6-2+USH

Abby Regan 12/2/11 USHCP Mr. Masterson

Key Terms: Capitalism: Private businesses run most industries, and competition determines how much goods cost and how much workers are paid. Free Enterprise: The idea that if the govt. left businesses to their own devices and allowed them to compete in the free market, the economy would prosper. Communism: Government controls all aspects of business, and everything is equally shared. Social Darwinism: The idea that society progressed through natural competition, and only those who were of the fittest would rise to power,and everyone else would fail. Corporation: This is where organizers raise money by selling shares of stock, or certificates of ownership, in the company. Trust: This is where a group of companies turn over control of their stock to a shared board of trustees. Then the trustees run all of the companies as one business. Monopoly: Where one person or one company has total control of a certain market, (such as being the only company that is allowed to drill for oil). Vertical Integration: This is where one buys companies that have materials and services that their business requires. Horizontal Integration: This is where one company controls other companies who make the same product.

Key People: Horatio Alger Jr.: Published a popular series of novels that examined the importance placed on individualism. Andrew Carnegie: A steel baron who encouraged others to invest in stocks as he had. John D. Rockefeller: One founder of the Standard Oil Company. Cornelius Vanderbilt: A pioneer in the railroad industry, aka he was very successful and tried new strategies. George Pullman: Designed and made railroad carts that made long-distance rail travel more comfortable.

Summary:

A New Capitalist Spirit
 * The USA was run by an economic system called capitalism, but new ideas came about that would change traditional business practices.
 * Many business leaders had the same opinion of the common American ideal, which was self-reliant individualism (hard work + self motivation = success).

Critics Respond
 * Some argued that the quickly growing business industry was unfair and harmful to the working class, because the wealthy had all the power.
 * Karl Marx, a philosopher and critic, wanted communism.

Social Darwinism
 * Some business leaders shared the same concerns as Marx, and welcomed the theory of Social Darwinism.
 * Religious leaders supported Social Darwinism.

The Corporation
 * Small businesses couldn't keep up with the changing economy, so they decided to turn to corporation.
 * Successful business owners suggested that others invest in stocks, which had little or no part in the companies daily operations.
 * Advantages of a corporation were: they could raise large amounts of money through stocks, limited liability, and a guaranteed stable business (because it wasn't dependent on specific owners for it's existence).
 * Where competition was "fierce", some corporations formed trusts, which could gain control of an industry and hold a monopoly on it.

Carnegie and Steel
 * Andrew Carnegie masterfully applied the new business strategies.
 * When he was 17, Carnegie became a private secretary to a railroad superintendent, and started investing in stocks from there
 * In the 1860s, Carnegie entered the steel industry with a strong business.
 * He reduced the cost of his products and increased profits by buying in bulk.
 * 1899, all his companies merged into one (Carnegie Steel Company), and he felt that it was his duty as a rich man to be a "virtuous" citizen.
 * Much of his donations were used to make public libraries.

Rockefeller and Oil
 * Rockefeller saw that the fierce competition was not efficient, so he set out to control the entire industry.
 * By owning companies that helped out in each stage of oil refining, Rockefeller was able to sell oil cheaper than other companies.
 * Rockefeller forced most of his rivals out of business by making deals with suppliers and transporters to get less expensive products and freight rates.
 * Rockefeller also shared his wealth with various charities.

The Railroad Giants
 * Many economic leaders made their money from the railroad industries.

Vanderbilt
 * Vanderbilt originally operated a shipping business, but made his money from the railroad industry after the Civil War.
 * By purchasing smaller lines and combining them to make direct routes between cities, Vanderbilt extended his railroad system.

Westinghouse
 * Westinghouse made the use of his invention (compressed air break) grow with public demonstrations.

Pullman
 * Because he didn't like the poor conditions of city life, Pullman built a company town next to his industry.

Mass Marketing
 * Industrialists developed new methods of marketing to sell their products.

Marketing Products
 * Catchy brand names, bright packages, and unique logos persuaded people to buy products from a certain company.
 * Companies also used advertising to convince people that their products were the best.
 * This increase in the use of advertising and brand names helped create a more lively economic culture in the USA.
 * There were different ways of advertising to make sure that all people in all areas of the USA could access a company's products.

The Department Store
 * Department stores sold various goods from different companies to make the goods easier to access in cities.
 * Women loved department stores because it provided a place to shop and a place to work.
 * Chain stores were very similar to department stores, except that they had branches in many cities.