Robber Barons or Captains of Industry?

1. Robber Barons or Captains of Industry?

2. Cornelius Vanderbilt • “Commodore” Cornelius Vanderbilt • Began in steamboats. • Combined and expanded Eastern railway lines (New York Central). • Superior service at lower rates. • Vanderbilt University

3. William Vanderbilt • Cornelius’ son • Dad gave him increasingly more control over the family business. • 1877 – Dad dies and William takes over the entire company.

4. William Vanderbilt • Bought out struggling RR companies • When asked if he ran his RR for the public good he said, “The public be damned…I don’t take any stock in this silly nonsense about working for anybody’s good but our own…”

5. Biltmore Estate: Built by William’s son in 1895

6. The Vanderbilts • His father gave away $1 million to start Vanderbilt University. • William gave away over $2 million to organizations such as • YMCA of New York • St. Luke’s Hospital • Museum of Natural History and Art

7. Andrew Carnegie • Born in Scotland to poor parents. • Came to America at age 13 in 1848.

8. Andrew Carnegie • Worked in a cotton mill. • Later became a telegraph operator.

9. Andrew Carnegie • “Rags to Riches” story • Bought stock and began making money. • 1873 – started a steel mill. • Became one of world’s wealthiest men through ways of doing business. • U.S. Steel Company – sold in 1901 and then retired.

10. Andrew Carnegie • Steel is King! • Bessemer Process – method of making cheap steel. • Remove impurities by blowing air through molten iron. • Transformed steel industry.

11. Andrew Carnegie • Looked for ways to make better products cheaper. • Tracked costs of everything. • Hired talented assistants, offered them stock in the company, and encouraged competition between them.

12. Vertical Integration • Vertical Integration • Combine all phases of manufacturing. • Allows him to control quality and cost, improve efficiency • Owns the Iron mine Ore freighters Factory Railroad lines Does not get overcharged by RR that takes iron to consumer Ensures quality iron ore being mined. Doesn’t get overcharged to send to factory Controls production methods to ensure quality

13. Andrew Carnegie • Four stories • 64 rooms • Heated and cooled

15. The Gospel of Wealth This, then, is held to be the duty of the man of Wealth: First, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial result for the community-the man of wealth thus becoming the sole agent and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer-doing for them better than they would or could do for themselves.

16. The Gospel of Wealth • Associated wealth with godliness. • Wealthy must prove themselves morally responsible because they were entrusted with society’s riches. •  contempt for poor. • Giving to society (museums, colleges, theatres, etc.), NOT direct aid to the poor.

17. Andrew Carnegie • Gave away over 90% of wealth. • Built public buildings such as schools, libraries, Carnegie Hall. • Carnegie Foundation still supports the arts today.

18. John D. Rockefeller • Oil – quickly becomes a major industry. • Discovery of first well in PA in 1859. • Kerosene – first major product of oil • Invention of automobile, internal combustion engine • Increases demand for oil • 1870 – Rockefeller organizes Standard Oil

19. John D. Rockefeller • Goal: eliminate middlemen, get rid of competitors. • Horizontal Integration: combining with similar companies to monopolize a market. • Trust: stockholders in smaller oil companies assigned their stock to Standard Oil • Companies not in trust agreement went out of business • Trust comes to mean any large-scale business combination.

20. John D. Rockefeller • “Rule or Ruin” • Extort cheaper rates or rebates from railroad companies. • Employed spies • Paid workers low wages • Questionable ethics • Benefits • Low prices • Good product • Large-scale methods of production and distribution

21. John D. Rockefeller

22. John D. Rockefeller • Gave away some of his wealth, $500,000,000. • Founded University of Chicago • Rockefeller Foundation – works to prevent poverty and hunger, improve housing, minimize disease, etc.

23. JP Morgan • Began banking career in his father’s bank.

24. JP Morgan • Specialized in consolidation and reorganization of failing businesses – combine them with businesses of the same type and make them profitable. • Interlocking Directorates: Placed officers of his own bank on boards of directors of other companies.

26. JP Morgan • 1901 he paid $487 million to Carnegie for his steel company. • Morgan consolidated other steel mills to create US Steel which was valued at over $1 billion. • Gave his $50 million art collection to the Met.

27. The Beginnings of Regulation • Farmers begin to protest the monopolistic practices of railroads. • Under pressure from agrarian groups (the Grange), state legislatures tried to regulate railroads. • 1886 – Wabash v. Illinois • Individual states had no power to regulate interstate commerce. • Federal government would have to do it.

28. Interstate Commerce Act - 1887 • Under Grover Cleveland • Prohibited rebates and pools • Pool: splitting business in a given area and sharing the profits. • Required railroads to publish rates openly. • Forbade unfair discrimination against shippers. • Outlawed charging more for a short haul than a long one. • Set up Interstate Commerce Commission to administer and enforce.

