Monday, November 01, 2010

Honors World History II: 2 November 2010

Current Events:
A man gets on his knees next to a car carrying U.S. President Barack Obama as he pulls away from Valois restaurant in Chicago, October 31, 2010. REUTERS/Larry Downing

The liberal news source "Democracy Now" reported: "It’s almost beyond the capacity of the mind to cope with that George Bush seemingly was more engaged in the battle against HIV than Barack Obama," according to Stephen Lewis, the former special envoy for HIV/AIDS in Africa and co-founder of AIDS-Free World.

CNN reported in July "That Republican president Bush was a bigger advocate on AIDS than "liberal" Obama may come as a surprise, but many people around the world are starting to notice the discrepancy."

The hecklers were concerned about Global Aids funding. And in order to quiet them down Obama responds with what the other side wants and plans to do, stating that we are funding global AIDs relief and the other side is not. Bush was credited for huge contributions to fighting AIDS in Africa going back to 2003. The Washington Post noted that he had tripled funding by 2006. The AP lauded Bush's efforts in this regard. The British newspaper the Telegraph called him “an African hero. The BBC suggested Bush may have been the Africa's best friend. Scientific studies showed the Bush initiated program had reduced the mortality rate by 10%, amounting to hundreds of thousands of lives worldwide.

By contrast, there has recently been criticism of the Obama regime for flat-funding of the same programs. This is not to suggest that Obama doesn't care about the problem or even that cutting back on some funding might not be a good idea at some point. But Obama stated at this rally, that Republicans haven't been engaged on the issue or that they are the ones who should be protested for lack of attention to it, is not in accordance with the facts.

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.
Federalist No. 51, James Madison

Revival of Volatility Signals Historic Era in U.S. Politics

No man is allowed to be a judge in his own cause, because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity. . . . The apportionment of taxes on the various descriptions of property is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice. Every shilling with which they overburden the inferior number, is a shilling saved to their own pockets.

It is in vain to say that enlightened statesmen will be able to adjust these clashing interests, and render them all subservient to the public good. Enlightened statesmen will not always be at the helm. Nor, in many cases, can such an adjustment be made at all without taking into view indirect and remote considerations, which will rarely prevail over the immediate interest which one party may find in disregarding the rights of another or the good of the whole.
Federalist No. 10, James Madison
Obama: "Punish Our Enemies," October 26, 2010

HW is available below (per our usual procedure HW is also posted at the bottom of the daily blog post as well as being posted on GradeConnect):

Chapter 11 Section 2 Radical Revolution and Reaction

During the first years of the revolution, a republic was established, Louis XVI was executed, and thousands of people were killed on suspicion of opposing the revolution. While factions fought over control within France, European states fearing the spread of revolution made plans to invade France. The National Convention responded by forming a Committee of Public Safety. The committee led a 12-month Reign of Terror, executing close to 40,000 suspected enemies and expunging signs of Catholic influence. The committee also raised the largest army in European history and repelled the invading armies. With the crisis past, the National Convention ended the Reign of Terror and executed its zealous leader, Maximilien Robespierre. Power shifted into the hands of more moderate middle-class leaders who produced a constitution in 1795. The constitution called for a two-house legislative body and an executive committee, called the Directory. The Directory faced mounting problems. In 1799 a popular General, Napoleon Bonaparte, seized power in a coup d'état.


Word Cloud for Chapter 11 Section 2 Radical Revolution and Reaction

Paste this code into your blog or home page to link to this Wordle:

Wordle: Word Cloud for Radical French Revolution


Terms, People, and Places

The Move to Radicalism

Radicals Take Control and Execute the King

Comparing Viewpoints

On the Execution of a King

King Louis XVI of France was executed by order of the National Convention. Reaction to this event was both loud and varied throughout Europe. The excerpts below present two different views on this event.

Critical Thinking

Which of the two viewpoints makes a better case for or against the execution of King Louis XVI? Cite examples from both statements to support your argument.

For the Execution

The crimes of Louis XVI are unhappily all too real; they are consistent; they are notorious. Do we even have to ask the question of whether a nation has the right to judge, and execute, its highest ranking public official . . . when, to more securely plot against the nation, he concealed himself behind a mask of hypocrisy? Or when, instead of using the authority confided to him to protect his countrymen, he used it to oppress them? Or when he turned the laws into an instrument of violence to crush the supporters of the Revolution? Or when he robbed the citizens of their gold in order to subsidize their foes, and robbed them of their subsistence in order to feed the barbarian hordes who came to slaughter them? Or when he created monopolies in order to create famine by drying up the sources of abundance so that the people might die in misery and hunger? . . .

—Jean-Paul Marat

Against the Execution

The Republican tyrants of France have now carried their bloody purposes to the uttermost diabolical stretch of savage cruelty. They have murdered their King without even the shadow of justice, and of course they cannot expect friendship nor intercourse with any civilized part of the world. The vengeance of Europe will now rapidly fall on them; and, in process of time, make them the veriest wretches on the face of the earth. The name of Frenchman will be considered as the appellation of savage, and their presence shunned as a poison, deadly destructive to the peace and happiness of Mankind. It appears evident, that the majority of the National Convention, and the Executive Government of that truly despotic country, are comprised of the most execrable villains upon the face of the earth. . . .

—London Times, January 25, 1793

The latter perspective, is one of the most well-known perspectives, and is considered the Burkean reaction based on ideas of the Englishman Edmund Burke.

Bastille Day at Eastern State Penitentiary in Philadelphia, 1:52

1st and 8th

Marie Antoinette downfall and execution, 3:57

Marie Antoinette was finally tried by the Revolutionary Tribunal on 14 October. Unlike the king, who had been given time to prepare a defense, the queen's trial was far more of a sham, considering the time she was given (less than one day) and the Jacobin's misogynistic view of women in general.

She was accused of (most, if not all, of the accusations were untrue and probably libelous accusations, sending millions of livres, treasury money, to Austria, plotting to kill the duc d'Orléans, declaring her son to be the new king of France and orchestrating the massacre of the Swiss Guards in 1792. People were impressed with her defense and the women present in the courtroom were the market women who had stormed the palace for her in 1789 began to support her.

The outcome of the trial had already been decided by the Committee of Public Safety and she was declared guilty of treason in the early morning of 16 October, after two days of proceedings. The same day at 12:15 pm, two and a half weeks before her thirty-eighth birthday, wearing a simple white dress, she was executed Place de la Révolution (present-day Place de la Concorde). Her last words were, "Pardon me Sir, I meant not to do it", to Sanson the executioner, whose foot she accidentally stepped on before she was executed by guillotine.

Her body was thrown into an unmarked grave in the former Madeleine cemetery, rue d'Anjou, (which was closed the following year). Both her body and that of Louis XVI were exhumed on 18 January 1815, during the Bourbon Restoration, when the comte de Provence had become King Louis XVIII. Proper Christian burial of the royal remains took place three days later, on 21 January, in the necropolis of French Kings at the Basilica of St Denis.


What occurred after radicals took control of the Assembly?

Crises and Response

The Convention Creates a New Committee

Robespierre “the Incorruptible”



The Guillotine Defines the Reign of Terror

In a speech given on February 5, 1794, Robespierre explained why the terror was necessary to achieve the goals of the revolution:

Primary Source

“It is necessary to stifle the domestic and foreign enemies of the Republic or perish with them. . . . The first maxim of our politics ought to be to lead the people by means of reason and the enemies of the people by terror. . . . If the basis of popular government in time of peace is virtue, the basis of popular government in time of revolution is both virtue and terror.”

—Maximilien Robespierre, quoted in Pageant of Europe (Stearns)

Suspect were those who resisted the revolution. About 300,000 were arrested during the Reign of Terror. Seventeen thousand were executed. Many were victims of mistaken identity or were falsely accused by their neighbors. Many more were packed into hideous prisons, where deaths from disease were common.

The engine of the Terror was the guillotine (gil uh teen). Its fast-falling blade extinguished life instantly. A member of the legislature, Dr. Joseph Guillotin (gee oh tan), had introduced it as a more humane method of beheading than the uncertain ax. But the guillotine quickly became a symbol of horror.

Within a year, the Terror consumed those who initiated it. Weary of bloodshed and fearing for their own lives, members of the Convention turned on the Committee of Public Safety. On the night of July 27, 1794, Robespierre was arrested. The next day he was executed. After the heads of Robespierre and other radicals fell, executions slowed dramatically.


Why did Robespierre think the Terror was necessary to achieve the goals of the revolution?

Reading Check


What were the differences between the Girondins and the Mountain?

