The Rise of Big Business

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.

7. 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”

8. “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.

9. 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.

10. 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.

11. Creation of Labor Unions

12. 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

13. 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.

14. 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

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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.

22. 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.