STANDARD(S) ADDRESSED: 11.2 Students analyze the relationship among the rise of industrialization, large-scale rural to urban migration, and massive immigration from Southern and Eastern Europe. LESSON OBJECTIVES/ GOALS/ SWBAT 1.Identify management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie. 2.Explain Social Darwinism and its effects on society. 3.Summarize the emergence and growth of unions. 4.Explain the violent reactions of industry and government to union strikes.

NEXT Section 3 Big Business and Labor The expansion of industry results in the growth of big business and prompts laborers to form unions to better their lives.

NEXT Carnegie’s Innovations Carnegie Makes a Fortune Andrew Carnegie one of first moguls to make own fortune Big Business and Labor 3 SECTION

BIG BUSINESS AND LABOR Andrew Carnegie was one of the first industrial moguls He entered the steel industry in 1873 By 1899, the Carnegie Steel Company manufactured more steel than all the factories in Great Britain combined

CARNEGIE BUSINESS PRACTICES Carnegie initiated many new business practices such as; Searching for ways to make better products more cheaply Accounting systems to track expenses Attracting quality people by offering them stock & benefits ANDREW CARNEGIE

NEXT Carnegie’s Innovations Big Business and Labor 3 SECTION New Business Strategies Carnegie searches for ways to make better products more cheaply Hires talented staff; offers company stock; promotes competition Uses vertical integration—buys out suppliers to control materials Through horizontal integration merges with competing companies Carnegie controls almost entire steel industry

CARNEGIE’S VERTICAL INTEGRATION Carnegie attempted to control as much of the steel industry as possible How? Vertical integration; he bought out his suppliers (coal fields, iron mines, ore freighters, and rail lines) in order to control materials and transportation

1. Vertical integration a. The process. by which a company buys out all of its suppliers; b. Gave a company total power over the quality and cost of its product; helped to create a monopoly

HORIZONTAL INTEGRATION Additionally, Carnegie bought up the competition through friendly and hostile takeovers This is known as Horizontal Integration; buying companies that produce similar products – in this case other steel companies MERGERS

2. Horizontal integration a. The process in which a company buys out, or merges with, its competitors; b. Gave a company control over its competition; helped to create a monopoly

Chapter 6; Section 3 A – What were Andrew Carnegie’s management and business strategies? –Carnegie’s used horizontal and vertical integration, buying out competitors as well as suppliers. –He also strove to improve machinery and manufacturing techniques.

NEXT Social Darwinism and Business Principles of Social Darwinism Darwin’s theory of biological evolution: the best- adapted survive Social Darwinism, or social evolution, based on Darwin’s theory Economists use Social Darwinism to justify doctrine of laissez faire 3 SECTION

SOCIAL DARWINISM The philosophy known as Social Darwinism has its origins in Darwin’s theory of evolution Darwin theorized that some individuals in a species flourish and pass their traits on while others do not CHARLES DARWIN LIMITED HIS FINDINGS TO THE ANIMAL WORLD

NEXT Social Darwinism and Business 3 SECTION A New Definition of Success Idea of survival, success of the most capable appeals to wealthy Notion of individual responsibility in line with Protestant ethic See riches as sign of God’s favor; poor must be lazy, inferior

SOCIAL DARWINISM Social Darwinists like Spencer believed riches was a sign of God’s favor, and being poor was a sign of inferiority and laziness HERBERT SPENCER WAS THE ONE WHO COINED THE PHRASE “SURVIVAL OF THE FITTEST”

3. Social Darwinism a. An economic theory based on Darwin's theory of biological evolution; it asserted that free competition would ensure success or failure in business; b. Glorified big business and tycoons; also discouraged government interference with big business

Complete control of all aspects of production.

4. Monopoly a. Complete control over an industry's production, quality, wages, and prices; b. Eliminated a company's competition, allowing it to increase profits

NEXT 3 SECTION Growth and Consolidation Businesses try to control industry with mergers— buy out competitors Buy all others to form monopolies—control production, wages, prices Holding companies buy all the stock of other companies John D. Rockefeller founds Standard Oil Company, forms trust - trustees run separate companies as if one Fewer Control More Continued...

BUSINESS GROWTH & CONSOLIDATION Mergers could result in a monopoly (Trust) A monopoly is complete control over an industry An example of consolidation: – In 1870, Rockefeller Standard Oil Company owned 2% of the country’s crude oil –By 1880 – it controlled 90% of U.S. crude oil CHICAGO’S STANDARD OIL BUILDING IS ONE OF THE WORLD’S TALLEST

A holding company is a company or firm that owns other companies' outstanding stock. The term usually refers to a company that does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

5. Holding company a. A corporation that does nothing but buy out the stock of other companies; b. Helped to create monopolies

(REAL TRUST)

6. Trust a. A large corporation made up of many companies that receive certificates entitling them to dividends on profits earned by all the companies combined; b. Helped to create monopolies

Chapter 6; Section 3 B – What strategies enabled big businesses to eliminate competition? –Big business formed partnerships to create monopolies. –They merged small companies into large corporations. –They aimed for total control of an industry, so that they could fix prices and wages to their advantage.

