Chapters 3 & 4Chapters 3 & 4

Industrialization, Unionization, Industrialization, Unionization, Urbanization, Immigration, & the Urbanization, Immigration, & the

American AristocracyAmerican Aristocracy

The Challenges of Urbanization and Immigration

Cities: Crowded; Noisy; and Exciting

Factors Contributing to Urbanization Factors Contributing to Urbanization in the Late 19in the Late 19thth Century Century

• In 1840 there were 131 cities in the nation. By 1900 the number had increased to 1,700.

• Farm machines were replacing farm workers.

• Factories, mills, and other city businesses needed workers.

• Cities also attracted people because cities were exciting.

• The influx of immigrants contributed to the growth of cities. Immigrants stayed where the work was, and the work was in the cities.

• The Americanization Movement was designed to assimilate people of wide-ranging cultures into the dominant culture.

• Schools & voluntary associations provided programs to teach immigrants skills needed for citizenship

Rise of Cities

• Between 1830-1860 Urban population of the US grew by 552%

• 1830 there were 1.1 million urban dwellers• 1860 there were 6.2 million urban dwellers• By 1900 there were 30 million urban dwellers• Cities grew because of:1. Immigration – millions of people moved to America

from foreign countries, usually seeking a better way of life.

2. Rural to urban migration- people leave the farm due to decreased opportunity- mechanization of agriculture, more opportunity in cities

Cities• African Americans begin to

move after the Civil War, but not in large numbers North until WWI.

• Many people moved to cities in response to limited opportunities in rural areas, low prices for staple crops, and the development of mechanized agricultural methods, which reduced the need for so many farmers and made small farming an almost obsolete enterprise.

Problems• Overcrowding• Crime• Disease• Poverty• Exploitation• Water-Sanitation• Pollution

Immigration• The United States is a nation of immigrants. By 1860 1/4 of

population was born in another country.• Immigration to the United States occurs in waves.• The First Wave of Immigration (Old Immigration): 1820-1860

– Irish- 2 million– German- 1.5 million– British- 750,000– Scandinavia – 250,000

• 1825- 10,000 immigrants admitted per year• 1845- 100,000 immigrants admitted per year• 1854- 428,000 per year• Second Wave of Immigration (New Immigration): 1860-1920• 1865-1890- 9 million arrivals• 1890-1915 16 million arrivals• By 1910, half of the people living in cities are immigrants, mostly

arriving either from southern and western Europe (mainly living on the east coast) or China (mainly living on the west coast).

New ImmigrantsSecond Wave of Immigration 1870-1914, 25 million European

Immigrants by 1920, 40% of pop-foreign born

• 1870- 1 in 7 were Irish Immigrants (New York)

• Southern and Eastern Europe• Italians 3.6 million come.• Greeks• Russian (Jews)• Turks• Polish• Serbian• In the West- Chinese and then

Japanese

• 1880- 457,000 Immigrants landed in Boston, New York, Philadelphia, Baltimore, New Orleans

• Most were unskilled:• Worked in Factories• Construction• Docks• Warehouses• Domestic Servants

Immigration

Push Factors• Factors that pushed

immigrants out of their native lands to America:

• Poverty-• Lack of Economic

Opportunity• Political Repression - No

freedom• Ethnic conflict-• War- conscription • No jobs• No hope of a future• Famine/ starvation/drought

Pull Factors• Factors that pulled

immigrants out of their native lands to America:

• Economic Opportunity• Jobs/ workers were needed• Land• $• A future of land ownership• Peace and stability• Freedom to make a better

life

Early Immigration

• Irish Potato Famine 1846-1851

• August 1845 the Irish potato crop was blighted or stricken with a disease.

• The disease ruined the main source of nutrition for the population.

• Famine, starvation, and disease killed much of the population.

• While the poor of Ireland starved British land owners and merchants made money.

• 1845- 25 million bushels if grain was shipped out.

• 1846-50 3 million live animals were exported

• 1847 1.3 million gallons of grain derived alcohol was exported.

• 1845-1860 the population of Ireland was reduced by 1/3.

