Presentation on theme: "1 14.3 Big Business Emerges 1865-1900 What were the factors that spurred Americas industrial growth?"— Presentation transcript:
Big Business Emerges What were the factors that spurred Americas 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.
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
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 7
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) 8
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 Morgans US Steel)
10 Tycoons 1.Profiteering from the Civil War gives rise to millionaire class (4000) 2.Millionaires capitalize on Transcontinental railroad, mechanization, industrialization, & expansion of markets 3.Surplus of raw materials, cheap labor, foreign investment ENCOURAGE CAPITALISM 4.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)
13 Andrew Carnegie = Steel Kingpin Steel is King : US pouring out 1/3 of worlds steel by 1890s 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 – Bankers 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 – 1 st 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 USs oil refineries Robber Barons Baron
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 ( ): The Challenge of Facts 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 14 th amendments due process clause Constitutions 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 1880s 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.
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 Womens roles change –Delayed marriages –Smaller families Accentuated class division –1900: 1/10 of US owns 9/10 of USs wealth –1900: 2/3 of Americans are wage slaves Workers lives increasingly precarious
31 Rise of Big Labor Increasing economic change social & economic disruption in workers lives Labor strengthened by Civil War, then declines. Why? Big Business doesnt 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
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
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?