Big Business

• What is a corporation?– Businesses that sell portions of ownership called stock shares (or

stocks)• What role do stockholders play in a corporation?

– Individuals invest money through the purchase of stock– This makes them a part owner– The money allows the company to engage in business, and hopefully,

generate profit– Stockholders then receive a portion of the profit as a return on their

investment• Why are corporations advantageous for stockholders?

– They can only lose the amount of money that they invest, no more– They are free to sell their stock to whomever they want

Corporate Leaders• Andrew Carnegie

– Worked in a railroad company and worked his way up– Turned to steelmaking…created the U.S. Steel Corp.– Used vertical integration to control every step of process

• John D. Rockefeller– Consolidated businesses using horizontal integration– Standard Oil Company owned 90 percent– Formed a trust that grouped many companies under one board of directors– The first billionaire in the world

• Leland Stanford– Made money selling equipment to miners– Governor of California– Founded Central Pacific Railroad– Believed that workers should be part of the ownership process

• All three gave back to charitable causes later in life (although Rockefeller gave less and later in life)

Vertical and Horizontal IntegrationHorizontal Vertical

•Several companies that do the same thing owned by the same group

Vertical and Horizontal IntegrationHorizontal Vertical

•Several companies that do the same thing owned by the same group

•Example – a monopoly – Standard Oil owned several companies that all produced oil.

Store #1 Wal-Mart Store #2

Vertical and Horizontal IntegrationHorizontal Vertical

•Several companies that do the same thing owned by the same group

•Example – a monopoly – Standard Oil owned several companies that all produced oil.

•A company owns several steps in the production process.

Vertical and Horizontal IntegrationHorizontal Vertical

•Several companies that do the same thing owned by the same group

•Example – a monopoly – Standard Oil owned several companies that all produced oil.

•A company owns several steps in the production process.

•Example – take a car company…if they own a rubber company for tires, an engine building company, steel producing company, and a shipping company, they own several steps in the production process and can earn money at every level.

The Car CompanyCar Factory

Shipping CompanyEngine Company

Tire CompanyRubber Tree Plantation

Social Darwinism

• Define social Darwinism.– The view that Darwin’s “survival of the fittest” theory

determines who would succeed in business and in life• Why did some business leaders give money to

charity?– They felt that the rich had a duty to aid the poor

The Antitrust Movement

• Why did critics oppose the practices of big business?– They believed that big business used unfair practices like driving

smaller competitors out of business and creating monopolies• How did concerns about trusts lead to the Sherman Antitrust

Act?– Voters were concerned about the political power of trusts and

wanted the government to control monopolies and trusts• Was the Sherman Antitrust Act successful in curbing the power

of wealthy trusts?– No

• Why (or why not)?– It did not legally define what a trust was and was too difficult to

enforce