The Rise of Big Business

Corporations!!!!!!!• A form of group ownership by a number of

different people

• Took advantage of expanding markets

• Investors lose no more than original investment

• Good for risky industries like RR or mining

Advantages of a Corporation• Access to huge amounts of

money• Funded new technology • Ran large plants across the

country• Operated in several

different regions• Same rights as an

individual– Buy & sell property– Sue in courts

• Maximized profits• Decreased cost of

production• Established Research labs

to improve products• Paid lowest possible wages

to works• Paid little for raw materials• Widely advertised

MONOPOLIES/OLIGOPOLIES• Attempted monopolies– Complete control of a product or service– Bought out or ruined competitors

• Oligopolies – a few, two or three, businesses control an entire market

Examples today – Fast Food, Cars, Drug stores and Supermarket chains

• Cartels—businesses making same product limit production and keep prices high – work together

CorporationsIntegration – Growth

• Horizontal: Combining many firms in the same business

• Vertical: Gaining control of the many different businesses that make up all phases of a product’s development– Standard Oil Co. : oil

wells/pipelines, tank cars/railroads, retail outlets

Trust

• Companies assign their stock to a board of trustees

• Board combines stock into new organization & runs the organization

• Rockefeller used this to get around an Ohio law that said he couldn’t buy out competitors or own their stock

“Robber Barons” v. “Captains of Industry”

• Feeling that trusts, cartels, & monopolies gave an unfair advantage

• Small businesses bought out or destroyed

• Unfair high prices for consumers

• Poor were being swindled

• Businessmen served the country positively

• Provided jobs for the large & growing workforce

• Developed efficient business practices

• Developed technology, stimulated economy, & innovation

• Philanthropists– Universities, museums,

libraries—help poor rise

John D. Rockefeller• Oil tycoon• Standard Oil Company• World’s first billionaire• Gave 10% of each

paycheck to the church• Used horizontal & vertical

integration• Made deals with railroads

to increase profits

Andrew Carnegie• Steel Tycoon—Carnegie Steel

Company• From Rags to Riches-Scottish

immigrant• Second richest man in history• Donated to establish Libraries,

schools, universities• Donated over 80% of his

fortune • “Gospel of Wealth”– Responsibility of wealth

OTHER GREAT ENTERPRENEURS

VANDERBILTS - Transportation PULLMAN – Railroad Cars

ENTREPRENEUR USE OF WEALTH?

BILTMORE ESTATE - ASHEVILLE PULLMAN’S ESTATE

Social Darwinism• Darwinism applied to

American capitalism• Theory developed by Charles

Graham Sumner• Wealth is a measure of a

person’s inherent value– The wealthy were the most

“fit”

• Argued for laissez-faire policies– Intervention would disrupt

natural selection—wrong to use public funds to aid poor

Used for discrimination!

The Organized Labor Movement

Workers & Big Business Clash

Workers• Low wages• Immigrants—large % of workforce• Desperate for any work• 12 hour days/6 days a week• Worked long hours on machines• Dangerous working conditions

Worker Hardships• Sweatshops– Dirty, Dangerous,

overheated, bad ventilation, poor lighting

• Accidents—faulty equipment & lack of proper training

• Strict regulation to ensure productivity

• Fines for breaking rules & working slowly

Child Labor• Most women worked in

factories• Both parents worked• Brought children to work

– Kept them off streets, and they could earn a wage

• Nearly 1 in 5 children between 10-16 ages worked– Mines, factories, textiles,

canneries, newsboys/messengers,

• Harsh conditions • Stunted physical & mental

growth

Company Towns • Many workers lived in

communities owned by business & rented to employees

• Forced to buy goods at the “company store”– Goods sold on credit with high

interest• Most of wages owed back to

employer• “Wage slavery”

– Employees couldn’t leave until they repaid loans, or they would be arrested

• Created a workforce that was forced to be loyal

NATIONAL LABOR UNION1. leader William Sylvis2. made up of individual unions from across the country3. 300 local union chapters4. urged to admit women and AfricanAmericans 5. huge membership 6506. success: 8 hour work day for government employees7. Labor Reform Party - ran a Candidate8. Only lasted for a few yearsfor President.

