Monopolies & Unions

Monopolies With the rise of corporations, competition between businesses increased. Many corporate leaders did not like this. To keep prices from falling, many companies formed pools or agreements to maintain prices at a certain level. Many pools did not last long because someone would always try to sell for cheaper to steal the market. Andrew Carnegie found himself making many different investments in his life, until he met Sir Henry Bessemer, who made the Bessemer process for producing steel. After meeting him, Carnegie decided to concentrate his investments on the steel industry. He began using vertical integration. This is where a company owns all of the different businesses on which it depends for its operation. Carnegie bought coal mines, limestone quarries and iron ore fields. By doing this, he saved money, which allowed his company to become bigger.

Monopolies Carnegie also pushed for horizontal integration, or combining firms engaged in the same type of business into one large corporation. John D. Rockefeller used this to create Standard Oil. When a single company achieves control over an entire market, it becomes a monopoly. Many people feared monopolies because there would be no regulation on prices. Competition keeps prices down. Because of this, laws were passed preventing monopolies.

Monopolies In response, Rockefeller created the first trust. It is a legal concept that allows one person to manage another’s property. Instead of buying a company outright, Standard Oil would have the stockholders give their stocks to a board of trustees. In exchange the stockholders received shares in the trust. They would make money off of the trust’s profits. A holding company is a company that does not produce anything, but controls the stocks of companies that do.

Unions Workers in industrial America faced monotonous work, dangerous working conditions, and an uneven division of income between the wealthy and the working class. Relations between workers and employers became more strained due to deflation, or a rise in the value of money, which causes prices to fall. When prices fall, so do wages. Workers felt the companies wanted to pay them less for the same work, so decided to organize. There were two types of workers: Skilled craftsmen and common laborers. Trade unions were formed to protect the interests of the skilled craftsmen. Industrial unions joined both types of laborers in one industry.

Unions Companies, obviously, opposed unions. They would have workers take an oath and sign contracts, promising not to join. Also, some would hire detectives to find out who was in the union. If you were found out, you were put on the black list. If you were on the list, it was nearly impossible to find work. If a union did strike, companies would hire strikebreakers, or scabs, to work. By the late 1870s, the first nationwide industrial union called the Knights of Labor was formed. They demanded an eight-hour workday, a government bureau of labor statistics, equal pay for women, an end to child labor, and worker-owned factories. They supported arbitration, a process where an impartial third party helps mediate between workers and management.

Unions In 1886 delegates from over 20 of the nation’s trade unions organized the American Federation of Labor (AFL). The AFL’s first leader was Samuel Gompers, whose plain and simple approach to labor relations helped unions become accepted. Gompers wanted to keep unions out of politics and to fight for small gains such as higher wages and better working conditions. Under Gompers’s leadership, the AFL had three goals: to get companies to recognize unions and agree to collective bargaining; to push for closed shops, where companies could only hire union members; and to promote an eight-hour workday.