The Reign of Terror


Go Online
For: Interactive French Revolution
Web Code: nap-1821

Thinking Critically

1. Identify Point of View

What were the goals of the Committee of Public Safety?

2. Predict Consequences

How do you think life (it should read "life") in France changed after the Terror came to an end?

Crushing Rebellion

The Republic of Virtue

Reading Check


Whom did the Committee of Public Safety consider to be enemies of the state?

A Nation in Arms

End of the Terror

In reaction to the Terror, the revolution entered a third stage. Moving away from the excesses of the Convention, moderates produced another constitution, the third since 1789. The Constitution of 1795 set up a five-man Directory and a two-house legislature elected by male citizens of property. The middle class and professional people of the bourgeoisie were the dominant force during this stage of the French Revolution. The Directory held power from 1795 to 1799.

Weak but dictatorial, the Directory faced growing discontent. Peace was made with Prussia and Spain, but war with Austria and Great Britain continued. Corrupt leaders lined their own pockets but failed to solve pressing problems. When rising bread prices stirred hungry sans-culottes to riot, the Directory quickly suppressed them. Another threat to the Directory was the revival of royalist feeling. Many émigrés were returning to France, and devout Catholics, who resented measures that had been taken against the Church, were welcoming them. In the election of 1797, supporters of a constitutional monarchy won the majority of seats in the legislature.

As chaos threatened, politicians turned to Napoleon Bonaparte, a popular military hero who had won a series of brilliant victories against the Austrians in Italy. The politicians planned to use him to advance their own goals. To their dismay, however, before long Napoleon would outwit them all to become ruler of France.


What changes occurred after the Reign of Terror came to an end?

By 1799, the 10-year-old French Revolution had dramatically changed France. It had dislodged the old social order, overthrown the monarchy, and brought the Church under state control.

New symbols such as the red “liberty caps” and the tricolor confirmed the liberty and equality of all male citizens. The new title “citizen” applied to people of all social classes. All other titles were eliminated. Before he was executed, Louis XVI was called Citizen Capet, from the name of the dynasty that had ruled France in the Middle Ages. Elaborate fashions and powdered wigs gave way to the practical clothes and simple haircuts of the sans-culottes.

This is a file from the Wikimedia Commons. Commons is a freely licensed media file repository. Description: Louis le dernier

Louis XVI of France wearing a phrygian cap, drinking a toast to the health of the sans-culottes. Etching and mezzotint, with watercolor. Scanned from a photographic slide.

Captions, in English:

"Long live the nation" (from bottle to mouth)


Louis XVI, having put on the Phrygian cap, cried 'long live the nation'. He drank to the health of the sans-culottes and affected a show of great calm. He spoke high-sounding words about how he never feared the law, that he had never feared to be in the midst of the people; finally he pretended to play a personal part in the insurrection of June 20. Well! The same Louis XVI has bravely waited until his fellow citizens return to their hearths to wage a secret war and extract his revenge.

Date: 1792 Source: Library of Congress Author: unknown Permission Public domain: This image (or other media file) is in the public domain because its copyright has expired.

This is a file from the Wikimedia Commons. Commons is a freely licensed media file repository. Summary: Cabinet des médailles de la Bibliothèque nationale de France, Paris, France Description: Attis as a child, wearing the Phrygian cap. Parian marble, 2nd century AD, probably during the reign of Emperor Hadrian.
Nationalism Spreads

Revolution and war gave the French people a strong sense of national identity. In earlier times, people had felt loyalty to local authorities. As monarchs centralized power, loyalty shifted to the king or queen. Now, the government rallied sons and daughters of the revolution to defend the nation itself. Nationalism, a strong feeling of pride in and devotion to one’s country, spread throughout France. The French people attended civic festivals that celebrated the nation and the revolution. A variety of dances and songs on themes of the revolution became immensely popular.

By 1793, France was a nation in arms. From the port city of Marseilles (mahr say), troops marched to a rousing new song. It urged the “children of the fatherland” to march against the “bloody banner of tyranny.” This song, “La Marseillaise” (mahr say ez), would later become the French national anthem.
Revolutionaries Push For Social Reform

Revolutionaries pushed for social reform and religious toleration. They set up state schools to replace religious ones and organized systems to help the poor, old soldiers, and war widows. With a major slave revolt raging in the colony of St. Domingue (Haiti), the government also abolished slavery in France’s Caribbean colonies.

Reading Check


How did the French revolutionary army help to create modern nationalism?

The Directory

Reading Check


Describe the government that replaced the National Convention.

Chapter 11 Section 3 The Age of Napoleon

Napoleon formed a new government, the consulate, in which he held absolute power. In 1802 he was crowned emperor and signed a peace treaty with Russia, Great Britain, and Austria. At home, he made peace with the Catholic Church and created a functioning bureaucracy. His Napoleonic Code preserved many of the rights gained in the revolution. War was soon renewed. By 1807, Napoleon had created a French empire. In parts of the empire, Napoleon sought to spread the revolution. However, his invasions had contributed to the spread of nationalism as well. This, along with British sea power, would spell his defeat. After a disastrous invasion of Russia, other European nations attacked Napoleon's army and captured Paris. Napoleon was exiled from France, and the monarchy was restored. Napoleon returned to power briefly, only to face final military defeat against a combined Prussian and British force at Waterloo and to be exiled once again.

Wordle: Chapter 11 Section 3 The Age of Napoleon
The Age of Napoleon


*Understand Napoleon’s rise to power and why the French strongly supported him.
*Explain how Napoleon built an empire and what challenges the empire faced.
*Analyze the events that led to Napoleon’s downfall.
*Outline how the Congress of Vienna tried to create a lasting peace.

Terms, People, and Places



Anne Louise Germaine de Staël


Napoleonic Code


Continental System

guerrilla warfare

scorched-earth policy


Congress of Vienna

Duke of Wellington


Concert of Europe

Video clips about Napoleon

Map of Napoleon's Empire

Refight Trafalgar!

Napoleon's Empire in 1812

Napoleon's army retreating from Moscow

Waterloo Interactive Battle Simulator

The Battle of Waterloo Game

The Rise of Napoleon

Enter "Boney"

After the execution of King Louis XVI, France entered a state of confusion and chaos without a single leader. Meanwhile, Napoleon Bonaparte, a brilliant and ambitious captain in the French army, was rapidly rising in the military ranks. Soon enough, Napoleon would come to rule almost all of Europe. One of his earliest victories in Lodi, Italy, convinced him that he was only just beginning his successful rise to power:

“From that moment, I foresaw what I might be. Already I felt the earth flee from beneath me, as if I were being carried into the sky.”

—Napoleon Bonaparte

Focus Question

Explain Napoleon’s rise to power in Europe, his subsequent defeat, and how the outcome still affects Europe today.

From 1799 to 1815, Napoleon Bonaparte would dominate France and Europe. A hero to some, an evil force to others, he gave his name to the final phase of the revolution—the Age of Napoleon.

Early Life

Napoleon was born in Corsica, a French-ruled island in the Mediterranean. At age nine, he was sent to France to be trained for a military career. When the revolution broke out, he was an ambitious 20-year-old lieutenant, eager to make a name for himself.

Napoleon favored the Jacobins and republican rule. However, he found the conflicting ideas and personalities of the French Revolution confusing. He wrote to his brother in 1793: “Since one must take sides, one might as well choose the side that is victorious, the side which devastates, loots, and burns. Considering the alternative, it is better to eat than be eaten.”

Additional references:

Napoleon and Josephine
Courtship and Marriage
The Emperor and Empress
Crisis and Divorce
A New Life

Napoleon and Josephine (screen at your leisure outside of class)

Military Successes

During the turmoil of the revolution, Napoleon rose quickly in the army. In December 1793, he drove British forces out of the French port of Toulon (too lohn). He then went on to win several dazzling victories against the Austrians, capturing most of northern Italy and forcing the Hapsburg emperor to make peace. Hoping to disrupt British trade with India, he led an expedition to Egypt in 1798. The Egyptian campaign proved to be a disaster, but Napoleon managed to hide stories of the worst losses from his admirers in France. He did so by establishing a network of spies and censoring the press.

The French military and scientific expedition in Egypt occurred 1798-1801.

Music: Maurice Ravel - "le Bolero" (screen at your leisure outside of class--set to events we are studying)

Success fueled Napoleon’s ambition. By 1799, he moved from victorious general to political leader. That year, he helped overthrow the weak Directory and set up a three-man governing board known as the Consulate. Another constitution was drawn up, but Napoleon soon took the title First Consul. In 1802, he had himself named consul for life.

