Modern U.S. History Chapter 6 Section 3
Sherman Antitrust Act
In 1890, the Sherman Antitrust Act made it illegal to form a trust that interfered with FREE TRADE between states and other countries. It was hard to prosecute under this act since the definition of "trust" was not very clear. Big firms when prosecuted would just reorganize into lots of smaller companies to avoid prosecution under the Sherman Antitrust Act.
The perception of tycoons as "robber barons"
By around 1890, Rockefeller's Standard Oil Company controlled 90% of the oil refining business. Rockefeller made HUGE profits by paying his employees very low wages and driving his competitors out of business by selling his vast oil at a lower price than it cost to make it. Once he controlled the market, he would then jack up the prices. This is why he and other tycoons were known as "robber barons".
How did it harm businesses such as Standard Oil and tycoons like John D. Rockefeller?
The government became concerned about expanding corporations. They were concerned that it hurt competition. Also, the public began think harshly about their business tactics.
Holding Company
a. What is it? A Holding Company is a corporation that does nothing but buy out stocks of other companies. b. How did it help businesses such as the Carnegie Company and tycoons like Andrew Carnegie? Headed by banker, JP Morgan, United State Steel was one of the most successful Holding Companies.
Monopoly
a. What is it? A Monopoly is when a firm buys out all its competitors. b. How did it help businesses such as the Carnegie Company and tycoons like Andrew Carnegie? This would be an advantage to Carnegie Company because they could have complete control over their industry's production, wages and prices.
Trust
a. What is it? A TRUST is when competing companies join together in trust agreements. b. How did it help businesses such as the Carnegie Company and tycoons like Andrew Carnegie? Trusts could be used to gain total control over a particular industry.
Horizontal Integration
a. What is it? Horizontal Integration is where Carnegie attempted to buy out competing steel producers. b. How did it help businesses such as the Carnegie Company and tycoons like Andrew Carnegie? With Horizontal Integration, competing companies merge together. This would give Carnegie control over his suppliers and cutting down on his completion.
Social Darwinism
a. What is it? Social Darwinism is the thought that some individuals of a species flourish and pass down their traits to the next generation. It is also called "natural selection". b. How did it help businesses such as Carnegie Company and tycoons like Andrew Carnegie? The English philosopher Herbert Spencer used Darwins theory to explain the evolution of human society. Soon this thought was being used by economists to justify the "laissez faire" doctrine which said the market place should not be regulated. This type of thinking was helpful to Carnegie who said he got ahead by his hard work, shrewd investments and new and inventive business practices.
Vertical Integration
a. What is it?? Vertical Integration was a process in which Andrew Carnegie bought out his suppliers such as, coal fields, , iron mines, ore freighters and railroad lines. b. How did it help businesses such as the Carnegie Company and tycoons like Andrew Carnegie?He did this to control the raw materials and transportation systems.