropist **steel mills in Pittsburgh Sold his company in 1901 to United States Steel Corp. for $250 million and he retired Andrew Carnegie “Steel King” Poor Scottish immigrant Made $25 million per year

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During his lifetime he gave more than $350 million to various educational, cultural, and peace institutions, many of which bear his name. His largest single gift was in 1911 for $125 million to establish the Carnegie Corporation of New York. He was a benefactor of Tuskegee Institute (now Tuskegee University). He also endowed over 2,800 libraries throughout the world

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John D. Rockefeller “Standard Oil Company” was the name of his business that made him millions of dollars. He pretty much eliminated all of his competitors through his “Standard Oil Trust” A TRUST is a group of corporations run by a single board of directors By 1880, Standard Oil controlled 90% of oil refining industry All of a sudden, people in other industries began forming trusts too!

John D. Rockefeller : 

John D. Rockefeller He, like Carnegie, was also a philanthropist By the time of his death in 1937, Rockefeller's remaining fortune, largely tied up in permanent family trusts, was estimated at $1.4 billion. Rockefeller's net worth over the last decades of his life would easily place him among the very wealthiest persons in history. As a percentage of the United States economy, no other American fortune—including Bill Gates or Sam Walton—would even come close.

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Rockefeller’s STANDARD OIL TRUST View video clip: John D. Rockefeller Creates Giant Oil Empire

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GOOD Built up the economy and created jobs Prices of oil and steel dropped dramatically (good for consumers) TRUSTS and MONOPOLIES I pity the fool who doesn’t like Trusts!

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BAD Once a company has control over an entire market, it could raise prices to whatever it wanted Leaders like Carnegie and Rockefeller were viewed as evil “robber barons” who would bend the rules to make money TRUSTS and MONOPOLIES Fear not America…I shall save you from the evil monopolies

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4. The monopoly determines prices 3. A monopoly emerges 2. One company buys other companies or forces them out of business 1. Several companies offer similar services or products Less competition The Progression of a Monopoly Create an example of different industries that could go through this process. Examples: retail stores, manufacturers of products, cable companies, software

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Horizontal Integration All competing companies are merged into one area of business

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Modern day examples: McDonald’s GAP

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Social Darwinism = Application of Darwin’s theory of evolution of human society. Do you believe that the rich are genetically superior? Do you believe that the poor are genetically inferior? In America today…

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Leading up to the late 1800s, the government’s view was that they should stay out of business affairs as much as possible. That is known as laissez-faire, a French word meaning “Let (people) do (as they choose).” Laissez-Faire Gov't Policies Go ahead Carnegie, buddy ole’ pal …. Just make the people happy and I’ll stay out of your business BUT, this will eventually change after the American people get fed up with monopolies and trusts, and demand that the government do something! View 2 video clips: Industrial Revolution Gives Rise to Wealthy Class Robber Barons Create New Wealthy Class