Chapter 22 section 3
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Chapter 22: Section 3. New Methods and Business Organizations. Terms to Know. Capitalism Economic system in which individuals, rather than governments, control the factors of production Commercial capitalism

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Chapter 22: Section 3

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Chapter 22 section 3

Chapter 22: Section 3

New Methods and Business Organizations


Terms to know

Terms to Know

  • Capitalism

    • Economic system in which individuals, rather than governments, control the factors of production

  • Commercial capitalism

    • Early economic system in which most capitalists were merchants who bought and sold goods

  • Industrial capitalism

    • Term for changes beginning in the 1700’s, when power-driven machines began to do much of the work that people had done before.

  • Interchangeable parts

    • Identical parts that can replace each other

  • Mass production

    • System of producing large numbers of identical items

  • Corporations

    • Businesses that allow people to buy stock in the company


The main idea

The Main Idea

  • Improved production methods helped to speed industrialization during the late 1800’s.


Capitalism

Capitalism

  • Capitalism

    • Describes an economic system in which individuals or corporations, rather than governments, control the factors of production.

    • Businesses and the means of production are privately owned and operated.

  • Factors of Production

    • 1) Land

    • 2) Capital

    • 3) Labor


Capitalism1

Capitalism

  • Commercial Capitalism

    • Before Industrial Revolution

    • Capitalists were merchants who bought and sold goods.

      • Merchant-a person who buys and sells commodities for profit; dealer; trader.

  • Industrial capitalism

    • During the Industrial Revolution (late 18th and early 19th centuries)

    • Capitalists were more involved in producing and manufacturing goods.


Division of labor

Division of Labor

  • Factory owners divided the manufacturing process into steps.

    • This increased production

    • Called DIVISION OF LABOR- divides the tasks among the employees

  • Use of machines in many of the steps

    • helped the workers produce more in a shorter time.

  • The lowered cost of production

    • made more profit for the owners.


Interchangeable parts

Interchangeable Parts

  • Eli Whitney

    • Used division of power to make muskets in the late 1700’s.

    • PRIOR TO WHITNEY: an entire gun was made by skilled artisans

      • Each gun was slightly different

      • If a part broke, a new one had to be handmade

    • Whitney invented machines that made parts that were all alike.

      • INTERCHANGEABLE PARTS

        • Made it easy to repair

        • Other factory owners saw this and adopted the idea.


The assembly line

The Assembly Line

  • Mass Production- the system of producing large numbers of identical items.

  • Mass Production needs:

    • Division of labor

    • Interchangeable parts

    • Assembly line


Chapter 22 section 3

  • 1800’s

    • Parts were made in a different location in the factory

    • Parts were then brought together and assembled at a single location

  • Manufacturers then devised theASSEMBLY LINE

    • The parts were carried from worker to work.

    • Each worker performed a certain task on the part.


The assembly line1

The Assembly Line

  • Henry Ford

    • Founded one of the largest industries in the world

      • FORD

    • Saw potential in the assembly line

    • Used a conveyor belt to carry automobile frames from one worker to the next.

    • Each worker added one or more of the numerous parts in the finished automobile


Discussion

Discussion

  • These images show a Ford assembly line in the early 1900’s.

  • Question:

    • How do you think the assembly line might have made work easier for these Ford employees?

      • Answer: The assembly line allowed the workers to perform a task in less time and with less energy.


Discussion1

Discussion

  • In about 1914 Henry Ford found himself facing a high turnover rate in his labor force. Rather than continue to hire new employees to offset these turnovers, Ford doubled the daily wage of his workers from about $2.50 to $5.00. His tactic paid off in more ways than one. Not only did his labor force stabilize, his operating costs also decreased. These positive factors allowed Ford to increase production.

    • Why was it a good tactic for Ford to double the daily wages to the workers.

    • Answer: Skilled and reliable workers stayed, reducing operating costs.


Rise of the corporation

Rise of the Corporation

  • Before the Industrial Revolution, most businesses were very small.

    • Sole proprietorship- business owned and run by just one person

    • Partnership- two or more people ran and owned a business

  • Small Companies and few workers could not afford mass-production methods or machinery for large-scale production.


Corporations

Corporations

  • As business grew during the 1800’s, another form of business became common.

    • Corporations

      • Businesses that allow people to buy stock in the company

  • Stocks

    • Allowed people to buy stock in their companies

      • Easier to raise money needed to run and expand a business.

    • Stock holders share profits

      • Depended on how many shares of stock they owned

      • Financial responsibility was limited to the amount he or she had invested.


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