29. Interstate Commerce Act • First large-scale attempt by the federal government to regulate business in the interest of society as a whole. • Fairly ineffective – difficult to enforce • Stabilized business, but did not revolutionize it.

30. Sherman Anti-Trust Act • First state legislatures tried to control trusts, but failed. • Sherman Anti-Trust Act – 1890 • Forbade combinations that prevented free competition. • Did not distinguish between “good” trusts and “bad” trusts. • Ineffective – no teeth, legal loopholes • Ironically used to curb power of labor unions (“restraint of trade”) • 1914 – law adjusted  enforcement

31. Impact of Industrial Revolution • Standard of living increased, wages rising • Urbanization • Immigration • Increased gov’t regulation of business • Concept of time – factory whistle • Increased gap between rich and poor • Foreign trade becomes more important  imperialism

32. Women in the Industrial Revolution • Hugely impacted – new social and economic opportunities • New inventions – typewriting, switchboard • Opportunities for jobs • “Gibson Girl” – independent and athletic woman • Delayed marriages • Smaller families • Most worked out of economic necessity. • Women earned less than men.

33. Rise of Labor Unions • Late 19th Century – work force dramatically expands. • Movement from farms to cities. • Immigration – huge increase. • 1870s and 1880s – England, Ireland, Northern Europe • 1890s and 1900s – Southern and Eastern Europe (Italians, Poles, Russians, Greeks, Slavs) • Wages - $600 considered poverty level • Average income - $400-500/year

34. Working Conditions • Difficult to adjust to modern industrial labor • Repetitive, monotonous, little skill • 10-12 hour days, six days a week • Unsafe and unhealthy working conditions • Frequent industrial accidents • No workman’s comp • Increasing number of children

37. National Labor Union - 1866 • Skilled, unskilled, farmers. • Excluded Chinese, few efforts to include women or blacks. • 600,000 members. • Disintegrated after Panic of 1873.

38. Molly Maguries • Irish-American secret society • Militant labor union in anthracite coal region of Pennsylvania. • Mining equipment destroyed, officials intimidated or killed. • Fear from mine operators crushed the union.

39. Great Railroad Strike - 1877 • America’s first major labor conflict. • Demonstrated massive nature of strikes in the new, more nationalized economy. • Seriously weakened rail unions – strike failed.

40. Knights of Labor • Membership open to all who “toiled” • Skilled, unskilled – did not work. • Blacks, whites, men, women. • Only barred “non-producers” – bankers, lawyers, etc. • Didn’t get involved in politics. • Campaigned for economic and social reform • Safety and health codes • Eight-hour shift • Terrence Powderly – union grew, won several strikes for eight-hour day.

41. Knights of Labor • 1886 – many failed strikes • Haymarket Square Riot • Protesting police brutality • Bomb thrown, several dozen killed. •  hysteria, anarchists rounded up • Five sentenced to death • K of L now associated with anarchists • Eight-hour movement suffered

43. American Federation of Labor • 1886 – Samuel Gompers – organized skilled workers • Federation – each union kept its own independence • Economic goals: • Better wages, hours, working conditions • Trade agreement authorizing “closed shop” – all-union labor • Weapons: walkout, boycott • Still exists today

44. Homestead Strike - 1891 • Carnegie’s steel mill in Homestead, PA – pay cut • Violence ensues – 7 died • State militia took over town. • Strike fails. • Tarnished Carnegie’s reputation.

45. Pullman Strike - 1894 • American Railway Union – Eugene Debs • Pullman Palace Car Company – cut wages, but did not reduce rent on company housing. • Strike, overturning Pullman cars. • AFL did not support strike • Increased respectability of AFL • But weakened labor’s cause as a whole.

47. Pullman Strike • US Attorney General – strike is interfering with U.S. Mail • Cleveland sends federal troops –crush strike • Workers upset • Proof of alliance between business and courts • Debs  jail  radical literature  socialism

48. Weapons used against unions • Call upon federal courts – injunctions to order workers to stop striking. • Bring in troops • Lockout – lock doors • “iron-clad oaths” or “yellow-dog contracts” – agreements to not join a union. • Blacklisting • Company town – high-priced stores, easy credit – workers fell into debt to company

49. Success of unions? • 1881-1900 • 23,000 strikes • Strikers lost about half • Won or compromised the rest • Total loss: $450 million • Biggest weakness: only 3% of workers involved in 1900. • Public attitudes began to change by 1900 – recognize right to organize, bargain collectively, strike. • Most employers continued to fight organized labor.