American History Chapter 5 - Section 3

What were some similarities between Carnegie and Rockefeller?

Both dominated their industries; both became wealthy and powerful in the late 1800s; both became philanthropists and used their money to benefit the community

What is the relationship between a corporation and its shareholders?

Corporations use the sale of stock to shareholders to raise capital (money) in hopes of growing their business. In turn, during periods of strong economic growth, shareholders are paid dividends from the company's profits. However, if the company fails, shareholders lose their investment.

Was the Sherman Antitrust Act successful?

In its early years, it did little to curb the power of big business

corporation

a business in which investors own shares

trust

a combination of firms or corporations formed by a legal agreement, especially to reduce competition

shareholder

a person who invests in a corporation by buying stock and is a partial owner

dividend

a stockholders share of a company's profits, usually as a cash payment

What is vertical integration?

acquiring companies that provide the equipment and services needed for an industry; purchase of companies at all levels of production

Andrew Carnegie

leading figure in the early years of the American steel industry; dominated the steel industry in the late 1800s; built Carnegie Hall and created more than 2,000 libraries worldwide

John D Rockefeller

most famous figure of the oil industry; organized the Standard Oil Company of Ohio and the Standard Oil Trust; dominated the oil industry in the late 1800s; established the University of Chicago and New York's Rockefeller Institute for Medical Research

Sherman Antitrust Act

prohibited trusts and monopolies in an effort to encourage competition and help keep prices low

stock

shares of ownership a company sells in its business which often carry voting power

merger

the combining of companies

monopoly

total control of a type of industry by one person or one company

What is horizontal integration?

when competing companies combine into one corporation; purchasing competing companies in the same industry

partners

associates who agree to operate a business together

How did Americans build fortunes in the oil and steel industries?

by creating companies that could provide goods and services in large quantities at affordable prices and by using trusts and monopolies to dominate their industries

What were some differences between Carnegie and Rockefeller?

different industries (steel and oil); Carnegie used vertical integration and Rockefeller used horizontal integration to gain control of their industries

trend

general movement

What methods did Rockefeller use to build his oil empire?

horizontal integration, lowering prices to drive competitors out of business, pressuring customers not to deal with rival companies, persuading railroads to give him special rates, forming a trust, creating a monopoly