the big business boom chapter 6 (1-3) chapter 6 (1-3)

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  • The Big Business Boom Chapter 6 (1-3)

  • RR: The 1st Big BusinessPre-CW railroadsCW Congress wants to expand RRsWhy? TCRR would strengthen the economic infrastructureHow? Hire 2 companies to build itUnion Pacific (starts in Omaha)Central Pacific (starts in Sacramento)Who? Most workers are immigrantsUnion Pac used Irish plains @ 6 miles / dayCentral Pac used Chinese thru Sierra Nevada

  • TCRR CompletedTook 7 years (1862-1869)The 2 crews met at Promontory SummitGolden spike, telegraph the newsImpactStandard gaugesSteel tracksTime zones

  • RR BenefitsFaster & more practical transportation of goodsLower costs of productionCreation of national marketsModel for big businessStimulation of other industries

  • The railroads showed the US just how massive business could get and how much money could be had by just a few individuals.There is a group of these guys, industrialists from this era, that amassed huge fortunes through various means.They are known by 2 different names:Robber BaronsCaptains of Industry(*Please note that these 2 names refer to the same group of people.)

  • Term #1: Robber BaronGerman nobles in 1200s that controlled the Rhine RiverUsed strategic positioning to take advantage of passersbyDemanded tolls from everyoneShips must pay or they cant passGot RICH simply because of their strategic location

  • Term #1: Robber BaronIn the Gilded Age, this was a negative term for rich industrialists.Built their fortunes by stealing from the public (strategic locations in business world)Drained natural resourcesDrove competitors out of businessPaid workers minimallyForced employees to work in dangerous & unhealthy conditions

  • Term #2: Captain of IndustryThis was a positive term for rich industrialists.CaptainsLeading us into a new era of commerceIncreasing the supply of goods by building factoriesRaising productivityExpanding marketsCreating jobs (raising standard of living for many)Philanthropists$billions in donations museums, libraries, colleges

  • John D. RockefellerFormed Standard Oil CompanyControlled up to 91% of oil industryRichest man everNumerous enormous donationsUniversity of Chicago

  • Andrew Carnegies GospelMade money in steel industryGospel of WealthBusinessmen should accumulate as much wealth as they can & redistribute to society(1) make money(2) give it all away strategicallyFlip side: Keep money away from ill-equipped people & organizationsTo benefit society as a whole

  • Social DarwinismApplied Darwins theory of natural selection to the business & social sectorsSurvival of the fittestNatural laws would dictate the success of those who deserve itJUST DONT INTERFERE!The government would largely stay out of businesss way during this time.

  • Business on a Larger ScaleTherefore, business grew.No longer cottage industries (mom/pop shops)Huge amt of capital neededDifficult to enter oligopoliesNationwide businesses because of transportation & communication advancesNew form of managementNot knowing all employees or aspects of operationProfessional manager

  • 2 distinct ways to create monopoliesVertical consolidationAndrew Carnegies steel company controlled every aspect of the supply chain (production to delivery).Horizontal consolidationJohn Rockefeller acquired all but 10% of the oil industry; if you wanted oil, you had to go thru him.

  • How did Rockefeller do it?He often dropped prices to below cost to drive out competitors.When the government cracked down on monopolies, they formed trusts instead.Merging companies under a board of trustees that acts as 1 accord but are technically not 1.Govt response = Sherman Antitrust ActEnacted 1890, but poorly enforced; ineffective

  • How did Rockefeller do it?He often dropped prices to below cost to drive out competitors.When the government cracked down on monopolies, they formed trusts instead.Merging companies under a board of trustees that acts as 1 accord but are technically not 1.Govt response = Sherman Antitrust ActEnacted 1890, but poorly enforced; ineffective

  • Great!!We have all this booming new business!But who do we have to do the actual work?

  • The Growing Work ForceDuring CW, laborers were scarce.Laws passed to encourage immigration14 million immigrants came by 1900.10 million Americans also migrated from rural to urban areas. Why?Farmers were poorBig drought (even poorer)Too much foreign competition (poorer still)

  • What was work like?Law = 10 hrs/day (rarely enforced)In practice = 12 hrs/day, 6 days/weekWage by productivity, not hourCalled pieceworkLocation: sweatshopDivision of laborFrederick Winslow Taylors studiesJoyless, boring, repetitiveDispensable workers

  • What was work like?Ruled by the clockStrict rules no tardiness, no talkingVery loud, dark, dirty, hot, poorly ventilated, w/ frequent fires & accidentsNo workers comp or insuranceMany young children had to workNo help providedAgainst Social DarwinismWould only encourage idleness