1. What were the factors that spurred America’s industrial growth?
14.3 Big Business Emerges
What were the factors that spurred America’s industrial growth?

2. Context The Age of Monopolies, Trusts, and Big Labor
America accomplished heavy industrialization in the post-Civil War era. Spurred by the transcontinental rail network, business grew and consolidated into giant corporate trusts, especially in the oil and steel industries.

3. Map: Expansion of Agriculture, 1860-1900
The amount of improved farmland more than doubled during these forty years. This map shows how agricultural expansion came in two ways--first, western lands were brought under cultivation; second, in other areas, especially the Midwest, land was cultivated much more intensely than before.
Copyright © Houghton Mifflin Company. All rights reserved.

4. Map: Industrial Production, 1919
Copyright © Houghton Mifflin Company. All rights reserved.

5. Experience When was the last time you felt that the “game was rigged”?
Have you experienced the power of a monopoly?
Do you trust “big business”?

6. Overview
Efficient use of expensive machinery called for “bigness” and consolidation proved more profitable than ruinous price wars

7. The Corporation Basically an “artificial legal person” Advantages
Secure capital, Limits on liability, Transferability of shares, perpetual life
Disadvantages
Public records, double tax, lack of personal connection between workers and employer

8. Monopolistic practices
Monopoly = a firm that completely controls an industry
Vertical integration = combining all phases of manufacturing in to one organization (Carnegie)
Horizontal consolidation = allying with competitors to monopolize a market (Rockefeller)

9. Other “Combinations”
Pools = secret agreement to fixes prices and output (Railroad)
Trust = More permanent than a pool. Stockholders of competing Companies turn over stock to a Board that coordinates companies within an industry to avoid competition (Standard Oil)
Holding company = a corporation composed of various competing enterprises within one industry (JP Morgan’s US Steel)

10. ALL OF THIS GIVES RISE TO TYCOONS
Profiteering from the Civil War gives rise to millionaire class (4000)
Millionaires capitalize on Transcontinental railroad, mechanization, industrialization, & expansion of markets
Surplus of raw materials, cheap labor, foreign investment ENCOURAGE CAPITALISM
Inventions  Industrialization 
More Inventions  More Industrialization
ALL OF THIS GIVES RISE TO TYCOONS

11. Key Inventors and Inventions
Alexander Graham Bell = telephone (1876)
Thomas A. Edison = electric lights, phonograph (c. 1890)
Bessemer Process/William Kelley = process to convert iron to steel (1850)
Typewriter 1867 (Christopher Sholes)
Automobile / Assembly line (Ford)

12. The Manufacture of Iron
Manufacturing iron was a hot and strenuous process, requiring workers to spend longs hours stoking hot blast furnaces. (Library of Congress)
Bessemer Process =
process to convert iron to steel
Copyright © Houghton Mifflin Company. All rights reserved.

13. Andrew Carnegie = Steel Kingpin
Steel is King : US pouring out 1/3 of world’s steel by 1890’s
“bootstrap” story: poor immigrant to tycoon
Controls all means of production, eliminates middle man
Sells to JP Morgan for 400 million
Becomes a philanthropist

14. J P Morgan – Banker’s Banker
Builds financial empire through railroads, banks, and holding companies
Buys out Carnegie and enters steel business
Uses trusts and holding companies to consolidate wealth and power
Forms US Steel Corporation – 1st ever corporation worth more than one billion $

15. Rockefeller – Standard Oil Corp.
Kerosene and then Automobiles drive up US oil consumption
Rockefeller ruthlessly uses horizontal consolidation to create largest monopoly
See “The Octopus,” Cartoon
1877 controls 95% of US’s oil refineries
Robber Baron’s Baron

17. Standard Oil Monopoly
Standard Oil Monopoly
Believing that Rockefeller's Standard Oil monopoly was exercising dangerous power, this political cartoonist depicts the trust as a greedy octopus whose sprawling tentacles already ensnare Congress, state legislatures, and the taxpayer, and are reaching for the White House. (Library of Congress)
Copyright © Houghton Mifflin Company. All rights reserved.

18. Compare the lives and beliefs of Carnegie and Rockefeller
using a Venn Diagram

19. Justifications for Big Business
Old Rich displaced by rule of the
“new rich”
Gospel of Wealth – discourages helping the poor by state
Laissez faire = “let it be”
Justified by Social Darwinism – survival of the fittest
Poor are poor due to lack of initiative

20. William Graham Sumner (1840-1910): The Challenge of Facts http://www
The truth is that the social order is fixed by laws of nature precisely analogous to those of the physical order. The most that man can do is by, ignorance and self-conceit to mar the operation of social laws. The evils of society are to a great extent the result of the dogmatism and self-interest of statesmen, philosophers, and ecclesiastics who in past time have done just what the socialists now want to do. Instead of studying the natural laws of the social order, they assumed that they could organize society as they chose, they, made up their minds what kind of a society they wanted to make, and they planned their little measures for the ends they had resolved upon. … let us not imagine that the task will ever reach a final solution or that any race of men on this earth can ever be emancipated from the necessity of industry, prudence, continence, and temperance if they are to pass their lives prosperously.

