5:3● The Rise of Big Business

● Corporation: owned by many people, but treated by law as if owned by one person– Can own property– Pay taxes– Make contracts– sue and be sued

● People who own corporations are “stockholders”– They own “stock”

5:3● What do corporations do with the money they

receive from stockholders?● Invest in new technologies● Purchase machines● Hire more workers

● “Economies of Scale”● The cost of manufacturing is decreased by

producing goods quickly and in large quantities

5:3● Vertical Integration

● Began by Andrew Carnegie (steel)● Owns all of the businesses on which it depends for

its operation

5:3● Horizontal Integration

● John D. Rockefeller (oil)● Combining firms in the same business into one

large corporation– Companies not doing well would sell out to their

competitors● Eventually becomes a “Monopoly”

– When a single company achieves control of an entire market

5:3● Trusts

● Started by Standard Oil● New way to merge businesses without breaking the

law● Legal arrangement that allows one person to

manage another person's property● Ownership of a stock: Stockholder● Managing a stock: Trustee