Chapter 6 Part 3 Pages 231-249. Big Business Robber Barons or Captains of industry? “Captains of industry” offers a positive impression of the achievements.

Chapter 6

Part 3Pages 231-249

Big Business• Robber Barons or Captains of industry?

• “Captains of industry” offers a positive impression of the achievements of men of inventiveness who through hard work and ingenious strategies transformed the American economy of the post-Reconstruction era and the early 20th century. These men are to also be honored for their charitable activities (philanthropy).

• “Robber baron” emphasizes the cruel and self-centered entrepreneurs who took advantage of the worker, whether it be immigrant, female, or child to accumulate wealth. The factory was a place where the worker experienced harsh conditions and poor pay.

The Industrialists

• Cornelius Vanderbilt Railroads• Jay Gould Railroads• Andrew Carnegie Steel• J.P. Morgan Banking, Railroads, Steel• John D. Rockefeller Oil

Most inherited wealth

• Exception was Andrew Carnegie• He really was rags to riches

• Came to the U.S. from Scotland at age 12• Worked in a cotton factory• To telegraph office• To Railroads

Was awarded RR stock

• Bought land containing oil but sold it to begin steel mill

• Had been introduced to the Bessemer process

• After great success sold Carnegie Steel to J.P. Morgan in 1901

Gospel of Wealth

• Carnegie’s book outlining his philosophy: Men of wealth had an obligation to provide opportunities to others

• Carnegie Hall, Carnegie-Melon University, Carnegie scholarships

Carnegie’s business strategies• Tried to make better products more cost-

efficiently

• Attracted talented workers, paid them partly with stock, encouraged competition among them

• Gather as much of the industry as he could

Vertical Integration

• Bought out his suppliers so he owned all aspects of the industry

• Coa; fields• Iron mines coal freighters• RR lines• Steel Plant

Horizontal Integration

• Buy or Force competitors out ti have a monopoly of the product

Social Darwinism

• A new way to justify shady business practices

• Darwin in Origin of Species gave us the notion of survival of the fittest

• Species that could adapt to their surroundings had a good chance of survival

Herbert Spencer

• Applied Darwin’s idea to big business

• Businessmen (and impeialists) used this to justify shady business practices used to drive competitors out of the market place

• Supported Laissez-faire

Laissez Faire

• Success or failure of a business was determined by natural law

• So the government should stay out of it

• (some believed that the government had an obligation to protect its citizens from abuse…farmers, workers)

The Growth of Big Business

• Created a wider gap between the rich and poor

Consolidation

• Last half of the 19th century saw many business mergers

• One corporation might buy out the stock of another to acquire a monopoly of the product

• Sometimes a holding company was formed to buy up the stock of other companies

J.P. Morgan

• Bought Carnegie Steel in 1901 for $492 million and combined it with his own steel interests to form U.S. Steel

John D. Rockefeller

• Standard Oil Co.• By 1911 Standard Oil controlled 98% of

the oil refining business in the U.S.

• The Trust• Competing companies would call in their

individual stock and give it to a Trust

The Trust

• Would issue new stock shares representing all member companies

• The companies would receiv e dividends based on profits earned by the trust

• Rockefeller had both a horizontal and vertical organization

Rockefeller

• Paid workers poorly• Sold his product at a loss until competitors

were driven into bankruptcy

• Then, when competitors were gone, Rockefeller raised his prices and make a killing

The term, Robber Barons

• Was given to these industrialists because of their unethical and illegal business practices

• BUT many of the “Robber Barons” gave huge sums as charatible organizations like Carnegie did

Rockefeller

• Gave over $500 million away through the Rockefeller Foundation

• The University of Chicago and other institutions

1890 The Sherman Antitrust Act

• Ws passed due to concern many had that the lack of competition was hindering economic growth

• Was also supported by farmers who were victims of the McCormick Harvesting Co.

The Sherman Antitrust Act

• Said that it was illegal to form combinations in restraint of trade

• The Act was rarely used as it was intended

• Companies could reorganize at the drop of a hat

In 1911

• The Supreme Court ruled that Standard Oil be broken up into smaller companies.

• It was • Rockefeller remained the major stock

holder in the smaller companies

The Sherman Antitrust Act

• Was used more often against striking workers than it was against big business until the turn of the century when Teddy Roosevelt became President

The North v the South

• Most industrial growth occurred in the North

• The South was still recovering from the Civil War

• Southerners had little money to invest in new industries

BUT

• Some industrial growth in the South

• Textiles• Tobacco• Iron and coal mining

Labor Problems

• Poor wages• Long Hours• Poor (dangerous) working conditions

Most workers

• 12 hour days• 6 days a week

• No vacation or sick time• No workman’s compensation • No unemployment insurance• No child labor laws• No Social security or job security

Labor Problems

• On the job injuries were common• Machinery not well maintained• Filth, cold, hot• Repetitive movements• Mindless• No pride in workmanship

Injuries

• 1882 675 workers were killed due to job-related injuries a week!

Wages

• So low that all members of the family had to contribute

• Women and children…some as young as 5!

