1. Section 5-3
Big Business

2. The Rise of Big Business
Corporation- an organization owned by many people but treated by law as though it were a person. It can own property, pay taxes, make contracts, and sue and be sued. The people who own the corporation are called stockholders.
Stock- shares of ownership in a corporation.
Economies of Scale- the cost of manufacturing is decreased by producing goods quickly in large quantities.

3. Consolidating Industry
Pools- agreements to keep prices at a certain level.
Andrew Carnegie- most successful business man of the industrialization era.

4. Consolidating Industry
Vertical Integration- a process in which he bought out his suppliers in order to control the raw materials and transportation systems.
Horizontal Integration- companies producing similar products merge.
Social Darwinism- philosophy that grew out of Charles Darwin’s theory of biological evolution.

5. Consolidating Industry
John D. Rockefeller- Established the Standard Oil Company. Joined with competing companies in trust agreements.
Monopoly- when a single company achieves control of an entire market.

6. Consolidating Industry
Trust- A legal arrangement that allowed one person to manage another person’s property. The person who manages that property is called a trustee. Instead of buying a company outright, companies had stockholders give their stocks to a group of trustees. In exchange, the stockholders received shares in the trust and a portion of the trust’s profits. Since the trustees did not own the stock; just managed it, they were not violating any laws. The trustees could control a group of companies like as if they were on large merged company.

7. Consolidating Industry
Holding Company- Does not produce anything itself. Instead, it owns the stock of companies that do produce goods. The holding company manages the companies it owns, effectively merging them into one large enterprise.
Sherman Anti-Trust Act- made it illegal to form a trust that interfered with free trade between states or with other countries