BA476 Quiz 2 Review PDF

BA476 - Quiz 2 review ● ● ● ● ● ● ● ● What did Samual Gompers do? ○ Founded American Federation of Labor ■ What was the main goal of the union ● Goals: higher wages, better working conditions, shorter work week ● Did not care much for social reform and accepted capitalism ● Created bargaining...

BA476 - Quiz 2 review ● ● ● ● ● ● ● ● What did Samual Gompers do? ○ Founded American Federation of Labor ■ What was the main goal of the union ● Goals: higher wages, better working conditions, shorter work week ● Did not care much for social reform and accepted capitalism ● Created bargaining power through unions in order to advance interests When you think of Andrew Carnegie, what was his philanthropic point of view? ○ that the wealthy should live modestly, provide moderately for their dependents, and use the remainder of their wealth to benefit society during their lifetimes ○ He believed that it was better for wealthy individuals to distribute their wealth philanthropically rather than leaving it to be divided among heirs or distributed by the state after death. Origins of colonial insurance ○ Where did we get it from? ■ England was the modern insurers of the world ■ Hand and Hand was the first mutual insurance company ○ What were the three main types? ■ Fire, naval, life True or False: Andrew Carnegie forced his employees to sign ironclad agreements ○ True True or False: Carnegie sold Carnegie Steel to JPM for $492 Million, thus creating the first billion dollar company ○ True What was Thomas Edison’s approach to business? ○ Horrible business man ○ Focused on development, invention, and promotion What was the Sherman Antitrust Act? ○ "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal." ○ set of rules that all companies have to follow to make sure they are competing fairly with each other, and no single company gets so big and powerful that it can take advantage of customers or squash other companies trying to compete ○ What company was it created for? ■ Standard oil which was disbanded due to violation of Sherman Antitrust Act What states allowed companies to charter their own stuff? ○ New Jersey ■ ● ● ● ● ● ● ● New Jersey law enabled firm’s chartered in New Jersey to hold stock in other states US Diplomacy ○ Taft's dollar diplomacy: ■ Post WWI conditions ■ Debtor to creditor nation ■ Overseas interests of business = american foreign policy ■ Stability and status quo ○ Government expanded oversea markets ○ Did we get involved in the military and politically… YES What was labeled “creeping socialism”? ○ The federal government continuing aid to businesses (UNSURE OF THIS ONE!!) What was the name of the insurance investigation? ○ Armstrong Investigations ■ NY Senator William W. Armstrong ● Investigated the largest insurance companies ■ 450 page report (1905) ● Called for changes in actuarial and marketing practices ● NY adopted many of the recommendations ● “Tonic” effect → other states also adopted ○ Post Armstrong Trials: great sense of distrust throughout the country regarding banking and insurance interests ■ 1905: life insurance companies met in Chicago for ALC ○ Resolutions adopted at the conference ○ Favored individual state laws over federal control ○ Opposed laws requiring payment to conduct business and extreme taxation What is the Wheeler-Lea Amendment for FCC; Pure Food, Drug, Cosmetics Act (1938) ○ Gave FTC “cease and desist” authority to regulate unfair and deceptive ads and false advertising of foods/drugs/therapeutic devices What is the Glass Steagall Banking Act (1933) ○ Creation of FDIC (Federal Deposit Insurance Corporation) ○ Regulation Q = interest could not be paid on checking ■ Set minimum capital requirements and capital adequacy standards for board regulated institutions ○ Separation of commercial and investment banking Who created radio and television? ○ Guglielmo Marconi ○ Created RCA which was forced to split NBC into two networks, creating ABC What was the first bank of the United States? ○ Hamilton created the first bank in response to foreign debt collected from the revolution ○ It was a monopoly ○ Government had ⅕ of the stock ○ ● ● ● Successful: ■ Made money ■ Provided services- loaned money, serviced as the government depository, transferred government funds free of charge ■ Provided assistance to business and industry ■ Checked overexpansion of state bank notes ○ Northerners loves it