The Industrial MovementUS History AIS

TimelineFor your reference

The Rise of Big Business in America

Factors Promoting Big Business in America: Abundant Natural Resources Coal

Oil

Iron Ore

Water

Factors Promoting Big Business in America: New Technologies Factory System

Allowed for faster, more efficient, more standard production

Steam Engine Faster and more efficient transportation

Railroads and Steamships Easier way to transport goods across the country and the ocean

New Machines and Tools Improved the factory system, agriculture, and transportation

Interchangeable Parts Made production cheaper and more efficient

Factors Promoting Big Business in America: Transportation Canals, steamships, and especially railroads

Easier and faster than horse and wagon

Greatly improved the ability to transport both raw materials and finished products Increased trade between the different sections of the United States

Factors Promoting Big Business in America: Cheap Labor There was a huge population that needed work

Large families (from rural areas)

Immigrants

The high demand for jobs kept cost of labor down Factories could pay less because they could easily find workers

Factors Promoting Big Business in America: Economic Environment Investment Capital

Local and international investors saw a bright future for US industry

SO they wanted to buy into businesses and encourage trade

Many investors made their money from the Triangle Trade

Remember: What was Triangle Trade?

The cycle between the US/West Indies (raw materials), Europe (manufactured goods), and Africa (slaves).

Laissez-Faire Literally means “hands off”

The government did not get involved in setting prices and wages

The market was controlled through supply and demand

Factors Promoting Big Business in America: Economic Environment Cont’d Federal Government Support

Imposed high tariffs that kept foreign goods out of US markets

Gave land to railroad companies to promote railroad development

Sold land to mining companies for less than the value

Stayed out of most of the affairs of business

Let “free enterprise” take place

Factors Promoting Big Business in America: Social Attitudes Social Darwinism

“Survival of the fittest” applied to the business community

The strongest businesses should survive and the weakest ones should fail

Used as a justification for many big business actions

Applied against government attempts to help the poor

Government policy seen as “against the laws of nature”

Horatio Alger Myth Based on books by the author Horatio Alger

His characters often embodied the “Puritan Ethic”

Hard work brings success

Often featured the dream of a poor boy rising to became a wealthy businessman

Factors Promoting Big Business in America:New Ways to Organize Business Corporations: big businesses where many investors own shares of the

business and hope to receive some profits in the future Increased capital (money) investment in American industry

Trusts: a group of corporations in a related field that work together Were later made illegal

Department Stores: several small stores together under one roof More efficiency

Mail Order Catalogs: Sears and Montgomery Ward opened up department store shopping to rural areas

Important Business Leaders

Andrew Carnegie John D. Rockefeller

Early Life -Immigrant from Scotland-Worked in a textile mill at age 12

-Born and raised in New York state-Focused on accounting from an early age

Big Break -Worked for Pennsylvania Railroad-Familiarized himself with Bessemer’s process of steel-making

-Moved to Cleveland, got involved in the oil business at its beginning-Merged all businesses together (horizontal integration)

Industry Steel Oil Refining -Controlled 90% worldwide

Reasons for Success(Methods Used)

-Vertical integration -Acquired coal mines, iron ore fields, limestone quarries-His prices were lower than any other competitor

-Horizontal integration -Singled-minded, goal-oriented focus-Able to adapt to changing government policies-Formed trusts in response to anti-monopoly legislation

Andrew Carnegie John D. Rockefeller

Later Life -Sold his company for a quarter of a billion dollars-Believed the wealthy had an obligation to society, so he gave away millions of dollars (philanthropy)-Supported many public libraries across the United States

-His son, John Jr, tried to change his father’s image into a lovable billionaire (handed out Rockefeller dimes)

Terms Monopoly: when one company dominates an industry (has no competition)

Philanthropy: donations of large sums of money or property to people, organizations, etc…

Vertical Integration: merging steps of production to cut the cost of production

Horizontal Integration: merging companies that produce the same product

Robber Baron: slang term for the Captains of Industry from this time period Broken down: Robber = thief, Baron = a person with power

The Standard Oil Octopus

Carnegie the Philanthropist

Other Important Business Leaders Cornelius Vanderbilt

Began as a ship captain and ended up owning large railroad companies

Owned the New York Central and dominated the railroad business between NYC and Chicago

JP Morgan Began as a banker, made money making loans to growing businesses

Took over many bankrupt railroads and merged them into larger, profitable ones

Later bought Carnegie Steel and merged it with others companies to form US Steel

Henry Ford Revolutionized the automobile industry by using assembly line s to produce more

affordable cars

Cornelius Vanderbilt

Impact of Big Business

Urban (City) Growth Why they came

For jobs and better housing

Visions of improved opportunities and prosperity (money)

Where they went The urban industrial centers of the North (mostly)

Immigrants tended to settle in the port city where they landed

Urban Growth Cont’d Problems

Crowded tenement apartment buildings were unsafe and unsanitary

Crime was prevalent, especially in poorer areas

Corruption in political sectors was rampant and did not improve most people’s daily lives

