1. The Rise of Big Business
Us. 12 Describe the rise of trust and monopolies

2. Objective
Describe the rise of trust and monopolies

3. Laissez faire supports our economic system of capitalism
An economic belief supported by the U.S. that opposes the government regulating business.
In the late 1800’s businesses operated without much government regulation. This is known as laissez-faire economics.
Laissez-faire means ‘allow to be’ or the government stays out of a person’s business in French.
Laissez faire supports our economic system of capitalism

4. Economic system characterized by private property ownership
CAPITALISM
Economic system characterized by private property ownership
Individuals and companies compete for their own economic gain (Profit)
Capitalists determine the prices of goods and services.
Production and distribution are privately or corporately owned.
Reinvestment of profits
Supports laissez faire and the “free enterprise” system

5. Economic system based on cooperation rather than competition
SOCIALISM
Economic system based on cooperation rather than competition
Many Americans opposed capitalism and believed a socialistic economy would better suit the US because some capitalists were corrupt.
Believes in government ownership of business and capital (money, natural resources)
Government controls production, sets wages, prices and distributes the goods. No profit or competition.
Opposite of laissez faire and capitalism

6. Who were the Big Business Tycoons? Andrew Carnegie – steel
Industrialization & the Rise of Big Business
Who were the Big Business Tycoons?
Andrew Carnegie – steel
Cornelius Vanderbilt – railroads
John D. Rockefeller – oil
J.P. Morgan - banking
“Rags to Riches”
What does this mean?

7. Rags to Riches? The exception, not the rule!
95% of executives & financiers in the US around 1900 came from upper class backgrounds
Fewer than 3% started as poor immigrants or farm children
2% of US Industrialists came from working-class origins
By 1910, the top 1% control 1/3 (33%) of all personal income.
Huge differences in the proportion of wealth eventually leads to conflict in the Gilded Age

8. Monopoly
Think about the game Monopoly. The object of the game is to buy and control everything on the board.
A major problem with a monopoly is that one person or a small group of people control part of the market, and they can set the price of their goods at a high price, gouging the consumer. When there is no competition, it gives too much power to one person.

9. Some tried to gain “monopolies”…
To gain complete control of a product or service; consumers have no other choices
Some corporations formed pools or “cartels”…
Businesses making the same product work together, agree to limit production to keep prices high

10. BUSINESS ORGANIZATIONS
Trusts or Monopoly
Companies in related fields combine under the direction of a single board of trustees.
Shareholders had no say.
Outlawed today.

11. BIGGER IS BETTER A trust or monopoly controls an entire industry
TRUSTS AND MONOPOLIES
BIGGER IS BETTER
A trust or monopoly controls an entire industry
Make product cheaper
Lower prices to customer
Is this true?

12. Sherman Anti-Trust Act (1890) Clayton Anti-Trust Act (1914)
First act passed by Congress to prevent monopolies and trusts.
Clayton Anti-Trust Act (1914)
Re-enforced the Sherman Anti-Trust Act and also aided labor unions in their efforts to protect workers.

13. 1st LAWS TO REGULATE BIG BUSINESS
These are the first laws to regulate industry and big business.
Congress passed Interstate Commerce Commission (ICC). 
U.S. government regulated interstate trade within the country.
End railroad corruption of charging high prices to ship goods and Rockefeller’s illegal deals.
Rebates/kickbacks/drawbacks were illegal.
In 1890, Congress passed a law which made trusts/monopolies illegal or any business that prevented fair competition.
Interstate Commerce Act (1887)
Sherman Antitrust Act (1890)