Industrialization Trusts, Monopolies, and Labor Unions

Today’s Objective After this lesson, students will be able to… Identify and explain the strategies and tools used by both industrialists and labor forces to further their position economically Essential Skills Students will assess information and draw conclusions Generate many diverse solutions to presented and found problems

5 Features of the Birth of American Industrialization Coal Deposits used as cheap source of energy (“Fuel of Industry”) Spread of Technological Innovation and the Factory System Competition of firms to cut costs and prices Overall Drop in Price Levels Failure of Money Supply to keep pace with Productivity

Outcomes of Industrialization Major Industries Develop Railroads Steel Oil Machinery Meatpacking More Cheap Consumer Goods Produced

Positives and Negatives Positives Creates jobs for everyone Cheaper goods (more consumerism) Development of middle class Opportunity for financial success US becomes rich world power Negatives Poor pay Long hours Unskilled labor (goodbye artisans) Terrible labor conditions Need for works = women and children

Strategies of Competition Undercut Prices Buyouts Trusts and Monopolies Vertical and Horizontal Integration

New Vocabulary Monopoly A company that completely dominates a particular industry Trust A set of companies managed by a small group known as trustees, who can prevent companies in the trust from competing with each other Corporation A company recognized by law to exist independently from its owners, with the ability to own property, borrow money, sue or be sued

Corporate Monopolies Horizontal and Vertical Integration

Vertical Integration Controlling all aspects of manufacturing from start to finish – raw materials to finished product Example: A car company that ins expanding into tire manufacturing

Horizontal Integration The merger of two or more companies which are in the same line of business Example: If Acme and Giant merged together

What would Rockefeller say… Monopolies are good because we can produce goods at a lower cost to consumers! Now everyone can have cheap oil and gas

What would the Populist (poor farmer) say… Monopolies are bad because they control the whole industry and there is no competition over prices! We have to pay high prices to ship our wheat on trains! And these companies pay low wages to their workers!

Big Business and the Government Leave Business Alone Laissez-faire Social Darwinism Limit Business Sherman Anti-Trust Act (1890) Ineffective early Splits Rockefeller’s Standard Oil into 34 Companies 2001 – U.S. Court of Appeals found that Microsoft violated the Sherman Act antitrust laws

Baseball Manufacturers The company manufactures baseball bats for the MLB Contract has expired an you must negotiate a new one Its playoff time and you need bats Managers – you cannot allow production to halt (playoffs, World Series) Laborers – if you refuse to work, laborers in other places are happy to be employed Must negotiate a contract – remember to save your best offer