and southerners hated it ■ Jefferson thought it was unconstitutional ● Disliked that 72% of the bank’s stock was held by foreigners non-voting stock- and only *% held by Americans ○ Lasted 20 years ■ Was not renewed in 1811 Who pioneered the credit card? ○ C&S National Bank What was part of the New Deal Legislation? ○ The New Deal Energy Measures ■ TVA ■ REA ○ New Deal Reform ■ Consensus that the fed requires strengthening ■ End of the gold standard (June 1933) ■ OMOs ■ Glass Steagall Banking Act ■ Board of Governors ○ Fair Labor Standards Act created as part of new deal ■ Established a minimum wage and maximum work week (8 hours for 5 days) ■ Created restrictions on child labor ■ Children under eighteen could not do certain jobs that were considered unsafe ■ Children under the age of sixteen could not work during school hours ○ Securities Act of 1933 (part of New deal) ■ First major federal legislation to regulate offer and sale of securities (regulate national stock exchange) ■ Uniform set of rules to protect investors against fraud ■ Publicly traded corporations need to register with FTC ■ Before going public, companies had to submit information made readily available to investors to the commission ○ What was NOT PART OF THE NEW DEAL LEGISLATION? What did the Federal Radio Commission do and what did it turn into? ○ FRC established in 1927 ○ Assigned frequencies, limits on power output, equalized geographic access to radio facilities ○ ● ● ● TURNED INTO FTC: FTC absorbed the duties of FRC and regulated broadcasting through control of entry into the industry and approving transfers of ownership What is the National Bank Act (1863-1864) ○ Provide uniform currency ○ Stabilize issuance of bank notes ○ Create government bond market ■ 1865 tax made state bank notes obsolete ■ Provide enhanced stability and security ● On the other hand, ignored needs of rural Americans ● Did not create framework for cooperation between member banks ■ Pitfalls and banking innovations led state banks to become popular again What was the second bank? ○ Similarities to the first bank: ■ Government had ⅕ ■ Monopoly ■ Same issuance ○ Differences from first bank: ■ Pay a $1.5M Bonus for a monopoly ■ Character of government prescription imprecise: cash or specie? ■ ⅕ of directors appointed by the president ○ 1823: almost bankrupt due to a dishonest president ○ reorganized under new head and conservative lines ■ Demanded debts ■ Unpopular ■ “Monster” ○ The end of the second bank: ■ 1836: became a state bank ■ Ran into panic of 1837 ■ Offered stability but was only in the hands of a few ■ 1841: bankrupt What replaced coal? ○ Natural gas ○ After WWII, natural gas heaters replace coal furnaces ○ Major switch was in American households ○ Natural gas heater ■ Decrease fuel costs ■ Decrease pollution ■ Decrease dependence on chaotic industry ○ National railway: diesel fuel ○ Navy/maritime: oil ● What did the REA (rural Electrification Administration) provide? ○ Created in 1935 by President Roosevelt ○ Brought electricity to countless rural homes throughout the 1930s ○ Goal: 90% of urban dwellers had electricity, only 10% of rural dwellers had electricity…REA wanted to fix this ■ Created 417 electric cooperatives serving 288K homes ■ Now, 25% of rural homes had electricity (up from 10%) ■ Worked with Tennessee Valley Authority to continue rural electrification projects ○ Created nonprofit electoral cooperatives among farmers ○ Congress lends money to the cooperatives ○ By 1950, 90% of all farms were electrified ○ Disliked by private utilities Electricity: ● What is the Brush Electric Company? ○ Founded by Charles Brush (He was a wolverine) (1880) ○ Pioneered electric power industry ○ Invented arc-light system; used for outdoor lighting ■ Powered by dynamos (generators) locate in small central power stations ● What was the Thomson-Houston Electric Company? ○ Founded by Elihu Thomson and E.J Houston (1883) ○ Developing more powerful dynamos for larger systems ○ Became leading electrical manufacturer ○ DOMINATED arc-lighting industry through acquisition of competitors, rather than patent control ● What made Thomas Edison a great inventor? ○ Exploited huge 80% untapped indoor lighting market; homes and businesses still used gas ○ Successfully created incandescent lamp (1879); received $500k financing to improve practicality for scale ○ Cheaper than gas through use of central power