THE RISE OF BIG BUSINESS AKA MONOPOLIES AKA

THE RISE OF BIG BUSINESS AKA MONOPOLIES AKA TRUST

CORPORATIONS DEVELOP Until 1900’s families owned small businesses that were local Corporations form that are owned by many people instead of one man Corporations increase their profits by: Paying low wages…upsets workers Broadened their advertising base Invested in inventors Many corporations formed monopolies in which they controlled the entire market (no competition)

TWO WAYS TO CREATE A MONOPOLY/TRUST Horizontal Integration: used commonly by Rockefeller One company buys out all of its competitors… creates monopolies that will later be banned by the federal government Vertical Integration: Buying up all the businesses that contribute to a final product Used commonly by Carnegie (steel company): Owned iron mines Owned RR that transported the iron to factories Owned the coal mines that extracted the coal to power his steel mills and railroads

“Robber Barons” Entrepreneurs who built monopolies that were unfair to consumers Swindled the poor Bought out competitors Seen as bad for the economy Rockefeller “Captains of Industry” Entrepreneurs that were seen as serving the nation in a positive way Creating jobs Stimulated innovation Were charitable Carnegie

SOCIAL DARWINISM “Survival of the fittest” promoted by Charles Darwin wealth was a measure of one’s inherent value and those who had wealth were most fit Only the wealthy should rise to the top Don’t use public funds to help the poor Said that the impoverished were unfit to reproduce

JOHN D. ROCKEFELLER Established the Standard Oil Company which held a monopoly on the oil industry Bought up smaller oil companies to create his own company (horizontal integration) Bought the oil wells, pipelines, retail outlets and railroads

ANDREW CARNEGIE Steel tycoon Used the Bessemer process (purifying iron into steel so that it was lightweight but still strong) to mass produce steel With so many skyscrapers going up steel in is huge demand Teamed up with J. P. Morgan to find investors in RR so that the demand for steel would increase Helped Carnegies create the industrial giant US Steel

OTHER ENTREPRENEURS Cornelius Vanderbilt: Made millions from the shipping and railroad business Became a symbol of the excesses during the Gilded Age George Westinghouse: Developed air brakes and a device that allowed trains to switch from one track to another

HORATIO ALGER In his books, Alger told stories of young men who won wealth and fame through honest hard work Advised Americans to seek success based on values Success through the strengths of their own efforts

GILDED AGE coined by Mark Twain describes the last decade of the 19 th century America had a rotten core but was covered with gold paint (gilded) the gap between the rich and the poor was too wide

GOVERNMENT REGULATION OF BIG BUSINESS Laissez-faire: little government interference in the economy “An American tradition” But the stronghold that these capitalists had on the economy worried the government Sherman Antitrust Act outlawed monopolies and trusts (companies owned by stockholders)…but not really enforced

TECHNOLOGICAL REVOLUTION WITH IMMIGRATION AND URBANIZATION COMES THE NEED FOR BETTER TRANSPORTATION/CONST RUCTION MORE EFFICIENT COMMUNICATION AND QUICKER PRODUCTION

INVENTION INVENTOR light bulb Thomas Edison power lines allows people to work longer hours George Westinghouse sends electricity over long telephone Alexander Graham Bell Bessemer process Henry Bessemer safety elevator Elisah Otis time zones Government electric trolley Stephen Field luxury car for train George Pullman typewriter EFFECT Many investors distances more jobs for women (operators) purifies iron to steel-lightweight skyscrapers made skyscrapers a reality with the modern elevator brake regulates RR schedules dangerous and ineffective, but a sign of things to come attracts travelers travel made easier fuels business, more jobs for women (typists)

INNOVATIONS Patents: grant giving the inventor exclusive rights to develop, use and sell an invention Number if patents sky rockets due to urbanization ◦ Promoted by the government and investors to improve industry and create new ones

TELEPHONE OPERATORS

THE BESSEMER PROCESS

SKYSCRAPERS/BRIDGES

ELECTRIC TROLLEY

PULLMAN LUXURY RAILCAR

TYPEWRITER/LIGHT BULB

LABOR UNIONS THE PROBLEM q q q employers get rich workers barely survive on their low wages long hours (12 hour shifts) 6 days a week in hot, dark and dirty factories dangerous work q Injuries were common due to improper training and faulty equipment q poor ventilation and loud machines

SWEATSHOPS The worst working environment Employed thousands of people Worked for long hours on machines Repetitive and boring Productivity was ensured through strict regulations Clock in and out, even for break time Workers were fined for breaking rules or working slowly

CHILD LABOR both parents worked meant the children worked in factories to stay out of trouble allowed children to make money (needed by family) had some of the most dangerous jobs…climb into machines and fix them stunted physical and mental growth eventually child labor laws were passed

COMPANY TOWNS Owned by the business and rented to employees Some employees were forced to live in these isolated communities Company controlled the company store where employees had to buy their goods…expensive Company wages pay the company rent and other bills Wage slavery

LABOR UNIONS FORM Complaints employer from workers are ignored by the complaints = threat to their business Government is on the side of the employer/business

TACTICS – USED BY EMPLOYERS Scabs: temporary workers to replace workers who strike Lockout: lockout employees until they agree to terms Injunction: court order to stop a strike Blacklist: list of workers who supported labor union and were kept from employment because of it Yellow dog contract: employee promises to not join a union in order to get hired

TACTICS – USED BY EMPLOYEES Collective bargaining: negotiate as a group Strike: refuse to work Mediation: negotiate with employer Arbitration: having a third party decide for the union and employer…the last hope Boycotts: refuse to buy

THE KNIGHTS OF LABOR Accepted skilled or unskilled workers (trade union) Actively recruited African Americans Encouraged boycotts and strikes Wanted increased wages, shorter hours and improved working conditions

AMERICAN FEDERATION OF LABOR Formed by Samuel Gompers a craft union (from a specific craft or skill) Did not accept women or AA Aimed to increase wages, lower working hours and better working conditions Wanted closed shops in which workers had to join the union to be hired

THE GREAT STRIKE Workers response wage cuts A nationwide strike Would not allow the train to move until wages were increased National Guard was called in, killed 10 strikers American sympathy for unions

HAYMARKET RIOT Workers strike for an 8 hour day Fights broke out and police were called A radical threw a bomb that killed a policeman and dozens of others Radicals are tried and executed Result: Americans are fearful of labor unions, Knights of Labor are blamed for the violence and their membership declines

HOMESTEAD STRIKE Carnegie Steel plant workers were striking against a wage cuts Pinkerton’s ( successful at breaking up strikes) are called into break up the strike, kill several strikers in a two week standoff American sympathy for unions

PULLMAN STRIKE George Pullman reduced wages at his luxury railcar factory did not lower rent within the company town Workers that tried to negotiate were fired Ask the American Railway Union under Eugene Debs to help in their strike…entire RR went on strike Railroad traffic stops Luxury cars are not needed if RR’s are not moving President Cleveland ordered (injunction) the strike to end…Debs was arrested Proof that the government favored business over employees Hinders support due to the disruption in business/trade