NEXT continued Fewer Control More Rockefeller and the “Robber Barons” Rockefeller profits by paying low wages, underselling others - when controls market, raises prices Critics call industrialists robber barons - industrialists also become philanthropists 3 SECTION Continued...

ROBBER BARONS Alarmed at the cut- throat tactics of industrialists, critics began to call them “Robber Barons” Famous “Robber Barons” included Carnegie, Rockefeller, Vanderbilt, Stanford, and J.P. Morgan

ROBBER BARONS WERE GENEROUS, TOO Despite being labeled as greedy barons, rich industrialists did have a generous side When very rich people give away lots of money it is called “Philanthropy” Carnegie built libraries, Rockefeller, Leland Stanford, and Cornelius Vanderbilt built schools ROCKEFELLER CHAPEL – UNIVERSITY OF CHICAGO

7. The perception of tycoons as “robber barons” Put tycoons on the defensive; turned public opinion against them and their businesses; finally, encouraged government regulation of big business

Chapter 6; Section 3 C – Do you agree with Carnegie’s defense of millionaires? Why or why not? –Agree – Everyone is independent on the millionaires to run businesses efficiently and to provide for the needs of the surrounding communities. –Disagree – if the millionaires’ control everything, they will always make people work unfairly and pay unfair prices.

NEXT continued Fewer Control More 3 SECTION Continued... Sherman Antitrust Act Government thinks expanding corporations stifle free competition Sherman Antitrust Act: trust illegal if interferes with free trade Prosecuting companies difficult; government stops enforcing act

SHERMAN ANTI-TRUST ACT In 1890, the Sherman Anti- Trust Act made it illegal to form a monopoly (Trust) Prosecuting companies under the Act was not easy – a business would simply reorganize into single companies to avoid prosecution Seven of eight cases brought before the Supreme Court were thrown out

8. Sherman Antitrust Act Made trusts (and monopolies) illegal in interstate and international trade; made…

NEXT continued Fewer Control More Business Boom Bypasses the South South recovering from Civil War, hindered by lack of capital North owns 90% of stock in RR, most profitable Southern businesses Business problems: high transport cost, tariffs, few skilled workers 3 SECTION

South Lags Behind Business involves innovation and competition, the south was crippled by its use of slaves. They were not particularly interested in changing their attitude. In the North with the absence of slavery there was a generally far greater degree of ambition and inventiveness in the workers of the north.

Chapter 6; Section 3 D – How did economic factors limit industrialization in the South? –The south had a devastated economy from the civil War. –It was at the mercy of Northern railroads companies for transporting goods to market. –It also paid added costs for raw materials due to high tariffs.

NEXT Labor Unions Emerge Long Hours and Danger Northern wages generally higher than Southern Exploitation, unsafe conditions unite workers across regions Most workers have 12 hour days, 6 day workweeks - perform repetitive, mind-dulling tasks - no vacation, sick leave, injury compensation To survive, families need all member to work, including children Sweatshops, tenement workshops often only jobs for women, children - require few skills; pay lowest wages 3 SECTION Continued...

WORKERS HAD POOR CONDITIONS Workers routinely worked 6 or 7 days a week, had no vacations, no sick leave, and no compensation for injuries Injuries were common – In 1882, an average of 675 workers were killed PER WEEK on the job

NEXT continued Labor Unions Emerge Early Labor Organizing National Labor Union—first large-scale national organization 1868, NLU gets Congress to give 8-hour day to civil servants Local chapters reject blacks; Colored National Labor Union forms NLU focus on linking existing local unions Noble Order of the Knights of Labor open to women, blacks, unskilled Knights support 8-hour day, equal pay, arbitration 3 SECTION

LABOR UNIONS EMERGE As conditions for laborers worsened, workers realized they needed to organize The first large-scale national organization of workers was the National Labor Union in 1866 The Colored National Labor Union followed

NEXT Union Movements Diverge Craft Unionism Craft unions include skilled workers from one or more trades Samuel Gompers helps found American Federation of Labor (AFL) AFL uses collective bargaining for better wages, hours, conditions AFL strikes successfully, wins higher pay, shorter workweek 3 SECTION Continued...

