Chapter 19: Section 2

In the late 1800s many entrepreneurs formed their business as corporations, or businesses that sell portions of ownership called stock share.

Stockholders in corporation typically get a % of profits based on the amount of stock they own.

Stockholders do not run the day to day business, they elect a board of directors that choose the corporation's main leaders.

Stockholders in a corporation are not responsible for business debts.

If businesses fail stockholders lose only the money that they invested.

Stockholders are usually free to sell their stock to whomever they want.

By 1900 more than 100 million shares per year were being traded on the New York Stock Exchange.

Andrew Carnegie - one of the most admired business-people of all time.

Scottish immigrant who stated in the railroad and worked his way up.

1873: focused on the steel industry.

Expanded his business by buying out competitors when steel prices were low.

Vertical integration- ownership of business involved in each step of the manufacturing process.

John D. Rockefeller - focused on the oil refinery industry.

Rockefeller's Standard Oil Company was the country's largest oil refiner.

Used vertical and horizontal integration.

Horizontal integration- owning all businesses in a certain filed.

Trust - legal arrangement grouping together a number of companies under a single board of directors.

Leland Stanford: made his fortune selling equipment to miners.

One of the founders of the Central Pacific Railroad and founded Stanford University.

Stanford argued that industries should be owned and managed cooperatively by workers.

By the late 1800s, people and the government were becoming uncomfortable with child labor, low wages, and poor working conditions.

People began to view big business as a problem.

A view of society based on scientist Charles Darwin's theory of natural selection.

"Survival of the Fittest" decided which human beings would succeeded in business and in life in general.

Others believe rich had the duty to aid the poor and give money through charity.

1880s : People began to criticize the practices of big business.

Large corporations drove smaller competitors out of business.

Owners of small businesses wanted the government to help control monopolies (total ownership of a product or service).

July 1890 Congress passed a law that made it illegal to create monopolies or trusts that restrain trade.

The act did not clearly define a trust in legal terms.

Antitrust laws were difficult to enforce and corporations and trusts kept growing in size and power.