Big Business Emerges What were the factors that spurred America’s industrial growth?

2 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.

3 Map: Expansion of Agriculture, Expansion of Agriculture, The amount of improved farmland more than doubled during these forty years. This map shows how agricultural expansion came in two ways--first, western lands were brought under cultivation; second, in other areas, especially the Midwest, land was cultivated much more intensely than before. Copyright © Houghton Mifflin Company. All rights reserved.

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

5 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”?

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

The Corporation Basically an “artificial legal person” Advantages –Secure capital, Limits on liability, Transferability of shares, perpetual life Disadvantages –Public records, double tax, lack of personal connection between workers and employer 7

Monopolistic practices 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) 8

9 Other “Combinations” Pools = secret agreement to fixes prices and output (Railroad) Trust = More permanent than a pool. Stockholders of competing Companies turn over stock to a Board that coordinates companies within an industry to avoid competition (Standard Oil) Holding company = a corporation composed of various competing enterprises within one industry (JP Morgan’s US Steel)

10 Tycoons 1.Profiteering from the Civil War gives rise to millionaire class 2.Millionaires capitalize on Transcontinental railroad, mechanization, industrialization, & expansion of markets 3.Surplus of raw materials, cheap labor, foreign investment ENCOURAGE CAPITALISM 4.Inventions  Industrialization  More Inventions  More Industrialization ALL OF THIS GIVES RISE TO TYCOONS

11 Key Inventors and Inventions Alexander Graham Bell = telephone (1876) Thomas A. Edison = electric lights, phonograph (c. 1890) Bessemer Process/William Kelley = process to convert iron to steel (1850) Typewriter 1867 (Christopher Sholes) Automobile / Assembly line (Ford)

12 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) The Manufacture of Iron Copyright © Houghton Mifflin Company. All rights reserved. Bessemer Process = process to convert iron to steel

13 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 Controls all means of production, eliminates middle man Sells to JP Morgan for 400 million Becomes a philanthropist

14 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 – 1 st ever corporation worth more than one billion $

15 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,” Cartoon 1877 controls 95% of US’s oil refineries Robber Baron’s Baron

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17 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) Standard Oil Monopoly Copyright © Houghton Mifflin Company. All rights reserved.

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

19 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

20 William Graham Sumner ( ): The Challenge of Facts 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.

21 Taking on the Trusts Trusts and robber barons defended by 14 th amendment’s due process clause Constitution’s “interstate commerce” clause inhibits states from controlling trusts Sherman Anti-Trust Act of 1890 –Largely ineffective (wording: Unreasonable restraint of Trade) and lack of enforcement, new forms of consolidation (holding Co.) IRONY: Used effectively against unions

22 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

23 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.

Workers of the Nation Unite Part 2 – Impact of Industrialization

25 Experience What do you think of unions? Have you ever signed a petition? Do you work now? – Do you think you are treated fairly? –Do you want to change your working conditions? –How would your boss/employer respond?

26 Impact of Industrialization Urbanization Erosion of Jeffersonian ideals Women’s roles change –Delayed marriages –Smaller families Accentuated class division –1900: 1/10 of US owns 9/10 of US’s wealth –1900: 2/3 of Americans are “wage slaves” Workers’ lives increasingly precarious

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28 Women telephone workers, Roanoke, Virginia As this telephone office in Roanoke, Virginia, reveals, women office employees usually worked under the direct supervision of male managers. (Library of Congress) Women telephone workers, Roanoke, Virginia Copyright © Houghton Mifflin Company. All rights reserved.

29 Child worker, glass factory Child labor was common in the factories of 19th century America. (Library of Congress) Child worker, glass factory Copyright © Houghton Mifflin Company. All rights reserved.

30 Children in textile mills Much of the new southern textile industry was based on child labor. These children were photographed by Lewis Hines in (National Archives/ Lewis Hines) Children in textile mills Copyright © Houghton Mifflin Company. All rights reserved.

31 1.Changes in the national economy in late- nineteenth century America resulted in a.A lower standard of living for most b.A decline in agriculture relative to manufacturing c.No significant changes in marriage patterns or family life. d.Sharper class distinctions

32 Rise of Big Labor Increasing economic change  social & economic disruption in workers’ lives Labor strengthened by Civil War, then declines. Why? Big Business doesn’t fight fair –Pools wealth to hire lawyers & scabs –“lockouts,” “yellow dog contracts,” blacklists” –“company towns” National Labor Union – 1866