• 1845 population = 8.2 million • 1860- Pop = 5.8 million• 1920- Pop = 4.2 million• 1 million died from starvation and

disease.• 2 million left to America• 1860-1926 4 million more went to

the US.

How did/do people react to immigrants coming to America?

• Whenever a new group enters into an established community tension is caused and a pattern of development can be seen.

• Examples:• When the Irish came in the

1840’s the established groups of British and Germans did not like the new Irish.

• Irish where different: • Language- Irish• Religion Roman Catholic• Culture different from British• Lifestyles-

• They were looked down upon and discriminated against. See cartoons.

• Xenophobia- anti foreigner attitudes

• Nativism- The idea of blaming immigrants for problems.

• Established groups blamed the new groups for problems:

• Taking Jobs, Lazy -Famous Slogan: “No Irish Need Apply”

• People said they were responsible for: Crime

• Immorality- alcohol abuse• Catholics- not loyal to America• Dirty- • Inferior, Damaging to the United

States

Child LaborImmigrant children Immigrant children were put to work in were put to work in

sweatshops – businesses sweatshops – businesses with harsh working with harsh working

conditionsconditions

Businesses wanted to hire children because they were a cheap source of labor.

Asian ImmigrationDuring the late 1800s, the During the late 1800s, the west coast (California) west coast (California) saw a boom in the saw a boom in the amount of immigrants amount of immigrants coming from Asia.coming from Asia.

Most Chinese immigrants Most Chinese immigrants came to America because came to America because

over-crowding in China led to over-crowding in China led to high unemployment, poverty high unemployment, poverty

and famine. and famine.

Chinese Exclusion ActThe Chinese Exclusion Act The Chinese Exclusion Act

was the law passed by was the law passed by Congress that greatly reduced Congress that greatly reduced the amount of Asian the amount of Asian immigrants coming to immigrants coming to America in the late 1800s.America in the late 1800s.

The law barred Chinese The law barred Chinese immigration for 10 years and immigration for 10 years and

prevented the Chinese from prevented the Chinese from becoming U.S. citizens.becoming U.S. citizens.

The Statue of Liberty in The Statue of Liberty in New York Harbor was New York Harbor was the symbol of America to the symbol of America to many immigrants many immigrants looking for a new life looking for a new life

A Land of Hope

““Give me your tired, your poor, your Give me your tired, your poor, your huddled masses yearning to breathe free, huddled masses yearning to breathe free, the wretched refuse of your teaming shore. the wretched refuse of your teaming shore. Send these, the homeless, the tempest-tost Send these, the homeless, the tempest-tost to me, I lift my lamp beside the golden to me, I lift my lamp beside the golden door.” door.”

-- Statue of Liberty-- Statue of Liberty

Immigrants Immigrants coming into coming into New York New York were stopped were stopped at Ellis Islandat Ellis Island

Ellis Island

Incoming immigrants were Incoming immigrants were given a physical to check for given a physical to check for

diseases and their criminal diseases and their criminal record was checkedrecord was checked

Urban Living Conditions

• Immigrants often lived in buildings abandoned by middle-class residents that were converted into multifamily units.

• These tenements soon became identified as “slums”.

• Many families would cram into spaces only meant for a few.

• Many immigrants tended to settle with others from the same country creating the ethnic neighborhoods and sections that can still be found in many big cities today.

Urban Living Conditions cont.Urban Living Conditions cont.

• In the slums, the tenements housing as well as the streets were not cared for properly. Raw sewage and garbage were everywhere. Contagious diseases were common in such conditions.

• Babies were especially susceptible.

• In the NYC slums at the turn of the century, six out of ten babies died before their first birthday.

Problems in the CitiesProblems in the Cities

Transportation

• Cities developed mass transit-transportation systems designed to move large number of people along fixed routes.

• Cities struggled to repair old transit systems and to build new ones to meet the demand of expanding population.

Water Supply

• Cities faced problems supplying safe drinking water.

• Residents of many cities had grossly inadequate piped water or none at all.

• Residents had to collect water in pails from faucets on the streets and heat it for bathing.

