Chapter 6-3. Part A –answers the question: What is it? Part B –answers the question: How did it help businesses such as the Carnegie Company and tycoons.

Chapter 6-3

Part A –answers the question: What is it? Part B –answers the question: How did it

help businesses such as the Carnegie Company and tycoons like Andrew Carnegie?

• A) What is it? Owning/controlling suppliers of a certain product.

• B) How did it help big business? In having control over cost/quality a business can make more profits

• Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need.

• Rather than rely on expensive middlemen, Carnegie vertically integrated his production process by buying out all of the companies—coal, iron ore, and so on—needed to produce his steel, as well as the companies that produced the steel, shipped it, and sold it. Eventually, Carnegie sold his company to banker J. P. Morgan, who used the company as the foundation for the U.S. Steel Corporation. By the end of his life, Carnegie was one of the richest men in America, with a fortune of nearly $500 million.

A) What is it? Buying out your competitors

B) How did it help big business? When there is no competition a business has monopoly over the product and can control prices = profits!

• The biggest names in the oil industry were John D. Rockefeller and his Standard Oil Company—in fact, they were the only names in the industry. Whereas Carnegie employed vertical integration to create his steel empire, Rockefeller used horizontal integration, essentially buying out all the other oil companies so that he had no competition left. In doing so, Rockefeller created one of America’s first monopolies, or trusts, that cornered the market of a single product.

A) What is it? An economic/social philosophy that asserted that free competition would ensure success/failure in a business.

B) How did it help big business? Glorified big business (survival of the fittest) and discouraged government intervention.

A) What is it? Complete control over an industries production, wages and prices

B) How did it help big business? Gave them complete power. They could raise prices, lower wages and make more $$.

A) What is it? A corporation that does nothing but buy out the stock of other companies

B) How did it help big business? Helped business tycoons obtain control in an industry

• What Is a Holding Company? Holding companies are conglomerates that own other firms. Investor words offers a more specific definition: "A company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors. Also called parent company."A good example is Warren Buffett's Berkshire Hathaway(NYSE: BRK.A), which owns GEICO, See's Candies, Executive Jet, Dairy Queen, The Pampered Chef, and Benjamin Moore paints, among many other businesses. Another major holding company is Fortune Brands(NYSE: FO), which owns companies making distilled spirits (Jim Beam, DeKuyper, Ronrico), golf equipment (Titleist, Cobra, FootJoy, Pinnacle), home products (Moen faucets, Aristokraft and Schrock cabinets, and Master Lock padlocks), and office products (ACCO, Day-Timers, Swingline).

• In the United States, Berkshire Hathaway is the largest publicly-traded holding company; it owns numerous insurance companies, manufacturing businesses, retailers, and other companies. Two other large notable holding companies are UAL Corporation and AMR Corporation, publicly traded holding companies whose primary purposes are to wholly own United Airlines and American Airlines, respectively

A) What is it? A group who run separate companies as one large company.

B) How did it help big business? Were created to gain total control over an industry/company

• Example: Competing companies join each other in trust agreements. Participants then turned their stock over to a group of trustees –people who ran the separate companies as one large corporation. Then, the companies were entitled to dividends on profits earned by the trust. This is what Rockefeller did with his Standard Oil company.

A) What is it? Term given to businessmen who dominated a certain industry

B) How did it help big business? It didn’t. It put tycoons on the defensive.

A) What is it? Made it illegal to form a trust that interfered with free trade

B) How did it help big business? It didn’t. It possibly kept them from forming trusts and making more $.

Interpret the Cartoon…

Who/what is in the picture?

What is the message/point of view/bias?

Few building codes Few labor laws Bad working conditions No workers compensation Low wages ..so… here come Labor Unions

• a) Samuel Gompers–president of the American Federation of Labor(AFL)

• Used strikes as major tactics• b) Eugene V. Debs –ran the American Railway Union

and later ran for president several times as a socialist

• i) Socialism–based on government control of business and property with an equal distribution of wealth

• Strikes– The Great Strike of 1877–workers for B&O

Railroad protested second wage cut in two months

– The Homestead Strike –Carnegie steel workers called a strike over cut wages

– Scabs–unpopular because they were workers used to break strikes

Pullman Strike

The Homestead Strike• 1892, Carnegie Steel workers strike over pay cuts• Win battle against Pinkertons; National Guard

reopens plant• Steelworkers do not remobilize for 45 years The Pullman Company Strike• Pullman lays off 3,000, cuts wages but not rents;

workers strike• Pullman refuses arbitration; violence ensues; federal

troops sent• Debs jailed, most workers fired, many blacklisted

• Women organize — Mary Harris ― Mother Jones organized coal miners, their wives, and their children to fight for better working conditions

• Triangle Shirtwaist Factory – 146 female workers died in a fire – Investigation resulted in changes in

local labor laws for women and children