stations with jumbo generators ○ Supporter of DC Current was a mistake ○ He SUCKED at business ● What is the General Electric Company? ○ Thomson-Houston merged with Edison GE (1892) ○ Incandescent street lights were cheaper and higher quality than gas and arc-lights; the industry exploded! ○ GE provided high-price, high-quality lighting ■ Gerard Swope → president of GE form 1922-39 and again from 1942-1944 ● Dissolved GE’s holdings in power companies ● New consumer products manufacturing divisions ● Developed progressive labor relation programs ● ● ● ● ● ● ● ● Proposed unemployment insurance for GE employees; advised FDR on Wagner Act and Social SecurityAct Who was Samuel Insull? ○ Became Thomas Edison’s secretary and later President of Chicago Edison Co. ○ Formed many holding companies; manipulated stock and sold to unwary investors ○ Empire collapsed and shareholders lost millions (1932) ○ Caused public to demand public power development during New Deal era Westinghouse Electric Company ○ Founded by George Westinghouse (1886); bitterly competed with GE to form “duopoly” with huge patent pool ○ Supported Alternating Currents (AC) while Edison Supported Direct Current (DC) ○ Sold for cash only, did not accept stocks and bonds of power stations as payment What was the Federal Power Commission (1920) ○ Coordinated hydroelectric projects under federal control ○ Largely inefficient entity, reorganized in 1928 ○ Ultimately took a backseat to the REA and TVA What was the Public Utility Holding Act (1935) ○ Consumer protection law; restricted utilities companies ○ Regulated “holding” companies of electric/gas utilities ○ Direct attempt to prevent fraudulent private sector activities (i.e. Samuel Insull) What is the Rural Electrification Administration (REA) (1935) ○ Goal: 90% of urban dwellers had electricity, only 10% of rural dwellers had electricity…REA wanted to fix this ■ Created 417 electric cooperatives serving 288K homes ■ Now, 25% of rural homes had electricity (up from 10%) ■ Worked with Tennessee Valley Authority to continue rural electrification projects What was the Tennessee Valley Authority (TVA) (1933) ○ Wide range of duties: energy production, irrigation, reforestation, erosion control, etc. = socialized power system ○ Goal: Combat Dust Bowl and Recession ■ New farming fertilizers ■ Improved crop yields ■ Replanted forests ■ Systems against forest fires New electricity source attracted business and created jobs ○ WWII: US needed aluminum for bombs and airplanes ■ Aluminum plants require electricity ○ Created 30 hydroelectric dams along the TN river System resulting in 28k new jobs ■ Hoover Dam (1935) ● ● ● ● ● ● ● ● Partial attempt to create jobs during Great Depression ○ 21k americans put to work ○ Generates enough power for 1.3M homes annually ○ TVA started building numerous nuclear reactors to continue providing more electricity (1960s) What was the Atomic Energy Commission (1946) ○ Responsible for: ■ Encouraging commercial nuclear power ■ Regulating its safety ○ Regulatory controversy abolished AEC in 1974; replaced by Nuclear Regulatory Commission in 1975 What did Charles Limberg do? ○ First solo transatlantic airplane flight in 1927 ○ He promoted the use of planes and served as a great PR and spokesperson What is the Federal Food, Drug, and Cosmetic Act? ○ Sought to prevent public health disasters such as the 1938 sulfanilamide elixir incident by ■ Enabling government inspectors from the FDA to inspect over the counter drugs ■ Requiring extensive pre-market testing of new drugs ○ Background: ■ Under original legislation, regulation of food and drug products involved “ex-post facto” action - a product could only be declared impure or mislabeled after it entered the market ■ Pros: reduced the number of “mistakes” by drug companies ■ Cons: pre-market clearance has increased lag time between the point when new drugs and products are developed and when they enter the market. This increases costs of R&D and defers profits for the firm What was the Federal Reserve Act of 1913? ○ Created national banking system ○ The federal reserve system was created by this act ○ Established 12 districts throughout the country ○ Originally intended to facilitate commercial banking McDonald’s ○ Richard and Maurice founded McDonalds in the early 1950s ○ Ray Croc: ■ Milkshake-mixer salesman who created the McDonald’s empire Smoot Hawley tariff ○ European