Housing

• Poor families struggled to survive in crowded slums living in tenements.

Hine, Lewis W. NYC tenement 1910

• Tenements were overcrowded, dirty and oftentimes had no windows, heat, or indoor bathrooms.

In the TenementsIn the Tenements

• Many immigrants lived in crowded tenement buildings. Families shared living space and decent lighting, water, and even fresh air were scarce.

• *

Jacob RiisHow the Other Half LivesHow the Other Half Lives

Jacob Riis was a journalist whose books gave a vivid Jacob Riis was a journalist whose books gave a vivid account of the life for ethnic groups of New York City account of the life for ethnic groups of New York City

living in this tenement slums living in this tenement slums

Jacob Riis, 1889 “Lodgers in a Bayard Street

Tenement, Five Cents a Spot"

Bunks in a seven-cent lodging-house, Pell Street

Jacob Riis – Men’s Lodging Room in the West 47th Street Station – c. 1892

Problems in the CitiesProblems in the Cities• Sanitation-As the cities grew; so did the challenge

of keeping them clean.

-Horse manure piled up on the streets;

sewage flowed through open gutters; and

Factories spewed foul smoke into the air.

• Fire-Overcrowded and poorly

built tenements and lack

of water made fire

especially dangerous.

-Most city firefighters

were volunteers and not

always available when

they were needed.

• Crime-As the population of cities increased so

did pickpockets and thieves.

-NYC organized the first full-time

salaried police in 1844.

-Most other cities were too small to have

much impact on crime.

Street cleaning, Fourth Street

• Garbage collection and street cleaning began regularly.

Reform

Typical tenement fire-escape serving as an extension of the flat: Allen Street

• New buildings were required to have fire escapes and plumbing.

Urban ReformsReform efforts gave rise to the Salvation Army beginning in 1878. It offered a practical aid and religious counseling to the urban poor.

The YMCA tried to help organized Bible studies,

prayer meetings, citizenship training and

group activities.

Social Gospel Movement-Leaders of this movement preached that people reached salvation by helping the poor.• Salvation Army

Government interventionAs the 20As the 20thth century (1900s) began, many people century (1900s) began, many people

began to see that the poor people living in urban began to see that the poor people living in urban areas were in need of help. areas were in need of help.

They began calling on the government to take a They began calling on the government to take a more active role in regulating the economy and more active role in regulating the economy and

helping those in need. helping those in need.

Jane AddamsFounder of the U.S. Settlement Founder of the U.S. Settlement

House movement, and one of the House movement, and one of the first women to be awarded the first women to be awarded the

Nobel Peace PrizeNobel Peace Prize

In 1889 she co-In 1889 she co-founded Hull House founded Hull House in Chicago the first in Chicago the first settlement house in settlement house in the United States. the United States.

Lillian WaldLillian Wald was a nurse, Lillian Wald was a nurse, social worker, public health social worker, public health official, teacher, writer, official, teacher, writer, women's rights activist, and women's rights activist, and the founder of American the founder of American community nursing. community nursing.

Her unselfish devotion to Her unselfish devotion to humanity is recognized humanity is recognized around the world and her around the world and her visionary programs have visionary programs have been copied everywhere.been copied everywhere.

Hull House in the early 1900’s (above) and Jane Addams in the 1930’s (right). She was a well-known social reformer.

Hull House Hull House – a settlement house set up by Jane Addams in Chicago

Settlement houses Settlement houses were community centers located in slum neighborhoods. Workers there provided help & friendship to immigrants and the poor.

Hull-House Nursery, ca. 1890s

City life for Immigrants• The “New” group usually congregates together and forms an

almost isolated community and institutions in the giant and growing cities of America.

• The Irish came together in great neighborhoods and sections of all Eastern Cities.

• They formed their own political groups and parties.• They used their large numbers to build powerful political

groups that dominated some large Cities and industries in those cities.

• Example: Police and Firemen in New York, Boston, Chicago, Philadelphia.

