Download Monopolies

Monopolies
What is a Monopoly?
1.
A monopoly is when someone has exclusive
control or possession of something.
2.
We are going to learn:
a.
b.
c.
How businesses in the late 1800s and early
1900s were turning into monopolies in order
to dominate.
Some business owners got extremely rich.
Why the government had to step in.
Understanding a Monopoly
1.
Let’s pretend that there are two students, Billy and Jimmy, selling
candy at school.
2.
Both students are selling candy and competing with each other
to gain more candy sales.
3.
Billy does not want to compete and wants to be the sole candy
seller at school. He does whatever he can to put Jimmy out of
business.
4.
Billy is successful and now is the only candy seller in the school.
5.
This is what it means to have a monopoly. Owning something
completely without competition.
Class Activity
3 students will represent 3 different cell phone companies.
1.
a)
b)
c)
1st student = Verizon - $120 per month
2nd student = T-Mobile $90 per month
3rd student = AT&T - $100 per month
2.
Students at their desks should vote with who they will buy a cell
phone from.
3.
Student 3 will now “buy” student 2’s company leaving just
Verizon and AT&T. Now who will you buy cell phones from?
4.
Student 1 will then “buy” student 3’s company leaving just
Verizon. Now who will you buy a cell phone from?
5.
Now ask the students if this is a fair idea. What did Verizon
eliminate buy buying out the cell phone industry?
6.
That’s right! COMPETITION. There is no competition to reduce
prices for the consumer.
History of Monopolies
1.
Monopolies were popping up all over
the place in the late 1800s and early
1900s. Many business owners began
having individual control over what they
were selling with no competition.
2.
Industries such as oil, railroads, banking
and tobacco were being dominated by
monopolies.
Robber Barons
1.
The people who ran monopolies were
called Robber Barons.
2.
People such as Andrew Carnegie, John
Rockefeller, J.P. Morgan and James
Buchanan Duke all dominated their
industry.
Andrew Carnegie
1.
Carnegie would dominate the steel business.
2.
He would have most of the steel produced in
Pittsburgh, PA (Hence the Pittsburgh Steelers)
3.
He would found a famous college in Pittsburgh
named after himself called “Carnegie”.
4.
He was worth roughly $298 billion in today’s
money.
John Rockefeller
1.
Rockefeller dominated the oil business.
2.
Rockefeller Center in NYC would be built by
his family.
3.
He would help found the University of
Chicago.
4.
He was worth about $633 billion in today’s
money.
J.P. Morgan
1.
Morgan would dominate the finance
and banking world.
2.
J.P. Morgan / Chase Company is a
leader in banking and finance today
because of J.P.
3.
He was worth about $1.7 billion in
today’s money
James Buchanan Duke
1.
James Buchanan Duke dominated the
business of tobacco in the south.
2.
He would call Durham, North Carolina his
home.
3.
He helped found Duke University
4.
He was worth about $150 million in today’s
money.
Problem with Monopolies
1.
While monopolies were popping up left and right in the
late 1800s and early 1900s, they were believed to be a
bad thing for America.
2.
There was a lack of competition which meant that
monopolies could dictate the price of a good and
service without worrying about competitors.
3.
Think back to Billy and Jimmy selling candy. They were
competing against each other which meant that the
candy price would have to be cheaper in order to gain
more business.
4.
This is where the government steps in…
US Government Intervention
1.
The government say that these
monopolies were controlling the price
and that it was becoming unfair and out
of control.
2.
The Sherman Antitrust Act was passed in
1890 in order to prevent monopolies
while encouraging competition in the
free market.
Legacy
1.
With the government stepping in to prevent
monopolies, people have questioned
government intervention in the free market.
2.
What do you think most of the arguments are
amongst politicians? They debate back and
forth whether they should have more or less
government involvement in this type of area.
3.
What do you think? Write your response in the
space below.