Big BusinessToni Shulman, Emily Waldenberg, Cole

Charney, Melanie Smith

US History 1 CP Period 2

What was Big Business?

Many new business emerged during 1865-1917 that helped boost America’s economic system. This time period was also known as the Gilded Age which meant a period of rapid economic growth. Many important names came up during this period especially Rockefeller and Carnegie. This time period was interrupted by two major depressions: Panic of 1873, and Panic of 1893. Despite the depression, this era was one of huge industrialization growth.

Challenges

The philosophy many had: “If you can’t beat then, join them.”

This led to Horizontal consolidations or “mergers” leading to virtual monopolies in many industries

If successful, to vertical integrations creating monopolies in select industries

Monopolies created a lot of problems in big business because complete control over an industry and its production often led to severe inflation of the prices

Those in trusts did not always earn their complete dividend as they were not legal mergers, and companies that did not profit were unable to pay the trustees their share

Company owners like Rockefeller reaped extremely LARGE profits, and yet paid their employees low wage, creating a widening economic gap between the rich and poor Enforcement of the Sherman Antitrust Act was nearly impossible

Prosecuting companies was difficult due to the vagueness of the act (didn’t define terms such as “trust”)This Act was passed by Congress out of concern that expanding corporations would stifle free competitionThe Supreme Court refused to support this act and threw out 7 of the 8 cases the federal gov’t brought against trust

The South, still recovering from physical devastation caused by the Civil War, did not experience the industrialization and growth the North did

South lacked capital and had few cities

Benefits The industrialization and economic growth

which occurred made product production, sale, transport much easier and more efficient

More people began investing their funds in the economy, causing continual economic growth long after the start of big business

Makes United States an industrial giant and international power

More cities will be able to be built due to the US’s virtual monopoly over steel worldwide thanks to Carnegee’s success

More developments in technology and science will be made due to more money from the millionaires of big business donating money to the causes

Unsolved Problems

-Social problems- wealth distributed unevenly-Rockefeller & Carnegie extremely wealthy while the poor lived off low factory money -Natural resources destroyed (coal & oil with rapid industrialization)-Free market without regulation (uncontrolled)-Poor treatment of workers still a problem after reign of big businesses-Sherman Antitrust act failed to enforce ban on monopolies  

Solved Problems

-New technology solved American reliance on foreign goods

-(Generally) increased standards of living for poor people with jobs

-Lowered some costs of products because competition

To what extent can rapid development of a country be controlled?

Rapid development of the United States was controlled, almost entirely by individuals with a lot of money and authority. Until the government started regulating labor laws and business transactions and a lot of time had passed not much was improved.

 

(DEVELOPMENT CONTROLLED ENTIRELY BY RICH AND WEALTHY BUSINESS MEN 10)

(DEVELOPMENT NOT CONTROLLED BY RICH AT ALL 0)

^9.5

• Carnegie and John D Rockefeller were able to buy out there industries due to a lack of regulations by the government. Carnegie used processes called vertical integration and horizontal integration to buy out suppliers and competition. Rockefeller had a different way about controlling the oil industry. Rockefeller merged companies through trust agreements. Where the participants in the trust turned over their stock to a board of trustees, who ran the separate companies as one large corporation. In return the companies received dividends on the profits earned by the trust.

•  • Until 1890 there were really no regulations on

Business and Labor.•  • In 1890 Sherman’s Anti Trust Act was created

which made illegal to form a trust that interfered with free trade between states or other countries.

• Labor Unions started to form to improve pay and work conditions. These labor Unions eventually were successful, but it took a while before they were followed. For a while, five year olds held full time jobs and gave up school/futures in order to help their families make ends meet.

•  • After few laws were put in place and they

weren’t followed.

• ^8.5

 

Multiple Choice

1. What interrupted the Gilded Age?

a. Panic of 1873 and Panic of 1893

b. The Black Plague

c. Loss of power in the Capitol

d. War erupted

Multiple Choice

1. What was the Gilded Age?

a. A time of peace

b. An era of rapid economic growth

c. An era of very harsh relations with neighboring countries

d. None of the above

Multiple Choice

1. The main purpose of the antitrust was to

a. Protect the environment

b. Increase competition in business

c. Encourage the growth of monopolies

d. Strengthen the rights of workers