• They set up:• Churches, Hospitals, Welfare Organizations, Schools, Social Clubs,

Political Organizations• They helped each other in exchange for loyalty during the voting

season.• Jobs, security,

Political Machine:• The best example of ethnic group organization

was called the Political Machine.• This was an organization of political and

community leaders that manipulated democracy for material gain. Leaders of an ethnic community would use their influence to raid public funds and offer rewards to loyal community members.

• Boss Tweed and Tammany Hall of New York City, were infamous for their political strength and corruption. They were reputed to have stolen millions in public funds.

Urban Innovations• Urban areas quickly became overcrowded and

space became scarce. New ideas were necessary to try and use space as wisely as possible Some of the innovations you’ll see on the next several slides are indicative of this fact.

Rise of Mass Transit System

1910 – First Trolley Car 1910 – First Trolley Car

1909 – New York City Subway1909 – New York City Subway

As cities like New York As cities like New York City, Chicago and San City, Chicago and San Francisco grew, they Francisco grew, they moved to improve moved to improve transportationtransportation

This led to the This led to the development of mass development of mass transit to move large transit to move large

amounts of people amounts of people around cities quickly. around cities quickly.

Time Zones developed

Western Western Union Bldg,. Union Bldg,. NYC – 1875NYC – 1875

Cities grew not only in terms of

population but also in size, with

skyscrapers pushing cities upward

SkyscrapersAs cities grew, engineers and As cities grew, engineers and

architects developed new approaches architects developed new approaches to housing and transportation for a to housing and transportation for a

large amount of peoplelarge amount of people

With a limited With a limited amount of land amount of land

and space, and space, businesses had businesses had to build up, not to build up, not out. This led to out. This led to the building of the building of

skyscrapers.skyscrapers.

New York Skyline, circa 1920

FlatironFlatironBuilding Building

NYC – NYC – 19021902

D. H. D. H. BurnhaBurnha

mm

Streetcars and trains allowed urban residents to live further from their jobs than walking distance.

Subways allowed commuters to travel to the city via underground trains. This leads to less congestion above ground on the streets.

With the rise of skyscrapers, electric elevators and escalators made it easy to get to the top. Now, people no longer had to use the stairs.

The Brooklyn Bridge allowed for easier commuting to and from different areas of New York City.

The Industrial RevolutionBy 1900, the U.S. was By 1900, the U.S. was

the leading industrial the leading industrial nation in the world as nation in the world as millions left rural areas millions left rural areas to work in the cityto work in the city

This happened due to an This happened due to an abundance of natural abundance of natural resources, a booming resources, a booming

population, new inventions population, new inventions and the free enterprise systemand the free enterprise system

Why America Industrialized• There were two industrial revolutions. The first occurred in the

early 1800’s but it was rather small and didn’t affect many people – up till the Civil War, most people lived on farms. After the war, many people left their farms for the big city factories or to work in coal mines in the Virginia and West Virginia mountains – the believed they could improve their lives by doing so. The truth was in many cases opposite of this, as wages in factories were usually very low forcing entire families, regardless of age, to work exceedingly long hours in horrific conditions just to be able to secure a bit of food and a roof over their heads. Coal mines were dangerous and a major health hazard and were not paying much better. Regardless, this wave of movement from rural areas to urban areas provided a large workforce for businesses to use. This large workforce combined with the America’s vast natural resources and the new ability to harness and control electricity initiated a second, much more important industrial revolution, a revolution that changed America forever for both the better and the worse.

Inventions and Innovations• There were many groundbreaking inventions and innovations in

the late 19th and early 20th centuries, especially once electricity was controlled.– Thomas Alva Edison invented the phonograph, and perfected

the large scale electric generator along with Nicola Tesla (Edison usually gets most of the credit, but many historians believe Tesla was the true genius behind both the lightbulb and the generator!). Edison also worked with Lewis Latimer, the guy who invented the carbon filament that created the first incandescent lightbulb, and together they invented the first long life lightbulb.

– Cyrus Field laid the first transoceanic telegraph cables, making intercontinental communication possible.

– In 1876, Alexander Graham Bell developed the first telephone, which revolutionized communication by increasing the scale and speed of nationwide communications.

