Big Business Labor How do the Robber

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Big Business & Labor How do the “Robber Barons” make their fortunes?

The Robber Barons • Businessmen and bankers who amassed huge personal fortunes, by using unfair business practices • Justified actions using Social Darwinism – survival of fittest! 1) A. Carnegie - Steel 4) L. Stanford railroad 2) JP Morgan. Banking/Steel 5) C. Vanderbilt – Ships, railroad 3) J. Rockefeller Oil 6) J. Gould railroad

Andrew Carnegie • Carnegie immigrates from Scotland in 1848 at age 12 • Clerk for the Superintendent the Pennsylvania Railroad by age 18. • Does great job, boss offers him stock in company • Become Superintendent of RR at age 24, starts investing money in other companies (oil, metal, cables) • Forms Carnegie steel company in 1870 s, most successful co in US • Sells Carnegie Steel to JP Morgan for HUGE profit, Morgan forms US Steel in 1901

Carnegie’s Business Strategy 1. Vertical Integration: Buy out suppliers of needed products and services so you control production top to bottom 2. Horizontal Integration: buy out competing producers so you are only co that offers that business 3. Pay workers low wages

John Rockefeller & Standard Oil Trust • Rockefeller makes Standard Oil one of the biggest and most profitable American cos • • Rockefeller tactics: 1. paid very low wages 2. lowered prices to force competition to sell 3. to avoid monopoly laws he formed trusts • A trust bought out companies, not Rockefeller directly. However, Rockefeller actually controlled the trust

Government Reaction to “robber barons” -Dilemma: Govt wants to protect free market, but feared big business & “trusts” are hurting competition -Big business says were not “robbers” but “captains of industry” -Congress passes Sherman Anti-trust Act, 1890, makes it illegal to form a trust that interfered with free trade/competition - Goal: to stop monopolies but difficult to enforce

Problems in the workplace • Employees also faced harsh conditions: 1) 6 -7 day weeks, 12+ hour days, no vacation, no sick leave, low wages 2) Poor physical conditions: polluted and often dangerous • “Robber Barons” also take advantage of millions of women/children who work for even lower wages Reaction of Labor - Craft Unionism: Samuel Gompers forms AFL for skilled workers, use strikes and collective bargaining - Industrial Unionism: Knights of Labor form (for everyone else – unskilled, Af. Ams, women) - International Workers of the World (IWW) was union formed of socialists and labor leaders (all workers worldwide)

Great RR Strike of 1877 -80, 000 railroad workers strike in West VA -Shut down most railroad traffic for week -Other workers join strike, strikers become violent, property damage begins -President Hayes authorizes use of federal troops to end the strike

Haymarket Riot, 1886 - 3, 000 gather to protest the police killing of striker, Chicago Mayor sends in extra police to breakup the protest -Anarchist throws bomb into police line, 7 police killed -Most blame unions for violence, public opinion turns against unions, connecting them to violence

Homestead Strike, 1892 -President of Carnegie Steel Henry Frick announces wage cut - When workers strike, Frick hires strike breakers(“scabs”) and brings in the Pinkerton Detectives to protect the scabs -Pinkertons, strikers & townspeople clash, 12 die in violence, strike ends Pullman Strike, 1894 • 4 K workers at Pullman Rail strike due to wage & job cuts • Strike led by Eugene V. Debs’ Am. Railway Union shuts down freight delivery west of Michigan • Pullman hires strike breakers (scabs), violence ensues, President Cleveland sends in Army, Debs jailed

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