The Industrial Movement US History AIS
Dec 29, 2015
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