Inventions and Innovations• George Westinghouse invented the alternating current (AC)

electrical system still used today, which allows for electricity to be controlled and distribute to wherever a person wants it sent to (i.e. turning on the light switch directs the electricity to the lights, while flipping it off stops the current). His company eventually invented hydroelectric power systems.

• In 1868 Thaddeus Lowe invented the ice machine, which became the basis for refrigeration technologies.

• Gus Swift invented the first refrigerated railcar in 1877.• In 1882 the Edison Electric Company began supplying

electrical power to New York City. Today, I own 1000 shares of this company, which is now named Consolidated Edison (ED).

• In 1886, a NY woman figured out a way to electrically wash clothes – yes, Josephine Cochrane invented the first washing machine!

The Transcontinental Railroads• In 1865 the US had 35,000 miles of railroad tracks laid

down. That number would soon shoot sky-high, as over 200,000 miles of railroad tracks were laid by the turn of the century (1900). The building of the transcontinental railroads began with the passage of the Pacific Railway Act of 1862. It wasn’t an easy process; engineering mistakes, angry Indians, bad weather, and money shortages were just some of the problems this undertaking faced. On May 10, 1869, the two transcontinental railroads, the Central Pacific and the Union Pacific, were joined together, finishing the first version of the transcontinental railroad system. Eventually other, smaller railroad lines would be built that would link the northern and southern halves of America, but this was where it all started.

Chicago North and St. Louis SouthAll the Way to The Pacific Ocean

Free Enterprise SystemThe free enterprise system

is an economic system whereby citizens of a nation are free to run a business (aka enterprise) the way they want to without government interference. The system is based on the laissez-faire theory, literally meaning “hands off” in French, translating top government keeping its hands off of business dealings.

The Birth of Systematic Management• The Labor Question

– Some “Social Gospel” proponents felt that workers should join unions, share in profits, and have arbitration instead of strikes.

– Engineers and others felt that better work methods and systems were the answer, including pay for performance incentive systems.

– The bottom line? Wealthy business owners and stockholders cared little for the workers, but cared greatly for profit margins and government non-intervention. Most politicians were bought and paid for by these wealthy men (many politicians were the wealthy men!) and so there was little help for the regular people who worked for these people.

Economies of Scale• In the early 20th century, big businesses, also known as

corporations dominated the political and economic landscape of America. Corporations are businesses owned by many people, called stockholders. Stockholders invest their money in the corporation, and if the corporation grows and is successful the stock of the company rises in value, and the stockholders make money along with the business itself. This setup allows corporations to be able to raise a great deal of money, differentiating them from smaller businesses. In a corporate structure, individual investors risk is limited to what they invest (limited liability) – the corporation is treated legally like it is a person, allowing the risk to be spread out amongst all investors rather than one or a few people taking on all the risk. All business styles can work and work well, but the advantages of the corporate structure give this type of business advantages smaller businesses cannot compete with.

Corporate Advantages• All businesses have fixed costs and operating costs. Fixed costs

are costs the company pays no matter what – rent, electricity, water, etc. Operating costs are the costs incurred in order to produce whatever it is a company produces. Small businesses usually have low fixed costs, but their operating costs can be very high. Corporations have the opposite; high fixed costs because they are so big, but because most try and be as vertically or horizontally integrated as possible, their operating costs are comparably low. In addition, they many times will also supply smaller competitors with what they need, so they can charge higher prices for their competition than for themselves. This gives greater pricing control as well, because of the ability to raise huge amounts of money, corporations can cut prices so low that competitors cannot match the prices (Walmart for example).

Monopoly• A monopoly exists when there is only one seller

of a good or service and there is no reasonable alternative available.

• Monopolies are generally unwanted in a free enterprise system as they tend to keep prices high and quality levels of goods and services produced low. In America, only certain types of monopolies are legal.

• Corporations have tried to get around anti-monopoly laws in several ways, disguising their business models so as to attempt to avoid detection by the law.

