1. The Rise of Big Business
American History

2. Goals Students will be able to: Terms to know:
Examine causes and consequences of the second Industrial Revolution
Determine how new industry, technology, and business changed the economy
Analyze changes as the United States became and industrial society
Review different economic and philosophic ideologies
Terms to know:
Corporation, monopoly, cartel, John D. Rockefeller, horizontal integration, trust, Andrew Carnegie, vertical integration, Social Darwinism, ICC, Sherman Antitrust Act

3. Corporations
In the late 1800s and early 1900s, the United States began to see an expansion of corporations
Corporations are run by multiple owners who pool resources to reach different markets
Corporations limit ones risk because one can only lose what they have invested in the company originally and the company itself assumes all liability
Corporations helped American business expand to new areas helping to fund technology, start new industries, or run large plants across the country
This was due to the large amount of capital corporations had access to

4. Corporations
Corporations were able to reduce the amount of money it cost to produce an item because it bought materials in mass amounts and paid workers low wages
This also allowed corporations to lower the price of goods sold, helping to improve the cost of living in the United States
Some corporations tried to establish monopolies, or become the only business that created a certain good or provided a certain service
Without any competition, business have the ability to set prices at any level, hurt the consumer
Some corporations established cartels
This is when businesses make the same product and mutually agree to sell their goods for a certain price, in order to keep prices high
John D. Rockefeller made deals with railroads so that they would transport only his oil and not that of his competitors

5. Integration
Businesses continued to look for ways to cut costs so that they could increase profit
Some business set up a system of horizontal integration
This is when one company tries to buy all of the companies that make the same product
This is largely done through the creation of trusts
This is when companies assign their stock to a board of trustees, who combine them into a new organization
This would allow one business to own the stock of another
Others, such as Andrew Carnegie, setup businesses using vertical integration
Vertical integration is a system where a business buys all of the businesses that are used to create their product
This allows a business to control every aspect of the creation of a product. From the collection of raw materials to the complete product.

6. The Role of Big Business
As cartels, trusts, and monopolies gained more power, many consumers began to view these practices as unfair
Smaller businesses who joined cartels found that they were also being squeezed out of the profits
These individuals viewed the leaders of these businesses as “robber barons”
There were those, however, who felt that these individuals were leading the nation and creating a better society
These individuals referred to people like Rockefeller and Carnegie as “captains of industry”
Through this time period, the idea of social Darwinism began to take hold
William Graham Sumner stated that it was wealth that measured one’s inherent value and those who had it were more fit to live in modern society
Those who supported a more laissez-faire system of economy celebrate social Darwinism as it provided them a justification for why government involvement in the economy was not needed

7. Government Regulations
In 1887, the government began to step in and reel back some of the power that had been developed by corporations
The U.S. Senate created the Interstate Commerce Commission to oversee all railroad operations
This organization could require railroad to send their records to congress so that their actions could be monitored for fair practice
In 1890, the Senate passed the Sherman Antitrust Act
This act outlawed the use of any trust that “operated in restraining of trade or commerce among the several states”
While these acts were largely unsuccessful, the began a movement to end the over reach of corporate power