Work and the Workers Factory Work Conditions

Long hours (12-16 hour days)

Low pay

Unsafe conditions (machines, factories, mines)

Replaceable workers

Child Labor Kids were used when possible because they could be paid less

The factory conditions were more dangerous for kids

Often had difficulty operating machines and working the long hours

Work and the Workers Cont’d Two Wage Earners

New opportunities for women to work

Women took jobs out of economic necessity or to take a greater role in society

Paid less than men were paid for similar jobs

New Job Opportunities for Women Textile Factories (clothing)

Domestic

Jobs as house cleaners, cooks, and nannies

Usually done in homes of the wealthy and sometimes the new middle class homes

Clerical

New inventions, such as the typewriter and the telephone, opened up new job opportunities for women

Abuses of Big Business Monopolies: attempts by companies to eliminate competition and “corner

the market” for a certain business sector

Influence on government: contributions to campaigns and candidates at a state and federal level in hopes to gain favorable legislation

Anti-organized labor: the government sided with management against unions

Unsafe products: companies often took advantage of the lack of regulations on products

Abuses of the Railroad Industry Long and short haul abuses: charging higher rates for short hauls than long

ones because most businesses wanted short hauls

Unfair storage fees: charged farmers higher rates (especially in the grain industry)

Rebates: industrialists given refunds as an incentive to use certain railroads

America Responds to Big Business

Populist Movement The movement originated with farmers that wanted changes in national

politics that would make their situation easier. The movement was a real threat to Democracy in the South, but it eventually died out as economic conditions changed.

The Grange Originally organized as a social organization for farming families

Eventually turned into a powerful lobbying organization for pro-farmer legislation

Populist Movement Cont’d The Granger Movement

Pressed Congress to pass laws to regulate the railroads and prices they charged farmers

Developed co-ops to store and distribute agricultural products in order to better control prices of farm products

The Populist Movement Cont’d The Government Responds to the Granger Movement

Munn vs. Illinois (1877): Supreme Court case

First of the famous “Granger Cases”—reactions against railroads charging unfair prices to the farming industry

Issue was whether or not a state could regulate the prices of railroad activities: Did the US Constitution permit a state to regulate privately-owned businesses?

7-2 decision in favor of the state: gave states the power to regulate local businesses

Interstate Commerce Act (1887)

First federal government regulation of big business

End of the concept of unquestioned laissez-faire

Created the Interstate Commerce Commission: Monitored and regulated interstate businesses—especially railroads—and began to end the abuses in industry

The Growth of Labor Unions Knights of Labor

Led for many general reforms: 8 hour days, end to child labor, equal pay for women

Most successful with boycotts

Declined in power after unsuccessful strikes and competition from the A.F. of L.

A.F. of L. or AFL American Federation of Labor led by Samuel Gompers

Fought hard for basic rights and conditions for workers

Became very popular, but did not welcome women, immigrants or African Americans

Objectives of Labor Unions Better wages for workers

Better working conditions Less hours

Safer conditions

Better associated benefits Health care

Sick days

Vacation time

Important Leaders of Labor Gompers

Early leader of the A.F. of L.

Debbs Leader of the American Railway Union

Organizer of the Pullman Strike (described later)

1913: Department of Labor created (president’s cabinet)

Conflict and Struggle Between Unions and Factory Management Tools of Management

Yellow-dog contracts: owners required workers to sign oaths to not join a union

Detectives were often hired to find union organizers—and then fire them

Lock-outs prevented workers from working—and getting paid!

Owners often hired replacement workers (scabs) during a strike

Black lists: owners often shared names of troublemakers—and no one would hire them

Conflict and Struggle Between Unions and Factory Management Tools of Unions

Collective Bargaining: third party representatives used to negotiate contracts

Strike: the organized action of not reporting to work by employees

Picket: standing near a business with signs to call attention to unfair conditions

Boycott: the organized action of not buying a business’ product

Major Strikes Homestead Strike (1889)

Workers at a Carnegie Steel Plant in Homestead, PA went on strike to protest a large wage cut

Management brought in security to protect the plant and continue work

Violence erupted: people were killed and wounded

Workers gave in, but only a few got their jobs back

The strike was a major setback for unions, especially in the steel industry

Major Strikes Cont’d Pullman Strike (1890s)

Striking workers of railway-car makers clogged up the railways in much of the country

President Cleveland sent in federal troops to keep the trains moving because they carried the US mail

US v. Debs (Supreme Court case): decided the federal government had a right to support the “general welfare” of the American people

Reaction to President Cleveland sending troops to suppress the strike

Other Labor Unions (mid-1900s) CIO: Congress of Industrial

Organizations Organized skilled and unskilled laborers in

various industries

Unions included: American Railway Union, United Mine Workers

AFL-CIO merger (1955) The two largest labor unions in US merged

to form a more powerful union organization

Largest union in the world