Page: 32 Big Business THE GILDED AGE: COINED BY MARK TWAIN Big Business - corporations develop : Business That act like a person- holds charters, have several owners -limited liability leads to public investment -mass market selling : Sell to many markets all over the world. Advantages of Big Business -greater efficiency Faster! -economy of scale -manager system (blue collared workers separate from the white collared workers) -productivity studies Fredrick Taylor: was an American mechanical engineer who sought to improve industrial efficiency Americanindustrial efficiency Disadvantages of Big Business - unfair competition practices HOW DID THEY BECOME SO BIG? (Write down two examples below) 1. Pay employees extremely low 2. Sell Oil Extremely low 3. Drive out or BUY out other competitors 4. Once they controlled the Market: Raise the prices -corruption and bribery -destroyed labor union movements Public Reactions -Mixed public feelings about Big Business! -Social Darwinism -based on Darwins theory of evolution -survival of the fittest -also applies to the business world -the best businesses survive *pass traits along to next generations -justified their wealth - Justified Laissez Faire Govt- no one had the right to intervene Public Reactions -Mixed public feelings about Big Business! - -Gospel of Wealth: Andrew Carnegie: Justified the new upper class self made rich -rags to riches American Dream Horatio Alger dime novels : promoted the dream 4 anyone who was hard working & honest= Success Types of Big Businesses -monopolywhen a business controls all or most of the supply of a product -trustwhen several businesses act as one under the control of a board of directors: Standard Oil (almost like a monopoly) -mergerwhen two or more businesses join to become one larger business -holding company---business which exists in order to control other businesses as a parent company Types of Big Businesses -horizontal integration type of monopoly formed by controlling all of the same type of business -vertical integration monopoly formed by controlling businesses related to the primary business Types of Big Businesses - Robber Barons - becoming rich illegally or unethically extreme profits made by business owners -Philanthropy??? : to increase the wellbeing of mankind- giving away large sums of money -big business practices exposed: trust, monopolies, long hours for workers & low wages -public finally began to call for regulation Robber Barons -Sherman Anti-trust Act, made it illegal to form a trust that interfered w/free trade btw states - weak law but set a precedent for future regulation _ **Prosecuting companies under the new law was NOT easy. 1. Did not define what a trust was. 2.businesses (like standard oil) made their trusts seems like single organizations *Eventually Govt stopped trying to enforce it.