Warm Up: Images Notes on: Growth of Big Business Closing Activity: Quotes Review

1. Warm Up: ImagesNotes on: Growth of Big BusinessClosing Activity: QuotesReview

6. Big Business -corporations develop Type of business that has many owners through the process of selling stock to investors -limited liability leads to public investment Can’t be held accountable just because stocks drop – Must have proof of purposeful negligent behavior -mass market selling Selling on a national and/or international scale – not going for a few small local markets any longer – going for all available markets

7. Advantages -greater efficiency Factories/Industry can produce more for cheaper and faster -economy of scale Utilized when planning on expanding size of the operation – Buying in bulk, Lower interest rates from banks, less for advertising -manager system Owners make profit without having to spend long hours in their own factories – Managers for paid little more to supervise other workers

8. Advantages -productivity studies Frederick Taylor Workers operate below potential when: Thought that with more production = less workers needed Non-incentive wage systems= low productivity Rely on “Rule of Thumb” rather than tested, scientific based method

9. Disadvantages -unfair competition practices No Competition = High Rates Competition = Drop prices until all competitors are no longer competition than increase prices higher than the original -corruption and bribery Pay officials off, lie to stock holders and others – Judges, IRS, Congressmen

10. Disadvantages • -destroyed labor union movements • Long hours – 12 hour days, 6-7 days a week. No vacation or sick days, faulty equipment, mind dulling tasks – 1882 – 675 killed/week. As young as 5 y/o, Low Wages – 27 cents/day • National Labor Union and Colored Labor Union – 8 hour days – Equal work for equal pay • Management refuses to recognize unions, fire members, sign “yellow dog contracts” – not going to join a union. • Sherman Anti-Trust Act – Strikes, Picket Lines, Boycotts – hurt interstate trade - illegal

11. Public Reactions -mixed public feelings -Social Darwinism -based on Darwin’s theory of evolution -survival of the fittest -also applies to the business world Individual responsibility and blame -the best businesses survive -justified their wealth -”Gospel of Wealth” Sign of God’s Favor – Protestant Work Ethic – God’s favor means the rich should help the poor -rags to riches “American Dream” Horatio Alger dime novels

12. Types of Big Businesses -monopoly—when a business controls all or most of the supply of a product -trust—when several businesses act as one under the control of a board of directors -merger—when two or more businesses join to become one larger business -holding company---business which exists in order to control other businesses as a parent company -horizontal integration —type of monopoly formed by controlling all of the same type of business -vertical integration —monopoly formed by controlling businesses related to the primary business

13. Types of Big Businesses -monopoly—when a business controls all or most of the supply of a product -trust—when several businesses act as one under the control of a board of directors -merger—when two or more businesses join to become one larger business -holding company---business which exists in order to control other businesses as a parent company -horizontal integration —type of monopoly formed by controlling all of the same type of business -vertical integration —monopoly formed by controlling businesses related to the primary business

14. Robber Barons -extreme profits made by business owners -Philanthropy??? -Practice of giving away large sums of money to charity Rockefeller – 500 mil.; Carnegie – 90% of his wealth -Helped to improve the image of robber barons Sell items lower than competitors, when competitors are gone sell for higher than original price BUT donate % of profits to charities

15. Robber Barons -big business practices exposed -public finally began to call for regulation Stifling of free competition -Sherman Anti-trust Act, 1890 -weak law but set a precedent for future regulation Made it illegal to form a trust that would interfere with free trade

16. 1“The man who dies leaving behind him millions of available wealth, which was his to administer during life, will pass away “unwept, unhonored, and unsung’…Of such as these the public verdict will then be:’The man who dies thus rich dies disgraced.” Andrew Carnegie, 1889 • 2“The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few…and the possessors of these, in turn, despise the republic and endanger liberty.” Populist Platform, 1892 • 3I can think of nothing less pleasurable than a life devoted to pleasure. John D. Rockefeller • 4"I would rather earn 1% off a 100 people's efforts than 100% of my own efforts.“ John D. Rockefeller

17. 5"God gave me my money. I believe the power to make money is a gift from God . to be developed and used to the best of our ability for the good of mankind. Having been endowed with the gift I possess, I believe it is my duty to make money and still more money and to use the money I make for the good of my fellow man according to the dictates of my conscience.“ • 6The only question with wealth is, what do you do with it? John D. Rockefeller • 7Charity is injurious unless it helps the recipient to become independent of it. John D. Rockefeller • 8Competition is a sin. John D. Rockefeller • 9Next to doing the right thing, the most important thing is to let people know you are doing the right thing. John D. Rockefeller

18. Quiz

19. Name the author of the popular dime novel books which described successful adventures and rags to riches stories?

20. This is the practice of giving away large sums of money to charitable causes?

21. This is when several businesses act as if they are one in order to control the supply and price?

22. This is a type of business that controls the supply of a product?

23. This is a type of business that has many owners through the process of selling stock to investors.

24. This is when one business joins with another to form a larger company.

25. This is when one business joins with another to form a larger company.

26. Name one of the advantages that bigger businesses have over smaller businesses?

27. This is the theory that only the best businesses will survive while weaker ones are eliminated?

28. This law was eventually passed as a way of regulating the activities of big business?