Chapter 9Industrialization

Section 3Big Business

The Rise of Big Business

Role of corporations◦Owned by many (stockholders) but law treats as

one◦Corp. can own property, pay taxes, make

contracts, sue & be sued Economies of Scale

◦Because of sell of stocks◦Make goods cheaply & quickly

2 types of costs◦Fixed Costs◦Operating Costs

Industry Consolidation

Pools◦Organized to stop prices from falling◦No legal protection (interfered with competition)

Andrew Carnegie◦Immigrant◦“rags to riches”◦Investments◦Bessemer Process-steel-Pittsburgh (1875)◦Vertical & Horizontal Integration

Vertical Integration

Horizontal Integration

Monopoly

When a single company achieves control of an ENTIRE market

Standard Oil◦John Rockefeller

Trusts & Holding Companies

Fear of large corporations & monopolies◦States-illegal for one

company to own stock in another (unless permission given) Standard Oil-formed a trust

◦Allows one person (trustee) to manage another’s property

New Jersey law◦Holding company

Selling the Product

New ways to market & sell goods