Big Business Rises

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By: Mark Fornoles and Mia Gonzales

Corporations Find New Ways of doing
Business

● Most businesses in the mid-nineteenth century were run by one person or family and that
limited investment abilities.
● There were businesses that were run locally.
● Industrialization changed the abilities of businesses by creating railroads that allowed the
businesses to sell to customers father away and get materials that they couldn’t, locally.
Because of this, businesses had more ability to grow in investment.
 The Corporation Meets New Needs

● Investors made a type of “group ownership” which was known as a corporation.

● In a corporation, more than one person has ownership of a business.
● Even if a corporation started having economic problems, investors would not be majorly
affected. They would only lose basically as much as they had initially invested.
● Corporation help to expand businesses.
● Like an individual owner, a corporation had the right to buy and sell property, and even
sue and if a person left the corporation, the corporation would not be greatly affected by
it because other investors would basically just take that person’s place .
● Corporations were made for expanding markets.
● Corporations had large amounts of invested money which they could use to fund things
like new technology, enter new industries, and run large plants across the country.
Basically, corporations contributed greatly to new things in society and the economy.
● Corporations didn’t just run things in the country they were in but could also operate in
several other regions.
● In the 1870’s, corporations in America increased very much.
● Corporations were a key aspect of industrial capitalism
 Finding New Ways to Gain Advantage
● Corporations used advertisement across the country which allowed them to have more
potential customers.
● They wanted workers’ wages to be low and prices of material that they bought to be
cheap.
● To decrease the cost in producing goods, corporations made organized business and
production management innovations.
● Corporations tried lots of new processes just so they could decrease production costs
and secure future profit.
● Cornelius Vanderbilt was a railroad industry entrepreneur that got into the steamboat
business.
● Corporations eliminated competitors by having the competitors pay them to relocate
because the competitors were being run out by low fares.
● Cartel: An arrangement where “ businesses making the same product agree to limit their
production and thus keep prices high.”
● John D. Rockefeller was an oil tycoon in Ohio that made the shipping of products of his
competitors hard by making agreements with railroads.
 Business Management Innovations
● Businesses leaders merged together and made a big company that lowered their production
cost.
● Horizontal Integration was used to have full control of the product or to gain monopoly.
● Company need to buy the company of their competitors or push their competitors out of the
business, so they can take over all the product and gain monopoly of the product. Companies
that gained monopoly in a product, they can higher the price for the consumers to gain more
profits
● Rockefeller was the first businessman who used the horizontal integration, but because of the
Ohio state law, Rockefeller can’t buy out his competitors. Rockefeller found a way to around
the law, he formed a new type of business organization called Trust.
● In a Trust, Company entrust their stock to a board of trustees, who merged them into new
business organization.
● Many state in mid-1800, some business leader think that trust is the only efficient way, and
stable to all free market business where competition could be more fierce and unpredictable.
● Andrew Carnegie is a business leader that used the vertical Integration allowed his companies
to lowered the cost of production.
 The Pros and Cons of Big Business

● Powerful empires for people who controlled steel, railroads, meat, farm equipment, sugar, lumber,
etc were created throughout the 1800s.
● This was good for the businesses but consumers and smaller companies started to question the
“goals and tactics” of the business leaders.
“Robber Barons” or “Captain of Industry”?

● Big businesses were bumping smaller businesses out of competition, joined trusts started
to realize that they were receiving few profits, consumers started becoming more aware
of the high prices of cartel and monopoly products, and all together consumers, workers
and even the federal government started thinking that trust, cartel and monopoly
systems were giving business leaders “unfair advantages”. All the people who started
thinking this way also started to call the big business leaders “robber barons”.
● But, there were other people who believed that nation was being benefited by the laissez-
faire policies and by industries due to free enterprise principles.
● They saw that the spread and growth of businesses was making jobs for the growing
labor force and they saw that “large, efficient corporation” would actually lower
consumer prices. They saw that the efficient businesses were actually helping the
economy greatly. Some important philanthropists of the time were: Carnegie,
Rockefeller, and Vanderbilt.
The Cause and Effects of Social Darwinism

● Charles Darwin was a biologist who believed in natural selection and survival of the
fittest.
● Social Darwinism: When Darwin’s theory was applied to the “rough-and-tumble world of
American Capitalism” by a Yale professor by the name of William Graham Sumner.
● Social Darwinism was basically the belief that “wealth was a measure of one’s inherent
value and those who had it were the most “fit”.
● The theory of Social Darwinism was often used to justify a wide variety of beliefs and had
people arguing.
● People who supported the laissez-faire economic system argued that the government
should stay out of private business they would disrupt natural selection if the butted in.
● Many believers of Social Darwinism thought that the nation would become stronger if
they allowed the most vigorous members to rise to the top and that using public funds to
assist the poor was wrong.
● Social Darwinism was used to justify discrimination because it pointed out how many
minorities were unfit because of their poverty-stricken state.
 The Changing Relationship Between
Government and Business
● The great industrialists’ method and their influence on the nation worries some
Americans.
● Many railroads companies that were competing practices fixing the rates and pooling, or
entering into a secret agreement that divide up the nation freight.
● They thought that unfair business practices and poor wages and working conditions for
the labor that increases the cost of government laissez faire policies. They wanted the
federal government to take an action
 Attempts to Regulate Business

● Interstate Commerce Commission (ICC) monitor the railroad shipping rates

● ICC can only keep on watch on the railroad that across every states line
● ICC can’t make laws and control the railroads’ transactions
● ICC was the first federal agency that monitors business practices.
● Federal government slowly became include in regulating the trust
● Sherman Antitrust Act outlawed the trust that operated “in restraint of trade or
commerce among the several state”
● The government claimed that it has a constitutional rights and can regulate such
commerce and it enforces a lot of law because court ruling generally favored business
owners
● ICC and Sherman Antitrust Act began toward federal limitation on corporations’ power.