Big Business and Its Changing Environment• Business & Society

– Matthew Josephson characterized the business leaders of this time as “Robber Barons.” The idea was that these people would use any means necessary to make more money, including mistreating workers and attempting to control government in whatever ways they needed to, legally and/or illegally.

– There is evidence that many business leaders engaged in corrupt practices such as watering down stock prices, bribing of government officials, manipulating stock prices, and conspiracy.

– Their motivation was alleged to be “survival of the fittest” and desire for monopoly.

– Motivation was also drive for economies of scale that led to lower prices.

– The following slides give a brief picture of the so-called Robber Barons (many of whom were not bad guys at all).

Vertical and Horizontal Integration• Vertical integration is where all the smaller companies that supply needed

goods and services to the larger, parent company are owned by the parent company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration. A monopoly produced through vertical integration is called a vertical monopoly.

• Horizontal integration is a strategy where a company creates or acquires production units for outputs which are the same - either complementary or competitive. A typical example would be when a company acquires competitors in the same industry doing the same stage of production for the same good or service. This creates a horizontal monopoly because any company that needs that specific good or service has only one company it can turn to in order to get what it needs.

• Both types of monopolies provide a great amount of pricing control, which is bad for consumers (monopolies create lesser quality and greater prices) but awesome for the monopolistic company!

The Rockefeller’s and Standard Oil• Standard Oil Co. Inc. was an American oil producing, transporting,

refining, and marketing corporation established in 1870. It was the largest oil refiner in the world from the 1880’s until 1911, when the United States Supreme Court ruled that Standard Oil was an illegal monopoly. Standard Oil dominated the oil products market initially through horizontal integration in the refining sector, then, in later years vertical integration; the company also became the first business trust. The Standard Oil trust streamlined production and logistics, lowered costs, and undercut competitors. "Trust-busting" critics accused Standard Oil of using aggressive pricing to destroy competitors and form a monopoly that threatened consumers.

• John D. Rockefeller was the founder, chairman and majority stockholder. In 1911, after the Standard Oil trust was dissolved into 33 smaller companies, Rockefeller became the richest man in the world. Other notable Standard Oil principals include Henry Flagler, developer of Florida's Florida East Coast Railway and resort cities, (including Miami).

Trusts and Trust Busting• A trust occurs when one person owns a company but allows another

person to manage their company. That person is called a trustee. What Standard Oil did was have major stockholders of the company give their stock over to a group of trustees that would manage their shares of stock in return for more shares of stock and profits made by the company. This created a system where the trustees could control various companies vertically and/or horizontally as if it were one huge company, thus creating an even larger form of monopoly.

• As stated previously, monopolies are only good for the monopolists; they are generally bad for everyone else. As a result politicians in the late 19th century passed laws to regulate monopolies and trusts, making many of these business arrangements illegal. Later, the three Progressive Presidents such as Theodore Roosevelt, William Howard Taft, and Woodrow Wilson became known as trust busters, in other words, politicians who went after monopolists and tried to bust up, or break up their monopolies.

American Anti-Trust Laws• The main Federal anti-trust statutes are the Sherman Anti-

Trust Act of 1890, the Clayton Anti-Trust Act of 1914, and the Federal Trade Commission Act of 1914. These laws accomplished three things. First, they restrict the formation of cartels and prohibit collusion (where corporations get together with one another, usually to either fix prices or wages or both, to the detriment of consumers and workers). These practices are considered to be practices restraint of trade and anti-competitive (price fixing) or detrimental to workers (wage fixing). Second, they restrict the ability of companies to merge with other companies or acquire other companies in order to lessen competition. Third, they forbid the creation of certain types of monopolies as well as the abuse of certain tactics to abuse monopoly power.

The Wright Brothers

A major advancement occurred in the A major advancement occurred in the field of transportation occurred on field of transportation occurred on December 17, 1903 in Kitty Hawk, December 17, 1903 in Kitty Hawk, North Carolina when the Wright North Carolina when the Wright Brothers flew the first airplaneBrothers flew the first airplane

Andrew Carnegie (1835-1919)Steel Industry

• Began his business and management career on the Pennsylvania Railroad.

