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Corporations & Bankers Big factories have now replaced small factories = cheaper goods, faster service Railroads distributed these goods across the nation.

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Presentation on theme: "Corporations & Bankers Big factories have now replaced small factories = cheaper goods, faster service Railroads distributed these goods across the nation."— Presentation transcript:

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2 Corporations & Bankers Big factories have now replaced small factories = cheaper goods, faster service Railroads distributed these goods across the nation

3 Now that a few large companies were running major industries, they needed capital CAPITAL: money for investment that a company uses to buy raw materials, pay workers & cover shipping/ advertising costs Corporations & Bankers

4 To raise capital, expanding businesses became corporations CORPORATION: business owned by investors Sells STOCK: shares in the business to investors, or stockholders This $$ can be used to build a new factory or buy machines Corporations & Bankers

5 In exchange for investing, stockholders hope to receive DIVIDENDS: shares of a corporation’s profit Corporations & Bankers

6 To protect their investments, stockholders elect a board of directors to run the corporation If the business goes bankrupt, the owner MUST pay all the debts of the business By law, stockholders CAN NOT be held responsible for a corporation’s debts Corporations & Bankers

7 To be so successful, corporations had borrowed tons of $$ from banks, so bankers made huge profits Most powerful banker late 1800s: – J.P. Morgan – Used banking profits to gain control of major corporations Corporations & Bankers

8 During an economic loss in the 1890s, Morgan invested in the stock of troubled corporations As large stockholders, they were on the corporations’ boards By 1898 Morgan controlled most rail lines & steel companies (bought Carnegie) By 1901 he combined all steel companies into one: U.S. Steel Company Corporations & Bankers U.S. Steel Company becomes the 1 st company in America to be worth over $1 Billion Dollars!

9 Black Gold Discovery of oil. Valuable resource that could act as fuel

10 J.D. Rockefeller builds oil refinery – He knows oil is worthless until it is refined to make kerosene Stoves/lamps Oil I’ve got to get my hands on some of that black gold!

11 Used profits from his refinery to create Standard Oil Co. of Ohio J.D. Rockefeller Grease me up, baby!

12 Hated the idea of competition, thought it was a waste Slashed prices to drive rivals out of business Pressured customers with media Cut a deal with railroads – supply for rebates on shipping J.D. Rockefeller

13 1882 creates Standard Oil trust Trust: group of corporations run by a single board of directors – This created a monopoly of the oil industry J.D. Rockefeller Hey J.D. Thanks for being a billionaire tycoon and inspiring my record label!

14 Cause & Effect CAUSES: -Railroad boom spurs business -Businesses become corporations -Nation has rich supply of natural resources -New inventions make business more efficient EFFECTS: -Steel & Oil become HUGE industries -Monopolies & trusts dominate important industries -Factory workers face harsh conditions -Membership in labor unions grows RISE OF INDUSTRY EFFECTS TODAY: -U.S. is world’s leading economic power -U.S. corporations do business around the world -Government laws regulate monopolies

15 businesses are owned by private citizens who decide what to produce, how much to produce & what prices to charge Free enterprise system: citizens

16 *GOOD for entrepreneurs starting out* **CONTRAVERSIAL for our fat cats** Many thought leaders of giant corporations were abusing the free enterprise system Companies compete to win customers by making the best product at the lowest price Free enterprise system: VS.

17 1. Trusts/ monopolies reduce competition Without competition there’s no reason for companies to keep prices low or improve products 2. Hard for new companies to compete with powerful trusts 3. Few Fabulous Wealthy vs. Majority Wretchedly Poor Political influence & wealth can sway people in power to buy or neglect certain companies Against Trusts

18 1890- banned formation of trusts and monopolies Too weak to be effective since it spanned the whole nation – Some state gov’ts passed laws to regulate, but powerful, $$ corporations side-stepped them Sherman Antitrust Act:

19 1.Too much competition ruins businesses & puts people out of work Are they really giving back? Or is Carnegie a rare example? Or is Carnegie a rare example? For Trusts “It will be a great mistake for the community to shoot the millionaires, for they are the bees that make the most honey, and contribute most to the hive even after they have gorged themselves full” – Carnegie

20 2. Growth of giant corporations brought – Lower production costs – Lower prices – Higher wages 3. Better quality of life for millions of Americans -By1900- Americans enjoy highest standard of living in the world For Trusts

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