Consul and Emperor

Two years later, Napoleon had acquired enough power to assume the title Emperor of the French. He invited the pope to preside over his coronation in Paris. During the ceremony, however, Napoleon took the crown from the pope’s hands and placed it on his own head. By this action, Napoleon meant to show that he owed his throne to no one but himself.

At each step on his rise to power, Napoleon had held a plebiscite (pleb uh syt), or popular vote by ballot. Each time, the French strongly supported him. As you will read, although the people theoretically had a say in government through their votes, Napoleon still held absolute power. This is sometimes called democratic despotism. To understand why people supported him, we must look at his policies.


How did Napoleon rise to power so quickly in France?

Reading Check

What personal qualities did Napoleon possess that gained him popular support?

Napoleon's Domestic Policies

Peace With the Church

He made peace with the Catholic Church in the Concordat of 1801. The Concordat kept the Church under state control but recognized religious freedom for Catholics. Revolutionaries who opposed the Church denounced the agreement, but Catholics welcomed it.

Codification of the Laws

Among Napoleon’s most lasting reforms was a new code of laws, popularly called the Napoleonic Code. It embodied Enlightenment principles such as the equality of all citizens before the law, religious toleration, and the abolition of feudalism.

But the Napoleonic Code undid some reforms of the French Revolution. Women, for example, lost most of their newly gained rights and could not exercise the rights of citizenship. Male heads of households regained complete authority over their wives and children. Again, Napoleon valued order and authority over individual rights.


What reforms did Napoleon introduce during his rise to power?

A New Bureaucracy

During the Consulate and empire, Napoleon consolidated his power by strengthening the central government. Order, security, and efficiency replaced liberty, equality, and fraternity as the slogans of the new regime.

To restore economic prosperity, Napoleon controlled prices, encouraged new industry, and built roads and canals. He set up a system of public schools under strict government control to ensure well-trained officials and military officers

Preserver of the Revolution?

Anne Louise Germaine de Staël

The date of the beginning of what Mme de Staël's admirers call her duel with Napoleon is not easy to determine. Judging from the title of her book Dix annees d'exil, it should be put at 1804; judging from the time at which it became pretty clear that the first man in France and she who wished to be the first woman in France were not likely to get on together, it might be put several years earlier. Napoleon said about her, according to the Memoirs of Mme. de Remusat, that she "teaches people to think who never thought before, or who had forgotten how to think."

The whole question of this duel, however, requires consideration from the point of view of common sense. It displeased Napoleon no doubt that Mme de Staël should show herself recalcitrant to his influence. But it probably pleased Mme de Staël to quite an equal degree that Napoleon should apparently put forth his power to crush her and fail. Both personages had a curious touch of charlatanerie. If Mme de Staël had really desired to take up her struggle against Napoleon seriously, she need only have established herself in England at the peace of Amiens. But she lingered on at Coppet, where she was shadowed by Napoleon's spies due to her tendency to defy Napoleon's orders, firstly that she keep away from Paris, and later out of France altogether, leaving her restless and lonely in rural Switzerland and constantly yearning after her beloved Paris.

In 1802 she published the first of her really noteworthy books, the novel Delphine, in which the femme incomprise was in a manner introduced to French literature, and in which she herself and not a few of her intimates appeared in transparent disguise. In the autumn of 1803 she returned to Paris. Had she not made her anxiety about the question of exile so public, it remains a question whether Napoleon would have exiled her; but, as she began at once appealing to all sorts of persons to protect her, he seems to have thought it better that she should not be protected. She was directed not to reside within forty leagues of Paris, and after considerable delay she determined to go to Germany.

Reading Check


What was the significance of Napoleon's Code?

Napoleon's Empire

Building the Empire

From 1804 to 1812, Napoleon furthered his reputation on the battlefield. He successfully battled the combined forces of the greatest European powers. He took great risks and even suffered huge losses. “I grew up on the field of battle,” he once said, “and a man such as I am cares little for the life of a million men.” By 1812, his Grand Empire reached its greatest extent.

As a military leader, Napoleon valued rapid movements and made effective use of his large armies. He developed a new plan for each battle so opposing generals could never anticipate what he would do next. His enemies paid tribute to his leadership. Napoleon’s presence on the battlefield, said one, was “worth 40,000 troops.”

Vocabulary Builder

anticipate—(an tis uh payt) vt. to foresee or expect

The Map of Europe Is Redrawn

As Napoleon created a vast French empire, he redrew the map of Europe. He annexed, or incorporated into his empire, the Netherlands, Belgium, and parts of Italy and Germany. He also abolished the tottering Holy Roman Empire and created a 38-member Confederation of the Rhine under French protection. He cut Prussian territory in half, turning part of old Poland into the Grand Duchy of Warsaw.

Napoleon controlled much of Europe through forceful diplomacy. One tactic was placing friends and relatives on the thrones of Europe. For example, after unseating the king of Spain, he placed his own brother, Joseph Bonaparte, on the throne. He also forced alliances on European powers from Madrid to Moscow. At various times, the rulers of Austria, Prussia, and Russia reluctantly signed treaties with the “Corsican ogre,” as the monarchs he overthrew called him.

In France, Napoleon’s successes boosted the spirit of nationalism. Great victory parades filled the streets of Paris with cheering crowds. The people celebrated the glory and grandeur that Napoleon had gained for France.

Napoleon’s Power in Europe, 1812

Go Online
For: Audio guided tour
Web Code: nap-1841

Map Skills

Napoleon’s empire reached its greatest extent in 1812. Most of the countries in Europe today have different names and borders.

1. Locate:

(a) French empire, (b) Russian empire, (c) Germany

2. Region

Locate the Confederation of the Rhine. What is this area called today?

3. Make Comparisons

Compare Europe of Napoleon’s empire to Europe of today on the maps above. How has Europe changed?

Spreading the Principles of the Revolution

In the end, Napoleon’s Continental System failed to bring Britain to its knees. Although British exports declined, Britain’s powerful navy kept vital trade routes open to the Americas and India. Meanwhile, trade restrictions created a scarcity of goods in Europe, sent prices soaring, and intensified resentment against French power.

French armies under Napoleon spread ideas of the revolution across Europe. They backed liberal reforms in the lands they conquered. In some places, they helped install revolutionary governments that abolished titles of nobility, ended Church privileges, opened careers to men of talent, and ended serfdom and manorial dues. The Napoleonic Code, too, influenced countries in continental Europe and Latin America.


How did Napoleon come to dominate most of Europe by 1812?

Reading Check


What were the three parts of Napoleon's Grand Empire? (i.e., identify which areas or countries make up the following): French Empire, Dependent states, and States allied with Napoleon.

The European Response

Britain's Survival (Napoleon Strikes Britain)

Britain alone, of all the major European powers, remained outside Napoleon’s European empire. With only a small army, Britain relied on its sea power to stop Napoleon’s drive to rule the continent. In 1805, Napoleon prepared to invade England. But at the Battle of Trafalgar, fought off the southwest coast of Spain, British Admiral Horatio Nelson smashed the French fleet.

Nelson won a decisive at Trafalgar but he only enjoyed his victory briefly as he fell mortally wounded during the battle.
The Battle of Trafalgar - Nelson's Victory (but dies mortally wounded in battle), 1:46

Nelson's Principles of War

Animated Map: the Battle of Trafalgar


Battlefield Academy: Re-fight Trafalgar!


With an invasion ruled out, Napoleon struck at Britain’s lifeblood, its commerce. He waged economic warfare through the Continental System, which closed European ports to British goods. Britain responded with its own blockade of European ports. A blockade involves shutting off ports to keep people or supplies from moving in or out. During their long struggle, both Britain and France seized neutral ships suspected of trading with the other side. British attacks on American ships sparked anger in the United States and eventually triggered the War of 1812.


In 1812, Napoleon continued his pursuit of world domination and invaded Russia. This campaign began a chain of events that eventually led to his downfall. Napoleon’s final defeat brought an end to the era of the French Revolution.
Nationalism Works Against Napoleon

Napoleon’s successes contained seeds of defeat. Although nationalism spurred French armies to success, it worked against them too. Many Europeans who had welcomed the ideas of the French Revolution nevertheless saw Napoleon and his armies as foreign oppressors. They resented the Continental System and Napoleon’s effort to impose French culture on them.

From Rome to Madrid to the Netherlands, nationalism unleashed revolts against France. In the German states, leaders encouraged national loyalty among German-speaking people to counter French influence.

Reading Check


Why did being a sea power help Britain survive an attack by the French?

