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Robber Barons or Captains of Industry? 11.2.5 Discuss corporate mergers that produced trusts and cartels and the economic and political policies of industrial.

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Presentation on theme: "Robber Barons or Captains of Industry? 11.2.5 Discuss corporate mergers that produced trusts and cartels and the economic and political policies of industrial."— Presentation transcript:

1 Robber Barons or Captains of Industry? Discuss corporate mergers that produced trusts and cartels and the economic and political policies of industrial leaders.

2 Homework Read and take STAR Notes on sections 14.1 & 14.2 to prepare for an activity Tuesday. Make sure to summarize the section at the bottom of your notes.

3 HOT ROC: Do billionaires have a responsibility to help the poor? Do millionaires? *HW Check Organizational Categories for your project. Project Reminder: Essay outline with a thesis statement for the project is due on Friday

4 Who are the billionaires (Robber Barons) of today?

5 Who are the billionaires?

6 Forbes 2011 RankNameWorthAgeSourceCountry 1Carlos Slim Helu & family$74 B71telecomMexico 2Bill Gates$56 B55MicrosoftUSA 3Warren Buffett$50 B81Berkshire HathawayUSA 4Bernard Arnault$41 B62LVMHFrance 5Larry Ellison$39.5 B67OracleUSA 6Lakshmi Mittal$31.1 B61SteelIndia 7Amancio Ortega$31 B75ZaraSpain 8Eike Batista$30 B54mining, oilBrazil 9Mukesh Ambani$27 B54 petrochemicals, oil & gas India 10Christy Walton & family$26.5 B56WalmartUSA

7 3 New Vocabulary words… Monopoly: A company that completely dominates a particular industry Trust: a set of companies managed by a small group known as trustees, who can prevent companies in the trust from competing with each other Corporation: A company recognized by law to exist independently from its owners, with the ability to own property, borrow money, sue or be sued

8 Corporate Monopolies Horizontal and Vertical Integration Textbook, page 171

9 Andrew Carnegie $75 Billion Andrew Carnegie came from Scotland with his parents in In 1861, at the age of 26, he started up the Freedom Iron Company, and used the new Bessemer process for making steel He formed all of his companies into the Carnegie Steel Company in 1899, which controlled raw materials, manufacturing, storage, and distribution for steel. Vertical Integration

10 John D. Rockefeller $192 Billion Born in 1839 His working life started as a bookkeeper He established one of the first oil refineries 1870With partners, forms a business trust: Standard Oil At its peak, controls 90% of all oil companies Horizontal Integration

11 Big Business and the Government: POV Leave Business Alone Laissez-faire Social Darwinism Limit Business Sherman Anti-Trust Act Splits Rockefellers Standard Oil into 34 companies (A U.S. Court of Appeals found in 2001 that Microsoft violated the Sherman Act antitrust law.)

12 The Gilded Age…1870s-1900 Where was the most money made? Was this positive or negative for America? Steel Production 77,000 tons 11 million tons Oil production5 million barrels 63 million barrels Railroad track53,000 miles 200,000 miles

13 Simulation Business A 3 volunteers (owner) Business B 5 volunteers (shareholders) Step 1 (August): Business A, set the price for t-shirts Step 2 (September): Business B opens up a store across the street, set the price for t-shirts at store B Class: Which store will you shop at?

14 Simulation Step 3 (October): Business A, respond to the t-shirt price of Business B Class: Which store will you shop at? Step 4 (November): Business B, respond to the t-shirt price of Business A Class: Which store will you shop at? Step 5 (December) Repeat process Class: Which store will you shop at?

15 Business Person A You own a successful t-shirt shop on Castro Street. You are just one shop but youve managed to stay in business because you are the only t- shirt shop on Castro Street. Recently, a t-shirt shop opened up across the street and its part of the national chain, Shirt Me Up, that has stores all over the nation. You are worried about losing some of your customers to them but you are willing to cut prices and offer sales if it will keep you in business. Basics – t-shirts cost $6 to manufacture and you currently sell them for $12. You need to make at least a $2 profit on each t-shirt in order cover the cost of your rent and pay your employees. If you lose money for more than a month then you will not be able to pay for your rent. Task: Respond to the sales ideas from Person B in competitive ways in order to stay open. Business Person B You are a local manager for the national t-shirt company, Shirt Me Up, that has stores all over the nation. You are currently managing the new store that just opened up on Castro Street. There is a t- shirt shop already on Castro Street, but you are pretty confident you can drive them out of business since you can draw on money from the national office. Basics – t-shirts cost $6 to manufacture and your competitor currently sells them for $12. They need to make at least $2 profit on each t-shirt to cover the cost of rent and employees. This is true for you also, but you can lose money for several months in a row because your national office will cover your costs. Task: Start the competition by telling the shoppers in your group that you are willing to offer t-shirts for $10 and ask if they will shop at your store instead. No matter what your competitor does, respond by offering your t-shirts for less money. It doesnt matter if you lose money, because eventually theyll go bankrupt and then you wont have to compete with them anymore. When they go out of business, raise your prices to $20 a t-shirt.

16 What would Rockefeller say… Monopolies are good because we can produce goods at a lower cost to consumers! Now everyone can have cheap oil and gas.

17 What would the Populists (poor farmers) say? Monopolies are bad because they control the whole industry and there is no competition over prices. We have to pay high prices to ship our wheat on the trains! And these companies pay low wages to their workers!

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