Cliff Notes for Chapter 18:
Big Business in the Late 1800s

 

[audio]The following information was presented in this chapter:

The industrial revolution made the U.S. a rich country. But between 1870 and 1910, a small number of people, the owners of large businesses, started to dominate the country's wealth by using competition and cooperation.

  • Lowering production costs using mass production techniques or vertical integration created opportunities for many companies to get competitive advantage (a situation that one company dominates other companies that sell the same kinds of products).
  • Competition is good for consumers by resulting in getting better product or service or getting lower prices. But, businesses do not like competition because they make less profit if they have to lower prices or to find ways to make a product better.
  • In the 1870s, businesses began to cooperate to decrease competition because of depressions. In the first stage, businesses discussed their problems together. In the second stage, businesses sometimes cooperated by forming pools. In the third stage, businesses often cooperated by forming rules. In the fourth stage, holding companies legally controlled many businesses producing the same product.
  • Big business tried to dominate government in the late 1800s by getting their supporters elected to office, getting themselves elected to office, and using bribes to influence other politicians.

 

[audio]Important dates to remember:

  • The depression of 1873
  • The depression of 1893
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    Who's who in this chapter:

  • James Hill's Great Northern Railroad had a competitive advantage by lowering its production costs.
  • Andrew Carnegie's steel industry is a famous example of how vertical integration can give a company a competitive advantage.
  • J. P. Morgan was a large bank owner who took advantage of the depression by buying ownership of the many bankrupt railroads. He also formed the basis for the U.S. steel monopoly.


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