Spain and Austria Battle the French

Resistance to foreign rule bled French-occupying forces dry in Spain. Napoleon introduced reforms that sought to undermine the Spanish Catholic Church. But many Spaniards remained loyal to their former king and devoted to the Church. When the Spanish resisted the invaders, well-armed French forces responded with brutal repression. Far from crushing resistance, however, the French response further inflamed Spanish nationalism. Efforts to drive out the French intensified.

Spanish patriots conducted a campaign of guerrilla warfare, or hit-and-run raids, against the French. (In Spanish, guerrilla means “little war.”) Small bands of guerrillas ambushed French supply trains or troops before retreating into the countryside. These attacks kept large numbers of French soldiers tied down in Spain when Napoleon needed them elsewhere.

Spanish resistance encouraged Austria to resume hostilities against the French. In 1805, at the Battle of Austerlitz, Napoleon had won a crushing victory against an Austro-Russian army of superior numbers. Now, in 1809, the Austrians sought revenge. But once again, Napoleon triumphed—this time at the Battle of Wagram. By the peace agreement that followed, Austria surrendered lands populated by more than three million subjects.

The Fall of Napoleon

Disaster in Russia

Primary Source

As shown in this painting, the Russian winter took its toll on Napoleon’s army. Philippe Paul de Ségur, an aide to Napoleon, describes the grim scene as the remnants of the Grand Army returned home.

What were the effects of this disaster in Russia?

Primary Source

“In Napoleon’s wake [was] a mob of tattered ghosts draped in . . . odd pieces of carpet, or greatcoats burned full of holes, their feet wrapped in all sorts of rags. . . . [We] stared in horror as those skeletons of soldiers went by, their gaunt, gray faces covered with disfiguring beards, without weapons . . . with lowered heads, eyes on the ground, in absolute silence.”

—Memoirs of Philippe Paul de Ségur

Tsar Alexander I of Russia was once an ally of Napoleon; they had signed the Treaty of Tilsit in 1807, a period when Napoleon was in no position to attack Russia (Glover, p. 160; Marshall-Cornwall, p. 219). The tsar and Napoleon planned to divide Europe if Alexander helped Napoleon in his Continental System.
Many countries objected to this system, and Russia became unhappy with the economic effects of the system as well (Glover, p. 161). Yet another cause for concern was that Napoleon had enlarged the Grand Duchy of Warsaw that bordered Russia on the west, all without notifying his supposed ally (Glover, p. 161; Marshall-Cornwall, p. 219). In addition, Napoleon at first proposed to marry for the second time to a Russian princess but he snubbed Russia to engage the Austrian Marie-Therese without notifying the Russians (Glover, p. 161).

In any case, perhaps the biggest but unstated reason was that Europe could not accommodate two egos as large as Napoleon's and the Tsar's on one continent. The war could have been avoided but it was not.

The causes which brought about the rupture between the Emperor the Tsar are numerous and complex; Napoleon's main motive was that he could not tolerate a on the boundary of his Empire the existence of a Power which was not entirely subservient to his own will. Napoleon had already beaten the Russians in battle (1806-1807 leading to Tilsit, Marshall-Cornwall, pp. 177-178) and he had formed a poor opinion of their leadership. Once they were finally beaten, he could create a strong Poland as a buffer state and satellite of France. Unfortunately, Napoleon decided to conquer Russia before he had succeeded in conquering Spain (Marshall-Cornwall, p. 219).
These and other slights led the tsar to withdraw his support from the Continental System. Napoleon responded to the tsar’s action by assembling an army with soldiers from 20 nations, known as the Grand Army.

In 1812, with about 600,000 soldiers and 50,000 horses, Napoleon invaded Russia. To avoid battles with Napoleon, the Russians retreated eastward, burning crops and villages as they went. This scorched-earth policy left the French hungry and cold as winter came. Napoleon entered Moscow in September. He realized, though, that he would not be able to feed and supply his army through the long Russian winter. In October, he turned homeward.

The 1,000-mile retreat from Moscow turned into a desperate battle for survival. Russian attacks and the brutal Russian winter took a terrible toll. Fewer than 20,000 soldiers of the once-proud Grand Army survived. Many died. Others deserted. French general Michel Ney sadly concluded: “General Famine and General Winter, rather than Russian bullets, have conquered the Grand Army.” Napoleon rushed to Paris to raise a new force to defend France. His reputation for success had been shattered.

Discovery School Channel (Video)

Watch Napoleon’s Lost Army on the Witness History Discovery School™ video program to learn about Napoleon’s invasion of Russia in 1812.


What challenges threatened Napoleon’s empire and what led to the disaster in Russia?

Reading Check


Why did Napoleon invade Russia?

The Final Defeat

The disaster in Russia brought a new alliance of Russia, Britain, Austria, and Prussia against a weakened France. In 1813, they defeated Napoleon in the Battle of the Nations at Leipzig.

Battle for Leipzig courtesy of the Hawks Club on one of their custom historical maps and historical simulations, 3:29.

After the Russian campaign and Leipzig Napoleon was finished. He was forced to abdicate, and he comforted his old guard who were his veterans and those who followed him for twenty years since the Italian campaign.
He gave his famous speech to the guard, France Has Fallen. The background music is Sigfried's Funeral March by Wagner from Twilight of the Gods, 2:54.

Napoleon Abdicates Briefly

The next year, Napoleon abdicated, or stepped down from power. The victors exiled him to Elba, an island in the Mediterranean. They then recognized Louis XVIII, brother of Louis XVI, as king of France.

The restoration of Louis XVIII did not go smoothly. He agreed to accept the Napoleonic Code and honor the land settlements made during the revolution. However, many émigrés rushed back to France bent on revenge. An economic depression and the fear of a return to the old regime helped rekindle loyalty to Napoleon.

As the victorious allies gathered in Vienna for a general peace conference, Napoleon escaped his island exile and returned to France. Soldiers flocked to his banner. As citizens cheered Napoleon’s advance, Louis XVIII fled. In March 1815, Napoleon entered Paris in triumph.
Napoleon’s triumph was short-lived. His star soared for only 100 days, while the allies reassembled their forces. On June 18, 1815, the opposing armies met near the town of Waterloo in Belgium. British forces under the Duke of Wellington and a Prussian army commanded by General Blücher crushed the French in an agonizing day-long battle. Once again, Napoleon was forced to abdicate and to go into exile on St. Helena, a lonely island in the South Atlantic. This time, he would not return.

Crushed at the Battle of Waterloo

You can learn more or prepare for the Battle of Waterloo Game by viewing the Waterloo Interactive Battle Simulator.

Waterloo Interactive Battle Simulator

If you have not prepared with the Battle Simulator the fight at Waterloo will still occur in the Game.

The Battle of Waterloo Game

Napoleon's death was not without controversy and there is evidence that he may have been poisoned (Cf. The Murder of Napoleon by Ben Weider. As a fascinating sidelight to the story of Napoleon, it appears that Count Charles-Tristan de Montholon, an aide to Napoleon and a member of the "pre-Revolutionary aristocracy" poisoned him slowly with arsenic (a poison) on St. Helena (Weider, p. 33).

Napoleon, although it was widely known that he had suffered from physical ailments his entire life (it appears to be the scratching disease, scabies, Napoleon's Glands, Arno Karlen, p. 7), had nonetheless a legendary reputation for work; yet, he succumbed at the relatively young age of 51 thus at the very least his death should raise questions.

At the time of Napoleon's death, the arsenic poisoning went unnoticed and it was not until a Swedish researcher in 1955, Sten Forshufvud, reconstructed the accounts and medical evidence of Napoleon's death that a modern, forensic connection could be established determining that Napoleon was murdered. Montholon had a motive, he was attached to the pre-Revolutionary aristocracy, and he appeared to be an agent of Count d'Artois, brother of King Louis XVIII, and later Charles X in the restored French monarchy who hated the Revolutionary Napoleon (Weider, pp. 144, 254).

Napoleon himself may have sensed something was amiss in his last days. Six days before his death he directed:

After my death, which cannot be far off. I want you to open my body. . . . I want you to remove my heart, which you will put in spirits of wine and take to Parma, to my dear Marie-Louise [Napoleon's second wife]. . . . I recommend that you examine my stomach particularly carefully; make a precise, detailed report on it, and give it to my son. . . . I charge you to overlook nothing in this examination. . . . I bequeath to all the ruling families the horror and shame of my last moments.
(Wieder, preface).

Napoleon’s Legacy

Napoleon died in 1821, but his legend lived on in France and around the world. His contemporaries as well as historians today have long debated his legacy. Was he “the revolution on horseback,” as he claimed? Or was he a traitor to the revolution?

