Econ Review

Capitalism People own businesses and land Hard work is rewarded / Competition Inequality among the classes Some excel (A+) some fail (U) Social Darwinism - Strong take advantage of the weak Many capitalist countries use welfare programs to help the poor (partial socialism) There are no purely 100% Capitalist or Socialist/Communist countries

Communism Government owns land and businesses Wealth is shared among citizens Everyone gets a D+ to a D- Freedoms are limited, rule by force Rule by 1 or the privileged few Government decides pay / reward, where you work, benefits Communism is often used to achieve Socialism No reward for hard work

Socialism Definition: A utopian (perfect) economic system, but most Socialists want greater “economic” equality not a perfect utopia All the world’s problems stem from the rich taking advantage of the poor Everyone has a job to do for society and everyone shares in the reward. Similar pay for most jobs, Not as large a pay scale Society is more important than the individual

2nd Industrial Revolution Gilded Age

Business Culture “Terms” Social Darwinism – Some individuals work harder, are smarter, and deserve more rewards Survival of the fittest / strongest Capitalism – People own land & businesses to make a profit; as they compete to make a profit consumers benefit AKA Free Enterprise System Entrepreneur – People who start their own business

Beginnings of Class Conflict Numerous inventions at the end of the 19th century led to a 2nd industrial revolution 3 distinct classes arose in cities Wealthy – Factory Owners Middle Class – Factory Bosses / Managers Working Class – Assembly Line Worker

Competing Views on Business and Government Due to the extreme examples of wealth and privilege the era becomes known as “Gilded Age” For workers, it’s the opposite; suffering, long hours, little pay Conflict between rich and poor raises questions about who is to blame for poverty and the role of our government in addressing those problems

Are they Captains or Robbers

Business Leaders John D. Rockefeller – Standard Oil Andrew Carnegie – Carnegie Steel Bessemer Process – Caused the US to become the leading steel producer Cornelius Vanderbilt – Railroad Tycoon JP Morgan – Banking Jay Gould – Railroads

The Govt., Rich, and Workers Our government’s job is to ensure our peace and prosperity Government and business leaders became natural allies However, during the 2nd IR, the gap between the rich and powerful and working poor grew Fuels massive class conflict

2 Views of the wealthy develop in the US Robber Barons - Negative Captains of Industry – Positive

Captains of Industry Wealthy business leaders have earned what they have through hard work, dedication (smarter) Provided Jobs Created New Products Pay Taxes to the govt. Philanthropy – giving large sums of money to charity Carnegie gave millions to public libraries “Gospel of Wealth” Many gave to universities

Robber Barons Robber Barons became a common nickname for Capt. of Ind. among the working class They got unbelievably rich while workers lived in tenements (slums) Workers worked long hours in unsafe conditions for little pay and no benefits No Insurance, Overtime, Vacations You get hurt you get fired Kids worked the same hours as adults

The Govt., Rich, and Workers Corporation – Large business, buy stock Get a cut of the company profits Trust / Monopoly – Companies in a field join together Prices go up, quality down Laissez faire – Govt. did not regulate businesses; working conditions or trade Which caused Corruption Raised the question of class conflict again and if govt. favored the rich

Business Owners & Political Corruption Govt. allowed / helped companies to produce products people needed, especially railroads Viewed as a benefit to all Americans Business owners made huge fortunes making these produces Rich donated heavily to politicians Again raised question if govt. only cared about the rich, especially when scandals made the news

Credit Mobilier – VP of Union Pacific Railroad (congressman) sold land to members of Congress below value Also charged the govt. millions more to build railroads than they cost Credit Mobilier and his friends scandals almost cost President Grant his reelection bid

Populism and the Rise of the Unions

Populist Movement Populism – Political party created to bring greater equality to the working class / common man A short depression 1892-93 led to political populist support Increased focus on class conflict Rich vs. poor

Government’s Role in Poverty? Western Life – Wood shortages, Homes of dirt & buffalo chips, huge families for labor, very lonely, hot summers cold winters National Grange – Poor Farmers united to try to lower railroad rates (monopoly) “Populists” Populists call for increased regulation of businesses and/or govt. ownership of some businesses

Water, Electric, Railroads Things necessary for daily life Interstate Commerce Act – US govt. regulated railroad rates 1st time ever govt. regulated a business Considered a victory by poor farmers over rich railroad owners

The Gold Standard Populists campaigned to change US money system, by adding silver More money for working poor Fear of rapid inflation William Jennings Bryan “Man should not be crucified to a Cross of Gold” Terrified business leaders donated heavily to Republican William McKinley’s victory

Working Conditions Triangle Shirt Waist Fire 140 women died in a factory “sweatshop” fire Bosses had locked many doors to prevent theft or workers leaving early Fire escapes were old and rusty; Broke as workers stampeded the exits Building was too tall for fire ladders Led to numerous new safety laws

Union Terms Unions – Workers banded together for better hours, pay, conditions Strikes and boycotts were common tactics Strike – Refusal to work Boycott – Refusal to buy a product Scab – A worker who replaces a worker on strike

Business vs. Labor Knights of Labor and the American Federation of Labor (Samuel Gompers) were early unions Common issues were the 8 hour workday, better pay, safer work environment, and an end to child labor Argument over who can join a union Skilled vs. Unskilled workers Skilled workers (welders, electricians, etc.) make a lot more than unskilled

Famous Strikes Haymarket Riot – Unions struck over wage cuts; riot broke out after police attacked strikers; 11 dead Homestead Strike – Union struck over wages; Carnegie hired mercenaries to end the strike; 16 dead Great Railroad Strike – Unions struck over wage cuts; conflict led to the army ending the strike

Pullman Strike – Union struck over wages & layoffs; army ended the strike since it interfered with mail delivery Eugene V Debs 4 time socialist candidate for President

Owners Retaliate Blacklists – Business owners tried not to hire union members / leaders Forced workers to sign papers promising not to join unions – Yellow Dog Contract All 3 branches of US govt. routinely sided with the owners Owners as robber barons became the norm

More Unions, More Radical As existing unions fought over who could join (Skilled vs. Unskilled) more sprang up Industrial Workers of the World (IWW) “Wobblies” – Led by Big Bill Haywood Used strikes and boycotts, would also use sabotage in the factories

Mixed success, US govt. cracked down on the group and they fell apart Fueled fear that unions were anarchists, socialists, and anti-US