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INDUSTRY AND BIG BUSINESS. What is a monopoly? What does “capitalist system” mean? If you have stock in a company, what does that mean? What’s the difference between a “trust” and a “corporation” What is the purpose of a labor union? Define “laissez-faire”. INDUSTRY & BIG BUSINESS 1.
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What is a monopoly? • What does “capitalist system” mean? • If you have stock in a company, what does that mean? • What’s the difference between a “trust” and a “corporation” • What is the purpose of a labor union? • Define “laissez-faire”
INDUSTRY & BIG BUSINESS 1 • Free Enterprise – private companies freely competing with each other with little or no government regulation • Monopoly – a single business in an industry that has the power to control the price of a good • How does a monopoly effect free enterprise?
2 • Corporation – a business that sells stock to investors who own part of the company and share its profits • Trust – a single board of trustees who control a group of member corporations • Name a modern example of a: • Corporation =AT & T, Time Warner • Trust = Gap owns Old Navy & Banana Republic
Horizontal Integration • A company controls ONE area of production such as raw materials OR manufacturing OR distribution • Vertical Integration • A company controls ALL parts of production from raw materials to distribution of finished goods
Think & list adjectives for the words below: “Robber Baron” “Captain of Industry”
Captain of Industry or Robber Baron? • Steel – Andrew Carnegie (Carnegie Steel) • Iron ore mines • Coal mines • Steel factories/mills • Transportation (railroads & shipping)
Oil – John D. Rockefeller (Standard Oil Company) • Oil rich land • Oil drills • Oil refineries • Transportation • In 1870, Standard Oil Co. processed 2%-3% of U.S. oil • By 1880, it controlled 90% of U.S. refineries.
Justifying Wealth • The rich believed in Social Darwinism • People became rich because they were smart and worked hard people were poor because they were “stupid” and “lazy” • Laissez-faire – idea that business should be free of govt regulation • Government Regulations • The public calls for action against wealthy business they refer to as “Robber Barons” took advantage of workers
Congress passes the Sherman Anti-Trust Act • Making all monopolies illegal; the law was not enforced • Congress passes the Interstate Commerce Act, which regulates railroad rates makes rebates illegal ***The Sherman Anti-Trust Act and the Interstate Commerce Act were largely ineffective and ignored at first!***
Political machines controlled the cities • Pendleton Civil Service Act • Attempted to cut spoils system • Hiring and promoting people based on how they scored on exams
