2Important Questions to Ponder What factors contributed to the rise of American industry?How did government policy on business lend itself to abuse?In what ways did the entrepreneurs help to shape the American industrial revolution?How did Labor address the abuses of the industrial revolution?
4Factors Encouraging Industrial Growth 1791 – Alexander Hamilton issues the Report on ManufacturersHamilton believed wealth of America’s natural resources assured development of industryAmerica’s natural resources not fully developed before Civil War
5Constitution and Government Policy the Constitution assisted the growth of America industry and business in the following ways:coining of money by Federal Government provided stable currency for business transactionsregulating interstate trade made possible “national laws” for industry and transportation
6Constitution and Government Policy tariffs protected against foreign competitionan established system of patents protected and encouraged inventors5th and 14th Amendments provided that no person could be deprived property without due process of law
9Corporationsa business arrangement whereby capital is raised by selling shares of stock in return for profit and partial ownership in a companyprofit and ownership based on amount of shares purchased by each individual investorlosses limited to amount of the individual investment
10Monopolies huge corporations formed in last half of the 19th Century by 1900 less than 2% of manufacturing companies produced 50% of all manufactured goodssome companies became monopolies:gained complete control over the price and production of a particular item (oil, steel, flour, etc.)all serious competition eliminated
11RegroupWhat did Hamilton believe assured the development of American industry?Whose responsibility of interstate commerce?What is the purpose of a patent?What is a corporation?What is a monopoly?
13The EntrepreneursEntrepreneur: a person who organizes, manages and assumes the risk of creating and running a business. They also claim the lion’s share of the profits.Can you provide a modern example of an entrepreneur?
14EXAMPLE 1900 – J.P. Morgan formed the United States Steel Corporation: merged a number of steel corporationsU.S. Steel became the world’s largest corporation (monopoly)
16United States Steel Corporation Corporate MonopolyUnited States Steel Corporation1900
17Entrepreneursbusiness leaders in post – Civil War period referred to as either of the following:Organize and manage risks of business & take lion’s share of the profitsBuy & sell companiesKnown as “robber barons” for negative actionKnown as captains of industry for the positives
19John D. Rockefellerdeveloped the Standard Oil Company into enormous corporate monopoly:controlled 95% of America’s refined oil businessused horizontal integrationhorizontal integration – a business practice whereby a corporation buys up rival companies for the purpose of eliminating competition
20Refined Oil Standard Oil Company Horizontal Integration John D. Rockefeller
22Andrew CarnegieCarnegie Steel Company produced over one – half of the nation’s steelused vertical integration to develop his corporationvertical integration – a form of business organization where a corporation acquires businesses that contribute to the completion of a finished product
23SteelCarnegie Steel Company Vertical IntegrationAndrewCarnegie
24Henry Ford produced the Model T Ford assembly line and mass production techniques made car affordable for average personused vertical integration techniquespaid high wagesrefused to recognize labor unions
25AutomobilesFord Motor Company Model T Ford Assembly LineHenryFord
26“Competition is the keen cutting edge of business, always shaving away at costs”. Henry Ford
28Regroup What is an entrepreneur? Examples? What is horizontal integration?What is vertical integration?How did the assembly line dramatically change industrial production? What was the benefit for the consumer? The Producer?
30Laissez – fairea “hands off” policy, whereby government interferes with business as little as possiblebelieved government should not regulate business beyond providing an atmosphere allowing business development, such as the following:stable currencyprotective tariffs
31Competition and Absorption large corporations merged and combined to do the following:eliminate competitionincrease profitsIncrease business efficiencymany Americans opposed monopolies:feared lack of competitioncalled for laws to regulate big business abuses (especially railroads)
34Social Darwinism Used to justify imperialism and industrialism Based on writing of Charles DarwinOrigin of the Speciesplants and animals evolved over timethrough “natural selection” certain species lived while others died out “survival of the fittest”Darwin’s theory dealt only with plant and animal kingdoms, not human society
35“While the law of competition may sometimes be hard… it ensures the survival of the fittest”. Andrew Carnegie
37Herbert Spencer Applied theory of evolution to human society Social Statics (book title):human society evolves through competitioncertain people advance over others through hard work, intelligence or strength (survival of the fittest)human progress is natural and can not be stoppedall progress in the result of competitionCoined term “survival of the fittest”
39Herbert Spencer Spencer’s theory called “Social Darwinism embraced by most AmericansWhat should the role of government be?How much should the government be involved in our economy?Should the market determine prices, conditions and so on?
40“All socialism involves slavery”. Herbert Spencer
41Andrew Carnegie Believed in Social Darwinism Carnegie put forth his social philosophy in a series of magazine articles entitled, “The Gospel of Wealth”
42Andrew Carnegie Gospel of Wealth (1889) stated the following: poverty the result of a character flawhard work and thrift would lead to successgovernment should not interfere with competitive struggle between individualsgovernment’s only function is to maintain order and protect propertylaissez – faire the most efficient economic policythe rich are obligated to help society through philanthropy
48Henry George disagreed with the “Gospel of Wealth” angered at a society of poverty amidst great wealthsocial philosophy put forth in book entitled, “Progress and Poverty”
49Henry George Progress and Poverty stated the following: rich do not have higher moral character than the poorrich were lucky in grabbing the best land and other sources of wealth firstrich should therefore be heavily taxedideas of Henry George rejected by most Americansideas considered too radical
51“The tragedy of the poor is the poverty of their aspirations”. “What has destroyed every previous civilization has been…the unequal distribution of wealth and power”. Henry George“The tragedy of the poor is thepoverty of their aspirations”.Adam Smith
52RegroupWhat argument was used to justify imperialism and industrialism?What is “Social Darwinism”?What arguments did Carnegie make in the Gospel of Wealth?What is philanthropy?
