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

CorporationsIntegration – 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 - Transportation PULLMAN – Railroad Cars

ENTREPRENEUR USE OF WEALTH?

BILTMORE ESTATE - ASHEVILLE PULLMAN’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 10-16 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 UNION1. leader William Sylvis2. made up of individual unions from across the country3. 300 local union chapters4. urged to admit women and AfricanAmericans 5. huge membership 6506. success: 8 hour work day for government employees7. Labor Reform Party - ran a Candidate8. Only lasted for a few yearsfor President.

National Colored Labor UnionLed by Isaac Meyers

Had to be created becauseSoutherners 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, skilledor 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 WORKERSOF THE WORLD

1. leader - William “Big Bill” Haywood

2. workers from around the country should unite as a brotherhood3. welcomed every one!!4. nicknamed WOBBLIES

AMERICAN RAILWAY UNION1. leader Eugene Debs2. 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 conditionsTriangle Shirtwaist fire in New York – 145 workers died in alocked 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• 1877--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 4th—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