The Rise of Big Business

Corporations!!!!!!! A form of group ownership by a number of different people Took advantage of expanding markets Investors lose no more than original investment Good for risky industries like RR or mining

Advantages of a Corporation Access to huge amounts of money Funded new technology Ran large plants across the country Operated in several different regions Same rights as an individual – Buy & sell property – Sue in courts Maximized profits Decreased cost of production Established Research labs to improve products Paid lowest possible wages to works Paid little for raw materials Widely advertised

MONOPOLIES/OLIGOPOLIES Attempted monopolies – Complete control of a product or service – Bought out or ruined competitors Oligopolies – two or three businesses control an entire market Examples today – Fast Food, Cars, Drug stores and Supermarket chains Cartels—businesses making same product limit production and keep prices high – work together

Corporations Integration – Growth Horizontal: Combining many firms in the same business Vertical: Gaining control of the many different businesses that make up all phases of a product’s development – Standard Oil Co. : oil wells/pipelines, tank cars/railroads, retail outlets Trust Companies assign their stock to a board of trustees Board combines stock into new organization & runs the organization Rockefeller used this to get around an Ohio law that said he couldn’t buy out competitors or own their stock

“Robber Barons” v. “Captains of Industry” Feeling that trusts, cartels, & monopolies gave an unfair advantage Small businesses bought out or destroyed Unfair high prices for consumers Poor were being swindled Businessmen served the country positively Provided jobs for the large & growing workforce Developed efficient business practices Developed technology, stimulated economy, & innovation Philanthropists – Universities, museums, libraries—help poor rise

John D. Rockefeller Oil tycoon Standard Oil Company World’s first billionaire Gave 10% of each paycheck to the church Used horizontal & vertical integration Made deals with railroads to increase profits

Andrew Carnegie Steel Tycoon—Carnegie Steel Company From Rags to Riches-Scottish immigrant Second richest man in history Donated to establish Libraries, schools, universities Donated over 80% of his fortune “Gospel of Wealth” – Responsibility of wealth

OTHER GREAT ENTERPRENEURS VANDERBILTS - TransportationPULLMAN – Railroad Cars

ENTREPRENEUR USE OF WEALTH? BILTMORE ESTATE - ASHEVILLEPULLMAN’S ESTATE

Social Darwinism Darwinism applied to American capitalism Theory developed by Charles Graham Sumner Wealth is a measure of a person’s inherent value – The wealthy were the most “fit” Argued for laissez-faire policies – Intervention would disrupt natural selection—wrong to use public funds to aid poor Used for discrimination!

INTERSTATE COMMERCE ACT!!! Senate created Interstate Commerce Commission to oversee the railroads. First ever federal body established to monitor business in America Advantages – Could obtain Railroads’ records & run investigations of unfairness – First of many other federal agencies set up to monitor American businesses Disadvantages – Could only monitor railroads that crossed state lines – Couldn’t make laws or control transactions

Sherman Antitrust Act 1880-passed by Senate Outlawed any trust that operated “in restraint of trade or commerce among the several states.” Seldom enforced Used by big business against labor unions Both the ICC & Antitrust Act started a trend in the government limiting power of corporations

The Organized Labor Movement Workers & Big Business Clash

Workers Low wages Immigrants—large % of workforce Desperate for any work 12 hour days/6 days a week Worked long hours on machines Dangerous working conditions

Worker Hardships Sweatshops – Dirty, Dangerous, overheated, bad ventilation, poor lighting Accidents—faulty equipment & lack of proper training Strict regulation to ensure productivity Fines for breaking rules & working slowly

Child Labor Most women worked in factories Both parents worked Brought children to work – Kept them off streets, and they could earn a wage Nearly 1 in 5 children between ages worked – Mines, factories, textiles, canneries, newsboys/messengers, Harsh conditions Stunted physical & mental growth

Company Towns Many workers lived in communities owned by business & rented to employees Forced to buy goods at the “company store” – Goods sold on credit with high interest Most of wages owed back to employer “Wage slavery” – Employees couldn’t leave until they repaid loans, or they would be arrested Created a workforce that was forced to be loyal

NATIONAL LABOR UNION 1. leader William Sylvis 2. made up of individual unions from across the country local union chapters 4. urged to admit women and African Americans 5. huge membership success: 8 hour work day for government employees 7. Labor Reform Party - ran a Candidate 8. Only lasted for a few years for President.