No one, however, questions Napoleon’s impact on France and on Europe. The Napoleonic Code consolidated many changes of the revolution. The France of Napoleon was a centralized state with a constitution. Elections were held with expanded, though limited, suffrage. Many more citizens had rights to property and access to education than under the old regime. Still, French citizens lost many rights promised so fervently by republicans during the Convention.

Crushed at the Battle of Waterloo

Battles and Campaigns (Mapping History) by Malcomb Swanston, p. 107.

The Encyclopedia of Warfare by Robin Cross, Napoleon's Tactics, p. 135; on Waterloo, pp. 141-143.

Napoleon as Military Commander by James Marshall-Cornwall, pp, 263-281.

The Napoleonic Wars: an Illustrated History, 1792-1815, by Michael Glover, pp. 215-222.

Waterloo Interactive Battle Simulator

The Battle of Waterloo Game

Chapter 12 Preview

The Congress of Vienna

Prince Clemens von Metternich

As Austria’s foreign minister, Metternich (1773–1859) used a variety of means to achieve his goals. In 1809, when Napoleon seemed vulnerable, Metternich favored war against France. In 1810, after France had crushed Austria, he supported alliance with France. When the French army was in desperate retreat from Russia, Metternich became the “prime minister of the coalition” that defeated Napoleon. At the Congress of Vienna, Metternich helped create a new European order and made sure that Austria had a key role in it. He would skillfully defend that new order for more than 30 years.
A key question to consider is: why did Metternich’s policies toward France change?


Europe After the Congress of Vienna, 1815

Go Online
For: Audio guided tour
Web Code: nap-1842

Map Skills

At the Congress of Vienna, European leaders redrew the map of Europe in order to contain France and keep a balance of power.

1. Locate

(a) German Confederation, (b) Netherlands, (c) Vienna

2. Region

Name three states that were in the German Confederation.

3. Recognize Cause and Effect

Why did the Congress enlarge some of the countries around France?

On the world stage, Napoleon’s conquests spread the ideas of the revolution. He failed to make Europe into a French empire. Instead, he sparked nationalist feelings across Europe. The abolition of the Holy Roman Empire would eventually help in creating a new Germany. Napoleon’s impact also reached across the Atlantic. In 1803, his decision to sell France’s vast Louisiana Territory to the American government doubled the size of the United States and ushered in an age of American expansion.


How did Napoleon impact Europe and the rest of the world?

Leaders Meet at the Congress of Vienna

After Waterloo, diplomats and heads of state again sat down at the Congress of Vienna. They faced the monumental task of restoring stability and order in Europe after years of war. The Congress met for 10 months, from September 1814 to June 1815. It was a brilliant gathering of European leaders. Diplomats and royalty dined and danced, attended concerts and ballets, and enjoyed parties arranged by their host, Emperor Francis I of Austria. The work fell to Prince Clemens von Metternich of Austria, Tsar Alexander I of Russia, and Lord Robert Castlereagh of Britain. Defeated France was represented by Prince Charles Maurice de Talleyrand.

Congress Strives For Peace

The chief goal of the Vienna decision makers was to create a lasting peace by establishing a balance of power and protecting the system of monarchy. Each of the leaders also pursued his own goals. Metternich, the dominant figure at the Congress, wanted to restore things the way they were in 1792. Alexander I urged a “holy alliance” of Christian monarchs to suppress future revolutions. Lord Castlereagh was determined to prevent a revival of French military power. The aged diplomat Talleyrand shrewdly played the other leaders against one another so France would be accepted as an equal partner.

The peacemakers also redrew the map of Europe. To contain French ambitions, they ringed France with strong countries. In the north, they added Belgium and Luxembourg to Holland to create the kingdom of the Netherlands. To prevent French expansion eastward, they gave Prussia lands along the Rhine River. They also allowed Austria to reassert control over northern Italy.

To turn back the clock to 1792, the architects of the peace promoted the principle of legitimacy, restoring hereditary monarchies that the French Revolution or Napoleon had unseated. Even before the Congress began, they had put Louis XVIII on the French throne. Later, they restored “legitimate” monarchs in Portugal, Spain, and the Italian states.

Congress Fails to See Traps Ahead

To protect the new order, Austria, Russia, Prussia, and Great Britain extended their wartime alliance into the postwar era. In the Quadruple Alliance, the four nations pledged to act together to maintain the balance of power and to suppress revolutionary uprisings, especially in France. Another result of the Congress was a system known as the Concert of Europe, in which the powers met periodically to discuss any problems affecting the peace of Europe.

The Vienna statesmen achieved their immediate goals in creating a lasting peace. Their decisions influenced European politics for the next 100 years. Europe would not see war on a Napoleonic scale until 1914. They failed, however, to foresee how powerful new forces such as nationalism would shake the foundations of Europe and Latin America in the next decades.

Portrait of Louis XVIII


Explain the chief goal and outcome of the Congress of Vienna.

Links, resources, and bibliographical references

Video clips about Napoleon

Map of Napoleon's Empire

Refight Trafalgar!

Napoleon's Empire in 1812

Napoleon's army retreating from Moscow

Waterloo Interactive Battle Simulator

The Battle of Waterloo Game

The Napoleonic Alliance

The Napoleonic Collection

Institute on Napoleon and the French Revolution at Florida State University

The Napoleon Foundation

The War Times Journal: Napoleonic Wars

The Napoleonic Guide
Napoleon as Military Commander by James Marshall-Cornwall

The Napoleonic Wars: an Illustrated History, 1792-1815, by Michael Glover

Napoleon's Glands and Other Ventures in Biohistory by Arno Karlen

The Murder of Napoleon by Ben Weider

Battles and Campaigns (Mapping History) by Malcomb Swanston

Bibliographic resources for the French Revolution

Previous to or the buildup to the Revolution

Cf. The Coming of the French Revolution (Princeton Classic Editions)
by Georges Lefebvre.

The Fall of the French Monarchy 1787-1792 (The French Revolution) by Michel Vovelle.

Great Fear of 1789
by Georges Lefebvre.

General works on the Revolution

The Crowd in the French Revolution (Galaxy Books) by George Rude.

A Short History of the French Revolution, 1789-1799 by Albert Soboul.

The Abolition Of Feudalism: Peasants, Lords, And Legislators In The French Revolution, by John Markoff.

Interpreting the French Revolution by Francois Furet.

Citizens: A Chronicle of the French Revolution by Simon Schama.

The Radical Revolution

The Sans-Culottes
by Albert Soboul.

The Vendee: A Sociological Analysis of the Counter-Revolution of 1793 by Charles Tilly.

Revolutionary Themes After the Revolution

Reflections on the Revolution in France (Oxford World's Classics) by Edmund Burke.

The Age of Revolution: 1789-1848 by Eric Hobsbawm.

Work and Revolution in France: The Language of Labor from the Old Regime by William H. Sewell Jr.

The Course in German History by A.J.P. Taylor.


Chapter 10 Test Prep page


These questions may be--but there is no guarantee--on the Test. They are here as possible questions on the Test for study purposes.

The Enlightenment and the American Revolution (1700–1800)
Philosophy in the Age of Reason


Enlightenment Ideas Spread Self-Test


Birth of the American Republic Self-Test


Chapter Self-Test


Sec. 1 The French Revolution Begins


On the Eve of Revolution


And, additional questions.


Marie Antoinette downfall and execution, 3:57

Marie Antoinette was finally tried by the Revolutionary Tribunal on 14 October. Unlike the king, who had been given time to prepare a defense, the queen's trial was far more of a sham, considering the time she was given (less than one day) and the Jacobin's misogynistic view of women in general.

She was accused of (most, if not all, of the accusations were untrue and probably libelous accusations, sending millions of livres, treasury money, to Austria, plotting to kill the duc d'Orléans, declaring her son to be the new king of France and orchestrating the massacre of the Swiss Guards in 1792. People were impressed with her defense and the women present in the courtroom were the market women who had stormed the palace for her in 1789 began to support her.

The outcome of the trial had already been decided by the Committee of Public Safety and she was declared guilty of treason in the early morning of 16 October, after two days of proceedings. The same day at 12:15 pm, two and a half weeks before her thirty-eighth birthday, wearing a simple white dress, she was executed Place de la Révolution (present-day Place de la Concorde). Her last words were, "Pardon me Sir, I meant not to do it", to Sanson the executioner, whose foot she accidentally stepped on before she was executed by guillotine.

