1. 7-3: Business and Labor

2. Learning Objectives
WXT 1.0 Explain how different labor systems developed in North America and the United States, and explain their effects on workers’ lives and U.S. society.
WXT 2.0 Explain how patterns of exchange, markets, and private enterprise have developed, and analyze ways that governments have responded to economic issues.
WXT 3.0 Analyze how technological innovation has affected economic development and society.
WOR 2.0 Analyze the reasons for and results of U.S. diplomatic, economic, and military initiatives in North America and overseas.
CUL 4.0 Explain how different group identities, including racial, ethnic, class, and regional identities, have emerged and changed over time.

3. Key Concepts
Technological advances, large-scale production methods, and the opening of new markets encouraged the rise of industrial capitalism in the United States
The migrations that accompanied industrialization transformed both urban and rural areas of the United States and caused dramatic social and cultural change.
The Gilded Age produced new cultural and intellectual movements, public reform efforts, and political debates over economic and social policies.

4. Overview Rise of industrial capitalism
Technological advances
Large-scale production methods
Opening of new markets
Pro-growth government policies
Business consolidation
Variety of perspectives on the economy and labor
Periods of extreme growth, periods of financial panics

5. Technology and Innovations
Technological Change
Industrial Civil War economy laid foundation for emergence of technology in North
Labor force secured through growing population
Immigrants
Rural migrants

6. Technology and Innovations
The Business of Railroads
Federal land grants
Transcontinental railroads
Innovations
Railroads—Vanderbilt
Iron
Coal
Electricity—Edison
Steel—Carnegie
Oil—Rockefeller
Banking—J.P. Morgan
Telephone—Alexander Graham Bell
Marketing Consumer Goods

7. Industrial Empires Competition and Consolidation
Corporations
Investors share risk and profits
Limited liability
Same legal standing as individuals
Trusts, Holding Companies, and Monopolies
Vertical integration (Carnegie)
Horizontal integration (Rockefeller)
Consequences of Consolidation
Large factories
Unskilled labor
Taylorism (scientific management)
10% owned 90% of wealth
White collar jobs—discretionary income
Lower prices—expanding middle class
Labor discontent

8. Laissez-Faire Capitalism
Government Policies Toward Business
Actions
Subsidies
High tariffs
Stable currency
Little regulation
Rationale
Motivation for business is self-interest (Adam Smith)
Capitalism best when government is small

9. Laissez-Faire Conservatism
Myth of the “Self-Made Man”
Rags-to-riches stories
Horatio Alger
Social Darwinism
Herbert Spencer
Survival of the fittest in society
Urban problems are part of natural selection
Justified extreme salaries
Concentration of wealth in the hands of the “fit” was a benefit to all

10. Laissez-Faire Conservatism
Gospel of Wealth
Rich have a duty to serve society
Philanthropy
Carnegie—$350,000,000 to charities
Social Critics and Dissenters
Veblen—“Theory of the Leisure Class”
Predatory wealth
Only 20% of women worked

11. Effects of Industrialization on Workers
Expansion of labor force
Machines replaced skilled workers
Taylorism
Separate class of workplace managers
Corporations
Unions weak because of surplus of cheap labor

12. Union Movement Purpose Methods Improve factory conditions
Turnover—problem with unskilled labor
Role of Panic of 1873
Methods
Collective bargaining
Strikes

13. Union Movement Unions Knights of Labor American Federation of Labor
Open-membership policy
Looked to create cooperative society
Workers would own the industries
Rejected socialism and anarchism
American Federation of Labor
Skilled workers
Pragmatic—not influenced by Marxism
“Bread and butter” issues

14. Union Movement Unions International Workers of the World
Strove to unite all laborers
“One big union”
Embraced class conflict and violence
Ties to anarchism

15. “The working class and the employing class have nothing in common
“The working class and the employing class have nothing in common. There can be no peace so long as hunger and want are found among millions of the working people and the few, who make up the employing class, have all the good things of life. Between these two classes a struggle must go on until the workers of the world organize as a class, take possession of the means of production, abolish the wage system, and live in harmony with the Earth. We find that the centering of the management of industries into fewer and fewer hands makes the trade unions unable to cope with the ever growing power of the employing class. Instead of the conservative motto, "A fair day's wage for a fair day's work," we must inscribe on our banner the revolutionary watchword, "Abolition of the wage system." It is the historic mission of the working class to do away with capitalism. The army of production must be organized, not only for everyday struggle with capitalists, but also to carry on production when capitalism shall have been overthrown. By organizing industrially we are forming the structure of the new society within the shell of the old.”

16. Union Movement Strikes Great Railroad Strike (1877)
Cause—wage cuts
Resolution—federal troops
Haymarket Square Bombing (1886)
Cause—support for strike
Resolution—persecution of anarchists and Knights of Labor
Homestead Strike (1892)
Resolution—Pinkerton agents

17. Union Movement Strikes Coxey’s Army (1894) Pullman Strike (1894)
Cause—demand for government aid
Resolution—federal troops
Pullman Strike (1894)
Cause—wage cuts
Resolution—federal troops, conviction of Eugene Debs
Themes
Government supports owners
Public opinion deplored labor tactics