Big Business & Government Policy (1870-1900)

1. Big Business & Government Policy(1870-1900) How did government & big business interact during the late 1800’s?

2. Big Business & Government Policy During the 1870’s & 80’s big industrialists attempted to form monopolies. (Carnegie & Rockefeller) What is a monopoly? A monopoly is when a producer has total control over an industry. Were the great industrialists Captains of Industry or Robber Barons? They could be considered Captains of Industry because they risked capital to make business grow They could also be considered Robber Barons because of the unfair business practices they used to increase the size of their businesses Industrialists used the theory of Social Darwinism to justify their unfair business practices.

3. Three Methods of Business Consolidation • Rail Road companies develop pooling agreements to fix rail road fares at high rates (scheme does not work because companies cheat on their agreements). • Trusts are developed by Rockefeller to bring control to former competitors. If competitors refuse to join the “Trust” Rockefeller would put them out of business. Other industries begin to follow example and also start “Trusts”. • Holding Companies hold the stocks of several firms in the same industry. Holding Companies owned the majority of stocks within an industry & where able to dictate policy within the industry. • What effecting did consolidation have on business? • Business became less competitive and more consolidated, leaving business power & national economics in the hands of a few big businessmen

4. Federal Regulation of Business Begins • Congress becomes alarmed about “unfair” Business/labor practices, enacts laws to deal with situation. • Interstate Commerce Act (1887) to regulate railroad companies. Congress created Interstate Commerce Commission (ICC) to regulate interstate regulations. • ICC acts to regulate railroads (eliminates pools/rebates & regulates rates) • Sherman Antitrust Act (1890) act attempted to outlaw trusts. • How did antitrust legislation impact business? • Limited impact (at first) • anti trust act was weakly worded/none of the trusts were successfully broken. • anti trust act does establish the principle that the government can regulate industry & break up monopolies. • Business would be better regulated later on during the Theodore Roosevelt administration

5. Organization of Labor • Industry creates problems (poor conditions) for workers • in response to poor conditions--workers begin to unionize • early unions are small/ineffective in dealing with worker issues (wages/hours) • Industrial workers face long hours/low wages/dangerous working conditions • workers fear joining unions (fear of being fired) • immigrants are eager to fill in for striking workers. • Government unemployment insurance does not exist during this time period • How have unions changed since early days? • Unions have gained more political power ($) , and have secured better working conditions for members

6. Formation of Labor Unions • Unions develop in spite of worker’s fears • Knights of Labor (labor union) first union to become a major economic force • No worker was excluded (skilled/unskilled) --open membership-- • Knights avoid strikes through arbitration/cooperatives are formed (workers operate their own companies) • Knights attempt to win 8 hour work/Knights win major strike against rail road companies (membership increases) • differences between skilled & unskilled workers--problems with workers of differing races begin to hurt union membership numbers • union became more focused on political issues/rather than worker issues (pay & wages) • Haymarket riot occurred when violence (bomb thrown into the crowd) took place during a pro union rally • What impact did the Haymarket riot have on unionism in America? • Public mistrust of unions grew, membership in unions decreased,the incident was a set back for the labor movement

7. American Federation of Labor • 2nd national union (still in existence today) • membership was limited to skilled workers • Union focused on worker issues/so called “bread & butter” issues (wages/hours/conditions) • A.F. of L. tended to discriminate against African American workers. • African American workers, turned away from the union, are hired as strike breakers by employers • Women discriminated against in the male dominated A.F. of L. • Women work under poor conditions (sweatshops) • Women begin to form their own unions (Women’s Trade Union League) • How did discrimination by AF of L impact race relations? • African Americans were hired as strike breakers (little other work available) this helped to cause an increase of tension between races

8. Radicals in the Labor Movement • Anarchists believe that capitalist system could not be reformed/called for violent overthrow • Socialists oppose capitalist system/seek peaceful means of changing system/call for government ownership of companies & industry. • How did Anarchism and Socialism impact public opinion of unions? • in some cases, fear of union membership grows, especially later on (1920’s) during the RED scare.

9. Violent Clashes Between Business & Labor • Pay decrease causes Great Railway Strike. Warfare breaks out between workers and PA state militia. President Hayes sends federal troops in to break the strike. • Homestead Strike at Carnegie steel company. Pinkerton detective agency called in by management. Many on both sides are killed/strike crushes steel workers union. • Pullman Strike called in protest to reduction of wages. President Cleveland uses troops to bust strike stating that US mail was delayed by striking workers. Railway union is broken. • The 1800's is marked by government use of troops to side with business over unions. • Why did the government side with business over labor during the late 1800’s? • Government was over influenced by the power and money of the big industrialists, union members lacked political power….how has this changed?

10. Conclusion: • How did government & big business interact during the late 1800’s? • Government did little to regulate business (regulatory laws lacked substance) • Government was influenced by power & money of the big industrialists • Government sided with big business over the workers during strikes (used military to break strikes)