Chapter 9, Section 2 Guided Notes
I)
Fighting for Profits
a. Industrialization caused a shift from family-owned businesses to larger corporations.
i. In a CORPORATION, many people share the ownership of a business.
ii. One benefit to corporations was that if failure happened, an individual would lose no more than
they invested.
b. The nature of certain industries like RAILROAD and mining made corporations a more viable
opportunity in these expanding markets.
c. Main goal of corporations was to increase PROFITS. They did so in several ways:
i. Decreased production costs—low wages and low costs;
ii. Increase profits—advertise
iii. Investment in research laboratories
iv. Create a monopoly: COMPLETE
CONTROL OF A PRODUCT OR
SERVICE BY ONE COMPANY.
v. Work together with other business to form a CARTEL; businesses with the same product
limit production to keep prices high.
vi. Making deals with other corporations
d. Development of more efficient ways to produce goods and at lower costs.
i. Horizontal integration: absorb many firms within a business.
1. However, many states had laws around this practice. The idea of a TRUST was
created, where a company sold their stock to a board of trustees, who then created a
new company.
ii. Vertical integration: GAINING
CONTROL OF MANY DIFFERENT
BUSINESSES THAT MAKE UP ALL PHASES OF A
PRODUCT S DEVELOPMENT.
II)
Debating the Role of Big Business
a. Some workers, consumers and even the government soon believed that these large trusts, cartels and
monopolies had TOO
MUCH POWER.
i. Small businesses could not compete, and customers were forced to pay high prices.
b. This earned corporate leaders the nickname ROBBER
BARONS.
i. However, others saw the positive impact of these individuals, so they chose a positive nickname:
CAPTAINS OF INDUSTRY.
They provided jobs for a labor force that kept
growing.
1. During this time, the United States became a strong international leader.
2. These leaders in industry also gave portions of their fortunes to universities, museums
and LIBRARIES.
c. In 1859, CHARLES
DARWIN publishes his book,
On the Origin of Species.
i. Soon, his idea of ‘survival of the fittest’ was applied
society and the idea of capitalism. It became known
SOCIAL DARWINISM. It stated that
wealth was a measure of value and those who had it were therefore the most ‘fit.’
as
ii. Proponents of laissez-faire policies used Social Darwinism to justify lack of government
interference in big business.
III)
The Government Imposes Regulations
a.
INTERSTATE COMMERCE COMMISSION (ICC) created in 1887 to oversee
railroad operations. It was the first time a federal body was set up to monitor American business. It was
just the first of many.
b. Congress passed the SHERMAN
ANTITRUST ACT in 1890 to keep trusts from
“retrain[ing] trade or commerce.” It was seldom enforced but paved the way for federal limitations of
corporate power.
Concept Questions:
1) What strategies did corporations use to decrease costs and increase profits? HORIZONTAL
INTEGRATIONà LARGER COMPANIES CREATED; VERTICAL
INTEGRATIONà CONTROL PHASES OF DEVELOPMENT AND
CHARGE HIGHER PRICES
2) What arguments did people use to support or oppose big business? MONOPOLIES
GIVE
BUSINESSES AN UNFAIR ADVANTAGE; SOCIAL DARWINISM TO
SUPPORT BIG BUSINESS.
3) How did the federal government regulate business? SHERMAN
FORMATION OF ICC.
ANTITRUST ACT AND