The Growth of Big Business TEKS 12(C), 19(B), 24(G)

Transcription

1 1 The Growth of Big Business TEKS 12, 19, 24(G) 2 Listen In the late 1800s powerful industrial leaders like Andrew Carnegie and John D. Rockefeller built giant corporations. Carnegie controlled steel; Rockefeller dominated the American oil market. Some historians called them robber barons, because they raided natural resources and mistreated workers. Other historians s called them captains of industry who expanded production markets and created ed jobs. 3 Listen To explain the need for such industrial giants, the theory of social Darwinism argued that government should not interfere in business practices so that those most fit would rise to the top and everyone would benefit. 4 Listen Many factors combined to create a new kind of business in the late 1800s. These industries needed large amounts of capital to start; therefore, only people with large l amounts of money could invest in them. Railroads and the telegraph allowed factories owned by the same business to communicate across the nation. Professional managers were hired and new, complex systems of accounting were developed to handle the large volume of money, products, and workers. 5 Listen Some industrialists gained complete control of one product or service through a monopoly. There were two main types of monopolies. The first was vertical consolidation, in which one company buys all the phases of a product s development so that it can produce things quicker and cheaper than all other competitors. The other is horizontal consolidation, in which a company brings many firms of the same business into one. To avoid state regulations, Rockefeller invented a trust, in which a company combined operations with other companies all run by a board of trustees. 6 Listen The government responded by passing the Sherman Antitrust Act in 1890 that outlawed trusts restraining interstate trade. 7 The Growth of Big Business Begin Taking Notes 1. Why were American industrialists of the late 1800s called both robber barons and captains of industry? 2. How did Social Darwinism affect Americans views on big business? 3. In what ways did big businesses differ from smaller businesses? 4. How did industrialists gain a competitive edge over their rivals? 8 Robber Barons or Captains of Industry? 1 Robber Barons Business leaders built their fortunes by stealing from the public. They drained the country of its natural resources. They persuaded public officials to interpret laws in their favor. They ruthlessly drove their competitors to ruin. They paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions. 1

2 2 Captains of Industry The business leaders served their nation in a positive way. They increased the supply of goods by building factories. They raised productivity and expanded markets. They created jobs that enabled many Americans to buy new goods and raise their standard of living. They also created museums, libraries, and universities, many of which still serve the public today. 9 Social Darwinism According to Charles Darwin all animal life had evolved by natural selection, a process in which only the fittest survived to reproduce. Social Darwinism applied Darwin s theory to society as a whole. It held that society and government should not interfere with relations between workers and employers and should stay out of affairs a of business. Those who were most fit in business would succeed and become rich. r Society as a whole would benefit from the success of the fit and the weeding out of the unfit. Most Americans believed that government should not interfere with h private businesses. As a result, the government neither taxed profits nor regulated their relations with workers. 10 Business on a Larger Scale Many factors combined to make a new kind of business in the United States. Larger pools of capital Entrepreneurs had to invest massive amounts of capital or borrow w from investors. Wider geographic span Railroads and the telegraph aided in the geographic expansion of businesses. Broader range of operations Big businesses often combined multiple operations and were responsible for all stages of production. Revised role of ownership Owners had less connection to all aspects of their businesses because b the businesses were too large. Professional managers were hired to run their business. New methods of management Innovations were also necessary for controlling resources. Big businesses developed new systems of formal, written rules and created specialized departments. 11 Gaining a Competitive Edge New Market Structures An oligopoly is an industry that is dominated by only a few large, profitable firms. Some companies set out to gain a monopoly,, or complete control of a product or service. Some industrialists prospered by taking steps to limit competition ion with other firms. One way was to form a cartel a a loose association of businesses that make the same product. Companies such as Carnegie Steel were able to maintain very low production costs. One reason Carnegie Steel could charge less for its product was a phenomenon known as economies of scale.. That is, as production increases, the cost of each item produced is lower. As Carnegie Steel expanded, its cost per item went down. 12 Horizontal and Vertical Consolidation 13 The Government Response 14 Many Americans who were skeptical of trusts and other large corporations began to demand government action to break up the industrial giants. Despite questions about the practices of the robber barons many y government officials did not want to interfere with the captains of industry and their contribution to the country s rising levels ls of wealth. However, in 1890, Congress passed a law to limit the amount of control c a business could have over an industry. The Sherman Antitrust Act outlawed any combination of companies that restrained interstate e trade or commerce. This law was vague in its wording and was often used in the courts to aid big business when applied against labor unions. 15 The Growth of Big Business-Assessment How did the theory of Social Darwinism affect the relationship between b the government and big businesses? Social Darwinism allowed for much government intervention. The concept of Social Darwinism benefited workers rights. Social Darwinists believed that government should not interfere with private business. Social Darwinists encouraged Congress to pass the Sherman Antitrust Act. A loose association of businesses that make the same product is a(n): cartel. oligopoly. monopoly. horizontal consolidation. 2

3 16 The Growth of Big Business-Assessment How did the theory of Social Darwinism affect the relationship between b the government and big businesses? Social Darwinism allowed for much government intervention. The concept of Social Darwinism benefited workers rights. Social Darwinists believed that government should not interfere with private business. Social Darwinists encouraged Congress to pass the Sherman Antitrust Act. A loose association of businesses that make the same product is a(n): cartel. oligopoly. monopoly. 17 Work horizontal consolidation. Look over your notes from today. 1. Answer the 4 questions from today s lecture. 2. In five sentences, write a brief summary of what we went over in class today. Use the highlighted key terms in your summary! Title the paper the same as the Lecture Notes. Make sure to put your Name, Date,, and Period in the upper right hand corner of your page. Turn this in at the beginning of class tomorrow put it in the hand-in/collection basket. Worth 25 out of 100 points for this week s Daily grade. 3

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