CRAFT UNIONS Craft Unions were unions of workers in a skilled trade Samuel Gompers led the Cigar Makers’ International Union to join with other craft unions in 1886 Gompers became president of the American Federation of Labor (AFL) He focused on collective bargaining to improve conditions, wages and hours

NEXT Union Movements Diverge 3 SECTION Continued... Industrial Unionism Industrial unions include skilled, unskilled workers in an industry Eugene V. Debs forms American Railway Union; uses strikes

INDUSTRIAL UNIONISM Some unions were formed with workers within a specific industry Eugene Debs attempted this Industrial Union with the railway workers In 1894, the new union won a strike for higher wages and at its peak had 150,000 members EUGENE DEBS

NEXT continued Union Movements Diverge Socialism and the IWW Some labor activists turn to socialism: - government control of business, property - equal distribution of wealth Industrial Workers of the World (IWW), or Wobblies, forms 1905 Organized by radical unionists, socialists; include African Americans Industrial unions give unskilled workers dignity, solidarity 3 SECTION

SOCIALISM AND THE IWW Some unionists (including Eugene V. Debs) turned to a socialism – an economic and political system based on government control of business and property and an equal distribution of wealth among all citizens The International Workers of the World (IWW) or Wobblies, was one such socialist union PROMOTIONAL POSTER FOR THE IWW

NEXT continued Union Movements Diverge 3 SECTION Other Labor Activism in the West Japanese, Mexicans form Sugar Beet and Farm Laborers’ Union in CA Wyoming Federation of Labor supports Chinese, Japanese miners

Chapter 6; Section 3 E – How did industrial working conditions contribute to the growth of the labor movement? –Poor working conditions and low wages forces workers to organize into unions to demand fair treatment.

Chapter 6; Section 3 F – How did craft unions and industrial unions differ? –A craft union included skilled craftsmen from many industries. –An industrial union included skilled and unskilled workers from a specific industry.

NEXT Strikes Turn Violent The Great Strike of 1877 Baltimore & Ohio Railroad strike spreads to other lines Governors say impeding interstate commerce; federal troops intervene 3 SECTION Continued...

STRIKES TURN VIOLENT Several strikes turned deadly in the late 19 th century as workers and owners clashed The Great Strike of 1877: Supported by Mary Harris Jones Workers for the Baltimore and Ohio Railroad struck to protest wage cuts

STRIKES SPREADS Other rail workers across the country struck in sympathy Federal troops were called in to end the strike

NEXT Strikes Turn Violent 3 SECTION Continued... The Haymarket Affair 3,000 gather at Chicago’s Haymarket Square, protest police brutality Violence ensues; 8 charged with inciting riot, convicted Public opinion turns against labor movement

THE HAYMARKET AFFAIR A bomb exploded near the police line – killing 7 cops and several workers Radicals were rounded up and executed for the crime Labor leaders continued to push for change – and on May 4, ,000 people gathered at Chicago’s Haymarket Square to protest police treatment of striking workers

Chapter 6; Section 3 G – How did the 1877 strike and Haymarket cause the public to resent the labor movement? –The public began to associate lobar activist with violence and danger.

NEXT continued Strikes Turn Violent The Homestead Strike 1892, Carnegie Steel workers strike over pay cuts Win battle against Pinkertons; National Guard reopens plant Steelworkers do not remobilize for 45 years 3 SECTION Continued...

THE HOMESTEAD STRIKE Even Andrew Carnegie could not escape a workers strike Conditions and wages were not satisfactory in his Steel plant in Pennsylvania and workers struck in 1892 Carnegie hired Pinkerton Detectives to guard the plant and allow scabs to work Detectives and strikers clashed – 3 detectives and 9 strikers died The National guard restored order – workers returned to work

NEXT continued Strikes Turn Violent 3 SECTION Continued... The Pullman Company Strike Pullman lays off 3,000, cuts wages but not rents; workers strike Pullman refuses arbitration; violence ensues; federal troops sent Debs jailed, most workers fired, many blacklisted

THE PULLMAN STRIKE After the Pullman Company laid off thousands of workers and cut wages, the workers went on strike in the spring of 1894 Eugene Debs (American Railroad Union) tried to settle dispute which turned violent Pullman hired scabs and fired the strikers – Federal troops were brought in Debs was jailed

NEXT continued Strikes Turn Violent Women Organize Women barred from many unions; unite behind powerful leaders Mary Harris Jones— most prominent organizer in women’s labor - works for United Mine Workers - leads children’s march Pauline Newman—organizer for International Ladies’ Garment Workers 1911 Triangle Shirtwaist factory fire results in public outrage 3 SECTION

WOMEN ORGANIZE Although women were barred from most unions, they did organize behind powerful leaders such as Mary Harris Jones She organized the United Mine Workers of America Mine workers gave her the nickname, “Mother Jones” Pauline Newman organized the International Ladies Garment Workers Union at the age of 16

NEXT continued Strikes Turn Violent 3 SECTION Management and Government Pressure Unions Employers forbid unions; turn Sherman Antitrust Act against labor Legal limitations cripple unions, but membership rises

EMPLOYERS FIGHT UNIONS The more powerful the unions became, the more employers came to fear them Employers often forbade union meetings and refused to recognize unions Employers forced new workers to sign “Yellow Dog Contracts,” swearing that they would never join a union Despite those efforts, the AFL had over 2 million members by 1914

Triangle Shirtwaist Company

Chapter 6; Section 3 H- What factors made the Triangle Shirtwaist fire so lethal? –The factory had only one fire escape and no sprinklers. –The factory was full of cloth and oil.