1. The Rise of Big Business
Ch 6, Section 2

2. A New Capitalist Spirit
Capitalism is when private business run most industry
Competition determines how much things cost and worker pay
Laissez-faire capitalism means to let the people do as they chose (no Govt. intervention)
Free enterprise frees the big business from government regulations

3. Marxism/Communism Marxism developed by Karl Marx a German philosopher
Proposed to remove the inequalities of wealth
{proposed by Marx Communism is the theory that individual ownership of property should not be allowed}
The community provides for the needs of the people

4. Good in theory
Why does it not work?
Too much power in Govt. hands
People in power become corrupt
No drive to put out a better product

5. Social Darwinism Originally {proposed by Herbert Spencer
Based on Charles Darwin Survival of the Fittest}
The “Fittest” businesses would rise to great wealth
Unfit businesses would fail

6. {Corporation organizers raise money by selling shares of stock}
Stockholders, who own shares of the company receive a percentage of the profit
{Trust is when a group of companies turn control of stock over to a board of trustees
The trustees then run all the companies as a single enterprise}

7. {Monopoly If a trust gains exclusive control of an industry}
This gives a company complete control of the product price and quality
Is this good or bad?

8. {Carnegie believed the rich were morally obligated to manage their wealth in a way that benefited their fellow citizen.}
Is this common?
What do you think?

9. Carnegie and steel
Carnegie was a master at using all of these business strategies
He started out investing in steel he then entered steel production
He used {Vertical Integration which is acquiring companies that provided the materials and services his enterprises depended on to reduce cost.}

10. Continued
Others had to pay for raw material or shipping their product.
He purchased Iron and coal mines that provided the raw materials
He bought steam ships and railroad lines to move the material.
He never had to pay someone else during the whole production process of his steel

11. Rockefeller and Oil John D Rockefeller founded Standard Oil
He started in wholesale food
Also used vertical integration
What kind of companies do you need to buy for vertical integration of oil?

12. answer You need… Barrel factories Oil fields Oil storage facilities
Pipelines and railroad tanker cars

13. Horizontal Intergration
Rockefeller then used horizontal integration
That is when one company starts buying other companies producing the same product.
He would make deals with suppliers to get cheaper supplies and freight
He intentionally drove his competition out of business.
By 1880 Standard oil Trust owned 90% of petroleum refinery
He did however donate $550 million to various causes over his life

14. The Railroad Giants
Vanderbilt

15. {Vanderbilt He extended his railroad system by buying smaller lines }
he controlled the lines between Cleveland, Chicago, New York, and Toledo

16. Westinghouse

18. The Department store
New store that sold a variety of goods under one roof
Became the domain of ladies as a place to shop and to work
This made a pleasant homelike atmosphere
Bought goods in bulk to pass savings to customers

19. Questions Social Darwinism is based on what?
Karl Marx came up with what form of Govt?
What is it when organizers raise money by selling shares of stock?
What is it called when a trust gains exclusive control of an industry?
He extended his railroad system by buying smaller lines