The Rise of Big
Business
Types of Business Organizations
Sole
Proprietorship single owner
Partnership
Sole
Proprietorship
Negatives
1)Limited Capital
(Money)
Partnership
2)Unlimited Liability
responsibility of the
owner to pay off all
debts even after the
business has failed
Two or more
individuals
Prior to the Civil War these were the
main types of Business organizations.
After the Civil War most were
unable to raise the money
necessary to start the buisness
that developed
Sole
Proprietorship
Partnership
1
• Has many owners
called
shareholders
• Shareholders buy
shares of Stock
Corporation
What is an advantage of a corporation?
• Ability to raise large sums of capital (money)
• Limited liability - only lose what you invest
• Stable organization- survives even if stock
holders die
The goal is to
make profits
for its
stockholders
• Purchase of
Stock =
ownership in
company
Corporation
Social Darwinism
$ Applied Darwin’s idea
of “Survival of the
Fittest” to business
$ Individuals who work
hard will succeed and
those that do not will
fail
$ government
intervention is not
needed
Laissez Faire allowed for the development of Monopolies
Monopoly
• Company that has exclusive
control of an industry
• Eliminates competition
Negatives
1. High Prices
2. Poor quality
3. No variety or
choices
2
Other Types of Monopolies
Pool-
informal agreement between
companies to keep their prices high
and to keep competition low.
Trust-
group of companies turn
control over to a common board of
trustees. The board then runs all
companies as a single enterprise
VERTICAL INTEGRATION
acquiring all
the resources
and the
companies
needed to
produce a
product
HORIZONTAL INTEGRATION
Eliminating
competition
by buying
companies
that produce
the same
product
3
Early Monopolists
Cornelius Vanderbilt
Railroads
Should these men be
remembered as Captains
of Industry
Or
Andrew Carnegie
Steel
J.P MORGAN
John D. Rockefeller
Oil
Banking, Railroads, Steel, General Electric
Captains of Industry
Revolutionized business and helped
put our country onto the path of
being a economic world power
Should they be remember
as Robber Barons?
Philanthropy
When very
rich people
donate lots of
money
•Carnegie Hall, Rockefeller
Center
•University of Chicago
•Carnegie Mellon University
ROCKEFELLER CHAPEL –
UNIVERSITY OF CHICAGO
4
Robber Barons
Increased their wealth by
using unfair business
practices
Andrew Carnegie
Positives
1. Cheep steel
helped country
grow
2. Steel built NY
bridges and
skyscrapers
3. Philanthropy
4. Made US
economy most
powerful
Andrew Carnegie
By 1899,
manufactured
more steel than
all the factories
in Great Britain
combined
5
Andrew Carnegie
Negatives
1. Workers paid poorly
2. Unsafe working
conditions
3. Workers felt like
slaves
4. Crushed a strike that
resulted in deaths
5. Bribed railroads
6. Broke prices and
raised prices
John D. Rockefeller
Positives
John D. Rockefeller
Created the
Standard Oil
Trust and
controlled
about 90% of
the oil
industry
Standard Oil Co.
1. Innovators
2. Built a modern
economy that
helped us win wars
3. Philanthropy
4. Responsible for
hiring thousands
and improving
everyone’s lives
6
John D. Rockefeller
The
‘Bosses
’ of
the
Senate
Negatives
•
•
•
•
•
•
Cutthroat business
practices that put
crushed small
businesses
Monopolization
Rate Wars
Rebates
Intimidation
Threat to Democracy
Philanthropy
The Box Scores
Year
Carnegie
1904
1910
$21,000,000
$179,300,000
$10,000,000
$134,271,000
1913
$332,000,000
$175,000,000
Moodle Homework
Should these men be remembered as
Captains of Industry
Rockefeller
“the man who dies thus rich,
dies disgraced”
-Andrew Carnegie
Or
Should they be remember as
Robber Barons?
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