Context The Age of Monopolies, Trusts, and Big Labor America accomplished heavy industrialization in the post-Civil War era. Spurred by the transcontinental rail network, business grew and consolidated into giant corporate trusts, especially in the oil and steel industries.

Map: Industrial Production, 1919 Copyright © Houghton Mifflin Company. All rights reserved.

Context The Age of Monopolies, Trusts, and Big Labor Industrialization radically transformed the condition of American working people, but workers failed to develop effective labor organizations to match the corporate forms of business.

Experience When was the last time you felt that the “game was rigged”? Have you experienced the power of a monopoly? Do you trust “big business”?

Overview Efficient use of expensive machinery called for “bigness” and consolidation proved more profitable than ruinous price wars

Monopoly = a firm that completely controls an industry Vertical integration = combining all phases of manufacturing in to one organization (Carnegie) Horizontal consolidation = allying with competitors to monopolize a market (Rockefeller) Trust = a board of directors/stockholders that coordinates companies within an industry to avoid competition Holding company = a corporation composed of various competing enterprises within one industry (JP Morgan’s US Steel)

ALL OF THIS GIVES RISE TO TYCOONS Profiteering from the Civil War gives rise to millionaire class Millionaires capitalize on Transcontinental railroad, mechanization, industrialization, & expansion of markets Surplus of raw materials, cheap labor, foreign investment ENCOURAGE CAPITALISM Inventions  Industrialization  More Inventions  More Industrialization ALL OF THIS GIVES RISE TO TYCOONS

Key Inventors and Inventions Alexander Graham Bell = telephone Thomas A. Edison = electric lights, phonograph Bessemer Process/William Kelley = process to convert iron to steel Kerosene lamp Typewriter automobile

The Manufacture of Iron Manufacturing iron was a hot and strenuous process, requiring workers to spend longs hours stoking hot blast furnaces. (Library of Congress) http://www.tiscali.co.uk/reference/encyclopaedia/hutchinson/images/c05312.jpg Bessemer Process = process to convert iron to steel Copyright © Houghton Mifflin Company. All rights reserved.

Andrew Carnegie = Steel Kingpin Steel is King : US pouring out 1/3 of world’s steel by 1890’s “bootstrap” story: poor immigrant to tycoon Carnegie uses vertical integration with “Pittsburgh millionaires” Controls all means of production, eliminates middle man Sells to JP Morgan for 400 million Becomes a philanthropist

J P Morgan – Banker’s Banker Builds financial empire through railroads, banks, and holding companies Buys out Carnegie and enters steel business Uses trusts and holding companies to consolidate wealth and power Forms US Steel Corporation – 1st ever corporation worth more than one billion $

Rockefeller – Standard Oil Corp. Kerosene and then Automobiles drive up US oil consumption Rockefeller ruthlessly uses horizontal consolidation to create largest monopoly See “The Octopus,” 1904 - Cartoon 1877 controls 95% of US’s oil refineries Robber Baron’s Baron

Standard Oil Monopoly Standard Oil Monopoly Believing that Rockefeller's Standard Oil monopoly was exercising dangerous power, this political cartoonist depicts the trust as a greedy octopus whose sprawling tentacles already ensnare Congress, state legislatures, and the taxpayer, and are reaching for the White House. (Library of Congress) Copyright © Houghton Mifflin Company. All rights reserved.

Compare the lives and beliefs of Carnegie and Rockefeller using a Venn Diagram

Justifications for Big Business Old Rich displaced by rule of the “new rich” Gospel of Wealth – discourages helping the poor by state Laissez faire = “let it be” Justified by Social Darwinism – survival of the fittest Poor are poor due to lack of initiative

William Graham Sumner (1840-1910): The Challenge of Facts http://www The truth is that the social order is fixed by laws of nature precisely analogous to those of the physical order. The most that man can do is by, ignorance and self-conceit to mar the operation of social laws. The evils of society are to a great extent the result of the dogmatism and self-interest of statesmen, philosophers, and ecclesiastics who in past time have done just what the socialists now want to do. Instead of studying the natural laws of the social order, they assumed that they could organize society as they chose, they, made up their minds what kind of a society they wanted to make, and they planned their little measures for the ends they had resolved upon. … let us not imagine that the task will ever reach a final solution or that any race of men on this earth can ever be emancipated from the necessity of industry, prudence, continence, and temperance if they are to pass their lives prosperously.

Taking on the Trusts Trusts and robber barons defended by 14th amendment’s due process clause Constitution’s “interstate commerce” clause inhibits states from controlling trusts Sherman Anti-Trust Act of 1890 Largely ineffective IRONY: Used effectively against unions

Industry and the South 1900: less manufacturing than before Civil War South acts primarily as source of raw materials Northerners control stock in Southern industry, discourage industrialization Shift in cotton mills from NE to S in 1880’s Cheap labor (virtually sharecropping) brings rural white southerners to mill towns, and then traps them there