33 PREAMBLE AND DECLARATION OF PRINCIPLES OF THE KNIGHTS OF LABOR TO THE PUBLIC: The alarming development and aggressiveness of great capitalists and corporations, unless checked, will inevitably lead to the pauperization and hopeless degradation of the toiling masses. It is imperative, if we desire to enjoy the full blessings of life, that a check be placed upon unjust accumulation, and the power for evil of aggregated wealth. This much-desired object can be accomplished only by the united efforts of those who obey the divine injunction, "In the sweat of they face shalt thou eat bread." Therefore we have formed the Order of Knights of Labor, for the purpose of organizing and directing the power of the industrial masses, not as a political party, for it is more - … But no one shall, however, be compelled to vote with the majority, and calling upon all who believe in securing "the greatest good to the greatest number," to join and assist us, we declare to the world that are our aims are:

34 Knights of Labor  Collective effort needed to counter trusts Founded as a secret society in Why? Led by Terence Powderly, Irish, utopian Inclusive and Diverse: –men and women –white and black –skilled and unskilled Broad (utopian? Socialist?) goals HURT by Haymarket Square riot, 1886,Chicago Associated with anarchists, falls into decline

35 Knights of Labor Black delegate Frank J. Farrell introduces Terence V. Powderly, head of the Knights of Labor, at the organization's 1886 convention. The Knights were unusual in accepting both black and female workers. (Library of Congress) Knights of Labor Copyright © Houghton Mifflin Company. All rights reserved.

36 Management and Labor This cartoon, from Puck, April 7, 1886, shows Terence Powderly, in the center, advocating the position of the Knights of Labor on arbitration. The Knights urged that labor and management (identified here as "capital") should settle their differences this way, rather than by striking. Note how the cartoonist has depicted labor and management as of equal size, and given both of them a large weapon; management's club is labeled "monopoly" and labor's hammer is called "strikes." In fact, labor and management were rarely equally matched when it came to labor disputes in the late nineteenth century. (Puck, April 7, 1886) Management and Labor Copyright © Houghton Mifflin Company. All rights reserved.

37 American Federation of Labor Skilled workers split from Knights of Labor 1886 AF of L was elitist in membership, narrow in goals Led by Samuel Gompers, Jewish cigar maker Foe of socialism and “utopian” policies Avoided politics and focused on union goals: –Better wages –Eight-hour day –Better working conditions AF of L successful in many of its strikes and in meeting many of its goals

38 1.The Knights of Labor were weakened by a.Its refusal to endorse social reform and the 8 hour day b.Stiff competition from the National Labor Union c.Its association in the public mind with the Haymarket riot d.Its inclusion of both skilled and unskilled workers

39 KNIGHTS OF LABOR AF of LABOR

40 STRIKES TURN VIOLENT: p Great Strike of 1877 Haymarket AffairHomestead Strike Pullman Strike Year: Cause/Dispute: Industry: Outcome/Effect: Year: Cause/Dispute: Industry: Outcome/Effect: Year: Cause/Dispute: Industry: Outcome/Effect: Year: Cause/Dispute: Industry: Outcome/Effect:

41 STRIKES HOMESTEAD STRIKE 1892 STEEL STRIKE Protest work & living conditions Pinkerton Detectives protect scabs, Several deaths US troops end it WEAKENS LABOR HAYMARKET AFFAIR 1886 Labor march Bomb thrown Several deaths 8 Anarchists arrested 4 hanged, 1 suicide PUBLIC TURNS AGAINST LABOR PULLMAN STRIKE 1893 Pullman Comp. cuts wages during Panic of 1893 Does not raise after ends Workers strike US troops end it Debs arrested Workers Blacklisted LABOR WEAK GREAT STRIKE OF 1877 Railroad strike Paralyzed rail & commerce Pres. Hayes Sent US troops to end it CHINESE EXCLUSION ACT

42 Railroad strike of 1877 This engraving depicts striking railroad workers in Martinsburg, West Virginia, as they stop a freight train on July 17, 1877, in the opening days of the great railway strike of that year. Engravings such as this, which show the strikers to be heavily armed, may or may not have been accurate depictions of events. But the photography of that day could rarely capture live action, and the technology of the day could not reproduce photographs in newspapers, so the public's understanding of events such as the 1877 strike was formed through artists' depictions. (Library of Congress) Railroad strike of 1877 Copyright © Houghton Mifflin Company. All rights reserved.

43 The Baltimore Railroad Strike & Riot of

44 Key Players in the Labor Movement Mother Jones and Pres. Calvin Coolidge -helped reform Child Labor Eugene V. Debs - Socialist, leader of Pullman Strike, later leads IWW (Intl. Workers of the World)

45 Big Business v. Big Labor Who was the winner? Why? ( look on page 433)

46 QUESTIONS TO CONSIDER Compare and Contrast Carnegie, Rockefeller, Morgan Compare and Contrast the Labor Movement and the Populist Movement. What were the Populists’ goals and why did they fail? What were the causes and effects of industrialization?