nations retaliated, thus further reducing international trade Singer Sewing Machine Scotland ○ Singer established America’s first successful overseas factory: Sewing machine assembly plant opened in Scotland ○ ● ● Singer went on to become America’s first multinational company and by 1874 was selling more than half of its machines abroad Coca Cola ○ Get notes from reading CCC ○ ○ ○ ○ Sent 25 dollars home a month and kept five dollars for themselves Made a dollar a day Nicknamed “tree army” Helped us indirectly prepare for WW-2 Other Important Acts ● Public Utility Holding Act: ○ Consumer protection law; restricted utilities companies ○ Regulated “holding” companies of electric/gas utilities ○ Direct attempt to prevent fraudulent private sector activities (i.e. Samuel Insull) ● Emergency Petroleum Allocation Act: ○ US domestic Policy created price ceiling ○ Reduced domestic supply while demand more than doubled from 1973-1977 ● Energy Policy and Conservation Act (1975): ○ Rolled back domestic crude oil prices, further decreasing supply ○ Established CAFE fuel efficiency standards ○ Department of energy is created (1977) ● Clayton Antitrust Act: ○ Supplemented and supported Sherman Act ○ Prohibited price discrimination and inter-company stockholding ● Webb-Pomerene Act: ○ Enabled firms to combine if it was to export goods ○ Used to promote American business in foreign markets ● Postal Act of 1879: ○ Second -class franking privileges for magazines improving distribution ○ Better defined and created four classes of domestic mail: first class for letters, second class for periodicals and newspapers, third class for bulk mail and fourth class for books and other material ● National Industry Recovery Act (1933) ○ Liaison between government and business developed during new deal ○ Robert Moely presented the plan: ■ Codes of fair competition ■ Hour and wage laws ■ Fair prices for consumers ■ Industry, government, and labor developed standards ■ Right to collective bargaining by labor ■ Stifled small business growth ■ Shot down by government in 1935 ● ● ● ● Agricultural Adjustment Act (AAA) ○ Agricultural depression worsened by Great Depression ○ FDR enacts AAA ■ AAA ruled unconstitutional ○ AAA reemerges as constitutional ○ The government virtually controlled the supply and demand ○ There was backlash due to the government's involvement ■ Some in the agricultural industry were harmed (processors and sharecroppers) ■ However, in total the AAA was successful in alleviating some of the agricultural depression ● Crop prices rose as planned ● Crop subsidies continue into the present day ○ Controversy surrounding subsidies is still prevalent ○ Aiding the wealthy, not the rural poor Securities Exchange Act of 1934: ○ Congress created SEC, assumed security registration of the FTC ○ Could not sell securities in interstate commerce/use mail service unless registered with SEC ○ officers/directors now required to disclose personal holdings ○ Securities brokers/dealers also had to register and provide individual financial information ○ Authorized commission to regulate sales and exchanges of securities Dollar a Year Man ○ experts from industry that provided government with advice without requiring the individuals to make undue financial sacrifice ○ army appropriations act of 1916 created Council for national defense that organized civilian advisory boards to help with mobilization ○ determined private companies should supply munitions rather than expand federal munition facilities ○ dollar a year men served on advisory committees leading the way in mobilization planning OSHA Act ○ Regulatory agency in the Department of Labor ○ Occupational Safety and Health Administration, created from the Occupational Safety and Health Act of 1970. ○ Sets standards to protect workers in businesses against safety and health hazards. ○ Require certain reporting and posting procedures, conduct workplace inspections without prior notification. ○ OSHA is viewed by many as “mindless bureaucracy, or bureaucracy run amuck.” The costs of the regulation were less for the agency doing the regulating than for the industries regulated. ○ ● ● ● - Success or failure of a business now hinges on decisions by federal regulatory agencies Overman Act: ○ The passage of the Overman Act on May 20, 1918 made what new federal agency the most powerful in conducting war? ■ War industries board Know the two