Topic 4-corporations

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Topic 4-corporations

  1. 1. Industrialization in the United States in the late 19th and early 20th centuries was characterized by the rise of corporations.
  2. 2. Analyze how the rise of corporations, trans formed the American economy from an agrarian to an increasingly urban industrial society. Write the objective in your handout.
  3. 3. Definitions associated with corporations Write:  Shares: one of the equal fractional parts into which the stock of a corporation is divided and sold on the stock exchange.  Stocks: the shares of a particular company or corporation. Write
  4. 4. Write: A company controls all or most of the sales of a specific good or product.
  5. 5. Corporation OWNED BY INDIVIDUALS BOARD OF DIRCTORS makes decisions CORPORATE OFFICERS run day- to-day operations ADVANTAGES TO EXPAND the business, it can raise money by selling shares of stock STOCKHOLDERS can lose only what they invest IT CAN CONTINUE TO EXIST after its founder leaves In the 1800s COMPETITION was fierce. To gain dominance some companies merged to form a trust BOARD OF TUSTEES ran it like a single corporation When a trust gained complete control over an industry it held a monopoly Monopoly had no competition. It could raise prices or lower quality at will.
  6. 6. Write: Corporations originated during the U.S. Second Industrial Revolution 4. When did corporations originate? TODAY’S CORPORATIONS
  7. 7. Definitions associated with corporations  Entrepreneurs  Market Economy  laissez-faire  Monopoly  Social Darwinism
  8. 8. Write: Heavy industry companies grew so large that they evolved into corporations.
  9. 9. Write: Entrepreneurs were willing to risk large sums of money in new business, and were fiercely competitive trying to stomp out the competition. Much of the public attitude thought the competition was perfectly natural. 6. How did entrepreneurs and public attitudes help the rise of big business (corporations) in the late 1800s?
  10. 10. Write: A system of distributing resources based only on the interaction of market forces, such as supply and demand.
  11. 11. Write:  Supply is how much of something is available.  Demand is how much of something  people want.  Put the two together, and you have supply and demand.  Generally speaking, the price of something will go up if the demand goes up.
  12. 12. Write:  A true market economy is free of governmental influence (laissez-faire) , and other external interference.  Before the Progressive Era, the United States was an example of a Market Economy.
  13. 13. Write: It means “hands off.” It describes the approach that government took concerning businesses. They did not interfere in the affairs of business. Prices, quality and competitive practices are solely determined by competition. Read but do not write: This approach was advocated by the English economist Adam Smith in his work The Wealth of Nations and followed by the US government up until the late 1800’s, early 1900’s
  14. 14.  Market Economy (capitalism)  A system distributing resources based only on the interaction of market forces such as supply and demand—free of governmental influence
  15. 15. Write:  It is a view of society based on Charles Darwin's scientific theory of natural selection  It is a belief that natural selection also applied to society. Stronger people, businesses, and nations would prosper. Weaker ones would fail. Write: This theory gave business the excuse for not providing very well for their workers.
  16. 16. The Rise of Big Corporations Big business prospered in the late 1800s because of entrepreneurs Started new ventures within the economic system called free enterprise or market economy (businesses are privately owned) Laissez-faire market economy companies operated without government interference---- was used during the late 1800s to justify unregulated business growth Huge inequalities under market economy—entrepreneurs became very rich but their workers were extremely poor Some people explained inequalities by a philosophy known as Social Darwinism Social Darwinism: Stronger people, businesses, and nations would prosper. Weaker people and businesses would fail.
  17. 17.  taking over other companies that make that same product as your company so as to reduce the competition  Rockefeller took over other refineries. Horizontal integration Example: Oil Monopoly
  18. 18.  Acquiring companies that supply that necessary materials for production or companies that transported the materials that the company produces  Rockefeller acquired companies that supplied the oil business, such as pipelines and railroad cars. vertical integration Example: Oil Monopoly
  19. 19.  He acquired companies that supplied the oil business and took over other oil refineries, eliminating his competition.  He eventually controlled 90% of the world oil trade=MONOPOLY. Example Oil Monopoly
  20. 20. In 1904 Puck published an iconic cartoon “Next!”. It shows an oil tank/octopus hybrid with the name “Standard Oil” on the Tank. The octopus has arms “wrapped around the steel, copper, and shipping industries, as well as a state house, the U.S. Capitol, and one tentacle reaching for the White House.”
  21. 21. Write:  (1839–1937) American industrialist and philanthropist;  he made a fortune in the oil business and establish a monopoly in the oil business 12. Identify John D. Rockefeller
  22. 22. Write: (1835–1919) American industrialist and humanitarian; he focused his attention on steelmaking and made a fortune  Carnegie Steel Company  Monopoly--dominated the American steel industry. 13. Identify Andrew Carnegie
  23. 23. Write:  (1794–1877) American business leader who controlled (had a monopoly) the New York Central Railroad and up to 4,500 miles of railroad track;  he later donated $1 million to a Tennessee university. 14. Identify: Cornelius Vanderbilt
  24. 24. Write:  (1831–1897) American business leader who made a fortune in the railroad business by designing and building railroad cars, including a sleeper car. 15. Identify: George Pullman
  25. 25. Write: Some Americans viewed the tycoons of the late 1800s as robber barons, who:  destroyed competitors with tough tactics  Did not care for the welfare of their workers  Gathered huge wealth for themselves 16. Define: Robber Barons
  26. 26. Write: Some Americans viewed the tycoons of the late 1800s as robber barons, destroying competitors with tough tactics. Others, however, saw them as captains of industry, using their business skills to strengthen the economy. 17. Do you think the four industrialists discussed in the text are best described as “robber barons” or “captains of industry”? Explain your answer.
  27. 27. READ: The economic and political power of trusts became a concern for the American public during the late 1800s. (Trusts control many companies in an industry through a single board of directors.) By lowering prices and fixing costs and expenditures, trusts drove many smaller companies out of business. For example, John D. Rockefeller and his associates formed the Standard Oil Company of Ohio in 1870. By 1882 the company monopolized nearly all of the U.S. oil industry.
  28. 28. READ: Such a concentration of wealth and economic power dramatically influenced the landscape of the United States economy. As a result, most Americans were very suspicious of trusts. Although trusts were capable of efficient production, they usually did so at the expense of their workers who often earned just enough money for survival. In addition, by monopolizing entire segments of industry, trusts threatened to squeeze small and emerging businesses out of existence.
  29. 29. Analyze how the rise of corporations, heavy industry, and technological innovations transformed the American economy from an agrarian to an increasingly urban industrial society. Essential Questions Did rapid industrialization improve the lives of Americans? Are the benefits of progress worth the costs?

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