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The Rise of Big Business

The Rise of Big Business. Rise of Corporations. Previous to Industrialization businesses were individually owned and nothing grew larger than what the family could support With the railroad, markets could expand, trade could increase and more people could access the business.

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The Rise of Big Business

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  1. The Rise of Big Business

  2. Rise of Corporations • Previous to Industrialization businesses were individually owned and nothing grew larger than what the family could support • With the railroad, markets could expand, trade could increase and more people could access the business. • This lead to the rise of Corporations

  3. Corporation • Investors develop a form of group ownership • The number of people share ownership of a business. • The investors lose no more than they had originally invested in the business. • Benefits • Allowed business to expand beyond family size • Allowed for risky businesses to grow. • Had the same rights as individuals • Can buy and sell property • Can sue in courts • Can buy out others in the corporations

  4. Making the Most Money • Increase profits • Advertising everywhere • Force competitors out of business • Gain a Monopoly • Complete control of a product or service • Buy out all competitors or drove them out of business • Can control prices • Form a Cartel • Partner with competitors to limit production and control prices.

  5. John D Rockefeller • Oil tycoon • Made deals with the railroads to increase his prices • Horizontal and Vertical integration • Horizontal – consolidate many firms into one business • Vertical – Buying or controlling the many businesses that make up all phases of a products development • Trust – companies assign their stock to a board of trustees, who form a new organization.

  6. Debating Big Business • Businesses doing these things created powerful empires. • Leaders grow wealthy • Smaller companies and consumers began to question their goals and tactics. • Consumers and government felt that systems gave businesses an unfair advantage • Small businesses cut out or forced into trusts with little payout • Became known as “Robber Barons”

  7. “Captains of Industry” • Many people believed that business leaders served the nation positively, thus earning the nickname “captains of Industry” • Factories, mills and railroads provided an abundance of jobs • Businesses increased innovations • Leaders were huge philanthropists • Used own money to build universities, museums, and libraries.

  8. Social Darwinism • 1859 – Charles Darwin published On the Origin of Species • Argued natural order and survival of the fittest • This theory was soon applied to business by Yale professor William Graham Sumner applied this theory to capitalism • Wealth was a measure of one’s inherent value and those who have it are most fit • Government should not mess with the natural order. • Nation will grow stronger if the fit are allowed to survive • Also increased discrimination of the poor.

  9. Government Regulations • As the rich got richer people worried that they were too powerful. • Some industries were practicing unfair business (railroad) • US Government created the Interstate Commerce Commission • Oversee railroad operation • First government group to monitor business • First of many government regulations • Sherman Antitrust act • Outlawed any trust that operated in restraint of trade or commerce among the several states. • Rarely used • Used more to hurt labor unions as the prevent commerce between states.

  10. Creation of Labor Unions

  11. Workers Life • Industrialization raised the quality of life for many Americans • More access to cheap goods than ever before. • Most Americans couldn’t afford on low pay and had to work factory jobs to live • Particularly bad for Immigrants, Women, and Children

  12. Sweatshops • Many people were forced to take jobs that didn’t require intense training • Immigrants who couldn’t speak English would take almost any job that was simple to learn • Factories worked workers 12 hour days with few breaks • Factories were very dangerous and many employees lost hearing, severely injured, or killed by machines in which they were not properly trained to operate • Also maintenance was rare in early factories.

  13. Child Labor • As industry boomed more jobs opened for women. • Laundresses, telegraph operators, and typists • But those required specific skills, and many women didn’t have the opportunity to get education in these areas, so most had to work the factory jobs • Low wages forced both parents to work so many brought their children to work. • They can make money too. • By the late 1800s nearly 1 in 5 children between 10 and 16 worked instead of going to school. • Leading to physical and mental growth problems. • Eventually this would lead to child labor laws

  14. The Company town • Many lived and worked in a town controlled by the company • Company built the houses and charged rent • The only store was the company store • Food bought on credit, company controlled prices • Many would owe the company by the time pay day arrived. • Laws said that unpaid credit would be punished with unpaid labor, “wage slavery” • Company towns filled with over control, and distrust • Even enforced segregation.

  15. Workers fight Back • Laborers tried to gain more power in the early 1800s, • Collective bargaining • Negotiating as a group for higher wages or better working conditions • Started forming unions • National Trade Union • Worked on strikes and helped to get a 10 hour work day.

  16. Socialism • In the 1830s a movement started in Europe • An economic and political philosophy of community control over business and share profits • Wealth is distributed equally between everyone. • In 1848 Karl Marx and Friedrich Engels expanded the idea so socialism • Communist Manifesto • Denounced capitalism and predicted that workers would overturn capitalism. • Many Americans supported its ideas when it came to wealth distribution.

  17. Labor Unions • Knights of Labor • Labor union founded by Uriah Smith • Functioned as a secret society working for social reforms • Encouraged boycotts and negotiations. • AFL • American Federation of Labor formed by Samuel Gompers in 1886 • Focused on specific issues such as wages, and hours, and conditions. • Had high dues that were used to support workers in strike.

  18. Strikes impact the Nation • Railroad Strikes 1877 • Cut laborers wages and they started violence destroying property • So violent federal government had to step in • Haymarket Square1886 • Workers wanted 8 hour work day • Fighting broke out between negotiators • On may 4th in Chicago an anarchist threw a bomb that killed a policeman. Dozens more were killed in the fighting aftermath. • Left a legacy of violence and distrust of unions.

  19. Strikes impact the Nation • Homestead Strike of 1892 • A Carnegie steel plant cut wages • Union called a strike • Henry Frick, Carnegie’s partner, called in the Pinkertons (strike breakers) • Killed many strikers and wounded others. • Anarchists tried to kill Frick • Negative opinion of the union lead to the end of the strike and laborers lost power throughout the country.

  20. Strikes impact the Nation • Pullman Strike of 1893 • Pullman Palace Car Company cut wages but kept the cost of living up in the company town. • Workers tried to negotiate… pullman fired them. • Workers turned to the American Railway Union led by Eugene V Debs • A union for all rail workers regardless of position. • Called for a nationwide strike, 300,000 workers walked off the job. • Halted rail service and mail service. • Federal Government stepped in and supreme court ruled against unions giving more strength to employers.

  21. Effects of the Labor Unions • The outcomes of the strikes set a trend for unions • Federal government usually supported employers • Strikes would become a way of life for American workers. • Labor Union supporters became more influenced by socialism • More violent strikes would start in the early 1900s.

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