New Business Structures: Corporations and Trusts
Corporations and trusts emerged after the Civil War as new business structures that allowed entrepreneurs to raise vast sums from many investors by selling stock, enabling the construction of massive industries like railroads and steel mills. Powerful trusts then used their combined resources to create monopolies that controlled entire industries and eliminated competition. This Grade 8 history topic from History Alive! Chapter 8 covers the rise of big business in America.
Key Concepts
After the Civil War, building giant businesses like railroads and steel mills required more money than one person could provide. The corporation emerged as a new way to fund these huge projects. A corporation could raise vast sums of money by selling small pieces of ownership, called stock, to many different people.
This structure allowed companies to grow to an unprecedented size. With this power, business leaders could create monopolies or trusts — powerful groups of companies that worked together to control an entire industry, set prices, and eliminate competition.
Common Questions
What is a corporation in US history?
A corporation is a business structure that raises money by selling ownership shares called stock to many investors, allowing companies to accumulate the vast capital needed to build large industries like railroads.
What is a trust in business history?
A trust was a powerful combination of corporations that worked together under shared management to control an entire industry, set prices, and eliminate competition, effectively creating a monopoly.
Why did trusts and monopolies become a problem?
Trusts eliminated competition by driving out smaller businesses, then used their market power to charge higher prices to consumers while paying lower wages to workers.
Who were the famous industrialists who built trusts?
Figures like John D. Rockefeller in oil and Andrew Carnegie in steel built massive trusts in the late 1800s, dominating their industries and becoming some of the wealthiest people in American history.