Big Business Chapter 19 Section 2 Andrew Carnegie

Big Business Chapter 19, Section 2

Andrew Carnegie l Born in Scotland l Poor immigrant l As a teenager took job with a railroad company and worked up to become railroad superintendent l 1873 focused efforts on steel making

Vertical Integration l Andrew Carnegie expanded business by buying out competitors when steel prices were low l Vertical Integration ¡ Ownership of businesses involved in each step of the manufacturing process

Mrs. Souza’s Chocolate Sprinkle Ice Cream l Vertical Integration ¡ I buy all steps in making Ice Cream l I buy the following ¡ Cows ¡ Cone factory ¡ Sprinkle Factory ¡ Chocolate Factory

Stop and Stand!! l In your President Pod…one person will take out a sheet of paper, and write your President’s name on the Paper l In Your Pod create a Vertical Integration Business

John D. Rockefeller l By 21, he was a partner in a wholesale business l Decided to start an oil-refining business l Only 10 years Rockefeller’s Standard Oil Company was the country’s largest oil refiner

Horizontal Integration l Owning all businesses in a certain field l Rockefeller controlled 90% of the oil refining business in the United States l Trusts (Rockefeller made this) ¡Legal arrangement grouping together a number of companies under a single board of directors

Mrs. Souza’s Chocolate Sprinkle Ice Cream l Horizontal Integration ¡ I buy all Ice Cream Companies l I buy ¡ Baskin Robbins ¡ Dairy Queen ¡ Coldstone ¡ Frosty Tips

Stop and Stand!! l In Your Pod create a Horizontal Integration Business…different then your Vertical Integration

Why Would Americans be nervous of John D. Rockefeller? Americans were nervous of John D. Rockefeller because he seemed to have the United States White House and government in the palm of his hand because he was so powerful

Leland Stanford l Made fortune selling equipment to miners l Governor of California l Founded Central Pacific railroad l Founded Stanford University l Believed industries should be owned and managed by workers!!!!

Dominance of Big Business l Many people were forming businesses ¡ Corporations l Sell portions of ownership called stock shares

Stockholders l Own the corporation, but DO NOT run its day to day business l Elect board of directors and a president to run the day to day business

Stocks l Mrs. Souza buys 100 shares of Baskin Robbins…they cost $1. 00, so I spent $100 ¡ Baskin Robbins’s stocks go up…I make money ¡ Baskin Robbins’s stocks go down…I lose money l But only as much as I put in!

FACT l By 1900 more than 100 million shares per year were being traded on the New York Stock Exchange l Countless business leaders were becoming wealthy, powerful, and famous

Social Darwinism and Business Leaders l Leaders justified their business methods by l Social Darwinism ¡ Charles Darwin’s theory…survival of the fittest l Many Leaders helped the poor

The Anti. Trust Movement l Many people believed that there were unfair business practices l People feared monopolies ¡ Total ownership of a product or service l Example: Comcast for some communities l Sherman Antitrust Act ¡ Made it illegal to create monopolies or trusts that restrained trade