1. Unit 5: Rise of Big Business
NOTES: WEEK 2(4.3)

2. Methods used by Businessmen
Rise of Big Businesses
Methods used by Businessmen
Contributing Factors
Key People
Vertical Integration
Horizontal integration
Business Climate
Capitalism
Social Darwinism
B. Change in Business Structure
Formation of Corporations
Trusts & Monopolies

3. Notes: Rise of BIG BUSINESS
What encouraged the development of Big Business?
Contributing Factors
A. Business Climate
Capitalism
Social Darwinism
B. Change in Business Structure
Formation of Corporations
Trusts & Monopolies

4. (1) Business Climate (a) Capitalism
With laissez-faire capitalism competition determines prices and wages
Therefore: believed government regulation would destroy self-reliance, reduce profits, and harm the economy.

5. (b) Social Darwinism
Many believed that inequalities were part of the natural order.
Charles Darwin believed species compete for survival in a natural selection process.
In Society: stronger people or businesses, and nations would prosper, and weaker ones would fail in a “survival of the fittest.”

6. (2) Change in Business Structure
(a) Formation of Corporations
Corporations : organization owned by people (treated as individual) that can own property, pay taxes, make contracts and can sue/be sued

7. (b) Trusts and Monopolies
Some companies merged and turned their shares of a company over to a board of trustees who ran the group of companies as a single entity.
Sometimes a trust gained a monopoly: having complete control of an industry.
** With no competition, prices could be raised or lowered at will.

8. Discussion Question
Why did businesses form monopolies, trusts, and holding companies?
eliminate competition
Holding company: company that has a controlling interest in one or more companies through having some ownership in the company (through stocks)

9. Methods Used by Business Men to Build business
Vertical integration: company owns all the different businesses of which it depends on for production

10. Horizontal integration – combining many firms engaged in the same type of business into one large corporation

12. KEY PEOPLE Andrew Carnegie – Carnegie Steel Industry
John D. Rockefeller – Standard Oil Company (created a monopoly to control prices and practices of oil refineries)
J.P Morgan – bought Carnegie Steel, controlled banking, railroads, and other corporations

13. Money, Money, Money
Wealthiest Americans today: Net Worth
Bill Gates (#1) = $66,000,000,000
Warren Buffet (#2) = $46, 000,000,000
Oprah Winfrey ( #151) = $2.7 billion
Mark Zuckerberg (#16) = $14 billion
John D. Rockefeller’s NET WORTH IN 2012 DOLLARS
EQUALED:….
$340,000,000,000