21. Taking on the Trusts
Trusts and robber barons defended by 14th amendment’s due process clause
Constitution’s “interstate commerce” clause inhibits states from controlling trusts
Sherman Anti-Trust Act of 1890
Largely ineffective (wording: Unreasonable restraint of Trade) and lack of enforcement, new forms of consolidation (holding Co.)
IRONY: Used effectively against unions

22. Industry and the South 1900: less manufacturing than before Civil War
South acts primarily as source of raw materials
Northerners control stock in Southern industry (especially the RR), discouraged industrialization due to lack of capital
Shift in cotton mills from NE to S in 1880’s
Cheap labor (virtually sharecropping) brings rural white southerners to mill towns, and then traps them there

23. Context The Age of Monopolies, Trusts, and Big Labor
Industrialization radically transformed the condition of American working people, but workers failed to develop effective labor organizations to match the corporate forms of business.

24. 14.4 Workers of the Nation Unite
Part 2 – Impact of Industrialization

25. Experience What do you think of unions?
Have you ever signed a petition?
Do you work now?
Do you think you are treated fairly?
Do you want to change your working conditions?
How would your boss/employer respond?

26. Impact of Industrialization
Urbanization
Erosion of Jeffersonian ideals
Women’s roles change
Delayed marriages
Smaller families
Accentuated class division
1900: 1/10 of US owns 9/10 of US’s wealth
1900: 2/3 of Americans are “wage slaves”
Workers’ lives increasingly precarious

28. Women telephone workers, Roanoke, Virginia
As this telephone office in Roanoke, Virginia, reveals, women office employees usually worked under the direct supervision of male managers. (Library of Congress)
Copyright © Houghton Mifflin Company. All rights reserved.

29. Child worker, glass factory
Child labor was common in the factories of 19th century America. (Library of Congress)
Copyright © Houghton Mifflin Company. All rights reserved.

30. Children in textile mills
Much of the new southern textile industry was based on child labor. These children were photographed by Lewis Hines in (National Archives/ Lewis Hines)
Copyright © Houghton Mifflin Company. All rights reserved.

31. Rise of Big Labor
Increasing economic change  social & economic disruption in workers’ lives
Labor strengthened by Civil War, then declines. Why?
Big Business doesn’t fight fair
Pools wealth to hire lawyers & scabs
“lockouts,” “yellow dog contracts,” blacklists”
“company towns”
National Labor Union – 1866

32. Knights of Labor Collective effort needed to counter trusts
Founded as a secret society in Why?
Led by Terence Powderly, Irish, utopian
Inclusive and Diverse:
men and women
white and black
skilled and unskilled
Broad (utopian? Socialist?) goals
HURT by Haymarket Square riot, 1886,Chicago
Associated with anarchists, falls into decline

33. Knights of Labor
Knights of Labor
Black delegate Frank J. Farrell introduces Terence V. Powderly, head of the Knights of Labor, at the organization's 1886 convention. The Knights were unusual in accepting both black and female workers. (Library of Congress)
Copyright © Houghton Mifflin Company. All rights reserved.

34. Management and Labor
Management and Labor
This cartoon, from Puck, April 7, 1886, shows Terence Powderly, in the center, advocating the position of the Knights of Labor on arbitration. The Knights urged that labor and management (identified here as "capital") should settle their differences this way, rather than by striking. Note how the cartoonist has depicted labor and management as of equal size, and given both of them a large weapon; management's club is labeled "monopoly" and labor's hammer is called "strikes." In fact, labor and management were rarely equally matched when it came to labor disputes in the late nineteenth century. (Puck, April 7, 1886)
Copyright © Houghton Mifflin Company. All rights reserved.

35. American Federation of Labor
Skilled workers split from Knights of Labor 1886
AF of L was elitist in membership, narrow in goals
Led by Samuel Gompers, Jewish cigar maker
Foe of socialism and “utopian” policies
Avoided politics and focused on union goals:
Better wages
Eight-hour day
Better working conditions
AF of L successful in many of its strikes and in meeting many of its goals

37. STRIKES TURN VIOLENT: p. 430-431
Great Strike of 1877
Haymarket Affair
Homestead
Strike
Pullman Strike
Year:
Cause/Dispute:
Industry:
Outcome/Effect:

38. Railroad strike of 1877
Railroad strike of 1877
This engraving depicts striking railroad workers in Martinsburg, West Virginia, as they stop a freight train on July 17, 1877, in the opening days of the great railway strike of that year. Engravings such as this, which show the strikers to be heavily armed, may or may not have been accurate depictions of events. But the photography of that day could rarely capture live action, and the technology of the day could not reproduce photographs in newspapers, so the public's understanding of events such as the 1877 strike was formed through artists' depictions. (Library of Congress)
Copyright © Houghton Mifflin Company. All rights reserved.

39. The Baltimore Railroad Strike & Riot of 1877

40. Key Players in the Labor Movement
Mother Jones and Pres. Calvin Coolidge
-helped reform Child Labor
Eugene V. Debs
- Socialist, leader of Pullman Strike, later leads IWW (Intl. Workers of the World)

41. Big Business v. Big Labor
Who was the winner?
Why? ( look on page 433)

42. QUESTIONS TO CONSIDER
Compare and Contrast Carnegie, Rockefeller, Morgan
Compare and Contrast the Labor Movement and the Populist Movement.
What were the Populists’ goals and why did they fail?
What were the causes and effects of industrialization?