Industrial Revolution Working Conditions

Division of Labor Changes Manufacturing When someone completes one task as part of the job Positive: increases productivity for businesses Negative: workers no longer take pride in work and removes creativity

Think About Making Shoes He may never work on shoes!

Growing Work Force Immigrants Former Farm Families Women and Children Does not include African Americans

Survival Guide for Poor Families (aka, immigrants!) Send children as young as age 6 to work Force children to leave school Ask for aid from a private charity (church, etc.) Government Welfare is non-existent at this time!

Workday Length Typically 12 hours/day, 6 days/week

The Growth of Big Business The Good and The Bad

Robber Barons Business leaders who made fortune by taking advantage of others. Drained natural resources, paid low wages to workers, required long hours of employees

“Robber Barons”

They persuaded public officials to interpret laws in their favor. They ruthlessly drove their competitors to ruin. Paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.

Captains of Industry The business leaders served their nation in a positive way. Increased the supply of goods by building factories. Raised productivity and expanded markets.

Created jobs that enabled many Americans to buy new goods and raise their standard of living. Also created museums, libraries, and universities, many of which still serve the public today. Carnegie Hall

Robber Baron versus Captain of Industry Robber Baron – negative Captain of Industry – positive

Andrew Carnegie

Andrew Carnegie Captain of Industry for steel production in Pittsburgh Used Bessemer Process to produce stronger steel Utilized vertical integration or consolidation Scottish Immigrant

Carnegie as a Philanthropist A Philanthropist uses wealth to improve society Carnegie funded the building of libraries, education facilities, and music/arts facilities

“Gospel of Wealth” Carnegie’s philosophy - A person should be able to make as much money as they can, BUT they should also use their wealth to improve society.

Social Darwinism Based on Darwin’s Theory of Evolution (1859) regarding natural selection and survival of the fittest Businessmen are justified in using any means to become rich and powerful – the government should stay out!

American businessmen adopted eagerly the ideology of Social Darwinism in order to defend their business practices as "natural." James J. Hill, a leading "Robber Baron" of the railroad-building era, saw the chance to justify his actions with "scientific" terminology: "The fortunes of railroad companies are determined by the law of the survival of the fittest." --James J. Hill

Monopoly vs. Cartel Monopoly – one company with complete control of a product or a service Cartel – a loose association of businesses in a similar field or that make the same product and agree to limit supply to drive up prices

Formed Standard Oil Company John D. Rockefeller Formed Standard Oil Company

John D. Rockefeller and the Standard Oil Company Wealthy individual who saw the oil industry as a way to get richer Made illegal deals with railroads to transport oil cheaper, thus weakening other refineries that he would eventually buy Utilized horizontal integration or consolidation for business purposes

Also important re: Standard Oil ... Trusts A group of separate companies that are placed under the control of a single managing board (Board of Directors) Trusts limit competition and cause prices to rise

What’s so bad about Monopolies? They underpay workers and drive competitors out of business They offer consumers NO CHOICE! Prices rise and quality falls!

Which Led to the Sherman Antitrust Act Enacted in 1890 Effort by Congress to end trusts Ineffective due to lack of enforcement

How Do I Get a Monopoly?

Vertical Integration/Consolidation Buying out or controlling businesses related to various phases of production for one product Carnegie Steel/Andrew Carnegie

Controlling the Market Using Vertical Integration, Bob could control the Pizza market in town by controlling many of the costs associated with making his pizza! Bob’s Pizza Bob’s Trucking Company Bob’s Cheese Factory Bob’s Farm

Horizontal Integration/Consolidation When you buy out all of your competitors (firms that are part of the same business) Standard Oil Company/John D. Rockefeller

Controlling the Market Bob’s Pizza Delaware Pizza Happy Time Pizza Pizza Pizza Using Horizontal Integration, Bob could control the Pizza market in town by buying the other Pizza shops! Bob’s Pizza Bob’s Pizza Bob’s Pizza Bob’s Pizza

Business Cycle The growth and contraction of a nation’s economy growth peak recession depression Business Cycle The growth and contraction of a nation’s economy A new concept in the mid-late 1800s