American StudiesBusiness Consolidation

1875-1900

Video in Media Folder American 07/08

Is he right?

• Gordon Gecko is a fictitious character who used his wealth and power to merge his company with others.

• Where would he fall of the economic spectrum?

Objectives: At the end of this lesson, by studying the

innovative business practices of J.D. Rockefeller, Andrew Carnegie, and J.P.

Morgan, you should be able to define horizontal and vertical integration as well as the merger movement. Finally, you will place the American economy in it’s proper place on

the economic spectrum at the turn of the century.

Business Merger/Combination/

Consolidation/IntegrationThink of them as the same.

The last quarter of the 19th century was a time of business consolidation or mergers. Companies were said to be integrated or combined to create more efficiency. These combinations limited competition between businesses.

Healthy competition is good for two Healthy competition is good for two reasons:reasons:

Higher Quality

Lower Prices

An Absence of competition can lead An Absence of competition can lead to?to? Lower Quality

Higher Prices

Competitive Market

Consumer choice, price comparisons, corporate policy comparisons, nutritional comparisons, product selections.

Health Care Debate

Rockefeller

Competitive Market

Consumer choice, price comparisons, corporate policy comparisons, nutritional comparisons, product selections.

Horizontal Integration/Mergers

A company acquires other companies in the same competitive market.

Non-competitive Market (Monopoly)

Consumer choice? Price breaks? Influence on corporate policy? Product choices? Nutritional choices?

Non-competitive Market (Monopoly)

How might Carnegie and Rockefeller justify this setup?

More efficient/ Survival of the fittest.

Carnegie

Vertical Integration

Through mergers and acquisitions, the company owns all phases of the business process.

J.P. Morgan

Which is better for the economy?Which is better for the economy?

Economic Spectrum

Command Mixed Market Mixed Command

Communism/Socialism

Pure Capitalism Fascism

Dictatorship DemocracyDictatorship

On a separate sheet, write which economic system (Communism/Socialism, Fascism, Pure Capitalism) and which type of government (Dictatorship, Democracy)fall under each system. Note Left wing and Right wing extremes.

Where do you think the American economy fell on this spectrum at the turn

of the century? Explain