INDUSTRIALISTS Captains of Industry and Robber Barons

Significant Inventions & Innovations  Henry Bessemer’s & (William Kelly) Process  Steel Production: 15,000 tons in 1865 to 28 mil. tons in 1910  Sold for $100 a ton in 1873 vs. $12 a ton in late 1890s  Edward Drake’s founding of Black Gold in PA in 1859  25 mil. Barrels of oil in 1880 alone  Elijah McCoy’s invention of a lubricating cup (1873)  Fed oil to parts of a machine while it was running  Samuel F.B. Morse’s telegraph (1837)  Alexander Graham Bell’s Telephone (1876)  Christopher Sholes’ Typewriter (1867)  Thomas Edison’s (and Lewis Latimer’s) Electric light (1879)  George Westinghouse’s Compressed Air-brake (1869)  Charles and J. Frank Duryea’s first practical motorcar in US (1893)  Wright Brother’s First piloted flight of 12 seconds & 120 ft (1903)

Other Important Changes…  Advertisement in magazines, newspapers, roadside billboards, and catalogs (Montgomery Wards, Sears, Roebuck and Company)  Department Stores (R.H. Macy) & Chain Stores (Frank W. Woolworth)

Railroad Tycoons  Used stock watering (inflating value of railroad stock) to gain wealth)  Bribery of judges and legislatures  Investing in professional lobbyists  Elected own men in office  Secret rebates & kickbacks to corporations  Increased rates on short hauls compared to long hauls  Formed pools to protect investments  Pocketing investments instead reinvesting (ex: Gould)

Jay Gould  Controlled much of the railroads in the West by the 1880s

Cornelius Vanderbilt  Replaced iron track w/ steel track  Controlled much of the railroads (especially in north east, such as NY)  Estimated fortune by the time of his death in 1870s: 100 mil. (worth 140 bil. in 2007 US dollars)  By 1877, controlled 4500 miles of track

George Pullman  Designed and manufactured “Pullman” railroad cars (dining, sleeping, etc.) to improve comfort for long distances  Established company towns & controlled workers’ daily lives

Andrew Carnegie  Steel  By 1890, controlled 25% of nation’s steel & 80% by 1901  Eventually sold Carnegie Steel to J.P. Morgan for over 400 mil.  Used Bessemer Process to turn iron into steel  Used vertical integration (consolidation)  Controlling every aspect of the production process by controlling the quantity in hopes of eliminating middlemen’s fees  Used horizontal integration as well

John D. Rockefeller  Oil  Controlled 95% of oil refineries by 1877!  Used rule or ruin tactics (ruthless business tactics)  Used Horizontal Integration (Consolidation)  Consolidating with competitors to monopolize a given market Formed the Standard Oil Trust Trust: Stockholders in various smaller oil companies sold their stock and authority to the board of director’s of Rockefeller’s Standard Oil Company  Worth about 900 mil. upon his retirement in 1897, worth about 1.4 mil by his death in 1930s (approx. 190 bil today dollars)

J.P. Morgan  Banking, Steel, etc.  Owned a Wall Street Banking House  Helped to refinance businesses and industrialization  Acted as a Holding Companies  Bought controlling shares of stock in member companies instead of purchasing companies outright  While the “held” companies remained separate businesses on paper, in reality, the holding company controlled them  Used interlocking directorates  Consolidate rival enterprises and ensure future harmony by placing officers of his own banking association on their various boards of directors  Ex of Business venture: Bought Carnegie Steel & other companies to form US Steel Corporation in 1901 (first billion corporation)

Did the Govt. do enough?  Slaughterhouse Cases (1873)  -Protection of labor was NOT a federal responsibility under the 14 th Amendment, but a state responsibility  -Protected businesses from federal regulation if they ONLY engage in intrastate commerce (within a state)  Munn vs. Illinois (1877)  Public always has the right to regulate business operations in which the public has an interest; ruled against railroads  Wabash Case (1886)  Individual states had NO POWER to regulate interstate commerce; responsibility rested with the federal government  SC decisions interpreted corporations as a person (1886)  Interstate Commerce Act (1887)  Set up the ICC  Prohibited rebates and pools and required railroads to publish their rate openly  Sherman Antitrust Act  Created in response to pubic demand for curbing excesses of trusts  Forbade combinations in restraint of trade, without distinction between good and bad trusts  (Interestingly, more trusts formed under McKinley than any other president before)

ROBBER BARONS?