• His steel foundries used the new Bessemer furnace technology to begin vertically and horizontally integrating his firm within the steel industry. Soon, he had a virtual monopoly over the steel industry as he used cost accounting to guide his pricing strategy and so was able to drive costs and prices down, making him the undisputed king of steel.

Andrew CarnegieCourtesy of The General Libraries, The

University of Texas at Austin.

The Bessemer ProcessThe Bessemer The Bessemer

Process was the Process was the innovation that innovation that made it cheaper made it cheaper to produce steelto produce steel

It was used in the It was used in the U.S. by Andrew U.S. by Andrew

Carnegie to build Carnegie to build his steel empirehis steel empire

Edison and the Light BulbIn 1879, American inventor Thomas In 1879, American inventor Thomas

Edison developed the first light bulb. Edison developed the first light bulb. The invention led to the wide spread The invention led to the wide spread use of electrical power and factories use of electrical power and factories being able to run at night.being able to run at night.

Edison is considered one of the most Edison is considered one of the most prolific inventors in history, holding prolific inventors in history, holding

1,093 U.S. patents in his name. 1,093 U.S. patents in his name.

This in turn This in turn produced more produced more jobs and more jobs and more

product, which led product, which led to lower prices.to lower prices.

Big Business and Its Changing Environment

• The social conscience of the 19th century entrepreneur gave rise to individual philanthropy:– Ezra Cornell – his money

founded Cornell University.– William Colgate – college

changed its name to his as result of his generosity.

– John Hopkins – founded John Hopkins University.

– Cornelius Vanderbilt – founded Vanderbilt University.

Cornelius VanderbiltCourtesy of The General Libraries, The University of

Texas at Austin.

Big Business and Its Changing Environment

• More Philanthropists– Joseph Wharton – grant enabled first business school at

University of Pennsylvania.– Edward Tuck – gift to Dartmouth started Amos Tuck School

of Admin. & Finance.– Leland Stanford – honored his son with a university– John Stevens – provided for the Stevens Institute of

Technology.– James B. Duke – Trinity College (later renamed for the

family).– Daniel Drew – promise of funds led to Drew University.– Moses Brown – founded Rhode Island College; became

Brown University in 1804.

Big Business and Its Changing Environment

• Famous Philanthropists– John D. Rockefeller –

given half a billion dollars by the time of his death as well as establishing the Rockefeller Foundation.

– Rockefeller is pictured here in 1907 beside a building. John D. Rockefeller

Chicago Daily News negatives collection, DN-0051595. Courtesy of the Chicago Historical Society

Big Business and Its Changing Environment

• Famous Philanthropists– Andrew Carnegie – gave

away $350 million by the time of his death in addition to his libraries, university, and the Carnegie Foundation.

– Authored “The Gospel of Wealth” a book which urged the wealthy to give generously to the poor and to the less fortunate. This stance stood in stark contrast to the Social Darwinists led by Herbert Spencer.

Andrew Carnegie Courtesy of The General Libraries, The

University of Texas at Austin.

The Gospel of Wealth• This was the title of an article written

by Andrew Carnegie in 1889 that describes the responsibility of philanthropy by the wealthy.

• The key, according to Carnegie, is distributing one’s fortune in a way that it will always be put to best use, rather than be wasted on worthless expenditures.

• Carnegie put his philosophy into practice through a program of financial “endowments” to build public libraries, known as 'Carnegie libraries' in cities and towns throughout the United States and the English-speaking world. The idea was to provide people with the tools to better themselves.

Social DarwinismHerbert Spencer an American sociologist and who fathered the idea of Social Darwinism. His doctrines of “survival of the fittest,” “laissez faire” and the "night watchman state" became the conventional wisdom of most English speaking social theory from 1890 to 1920, celebrated by sociologists such as W. G. Sumner and by robber barons such as Andrew Carnegie. Spencer saw individualism and competition as the key to social progress, and he argued that government programs are ineffective and lead to dependency. The individualism and the biological reductionism of Social Darwinism was in conflict with the basic insight that human behavior is socially shaped by culture, families, religion, class, gender, schools, organizations and other groups.