Growth of Big Business Notes

• Why did it require more money to start a company in the new industrial age of the later 19th century?

  To have money to build factories / market products. Business leaders often combined their efforts and cash to create corporations
• What developments of the later 19th century allowed for the growth of Big Business in the United States?

  Railroad, industrial revolution
• What is the difference between a monopoly and an oligopoly?

  Oligopoly - High start up costs means only a few large companies

  Monopoly - buy out or drive out competition
• What is a cartel?


  Close association of businesses making the same product - keep prices up
• What is the difference between vertical integration and horizontal integration?

  Vertical - owning all phases of production (ex., Carnegie)

  Horizontal - buy up competition (Rockefeller)

  (Economies of scale - more production means each item costs less, which puts smaller companies at a disadvantage)
• How were Darwin's theories applied to society and who was the leading proponent of Social Darwinism?

  Herbert Spencer - British philosopher

  Based on Darwin's theory of natural selection; "survival of the fittest"
• What form of integration did Andrew Carnegie use to build Carnegie Steel?

  Railroad Superintendent - invested in steel companies and sold steel to himself

  Used vertical integration - bought up all phases of production; iron mines, steel factories, etc.

  Relative worth (in today's money) is $75 million
• How did John D. Rockefeller get around laws that prohibited controlling multiple businesses in the same industry?

  Founded Standard Oil in 1870. Used leverage with railroads to gain rebates.

  Trust - illegal to own multiple companies in the same industry, but Rockefeller turned over stock, and created trusts.

  Relative worth (today's money) is over $600 billion.
• What was the Sherman Anti-Trust Act actually used for?

  1890 - outlawed combinations that restricted interstate commerce

  Pro-business courts used it mainly against labor unions.