AMERICAN HISTORY. ENTREPRENEURS—risk takers who use their money and talents to launch new...
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- AMERICAN HISTORY
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- ENTREPRENEURSrisk takers who use their money and talents to
launch new ventures BELIEF IN FREE MARKETS CAPITALISMan economic
system in which private businesses run most industries. Competition
determines prices and wages
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- Late 1800s, most business leaders believed in LAISSEZ-FAIRE (to
let do) capitalism Companies to conduct business without government
intervention Business leaders believed that government regulation
would destroy individual self-reliance, reduce, profits, and harm
the economy
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- SOCIAL DARWINISM There were inequalities under capitalism
Adapted the ideas of British scientist Charles Darwin applied them
to human society Darwin said members of a species compete for
survival Social Darwinists believed that stronger people, nations,
and businesses would survive
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- Weaker ones would fail Survival of the fittest There was
opposition to any interference
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- Late 1800sindustrialization continues Businesses became larger
and more complex PROPRIETORSHIPS AND PARTNERSHIPS
Proprietorshipbusiness run by a individual Partnershipbusiness
owned by 2 or more individuals
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- Owners were responsible for all debts and obligations of the
business CORPORATIONS A business with the legal status of an
individual It is owned by STOCKHOLDERS (people who buy shares in
the company) Major business decisions are made by a board of
directors
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- The board hires corporate executives to run the day-to-day
operations Corporation Advantages: 1) raise large sums of money
through stock sales 2) stock money used to expand the business 3)
stockholders have limited responsibility for the corporate
debt
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- 4) Stockholders can only lose what they have invested
Corporations continue on long after the original founders leave
TRUSTS AND MONOPOLIES Companies agreed to merge and turn over their
separate stocks to a board of directors
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- MONOPOLYA company has no competition so it would have complete
control of the marketprices, supply, etc.
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- Late 1800s, many corporate leaders amassed staggering fortunes
ROCKEFELLER AND OIL John D. Rockefeller entered oil business in
1863 with Standard Oil Company VERTICAL INTEGRATIONacquiring
companies that supplied his business
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- Barrel factories, oil fields, oil-storage facilities,
pipelines, railroad cars This allowed low cost and high profits
HORIZONTAL INTEGRATIONtake over other companies producing the same
product Rockefeller bought other oil refineries 1879Standard Oil
was refining 90% of all oil in the USA
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- Rockefeller limited competition in other ways Special deals
with railroads and shipping companies for the lowest shipping price
Forced other companies out of business Fortune worth $900,000,000
More than half donated to worthy causes >$80,000,000 donated to
the University of Chicago Millions more into education through his
Rockefeller foundation
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- CARNEGIE AND STEEL Andrew Carnegie--Born in Scotland Immigrated
to the USA at age 12 Began investing in iron, oil, railroad,
telegraph Founded his own steel business Carnegie held costs down
through vertical integration Buy supplies in bulk, producing items
in large quantities
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- End of 1800s Carnegie Steel Company dominated the industry
1901Carnegie sold the company to banker J.P. Morgan for
$480,000,000 After retiring, he devoted time to philanthropy and
charity work Gave away >$350,000,000 to support education He
built public libraries, financed scientific work, and established
Carnegie Mellon University in Pittsburgh
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- He also built Carnegie Hall, the famous concert site, in New
York City Carnegie believed that wealthy people had a duty to
society RAILROAD TYCOONS Cornelius Vanderbilt invested in railroads
during the civil war 1872owned New York Central Railroad He
controlled 4,500 miles of railroad track
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- Vanderbilt didnt do much charitable work Greatest donation was
$1,000,000 to Central University in Tennessee, which was later
renamed Vanderbilt University 1877-Vanderbilt died leaving an
estate of $100,000,000 GEORGE PULLMAN made his fortune designing
and building railroad cars
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- His company, Pullman Palace Car Company (Chicago 1887) created
sleeper cars for comfortable long distance travel 1881he built an
entire town south of Chicago for his employees The town of Pullman
had comfortable homes with indoor plumbing, shops, a church, and a
library
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- No local government and no local newspapers People that
criticized the company might be evicted from their house A MIXED
LEGACY Some tycoons viewed as robber barons Critics say they
squeezed out competition
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- Other people saw them as captains of industry They used
business skills to make the American economy more productive
Rockefeller and Carnegie won praise for generous donations
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- Retailers were looking for ways to maximize their profits
Companies that advertised started targeting ads toward women Food
companies used wholesome farm images to convey a sense of purity
Clever brand names were developed to help people remember a product
Uneeda Biscuit Crackers
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- The department store was created to make it easier to shop
One-stop shopping Stores that bought in bulk passed savings on to
customers Rural people could purchase items from mail-order
companies 1895Sears, Roebuck, Co. produced a 507-page catalog
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- 11904Montgomery Ward catalog weighed 4 pounds and was mailed to
about 4 million homes TTHE END