Between 1890- 1910

• The number of women workers doubled from 4 million to over 8 million

• 20% of boys and 10% of girls under 15 worked full time

• Women and children had special problems especially in sweatshops

Wages

• On average a full time male adult worker made $498 a year

• Women made $267 a year

• Children who worked 14 hour days made 27 cents a day

Labor Organizations

• Note: skilled workers had an easier time of it as they had a special skill

• Some skilled unions around in the 1700s

1866 The National Labor Union

• Was the first large-scale union• Was organized by Sylvis (an iron worker)• No women, no Blacks

• By 1868 had over 640,000 members• Blacks organized their own: the Colored

National Labor Union

The Panic of 1873

• Ended this union• People were too desperate for work

• BUT by 1868 some government workers had an 8-hour day

1869 The Knights of Labor

• Open to everyone except professionals

• Fought for an 8-hour day and equal pay for women (why?)

• At first it was organized in secret so did not fall as a result of the Panic of 1873

By 1886 Powderly in charge

• And it came out into the open with over 700,000 members

• But became involved in a series of unsuccessful strikes in the 1880s and 90s and it fell apart

Craft Unions

• Were for skilled workers

• Sam Gompers combined several craft unions to form the AFL

• American Federation of Labor

The AFL

• Focused on collective bargaining• Wanted an end to child labor (why?)• An end to the use of injunction in labor

disputes

• Injunction: a court order ordering workers back to work

Some early success

• Wages were up and hours were down

• 1890 54.5 hours weekly• 1910 49 hours weekly

• 1890 wages up from $17. 5 to $24

The AFL

• Was harmed in a big way in 2890’s strikes but managed to stay alive into the 20th century

Industrial Unions

• Some believed that unions should represent all workers (skilled and unskilled) in a single industry

The ARU

• Eugene Debs founded the American Railway Workers Union in 1894

• This union died during the Pullman strike (later)

The International Workers of the World

• The IWW (Wobblies) were a socialist group

• Founded by Big Bill Haywood• Open to everyone

• Had a communist agenda and only 100,000 members

• Gone by 1912

Socialists

• Wanted government control of business and property

• They also wanted an equitable division of wealth

• Karl Marx envisioned a world-wide uprising of workers who would take control

Most “socialists” in the U.S.

• Were not committed to a workers’ violent revolution but DID want a society where people could earn a living wage in decent working conditions with reasonable hours

Minorities

• Formed their own unions with similar agendas: wages, hours, conditions

• BUT they also demanded equal pay without regard to race or color

The Strikes

• 1877 The Great Strike

• Railroad workers for the Baltimore and Ohio railroad had a work stoppage that spread.

• Freight and passenger traffic came to a standstill covering 50,000 miles for over a week

The Great Strike

• Ended when federal troops were sent.• Many state governors put pressure on

President Hayes to send in troops

• Governors insisted that the strikers were impeding interstate commerce

1886 The Haymarket Square Riots

• On May 3rd workers at the McCormick plant struck for better hours, wages and the local police had been called in.

• One striker was killed, other were wounded

• The next day over 3,000 met at Haymarket Square outside of the plant

Haymarket Square Riots

• The crowd was protesting police brutality• More police came• Someone threw a bomb at the police• The police fired into the crowed,,,Chaos

• Speakers at the demonstration and other radicals were rounded up and charged with inciting a riot. 8 found guilty

1892 The Homestead Strike

• At the Carnegie plant in Penn

• Strike began when the plant manager (Frick) announced wage cuts

• Scabs had already been hired• The Pinkerton Detective Agency had been

hired to protect the scabs and plant

The Striking workers

• Remained in the plant!• Carnegie feared for his expensive

machinery• The Pinkertons approached the plant from

the river• The strikers poured oil into the river and

set it on fire• Someone shot and wounded Frick

Chaos again

• Pennsylvania National Guard was sent in to remove the strikers and restore calm

The Pullman Strike 1894

• Back to Chicago

• After the Panic of 1893 the pullman co. laid off 3000 workers and cut the wages (25=50%0 of the remaining workers

• Rents and prices in shops remained the same

1894 The ARU ws formed

• By Eugene Debs• Debs called for a nation-wide strike of

railroad workers• Railroad traffic came to a stop nation-wide• Cleveland sent his Attorney General to

handle it• Olney (the Attorney General) placed a bag

of mail on a stationary train

Olney said

• That the strikers had combined in restraint of trade and charged them with violation of the Sherman Antitrust Act!

• Debs was found guilty and was jailed. While there he read Marx and became a socialist and later ran for President as a Socialist 5 times

The striking workers

• Were fired and blacklisted so they could not get another job ever in the industry

Women and the Labor Movement

• Same issues as men with additional problems

• Concern over child labor and equal pay

Mother Jones

• Mary Harris Jones had come to the U.S. as a child from Ireland

• Her family had received assistance from the Knights of Labor when she was young

• She helped to organize the American Mine Workers Union

• She sponsored a children’s march on the White House to publicize child workers

80 Children who worked at the mill

• Teddy Roosevelt was sympathetic BUT

• No federal child labor law until the Depression

The ILGWU

• The International Ladies Garment Workers Union was organized by Pauline Newman when she was 16

• The women worked in the garment industry

1911 Fire at the Triangle Shirtwaist Co.

• Oily rags, sparks from machines, loscked stairwells, broken fire escape

• 146 were killed• Gained the suppport of the American

public• Did get better wages, hours, federal

insurance laws

Union Membership declined

• Yellow Dog Contracts• No middle class support• Government sided with Bigh Business• Plenty of cheap labor available

Consider

• Why did unions fail to improve the lot of the industrial worker in the last decades of the 19th century?

Terms to Know• Andrew Carnegie• Vertical and horizontal integration• Social Darwinism• John D. Rockefeller• Sherman Antitrust Act• Sam Gompers• The AFL and the IWW• Eugene Debbs• Mother Jones