54The Gilded Age (1877 – 1900)an era of great wealth and industrializationnoted for conspicuous consumptionconspicuous consumption – the habit of those who had money to spend it in ways that made their wealth most obvious (enormous mansions, yachts, elaborate balls and parties)
59The Gilded Age (1877 – 1900)upper classes also considered philanthropy a social responsibility to help the less fortunateRockefeller and Carnegie gave away hundreds of millions of dollarsmany workers poor and believed they were exploited during the Gilded Agefactory and mine workers received very low wagescalled “wage slavery” by workers and labor unions
61The Gilded Age (1877 – 1900)many Americans demanded government action against the power and perceived abuses of big businessOWS, anyone?“It’s not fair”!!
62“God gave me my money. I believe the power to make money is a gift from God…Having been endowed with the gift…it is my duty to make money and still more money and use the money… for the good of my fellow man according to the dictates of my own conscience”. John D. Rockefeller
63Sherman Anti-Trust Act (1890) passed by the U.S. Congress to do the following:outlaw any monopoly or conspiracy in “restraint of trade”aimed at preventing monopolies from controlling the marketCreate more competition which would have the effect of lowering prices on consumer goods
64Regroup What was the Gilded Age and what made it gilded? What is conspicuous consumption?What was the Sherman Antitrust Act and why was it perceived as necessary by many Americans?
66Labor Movement Beginsunion membership and activity developed rapidly in industrial eraworking conditions improved through collective bargainingcollective bargaining – the process whereby union leaders represent union members in negotiations with management over the issues of wages, hours, conditions etc.
69Knights of Labor organized by Uriah Stephens in 1869 accepted skilled and unskilled workersall meetings kept secretIn 1879 the K of Lends secrecy of union meetingsmembership grows into nation’s largest union
71Knights of Labor the K of L had the following major goals: an eight hour workdayno child laborequal pay for men and womenthe formation of cooperatives so workers could work for themselves
72Knights of Labor Haymarket Riot (1886): a violent strike in Chicago’s Haymarket Squareseven policemen killed by a bombKnights blamed and accused of being anarchistsmembership in the K of L therefore declined
74American Federation of Labor Founded by Samuel Gompers in 1886larger membership than the KnightsAFL favored the following “bread and butter” goals:eight hour work dayssafer working conditionshigher wagesworkers compensation insurancereduced immigration
75American Federation of Labor AFL had the following membership policies:only accepted skilled membersbelieved unskilled workers easily replaceableskilled workers therefore had more bargaining powerAFL used the following methods to achieve their goals:favored cooperation with managementlobbied for pro – labor legislation on state and national levelsreluctant but willing to strike
79Homestead Strike (1892)Unionized iron and steel workers opposed pay cutsAmalgamated Association of Iron and Steel WorkersHomestead Strike failed for the following reasons:state militia used to put down violenceunion bankruptedunion lost public sympathy and support
80Pullman Strike (1894)Pullman Company built a company town (Pullman, Illinois)provided housing and stores for employees1894 – company cut wages 25 – 40%rents and company store prices not cutcompany refused to negotiate with workers
81Pullman Strike (1894) American Railway Union: led by Eugene V. Debsorganized nationwide boycott against Pullmanboycott prevented delivery of federal mailDebs jailed for disobeying court injunctioninjunction – a court order prohibiting a certain action (strike,boycott, protest march, etc.)
83Debs Calls For Nationwide Boycott Against Pullman
84Pullman Strike (1894) The Pullman Strike had the following results: army used to crush the strike12 people killed2000 railway cars destroyeda court injunction successfully broke strike
85Results of Labor Strikes violent strikes lost unions public support and sympathy:viewed as anarchist and too radicalespecially after Russian Revolution (fear of communism)union leadership hoped to reach agreement through the following techniques:collective bargainingMediationarbitration
86“The most heroic word in all languages is revolution”. Eugene V. Debs “It is impossible for capitalists andlaborers to have common goals”.Samuel GompersPresident, AFL
87Results of Labor Strikes collective bargaining – negotiation between management and labor:should negotiations break down a third party is sought mediation – a neutral third party seeks a solution between labor and managementmediator’s is solution “non – binding”arbitration – labor and management agree to abide by the decision of a neutral third party
88Regroup What is collective bargaining? What is the result/product of collective bargaining?What were the “bread and butter” goals of the AFL?What two major strikes took place during this time? What were the causes/results?
89Important Questions to Ponder What factors contributed to the rise of American industry?How did government policy on business lend itself to abuse?In what ways did the entrepreneurs help to shape the American industrial revolution?How did Labor address the abuses of the industrial revolution?