+

Rise of the Corporation

+The Need For Cash

Until 1880, most businesses owned by person or partnership

Solution was the corporation A group that is authorized by law to carry on as a

business enterprise with the rights of a single individual

Entrepreneur takes advantage of new innovations and manage the 3 Factors of Production

+The Entrepreneurs

John Rockefeller

Builds 1st oil drill in 1859 (Titusville, PA.) Establishes 1st oil refinery in 1863 Creates “horizontal” integration

Controls key phase of process (refining oil) Build oil “trust” to control 90% of oil refinery business Used “rebates” from R.R. to control competitors

+The Entrpreneurs

Andrew Carnegie

Invests in building steel mills

Uses “vertical integration” Controls all phases of industry Bought iron ore mines in Minnesota Used his own shipping line to transport materials to

Pittsburgh steel mills

ALLOWED BOTH TO KEEP COSTS LOW AND DRIVE OUT COMPETITORS

+IMPACT OF BIG BUSINESS

Richest 1% earn more than poorest 50%

40% in US live below the poverty line (make $1.50 / day)

By 1880 45% of workers barely earn above $500 / yr. (poverty line)

One-half of families live w/o property

+The Philanthropists

Andrew Carnegie Began work as a bobbin boy for $1.20/week Used fortune to build 3000 libraries Carnegie-Mellon University Carnegie Hall for the Performing Arts Carnegie Institute for Research

Donated total of $300 million dollars by 1919 ($64 Billion in today’s $$)

+The Philanthropists

John Rockefeller In his first job as bookkeeper: he earned 50 cents a day Net Worth $663 Billion (2008 figure)

Donated a total of $550 million over his lifetime

Funded universities (Univ, of Chicago; Spellman, Yale)

Funded medical research through Foundation (attacked yellow fever)