1. What is a monopoly?2. What does “capitalist system”
mean?3. If you have stock in a company,
what does that mean?4. What’s the difference between a
“trust” and a “corporation”5. What is the purpose of a labor
union?6. Define “laissez-faire”
Free Enterprise – private companies freely competing with each other with little or no government regulation
Monopoly – a single business in an industry that has the power to control the price of a good
How does a monopoly effect free enterprise?
INDUSTRY & BIG BUSINESS 1
Corporation – a business that sells stock to investors who own part of the company and share its profits
Trust – a single board of trustees who control a group of member corporations
Name a modern example of a:Corporation =AT & T, Time WarnerTrust = Gap owns Old Navy & Banana
Republic
2
Horizontal IntegrationA company controls
ONE area of production such as raw materials OR manufacturing OR distribution
Vertical IntegrationA company controls
ALL parts of production from raw materials to distribution of finished goods
Captain of Industry or Robber Baron?Steel – Andrew
Carnegie (Carnegie Steel)Iron ore minesCoal minesSteel factories/millsTransportation
(railroads & shipping)
Oil – John D. Rockefeller (Standard Oil Company)Oil rich landOil drillsOil refineriesTransportation
In 1870, Standard Oil Co. processed 2%-3% of U.S. oil
By 1880, it controlled 90% of U.S. refineries.
Justifying WealthThe rich believed in Social Darwinism
People became rich because they were smart and worked hard people were poor because they were “stupid” and “lazy”
Laissez-faire – idea that business should be free of govt regulation
Government RegulationsThe public calls for action against wealthy
business they refer to as “Robber Barons” took advantage of workers
Congress passes the Sherman Anti-Trust Act Making all monopolies illegal; the law was not
enforced
Congress passes the Interstate Commerce Act, which regulates railroad rates makes rebates illegal
***The Sherman Anti-Trust Act and the Interstate Commerce Act were largely ineffective and ignored at first!***
Political machines controlled the cities
Pendleton Civil Service ActAttempted to
cut spoils system
Hiring and promoting people based on how they scored on exams
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