Chapter 14 Industrialization

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Chapter 14Industrialization

• Section 3
• Big Business

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The Rise of Big Business

• By 1900 big business dominated the economy
• Corporation organization owned by many people
  but treated by law as though it was a single
  person.
• Stockholders people who own the corporation,
  own shares called stock
• Issuing stock allows a corporation to raise large
  sums of money but spreads out the financial risk.

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The Rise of Big Business

• From the sale of stock, corporations could invest
  in new technologies to increase their efficiency.
• By making goods cheaper quicker, corporations
  could achieve economies of scale.

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Two kinds of costs

• Fixed costs costs a company has to pay whether
  it is operating or not.
• Examples loans, mortgage, taxes
• Operating costs costs that occur when a company
  is in operation.
• Examples wages, shipping charges, supplies

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The Consolidation of Industry

• Andrew Carnegie poor Scottish immigrant, worked
  his way up from a bobbin boy to president of
  Pennsylvania RR.

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Andrew Carnegie

• Opened a steel company in 1875 and adapted his
  steel mills to use the Bessemer process.

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Vertical Horizontal Integration

• Vertical company owns all the different
  business it depends on for its operation.
• This saved money and made the company bigger.
• Horizontal combining many firms doing the same
  type of business into one large corporation.

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Vertical Integration
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Horizontal Integration

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Monopoly

• Occurs when one company gains control of an
  entire market.
• Many states made it illegal for a company to own
  stock in another company without permission from
  the state legislature.

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Trusts

• 1882 Standard Oil formed the first trust, which
  merged businesses without violating laws against
  owning other companies.
• A trust allows a person to manage another
  persons property.

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Holding Companies

• A holding company did not produce anything
  itself.
• Instead, it owned the stock of companies that did
  produce goods.
• Controlled all the companies it owned, merging
  them into one large enterprise.

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Holding CompaniesDont Write

• 1904 the U.S. had 318 holding companies.
• Together they controlled over 5,300 factories and
  were worth more than 7 billion.

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Selling the Product

• Retailers looked for new ways to market and sell
  goods.
• Advertising changed, with illustrations replacing
  small type line ads.

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Selling the Product

• The department store changed the idea of shopping
  by bringing in a huge assortment of products in a
  large, glamorous building.

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The Grand Depot
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Selling the Product

• Chain stores, like Woolworths, focused on
  offering low prices instead of special services
  or fancy decor.

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Woolworths
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Selling the Product

• Mail-order catalogs were created to reach rural
  Americans.
• Montgomery Ward and Sears, Roebuck were the two
  largest catalog retailers.

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Sears, Roebuck Catalog
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End of Section 3

• Next Section 4
• Unions