Her body was thrown into an unmarked grave in the former Madeleine cemetery, rue d'Anjou, (which was closed the following year). Both her body and that of Louis XVI were exhumed on 18 January 1815, during the Bourbon Restoration, when the comte de Provence had become King Louis XVIII. Proper Christian burial of the royal remains took place three days later, on 21 January, in the necropolis of French Kings at the Basilica of St Denis.

Allan Sherman - You Went The Wrong Way Old King Louie, 3:33

Chapter: Know It? Show It

Radical Days of the Revolution


The French Revolution and Napoleon


HW: email (or hard copy) me at

Tuesday HW
1. p. 344, Practicing the Skill, #1-4
Email only if you answer (i.e., you voluntarily choose to participate):
Last week what I liked least about the class was . . .
Last week what I enjoyed most about the class was . . .

Honors Business Economics Chapter 3, 2 November 2010

Current Events:

Armed security guards will now be posted at all 36 full-service unemployment offices in the state of Indiana.

Better Off? 75% say no, highest since Carter in the mid-1970s...

CNN Poll: Those who say things going poorly higher than 1994 or 2006

Chapter 3

Business Organizations, p. 60

Section 1 Forms of Business Organization, p. 61

Most businesses operate in search of profits. Others are organized and operate like a business, although profits are not their primary concern. There are three main forms of business organization. The first is the sole proprietorship, which is a business owned and operated by one person. The second is the partnership, which is a business jointly owned by two or more persons. The third is the corporation, which is recognized as a separate entity having all the rights of an individual. The proprietorship is the most common and most profitable form of business organization. The corporation is the largest and most visible.

One is a sole proprietorship which one individual, the sole proprietor, exercises complete control over the business. Another is a partnership in which two or more individuals combine their efforts and share the profits of the business. Under both business forms, the business is an asset owned by the owner or owner, it has no existence separate from them, and any financial or legal problems encountered by the business are their responsibility. All of the owners’ assets, even those not involved in the business, are at risk. Liability is unlimited.

Chapter Three Spotlight Video

Content Vocabulary

Some Real Examples

Let's pick on Google for a minute. Google is the King of Search. It has very high profit margins… and a huge load of cash sitting on its balance sheet. So how do we know what a fair price is to pay for GOOG?

Well, as we said, the market value of a company is… whatever the market forces of supply and demand say it is. GOOG has often traded at around $500 per share. The country has roughly 320 million shares outstanding, so if you do the math (320 million x $500) you see that the market has priced the company's total value at something like $160 billion. Whoa.

But Google has enormous profitability. The company has about $32 billion in cash lying around (as of 2010) and no debt on its balance sheet. And it generates almost a billion dollars a month in cash profits. So if you subtract the $32 billion from the $160 billion, you get an "equity capitalization" of a little under $130 billion. If the company will earn $12 billion in the next year, that means that GOOG is trading at a price-to-earnings ratio of about 11x earnings.

If the company continues to grow at anything like the pace it has grown in the past, that's likely "cheap" – even at $500 a share. But if the company's growth slows down, there's also a long way for that price to fall. So would you say GOOG is worth the risk?

What about the Un-Google? GOOG is a great company in a vibrant industry with great profit margins and "free cash flow dynamics" – that is, the company has relatively low costs in infrastructure or capital expenses. But what about a company facing almost the opposite situation; an easy target is the auto industry.

The industry is "enjoying" little or no growth in the United States. Running huge auto plants is enormously expensive in terms of capital expenditures – keeping all that heavy machinery running isn't cheap. Old union contracts have locked in high labor costs and reduced flexibility in the way management can use its workers. It's not an accident that companies like GM and Chrysler almost went out of business in 2009 and had to be bailed out by the government.

So, do you want to buy stock in GM? It certainly looks like a risky bet… and it is. But – remember the magic of supply and demand here – it's possible that demand for GM stock will fall so low that it might start to look to you like a stock with upside. In 2010, somebody bought Newsweek magazine – a firm in another deeply troubled industry – for one dollar. He'll probably lose a ton more money… but if he can somehow turn things around, his upside is huge. Do you have the taste for risk that would lead you to invest in a dodgy industry like autos or print media? Or would you rather stick to Google?

Finally, what about those super-trendy stocks that explode into popularity and trade at seemingly unbelievable valuations. That is, some given company – let's call it, just for fun – goes public at $30 a share, having earned 70 cents a share the year before and with Wall Street analysts projecting that it will earn a dollar a share in the next year.

By three days after the IPO (initial public offering: a company's first stock offering to the public), though, investors just can't get enough Shmoop; the price of the stock has zoomed to $100 a share and the Wall Street Journal writes, "ZOMG! Shmoop Trades at 100x Earnings."

What's going on here? Why would investors invest at such a high multiple? Nobody in his right mind would pay $100 per share for only $1 in earnings, right? But what's happened here is that the market is pricing in higher expectations of the future. The buying public has fallen so in love with the CEO of Shmoop and with the wily founder's creative vision that they believe the company will, in fact, earn $3 a share next year and $10 a share the year after that. So in the world they imagine, Shmoop will really be trading at 10x earnings rather than 100x, making it a fabulous growth stock. That's their dream, anyway; it will be up to their friends at Shmoop to make it actually happen. If it does, those investors will have made a mint. If it doesn't… oops.

Some Final Basics

If you’re hunting for an investment, remember that not all stock is the same. There are two basic types of stock: common and preferred. Common stock grants not just partial ownership in a corporation, but also voting rights. Each share of common stock carries a vote that its owner may cast in the elections that select the board of directors. A sizable bloc of stock confers significant power in choosing the people who will govern the company. Preferred stock does not confer voting rights, but it does guarantee some sort of dividend. Common stock holders may not receive a dividend if the board of directors decides to re-invest all of the profits. Preferred stock holders are also closer to the front of the line if the corporation goes out of business. If the company goes broke, creditors and bond holders have first claim on the company’s assets; preferred stock holders come next.

Next, investors have to know where to buy the stock that they are looking for. Not all stocks are sold in the same place or in the same way. For starters, you don’t buy stock from the company itself—you buy it from a current owner of the stock—and a stock broker facilitates the exchange. The exchange may take place in a physical stock market—America’s largest and oldest are the New York Stock Exchange and the American Stock Exchange. But the nation’s fastest growing exchange is the National Association of Securities Dealers Automated Quotations or Nasdaq. There are also regional exchanges in several cities that handle the stock of corporations in their area.

Nowadays, though, as far as you're concerned, it's all about the internet. You don't really care where your stock is listed, and you can almost certainly do all your trading from your laptop while wearing your pajamas. But if you don't want to lose your shirt (like that mixed metaphor there?), you'll probably want to have a strong sense of whether the market as a whole is rising or falling.

A bull market is a market in which prices are rising. In a bear market prices are falling. Generally, investors favor bull markets because they are “long” in a stock—that is, stock investors buy a stock with the expectation that it will rise in value so they can sell it for a profit. But is it also possible to “go short” or “sell short” and make money on a falling stock. (If you have never been able to pick a winner this is the niche you’ve been looking for.) When you sell short you borrow the stock from your broker with the agreement that you will return the same number of shares at a later date. You then sell the stock while its price is relatively high, wait for the price to fall, and then buy the stock and return it to your broker. Your profit lies in the difference between the price you sold the borrowed stock for and the price you pay in buying the stock that you return to your broker. You can make a lot of money that way... or lose it all. Probably not a game to be played by amateurs, to be honest.

Brokers can help you out in other ways as well. When you buy stock on margin, your broker lends you a portion of the purchase price. For example, you may be asked only to pay 10% of the total purchase price. Of course, your broker charges you interest on the money he lends you. And if the stock you buy falls in value, placing the money he lent you at risk, he will issue a margin call demanding that you deposit more money or securities into your margin account to protect him from losses.

You should also understand the various ways that you can hedge your bets or reduce your risks in the market. Options, for example, give you the opportunity to buy or sell a stock at a specified price during a limited period of time. When you buy a put option, you are buying the option of purchasing stock at the strike price during an agreed upon period of time. When you purchase a call option, you are buying the option of selling stock at the strike price during an agreed upon period of time. An option allows you to hedge your bets—lock in a certain price before it changes to your disadvantage. But you pay for this certainty. Your final gain or loss will include the price you pay for the option.

You can also reduce your risk by placing stop orders. These are standing orders with your broker stating that he should buy or sell stocks when they reach a certain price. For example, when you are long in a stock you might place a sell stop order telling your broker to dump the stock if the price falls to a certain point. If you are short in a stock, you would place a buy stop order telling your broker to buy the stock if it climbs to a certain price, so that you can cover your short without losing any more money.