types of coal ○ Anthracite (hard) Coal ■ Cheap ■ Clean-burning ■ High quality ○ Bituminous (Soft) Coal ■ Cheaper ■ Huge pollution What were the technological advancements related to coal? ○ Bessemer Process ■ Pioneered by sir Henry Bessemer (1856) ■ Price of steel dropped 80%, increased production capacity by 10% ○ Open-Hearth Process: ■ Even better than Bessemer Process (1860s) ● Rapid Growth of iron and steel industries: ○ Buildings (skyscrapers) ○ Railroads ○ Automobiles ○ Manufacturing (steel molded steel parts) Industry structure and Conditions - Labor → Easy to find cheap labor - Capital → little required - # of firms → many, small producers - Profitability → small ○ What impact did these conditions have? ■ Excessive competition ■ Instability of prices and output ■ ■ ■ ● ● Interregional competition grew due to easy transportation of coal between markets Mechanization ● Reduced costs ● discouraged labor unions Attempts to export excess supply failed ● Prices remained unstable (profits unpredictable) Know era of the merger and industry consolidation and forms of consolidation ○ Pools ■ First form of consolidation ■ Popular with railroads ■ Followed only during good times ■ Interstate ended RR pools ○ Trust ■ Rockefeller + Morgan ■ Standard Oil first trust ■ Total power in hands of trustees ■ Broken up by Ohio vs Standard Oil ○ Holding Company ■ NJ firms allowed to hold stock in other states ■ Almost indistinguishable from trusts ■ Northern securities → stricter regulation ○ Pools → Trust → Holding Company Know Welfare Unionism, Business Unionism, and Revolutionary Unionism (post dust bowl) ○ Welfare Unionism ■ Goals: ● Elevate social, intellectual, and moral position of the workers ● Create equal opportunities for all ■ Mostly concerned with social and political actions over wages ■ Methods ● Campaign against monopolies ● Examples: ○ Knights of labor: ■ Became open labor union in 1978 ■ Membership ● Open to laborers except lawyers, doctors, and bankers ● Members included skilled and unskilled labor ● Did not discriminate membership based on gender and race ○ Key Goals: ■ Abolish wage system for a utopian cooperative order ■ Establish bureau of labor statistics, weekly payday, 8 hour workday, abolish child labor and contract labor ■ Led successful strike against jay Gould’s Western railroad system National Labor Union ○ ○ ● ● ● ● ● ● ● ● ● ○ Business Unionism: ■ Goals: ● Higher wages, better working conditions, shorter work week ■ Methods: ● Used union as bargaining power to advance interests ○ Did not care much for social reform and accepted capitalism ■ Ex. American Federation of Labor ○ Revolutionary Unionism: ■ Goals: ● Overthrow capitalism and replace with communism or socialism ■ Methods: ● Movement not prevalent in America ● Ex: International Workers of the World ○ Organized western unskilled and migratory workers in lumbering, shipping, and fruit growing ○ Goal: to replace unions in control of a business ○ Wished to overthrow the capitalist structure of the US ○ Used striking aggressively ○ Basically non-existent after 1920 AFL Know what three things led to imperialism Know what military industrial complex is ○ Referring to the connections between military establishments and the arms industry that pervaded economic and political.. Know who Ralph Nader was Know ship building and steel slide about Carnegie steel and canadian nickel output Know henry J kaiser Know wartime agencies ○ War production board ○ War shipping administration ○ Office of price administration Rise of department stores: ○ Alexander T Stewert John D. Rockefeller ○ ○ ○ ● ● Took over from Carnegie Built refinery to produce naphtha and kerosene 1863 Founded Standard OIl Company in 1870 ■ Largest oil concern in the world ■ Vertical integration ■ Stabilized industry ○ Bought 80% of refining capacity in Cleveland 1873 ○ Bought independent refineries in NY, Philadelphia, Baltimore Pujo Committee ○ Investigated the money trust, J.P.Morgan Industrial Mobilization Plan ○ Relied on joint military-civilian committees to control the economy ○ Recognized that modern warfare required total planning of the economy 1912: Government requires licenses for operators and stations 1927: Federal Radio Commission established 1934: Federal Communications Commission established 1941: RCA forced NBC to split into NBC and ABC 1960s: Increased FCC authority to ensure high standards of programming