Rise of Big Business in America During the Gilded Age

Summary

This video lesson explores the rise of big business during the Gilded Age in American history, focusing on the second industrial revolution. It explains how corporations like Standard Oil used stock sales to raise capital, leading to economies of scale that lowered production costs and allowed for market dominance. The lesson also covers vertical and horizontal integration, monopolies, and trusts, illustrating how these strategies enabled businesses to control entire industries and influence government, as depicted in political cartoons of the era.

Takeaways

• 🏭 The Gilded Age saw the rise of big business during America's second industrial revolution, with corporations becoming the dominant form of business.
• 📈 Corporations raised capital by selling stock to the public, allowing them to grow and invest in their businesses, leading to economies of scale.
• 💹 Economies of scale meant that as corporations grew, their manufacturing costs decreased, allowing them to produce more goods at a lower cost.
• 🔄 Standard Oil exemplified how corporations could use their size and resources to drive out competition through horizontal integration.
• 🛠️ Vertical integration, as practiced by Andrew Carnegie in the steel industry, involved owning all necessary resources for production, further reducing costs and increasing efficiency.
• 💼 Monopolies emerged when one business controlled the majority of an industry, leading to unchecked power and potential for price manipulation.
• 📉 Monopolies could lead to a lack of innovation due to the absence of competition, which is crucial for businesses to remain fresh and competitive.
• 🤝 Trusts were formed as a way for businesses to collude, fix prices, and eliminate competition, further centralizing power and wealth.
• 🏛️ Monopolies and trusts were criticized for their influence over the government, as depicted in political cartoons showing their control over legislative bodies.
• 🔍 The rise of big business and monopolies during the Gilded Age set the stage for future discussions on corporate power, regulation, and the need for anti-trust laws.

Q & A

What was the dominant form of business that emerged during America's second industrial revolution?

Corporations emerged as the dominant form of business during America's second industrial revolution.

How did corporations raise capital during the Gilded Age?

Corporations raised capital by selling stock to the public, which allowed individuals to become stockholders and part owners of the company.

What is the relationship between selling stock and a corporation's ability to invest in its business?

By selling stock, corporations could raise money that they would then invest back into their business to purchase materials, hire employees, and increase production capabilities.

What is an economy of scale and how does it benefit corporations?

An economy of scale refers to the decrease in manufacturing costs as production increases. Corporations can invest in new technology and machinery, which increases their production capabilities, decreases production costs, and allows them to sell goods at lower prices.

How did Standard Oil use economies of scale to its advantage?

Standard Oil used economies of scale by investing in more oil drills and derricks, which allowed it to produce oil more cheaply and sell it at a lower price than its competitors.

What is horizontal integration and how did it help Standard Oil eliminate competition?

Horizontal integration is when a company expands within the marketplace by putting competition out of business. Standard Oil used this strategy by lowering the price of oil temporarily to force competitors out of business, then raising the price again after acquiring their resources.

What is vertical integration and how did Andrew Carnegie use it in the steel industry?

Vertical integration is when a company owns all the materials needed for its production process. Andrew Carnegie used vertical integration by purchasing coal mines, iron fields, and lime quarries to control the means of steel production and reduce costs.

How did the formation of trusts contribute to the rise of big business during the Gilded Age?

Trusts allowed a group of businesses to be run together by a board of trustees with the goal of eliminating competition and controlling the marketplace. This led to the fixing of prices and the squashing of competition.

What is a holding company and how did it contribute to the dominance of corporations like Standard Oil?

A holding company is a business that holds or owns stock in other companies without producing anything itself. It allowed corporations like Standard Oil to run multiple businesses together as one large enterprise, dominating the market and eliminating competition.

Why were monopolies a concern during the Gilded Age?

Monopolies were a concern because they allowed one business to control the majority of an industry, which could lead to drastic price increases, a lack of innovation, and unfair business practices.

How did political cartoons of the time depict the influence of monopolies on the government?

Political cartoons depicted monopolies, such as Standard Oil, as octopuses with tentacles wrapped around government institutions, indicating their financial influence and control over the government.