Why It Matters Today

Investor Warren Buffett, the richest person in the world, has been called "The Oracle of Omaha."

A mailman who was putting $1000 each year into savings once asked him how to become a billionaire. "Live to 5000," Buffett said.

That's funny, but it points to a deeper truth. Lottery winners excepted, it takes time to build wealth. Hopefully not 5000 years, but the miracle of compounding interest means that small investments can really add up over a long period of time. (Or "multiply up," really.)

Over the course of the last century, the stock market has grown by an average rate of about 9% per year. Looking forward, a more realistic bet is that the stock market will grow 5% per year. With the reinvestment of compounding interest, that means you'd have been about to double your money about every eight years. At that rate, if you'd invested $1000 back in 1930, your investment would have grown to be worth more than $1 million in 2008.

You’re just about ready to take a dip in the market... but do you know how to read Google Finance? A Schwab account?

Check out the stock data below. This is a snapshot (taken a while ago) of three important publicly-traded companies:

So, what does all of that mean? Here's the breakdown, from left to right:

Ticker Symbol: Think of this as the company's nickname. GOOG = Google. BA = Boeing. GE = General Electric.

* Stock Tip: You can completely mess up if you don't pay attention. If you buy a share of HOG, you are buying a motorcycle company, not a pig.

Price: The last trade made for one share of this company.

* Stock Tip: If you're buying or selling shares, make sure to check whether the price quote you're looking at is real-time or not. Yahoo Finance and Google Finance offer real-time quotes. The price quotes on some websites and most TV stations may be delayed by 20 minutes or more.
* Stock Tip: Don't compare the price of company A and company B. Price = Market Cap / Shares Outstanding. So, if a company does a 2-for-1 split of its stock (doubles the number of Shares Outstanding), the Price would drop by half. The company is still worth the same amount. So, Price is not an indicator of the companies overall value.

Change: The amount the stock price has changed since it last closed (at the end of yesterday).

Percentage Change: Harken back to 4th grade math - this is percentage that the stock has changed since it last closed (at the end of yesterday).

Day Range: The day range shows the highest and lowest price that the stock had for the day. Ideally, buy low, sell high. The best investors (and we mean Warren Buffett) don't worry as much about a stock's daily price as its long-term prospects.

52 Week High and Low: This identifies the highest and the lowest price that this stock has sold for over the past 52 weeks. This information allows you to place its current price within a one-year context.

Market Capitalization: This is a measure of the total value of the company. Market Cap = Total Shares Outstanding x Current Price.

* Stock Tip: Market Cap often underestimates the true value of a company because it doesn't include (a) stock options held by employees and (b) privately-owned shares that are not reported, and (c) a pile of cash that the company has locked up in a vault (yep, most companies do this). On the flip side, the company likely has debt (loans) that would subtract from the overall value of the company. Debt isn't included in Market Cap, either.

Div is short for dividend. A dividend is the amount that the company will pay you (typically once per quarter) for each share of stock that you own. Some companies (like Google, in the above example) don't pay dividends.

Yield = dividend / price. This tells you what portion of the price you paid is "guaranteed" to be paid back to you each quarter. Companies can change their dividend at their own whim, so there really are no guarantees. When taxes on dividends are raised, or during tough times, companies often reduce their dividends.

P/E Ratio: The price-to-earnings ratio tells you "how many dollars today are you willing to pay for a dollar of earnings in the future?" In other words, this tells you how excited investors are about the companies growth prospects.

* Stock Tip: Expectations don't always match reality. Just because a company has a high P/E Ratio doesn't mean it will actually do well in the future. Sometimes, the better bet is a slower-growing company with a great management team who can beat expectations.

Volume: Nope, not the kind that you see in geometry. This simply tells you the number of shares that have traded that day.

Open: Stocks open and close. Open is how they begin the day. Close is how they end. Today's close = tomorrow's open.

Okay, team. If you think you've got it, then hop on over to our Corporations and Stocks game to see how you would have fared in the stock market over the past fifteen years.

Why It Matters Today

Think of the stock market as that moving-floor escalator thing you stand on in airports. As soon as you load a grand onto it, the money starts moving slowly forward, over time, at a clip of about 5% a year. Looking at the chart, you will see huge gyrations. You will likely experience some amazing boom times as well as some excruciating lows. But unless you are really stupid or really lucky or both – or become a professional money manager – you’ll likely compound your savings at about that 5% clip, give or take (and likely take because most people give over a lot of profits to the tax man or to stock brokers by trying to beat the market via trading stocks they know little about... but that’s a different story).

Corporations and Stocks game




Corporations provide a different sort of benefit for their stockholders. Individuals can become partial owners in an enterprise without knowing a thing about business in general or about the specific service or product produced by the particular company. They become partial owners in a business that is professionally managed. Their personal assets are also shielded from any legal or financial liabilities taken on by the corporation. Like all of the corporation’s owners, they enjoy limited liability—only the money they paid for the stock is at risk. And their ownership is easily transferred. They can simply sell their stock and walk away from the business. They may not get as much as they paid for the stock, but that is all they lose in surrendering ownership.

Of course, there is a price for all of this. Since corporations are legally distinct entities, they must pay taxes like the rest of us. Corporate profits are taxed. And then, when those profits are divided up and paid out to shareholders in the form of dividends, shareholders pay income taxes on these profits once again. Shareholders must also pay taxes on any money they earn from the sale of their stock. If the selling price is greater than the purchase price, shareholders pay a tax on this difference or capital gain. But currently individuals pay a much lower tax on capital gains made on assets held for longer than one year than they do on income, shielding them from some of the pain of paying those taxes.

Why It Matters Today

Over the course of the last several decades, stock ownership has become significantly more widespread. At the time of the great crash of 1929, which began the Great Depression, fewer than 1% of Americans owned any stock at all. Today, more than half of all households are invested in the stock market in some way, most commonly by owning mutual funds and 401(k) retirement plans.

The stock market -- the place where individuals can invest in corporations -- has thus become an important factor in many ordinary Americans' well being.

At the same time, in recent decades returns on stock market investments have far outpaced returns on labor. In other words, it has become increasingly difficult (if not impossible) to earn a comfortable living or (especially) to enjoy a comfortable retirement on work wages or salary alone. If you're not earning investment income, you're going to have a really hard time making it in the 21st century.

So even if you don't own stocks yet, you should start figuring out how you're eventually going to buy into the market.

Quarterly distribution of corporate profits to shareholders. Not all stocks pay out dividends.

common stock

A type of corporate stock that confers voting rights but does not guarantee a dividend. Common stock holders participate in the election of the board of directors. The most common type of stock (hence the name, rimshot).

preferred stock




double taxation

This is a definition of what is commonly labeled “double taxation,” corporate profits are taxed and then, if distributed in the form of dividends, these same profits are taxed again along with the rest of the shareholder’s income.

Academic Vocabulary



Student Web Activity "The Better Business Bureau"


The Better Business Bureau


Reading Strategy


Companies in the News

Main types of business, 6:20

Types reviewed and advantages and disadvantages

In-class assignment: what are the types reviewed, what are their respective advantages and disadvantages?

Corporations are everywhere. You probably deal with thousands of them every day They're such a critical part of the American economy that you probably don't even notice or think about it.

But this wasn't always the case. When the United States was born, corporate charters were rarely granted. The benefits gained through incorporation were considered so great, they were offered only to businesses that served a broad public interest. A ferry company might receive a corporate charter, but an ordinary factory would not. If you proposed to build a canal that would link towns and expand trade, the state might grant you charter. But if you sought to incorporate your flour mill, you would probably be turned away.

Long story short: you could only incorporate if your business was going to do something very special to serve the public interest.

By the middle of the nineteenth century, however, these views had changed. Policymakers came to realize that the corporate form served all Americans by facilitating economic growth. For business owners, the corporation offered a way to increase both their capital and the stability of their businesses. For investors, the corporation offered a relatively risk-free way of taking part in emerging commercial opportunities.

Today, corporations bring in more than 80% of all dollars earned in America. Savvy stock investors participate in a global exchange worth more than $100 trillion. Corporations are here to stay, and they provide many of the best opportunities for individuals to get ahead in the world. Yet many people are left behind simply because they do not understand how to read a financial website. Are you one of them? Read on, and you won't be.

