THE RISE OF BIG BUSINESSAKA

MONOPOLIESAKA

TRUST

CORPORATIONS DEVELOP

Until 1900’s families owned small businesses that were local

Corporations form that are owned by many people instead of one man

Corporations increase their profits by:Paying low wages…upsets workersBroadened their advertising base Invested in inventors Many corporations formed monopolies in

which they controlled the entire market (no competition)

TWO WAYS TO CREATE A MONOPOLY/TRUST

Horizontal Integration: used commonly by

Rockefeller One company buys out all

of its competitors… creates monopolies that

will later be banned by the federal government

Vertical Integration: Buying up all the

businesses that contribute to a final product

Used commonly by Carnegie (steel company):Owned iron minesOwned RR that transported the iron to factories

Owned the coal mines that extracted the coal to power his steel mills and railroads

Entrepreneurs who built monopolies that were unfair to consumersSwindled the

poorBought out

competitorsSeen as bad for

the economyRockefeller

Entrepreneurs that were seen as serving the nation in a positive wayCreating jobsStimulated

innovationWere

charitableCarnegie

“Robber Barons” “Captains of Industry”

SOCIAL DARWINISM

“Survival of the fittest” promoted by Charles Darwin

wealth was a measure of one’s inherent value and those who had wealth were most fitOnly the wealthy should rise

to the topDon’t use public funds to

help the poorSaid that the impoverished

were unfit to reproduce

JOHN D. ROCKEFELLER

Established the Standard Oil Company which held a monopoly on the oil industry

Bought up smaller oil companies to create his own company (horizontal integration)Bought the oil wells,

pipelines, retail outlets and railroads

ANDREW CARNEGIE Steel tycoon Used the Bessemer process

(purifying iron into steel so that it was lightweight but still strong) to mass produce steel

With so many skyscrapers going up steel in is huge demand

Teamed up with J.P. Morgan to find investors in RR so that the demand for steel would increase

Helped Carnegies create the industrial giant US Steel

Other Entrepreneurs Cornelius Vanderbilt:

Made millions from the shipping and railroad business

Became a symbol of the excesses during the Gilded Age

George Westinghouse: Developed air brakes

and a device that allowed trains to switch from one track to another

Horatio Alger

In his books, Alger told stories of young men who won wealth and fame through honest hard work

Advised Americans to seek success based on values

Success through the strengths of their own efforts

Gilded Age

coined by Mark Twain

describes the last decade of the 19th century

America had a rotten core but was covered with gold paint (gilded)

the gap between the rich and the poor was too wide

Government Regulation of Big Business

Laissez-faire: little government interference in the economy “An American tradition”

But the stronghold that these capitalists had on the economy worried the government

Sherman Antitrust Act outlawed monopolies and trusts (companies owned by stockholders)…but not really enforced

TECHNOLOGICAL REVOLUTION

WITH IMMIGRATION AND URBANIZATION COMES THE NEED FOR BETTER TRANSPORTATION/CONSTRUCTION MORE EFFICIENT COMMUNICATION AND QUICKER PRODUCTION

INVENTION INVENTOR EFFECT

light bulb

electric trolley Stephen Fielddangerous and ineffective, but a sign of things to come

luxury car for train George Pullmanattracts travelerstravel made easier

typewriter Many investors fuels business, more jobs for women (typists)

Thomas Edisonallows people to work longer hours

sends electricity over long distances

more jobs for women (operators)

purifies iron to steel-lightweight skyscrapers

made skyscrapers a reality with the modern elevator brake

time zones regulates RR schedulesGovernment

George Westinghouse

Alexander Graham Bell

Henry Bessemer

Elisah Otis

power lines

telephone

Bessemer process

safety elevator

INNOVATIONS Patents: grant giving

the inventor exclusive rights to develop, use and sell an invention

Number if patents sky rockets due to urbanization ◦ Promoted by the

government and investors to improve industry and create new ones

TELEPHONE OPERATORS

THE BESSEMER PROCESS

SKYSCRAPERS/BRIDGES

ELECTRIC TROLLEY

PULLMAN LUXURY RAILCAR

TYPEWRITER/LIGHT BULB

LABOR UNIONSTHE PROBLEMemployers get rich workers barely survive on their low wageslong hours (12 hour shifts)6 days a week in hot, dark and dirty factoriesdangerous work

Injuries were common due to improper training and faulty equipment

poor ventilation and loud machines

SWEATSHOPS The worst working environment Employed thousands of people Worked for long hours on machines

Repetitive and boring Productivity was ensured through strict

regulations Clock in and out, even for break time Workers were fined for breaking rules or working

slowly

CHILD LABOR both parents worked

meant the children worked in factories to stay out of trouble

allowed children to make money (needed by family)

had some of the most dangerous jobs…climb into machines and fix them

stunted physical and mental growth

eventually child labor laws were passed

COMPANY TOWNS Owned by the business and rented to employees Some employees were forced to live in these

isolated communities Company controlled the company store where

employees had to buy their goods…expensive Company wages pay the company rent and other bills Wage slavery

LABOR UNIONS FORM

Complaints from workers are ignored by the employercomplaints = threat to their businessGovernment is on the side of the

employer/business

TACTICS – USED BY EMPLOYERS Scabs: temporary workers to replace

workers who strike Lockout: lockout employees until they

agree to terms Injunction: court order to stop a strike Blacklist: list of workers who supported

labor union and were kept from employment because of it

Yellow dog contract: employee promises to not join a union in order to get hired

TACTICS – USED BY EMPLOYEES Collective bargaining: negotiate as a

group Strike: refuse to work Mediation: negotiate with employer Arbitration: having a third party decide

for the union and employer…the last hope

Boycotts: refuse to buy

THE KNIGHTS OF LABOR Accepted skilled or

unskilled workers (trade union)

Actively recruited African Americans

Encouraged boycotts and strikes

Wanted increased wages, shorter hours and improved working conditions

AMERICAN FEDERATION OF LABOR Formed by Samuel

Gompers a craft union (from a

specific craft or skill) Did not accept

women or AA Aimed to increase

wages, lower working hours and better working conditions

Wanted closed shops in which workers had to join the union to be hired

THE GREAT STRIKE Workers response

wage cuts A nationwide strike Would not allow the

train to move until wages were increased

National Guard was called in, killed 10 strikers American sympathy

for unions

HAYMARKET RIOT

Workers strike for an 8 hour day Fights broke out and police were called A radical threw a bomb that killed a

policeman and dozens of others Radicals are tried and executed Result: Americans are fearful of labor

unions, Knights of Labor are blamed for the violence and their membership declines

HOMESTEAD STRIKE Carnegie Steel plant workers were striking

against a wage cuts Pinkerton’s

( successful at breaking up strikes) are called into break up the strike, kill several strikers in a two week standoff

American sympathy for unions

PULLMAN STRIKE

George Pullman reduced wages at his luxury railcar factory

did not lower rent within the company town Workers that tried to negotiate were fired Ask the American Railway Union under Eugene

Debs to help in their strike…entire RR went on strike Railroad traffic stops Luxury cars are not needed if RR’s are not moving

President Cleveland ordered (injunction) the strike to end…Debs was arrested Proof that the government favored business over

employees Hinders support due to the disruption in

business/trade