Big Business Chapter 9 Section 3 The Rise

“Big Business” Chapter 9 Section 3

The Rise of Big Business n The Role of Corporations n n An organization owned by many people but treated by law as though it were a single person Economies of Scale n n Corporations invested in more machines and larger manufacturing facilities Big corporations would continue operating during poor economic times because their operating costs were small compared to their fixed costs

The Consolidation of Industry n Andrew Carnegie and Steel n Bessemer process n n Horizontal Integration n Combining many firms engaged in the same type of business into one corporation n n Blowing air through molten iron to burn out impurities Creates monopolies Vertical Integration n Companies own all of the different businesses on which it depends for its operation

Vertical Integration

Vertical Integration Carnegie Steel Refinery Rail Lines Raw Materials Limestone Quarries Iron Ore Fields Coal Mines

Horizontal Integration

Horizontal Integration Standard Oil Refinery

The Consolidation of Industry n Trusts n n n To preserve competition and prevent horizontal integration, many states made it illegal for one company to own stock in another A trust allows one person to manage another person’s property Holding Companies n n Does not produce anything itself Owns stock in companies that produce goods

Selling the Product n n Women were able to purchase items such as food or clothing, rather than growing or make them In the late 1800’s, mail-order catalogs became a popular way to sell products to people living in rural areas