National Colored Labor UnionLed by Isaac Meyers

Had to be created becauseSoutherners refused to join the union if blacks were accepted

Met in large churches to plan their strategies

INTERNATIONAL LADIES GARMENT WORKERS UNION

1. leaders- Pauline Newman- Mary Harris Jones 2. Issues - working conditionsTriangle Shirtwaist fire in New York – 145 workers died in alocked work area- fought for fire codes - 54 hour work week for women and minors, - prohibition of Sunday work- abolition of child labor

The Railroad Strikes• 1877--Workers went on strike in response to wage cuts – B&O railroad began the strike-Violence and massive destruction in several cities• Strikebreakers hired to perform jobs of striking workers and needed protection• State and federal government sent in troops to restore order• Set the stage for following violent strikes

Homestead Strike• Carnegie Steel plant cut

wages• Union called a strike• Henry Frick, Carnegie’s

partner, brought in the Pinkerton agents – a private police force

• Pinkertons and strikers engage in standoff for two weeks

• killed several strikers & wounded many others

Pullman Strike of 1893• Workers laid off and wages cut by

25%• Workers tried to negotiate with

Pullman, but he shut down the plant

• Workers turned to the American Railway Union

• Eugene V. Debs• A.R.U. called for a nationwide

strike• By June of 1894, 300,000 rail

workers had walked off the job• Strikers were able to disrupt

railroad traffic and mail delivery

Innovation & Industry

American Industrial Growth• Factories increase production– New tools and production methods for larger numbers

of goods– Mass production – Assembly lines– Long work days

• Transformation of the food Industry– Methods of processing food for shipping

• Railroads expand markets and shipping for resources

Natural Resources—Coal • Abundant resources

help fuel growth

• Coal mines on Eastern Seaboard –fuel for powering steam locomotives and factories

Discovery of Oil• World’s first oil well

drilled in 1859–Titusville,

Pennsylvania–Edwin Drake

• Drilled Oil cheap to produce/easy transport

• Oil industry grew quickly—encouraged growth in kerosene & gasoline industries

Oil before Drake

• Oil used for light and fuel

• Oil obtained from boiled down whale blubber– Time consuming– Scarcity of whales

Entrepreneurs• Flourished in system of Capitalism & Free

Enterprise

• Fueled industrialization by investing in products or ideas to make a profit

• Invested in factories, railroads, & mines

Government & Business

• Gave free land to railroad builders • Use of protective tariffs• Laissez-faire policies• Patent—granted by the federal

government to an inventor for exclusive rights over their invention• Encourages invention and

innovation

• 1876—Established research lab at Menlo Park, NJ

• Received more than 1,000 patents for new inventions– Battery for electric car– Mechanical voice recorder– Motion Picture Camera– Improved the Light Bulb

THOMAS EDISON

George Westinghouse

• Technology for sending electricity over long distances• Powered homes,

factories, and city streets• Patent for train air

brakes in 1869

Alexander Graham Bell• 1876—patented the

telephone• Spread quickly• By 1881, more than 34,000

miles of wire strung• Long distance lines connected

cites in the Northeast & Midwest

• More than 1 million telephones in the United States by 1900

• 1896—Guglielmo Marconi invented wireless telegraph

Henry Bessemer & Steel

• Bessemer Process - developed in the 1850s in England by Henry Bessemer

• Process for purifying iron—resulted in strong and lightweight steel!

Steel and Innovation• Quickly adapted by

Americans– out producing British in steel

manufacture by 1890

• Steel used for skyscrapers, elevators, suspension bridges – roadway suspended by steel

cables

• Brooklyn Bridge (1883)• Flatiron building(1902)– one of first skyscrapers

ELISHA OTIS

Worked on the elevator system in the U.S.

Created a system for abraking system for the elevator

His invention made skyscrapers practical

Steel made them possible!!!!

C.F. Dowd’s Time Zones

• Throughout the 1800s, most towns set clocks independently

• Time differences made it hard to set train schedules

• In 1884, delegates from 27 countries divided the globe into 24 time zones.

• Railroads adopted this system

Mass Production

• Growing demands from the American and European consumer

• Need for quickly and cheaply developed products

• Machinery and systems for making many products once done by hand

Exports• By the 1880s,

Americans dominated international markets with grain, steel, and textiles

• Fueled the expansion of American economy