History Chapter 13
How were the new big businesses of this time different from traditional companies?
"Big Business" owners rarely know their workers but traditional companies often knew their workers. Big business was impersonal, extremely profit-driven, and responsive mainly to investors where as traditional companies work for more moral reasons
Adam Smith and Classic Economics
1. Law of Self-Interest a. People will naturally do things that benefit themselves b. Example: Cupcake Empire 2. Law of Competition a. Competition is a naturally occurring part of business environment b. Benefits: - Lower Prices - Quality - More Innovation 3. Law of Supply and Demand a. The amount of a product (supply) and the purchasing power of consumers (demand) would naturally maintain equilibrium (balance) - Situation where supply meets demand b. Example - iPads/nanos
Reducing Competition: Monopolies and Trusts
1. Monopoly - When one company is the only seller of a product or service 2. Trust - group of companies that are managed by a board of trustees and can prevent companies in the trust from competing with each other
Horizontal Integration
1. Process of combining many companies within same industry.
Government Limits Business
1. SHERMAN ANTI - TRUST ACT - Outlawed monopolies, trust or other combinations that restricted trade. 2. UNITED STATES VS. E.C. KNIGHT: Sherman Act applied only to trade, not to manufacturing --> manufacturing a local act not subject to interstate commerce
How do monopolies and trusts differ?
A monopoly is a company that completely dominates an industry whereas a trust is a set of companies that managed by a small group know as trustees, who have the power to prevent companies in the trust from competing with each other. Monopolies are companies who have beat the competition and trustees try to prevent competition.
Do you think Gilded Age was appropriate for America at the time? 2 ex.
Yes, because although these 3 people were very successful, their workers, especially Carnagie's, didn't have as easy of a life. People inly saw how successful they were, no the other helped make it all or even the peoples lives were destroyed to make it all happen. Another example was Rockefeller because even though he was extremely wealthy he had a terrible reputation and used ruthless tactics.
Why'd do some historians call industrialists captains industry? Which industrialists from this chapter do you think would be considered captains of industry, and why?
The industrialists prospered for mostly positive reasons. They worked hard and took advantage of new technology. They also found new ways to finance and organize business. Henry Ford is an example of a captain of industry because he took advantage of new technology to make the assembly line to make working more efficient
How Did capitalists (investors) in the late 1800's helpful the development of new technologies?
These innovations inspired others to invent new technology as well. They made investors want to fund the development of new products. Also, their inventions later led to greater inventions using the technology they formed.
Why were corporations formed, and how are they run?
Many small business owners didn't have the capital needed to expand resulting int he formation of corporations . If you bought a stock, the money would go towards the finance of the corporations. Stockholders could profit from success. The corporation hired managers, accountants, engineers, etc. to keep production going.
Social Darwinism
1. Based on Charles Darwin's theories of evolution, the belief that the best - run business, led by the most capable people, will survive and prosper
Development of the Corporation
1. Factors of Production - Needed as business. grew larger. a. Land - To expand factories and gain natural resources b. Labor - immigrants supply cheap labor c. Capital - Any asset that can be used to produce income *Although land and labor were plentiful, gaining enough capital was a challenge --> results in development of corporation 2. Corporation - a company that is recognized as separate from its owners a. a corporation can own property, borrow money, sue or be sued b. Corporations sell stock to raise capital ($).
Managing Work Environment
1. Frederick Taylor and Scientific Management - Principles of Scientific Management a. Goal to make workplace as efficient as possible. b. "Time Studies" to determine most efficient way to do a job. 2. Benefits: Great production/efficiency leads to a larger profit
Laissez-Faire (?) - Government help to "big business"
1. Land - easy access to cheap, free land a. Railroad given land to expand vail service in the U.S. 2. Natural Resources - easy access to minerals to companies who would exploit them to grow economy 3. Protective Tariff - gave companies a competitive advantage by making foreign goods more expensive and encouraging consumers to by Americans goods 4. Laws - Government pass laws that favor business (over workers)
Old Vs. New Manufacturing
1. Skilled v. Unskilled Old: Skilled labors created whole product New: Mass productions used to create products DIVISION OF LABOR- used to create multi-step production SPECIALIZATION- workers of a part of the manufacturing process 2. Handmade Products vs. Mass produced Old: Products are made specially for the customer by skilled craftsmen New: Products made within a factory system. Goods produced for the general customer - Made possible by standardization - all of parts have to be same for mass production to work 3. Limited Production/Distribution v. Mass Production/Distribution Old: Distribution of products limited to surrounding community New: Mass distribution needed to find market for increased production--> made more products available to Americans
Sources of Industrial Growth
1. Technological Innovation a. As technology improves the quality of the products and process of manufacturing also improves b. Example: Bessemer Process 2. Natural Resources a. The cost of raw materials is an important part of manufacturing b. Example: Iron ore; Coal; Wood 3. Immigration a. Immigrants provide cheap labor and also consumers 4. Laissez-Faire Philosophy a. Government policy of limited regulation of business b. Without extra cost of Regulation, business grows larger, faster c. Regulation Example: Safe Factory Environment; vacation 5. Expansion of railroad system allowed for the increased supply of products dues to mass production t get to new markets Protective Tariff a. Tax on imported goods b. Protected American industry from foreign competitions c. Made foreign goods more expensive - Americans bought american Products and Supported growth of American Business
Vertical Integration
1. When a company takes control of each step in the production and/or distribution of a product
Why do some historians call industrials robber barons? Which industrialists from this chapter of you think would be considered robber barons and why?
For the way they gained their wealth and the lordly style in which they lived. They robbed the nation its natural resources and bribed officials to ensure their success. John D. Rockefeller would be considered a robber baron because he would bankrupt his competitors to help his company.
How did Fredrick W. Taylor's studies impact industry in the early 1900's?
He increased profits by increasing the speed of productivity. It resulted in cheaper goods but many people lost their jobs due to being replaced by machines.
How did horizontal and vertical integration lead to larger companies?
Horizontal integration joined small companies together to make larger companies. Vertical integration leads to larger companies by buying places that acquire raw materials to manufacturing, packaging, and shipping. They gained more control.
Which invention do you think had the greatest impact on America int eh 1800's:oil drilling, the Bessemer process, or electricity?
I think electricity had the greatest impact on America. One reason I think this is because it make working, cooking, and just overall living easier. Another is reason is because the invention of electricity made it so much easier to invent other cool or practical things.