National Colored Labor Union Led by Isaac Meyers Had to be created because Southerners refused to join the union if blacks were accepted Met in large churches to plan their strategies

The Knights of Labor Founded in 1869 by Uriah Smith Stevens Included all workers—any trade, skilled or unskilled Actively recruited African Americans Worked as a secret society 8 hour day and equal pay for equal work Strikes as a last resort TERRENCE POWDERLY reorganizes the movement Abandoned secrecy of the union By 1885, the Knights included 700,000 men and women across the nation—all races and ethnicities Largely disappeared by the 1890s after a series of failed strikes

The American Federation of Labor (AFL) Formed in 1886 by Samuel Gompers – Head of the local cigar makers’ union in NY Strictly a craft union of skilled workers – Made up of 100 local unions for specific crafts/trades – Gained bargaining strength through the AFL Goals: strike and pension fund for workers in need, wages, working hours, working conditions Less successful than the knights – Excluded women-Gompers thought they would drive wages down – Open to African Americans in theory, but were often excluded

INTERNATIONAL WORKERS OF THE WORLD 1. leader - William “Big Bill” Haywood 2. workers from around the country should unite as a brotherhood 3. welcomed every one!! 4. nicknamed WOBBLIES

AMERICAN RAILWAY UNION 1. leader Eugene Debs 2. believed skilled and unskilled workers should unite 3. organized railroad workers – others joined his cause 4. membership increased with strike victories 5. Leadership became associated with socialism

INTERNATIONAL LADIES GARMENT WORKERS UNION 1. leaders - Pauline Newman - Mary Harris Jones 2. Issues - working conditions Triangle Shirtwaist fire in New York – 145 workers died in a locked work area - fought for fire codes - 54 hour work week for women and minors, - prohibition of Sunday work - abolition of child labor

The Railroad Strikes Workers went on strike in response to wage cuts – B&O railroad began the strike -Violence and massive destruction in several cities Strikebreakers hired to perform jobs of striking workers and needed protection State and federal government sent in troops to restore order Set the stage for following violent strikes

Haymarket Square May 1, 1886—Workers participate in a national demonstration for an 8-hour workday Strikes erupt & fights break out – Strikers v. strikebreakers – Strikers v. police May 4 th —protestors gather in Haymarket square in Chicago Protester threw a bomb that killed a policeman In the chaos that followed, dozens of people were killed

Impact of Haymarket Square 8 anarchists tried for murder—4 executed Governor of Illinois pardoned three of the others—scanty evidence for convictions Americans became wary of labor unions Knights of Labor were blamed and membership fizzled out Employers and the American public associated union activities with violence

Homestead Strike Carnegie Steel plant cut wages Union called a strike Henry Frick, Carnegie’s partner, brought in the Pinkerton agents – a private police force Pinkertons and strikers engage in standoff for two weeks killed several strikers & wounded many others

Pullman Palace Car Company Luxury railroad cars George Pullman owned housing, stores, and churches in the company town Charged steep rents Cut wages several times, but never reduced rents or price of goods After rent deduction, worker’s paycheck in late 1800s equaled about $0.40 in today’s dollars!

Pullman Strike of 1893 Workers laid off and wages cut by 25% Workers tried to negotiate with Pullman, but he shut down the plant Workers turned to the American Railway Union Eugene V. Debs A.R.U. called for a nationwide strike By June of 1894, 300,000 rail workers had walked off the job Strikers were able to disrupt railroad traffic and mail delivery

The Pullman Strike & Eugene V. Debs Railroad owners used the Sherman Antitrust Act against the strikers – unions were operating the restraint of trade or commerce between several states July 4, 1894, Cleveland sent in troops & ended the strike Debs imprisoned for refusing to end the strike – acted against interstate commerce – spent 6 months in jail & became a Socialist

Impact of Pullman Strike Employers often cited the Sherman Antitrust Act to appeal for court orders against unions. Federal government often approved appeals Limited union gains for over 30 years Eugene Debs – 1897—Founded American Socialist Party – 1905—Helped found Industrial Workers of the World aka Wobblies. Radical union of unskilled workers-many socialists Led many strikes-often violent