A trip through the local strip mall might suggest that corporations are taking over America—everywhere you look, you'll see Starbucks and Walmarts; the locally owned "mom and pop" business might start to seem like a dinosaur. But, as is often the case, the statistics tell a different story. The number of sole proprietorships and partnerships (based on the number of tax returns filed) increased by more than 53% between 1990 and 2006; the net income earned by this sector of the economy increased by almost 500%. In comparison, the number of corporations increased by 57%; their net income increased by 425%.

But corporate receipts accounted from more than 80% of all dollars earned in 2006.

Does that mean that America’s small business community is growing as fast as its corporate sector? Not exactly. Sole proprietorships, partnerships, and corporations are distinct forms of business organization—and size is not really the defining feature of any of them.

Why It Matters Today

Ever think about starting your old small business? Maybe even something as simple as mowing lawns or babysitting neighborhood kids? If you wanted to set yourself up legit, you'd probably start with a sole proprietorship. It's simple, it's easy, and it's cheap.

Later, if your lawn-mowing or babysitting business really takes off, you may outgrow the basic structure of the sole proprietorship. Once you have employees, or grow large enough to fall under government regulation, or begin to worry about liability issues, it's probably time to incorporate.

Sole Proprietorship, p. 62

Main Idea

Forming a Proprietorship



Reading Check, p. 64


What are the major disadvantages of a sole proprietorship?
The most basic and fundamental type of business organization is the sole proprietorship. Within these types of businesses one individual, the sole proprietor, exercises complete control over the business and is legally and financially responsible for the activities of the business. If a customer trips and breaks a leg, the proprietor is sued; when it’s time to expand, the proprietor must secure the loan under his or her name.

A slightly more complex form of business organization is a partnership. Under this arrangement, two or more individuals combine their efforts and share the profits of the business. They also share all of the risks, as well as the financial and legal responsibilities. The details are generally spelled out in a letter of agreement between the partners.

Within a partnership, one individual is not held entirely responsible for the activities of the business. But for the most part, sole proprietorships and partnerships are very similar. The business is an asset owned by the owner or owners, it has no existence separate from the owners, and any financial or legal problems encountered by the business are the legal responsibility of the owners. All of the owners’ assets, even those not involved in the business, are at risk. Liability is unlimited.

That issue of liability is the single biggest reason why many businesses choose to incorporate; a corporate structure (read on to the next page for more) protects the business owner from individual liability if things go wrong with the business. Sales go in the toilet while costs shoot through the roof? Somebody wipe out on your sidewalk and sue you for millions of dollars worth of "pain and suffering"? If your business is a sole proprietorship or partnership, you might end up losing everything. But if you've incorporated, the business may be toast but you, as an individual, are protected.


Main Idea

Types of Partnerships

Forming a Partnership, p. 65

Introduction to Shark Tank, 3:49


Shark Tank - Season 1 Episode 1 Part 1/5, 9:49


Disadvantages, p. 66

Reading Check


What are the differences between a general partnership and a limited partnership?

Corporations, p. 67

Main Idea

What is a Corporation?, 7:15

Forming a Corporation
A corporation is a very different type of business organization. Most significantly, a corporation is a business entity legally separated from its owners. When business owners decide to incorporate they secure a charter from the state government. This charter is like a birth certificate, establishing the existence of a new and separate legal entity. Once incorporated, the corporation can buy and sell property, enter into contracts, sue, and be sued... just like a living, breathing person.

In fact, that's what a corporation is: a legal "person." (The word "incorporate" shares the same root as "corpse"; it means something like "to give it a body.") The idea is that the corporation is a fictitious person, with many of the same rights under the law as a real person.

For the sole proprietor turned corporation, there are several benefits. Most importantly, his personal assets (home, car, boat, iPod) are no longer at risk should the corporation have problems. If the corporation is sued, only its assets are at risk. If the corporation goes broke, its creditors can only go after the corporation’s assets. As there is a legal barrier separating the corporation and its owners, the owners enjoy limited liability.

There are other benefits as well. To finance expansion, corporations may sell stock. Most corporations, in fact, do not sell stock to the public; all of the stock is privately owned. But if a company decides to expand its capital base by “going public” it issues an initial public offering or IPO. People buying the stock acquire partial ownership in the corporation. And the more shares they buy, the larger percentage of the corporation they own. Of course, this also means that the original owners also have to share profits. These may be distributed to the shareholders quarterly in the form of dividends.

Corporations may also raise money by selling corporate bonds. Like governments, corporations may issue bonds that promise repayment over a specified period at a certain interest rate.

Another benefit of turning a sole proprietorship or partnership into a corporation is that the business becomes more durable—that is, it is no longer so tied to the health of the founder. If the founder dies, the corporation lives on. Similarly, a corporation is less dependent on the talents of its founders. As corporations grow, they are governed by a board of directors elected by the shareholders. This board selects a president or CEO (chief executive officer) to manage the corporation. A sole proprietorship may have a technically brilliant but, from a business point of view, inept founder. He may turn the business over to his even more incompetent children. But the governing structure of corporations allows management to be handed over to professionally trained executives.

Why It Matters Today

Are corporations people?

The common-sense answer is no. A corporation is not, to state the obvious, actually a living human being.

But in the eye of the law, the answer is essentially yes. A series of Supreme Court decisions in the 1800s expanded the rights of corporations, eventually extending to them the crucial rights to substantive due process included in the 14th Amendment. As recently as January 2010, the Court reaffirmed that corporations have most of the rights of real people, overturning a campaign finance law on the grounds that it violated corporations' (and unions') right to free speech.

Corporate Structure

In Motion Corporate Structure


Advantages, p. 68
Financially, corporations benefits from being allowed to raise capital by selling stock. In purchasing stock, stockholders become partial owners of the corporation and are entitled to a share of the profits. Corporations can also raise money by selling bonds like a government. Legally, corporations benefit from limited liability. Since the corporation is a legal entity separate from its owners, the owners’ personal assets are not placed at risk by any action taken by the corporation. Should the corporation be sued or have financial problems, only corporate assets can be seized.

Disadvantages, p. 69

Through what is commonly labeled “double taxation,” corporate profits are taxed and then, if distributed in the form of dividends, these same profits are taxed again along with the rest of the shareholder’s income.

Reading Check, p. 70


Why do many business owners prefer corporations over other forms of business organizations?

Entrepreneur, p. 71

Profiles in Economics

Andrea Jung

On Charlie Rose - Andrea Jung, 2:20

Proprietorship - owned and run by a single person.

Partnership - jointly owned by two or more persons.

Corporation - business organization recognized by law as a separate legal entity with all the rights of an individual.


Forms of Business Organizations, Tax and Insurance Issues for Small Business, 9:56

Learn: * How to Choose a Form of Business * How it can maximize your protections and future growth potential * Characteristics of a sole proprietorship, general partnership, corporation, limited liability companies and limited liability partnerships * Whether S Corporation Tax election is right for you * What tax issues are important for small business and why * What insurance coverage every small business owner should consider

Larissa Buerano, Agent, State Farm Insurance

Rajeev Kaul, CPA, PC.

Joyce Moy, Executive Director, Asian American / Asian Research Institute - CUNY

My Own Business: A course on how to start a business

Chapter 3: Business Organizations
Self-Check Quizzes

Crossword Puzzle

Vocabulary eFlashcards
Show Business is the Federal Reserve Bank of Boston's learning activity on economics and the entertainment industry. The goal is to provide an additional tool for teaching and learning about basic economic concepts, with some economic history snuck in.
JA Titan
Test your skills running a business in this ultimate business simulation! As CEO, you will match wits in the competitive, technologically advanced industry of the Holo-Generator™.Cf.

Corporations and Stocks game


A music video from School House Rock on investing and Wall Street.



Ch. 3 Sec. 2 Business Growth and Expansion

Honors Business Economics Chapter 3 Section 2 Business Growth and Expansion
Guide to Reading

Section Preview

Content Vocabulary

Academic Vocabulary

Reading Strategy


Companies in the News

Reinvesting for Monster Growth

Growth Through Reinvestment

Main Idea

Economics and You

Estimating Cash Flows

Reinvesting Cash Flows

Reading Check


What is the benefit of reinvesting cash flow in a business?

The Global Economy and You

Know Your Manners

Growth Through Mergers

Main Idea

Economics and You

Types of Mergers

Reasons for Merging



Reading Check


How do conglomerates and multinationals differ?

Case Study


Figure 3.4 Growth Through Reinvestment, p. 73



HW email to or hand in hard copy.

Tuesday HW
1. p. 63, Sole Proprietorship, What are the advantages of sole proprietorships?
2. Why is unlimited liability a disadvantage of a proprietorship?
3. Why might a business not want to have a large inventory of parts and supplies on hand (p. 64)?