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Rise of the Corporation

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

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Rise of the Corporation

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  1. Rise of the Corporation

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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 $$)

  7. 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)

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