Big Business and Organized Labor

1. Big Business and Organized Labor Chapter 6 Bethlehem Steel Works, 1896 Library of Congress

2. Industrialization: Introduction • What made America in the 1880s so different from the 1860s was a new industrial order. • The process of industrialization had begun at least three decades before the Civil War. • Small factories had produced light consumer goods like clothing, shoes, and furniture. They catered to local markets in an economy of farmers and merchants. • They could not meet the demands of the rapidly growing national market.

3. Industrialization: Introduction • After the 1850s the industrial economy matured, with large factories, more machines, greater efficiency, and national markets. • Entrepreneurs developed systems of mass production and distribution. Huge corporations came to dominate the economy. • Ordinary Americans scrambled to adjust and an organized labor movement would emerge.

4. The Second Industrial Revolution • The first had occurred in Britain during the late 18th century. • Coal-powered steam engine ;Textile machines for spinning thread and weaving cloth; Blast furnaces to produce iron • The second occurred in the the U.S. and Germany during the second half of the 19th century. • National transportation and communication network that created a national and even international market. • The use of electric power. • The application of scientific research to the industrial process. Example: the production of steel and chemicals. Also inventions.

5. Natural Resources and Industrial Technology

6. National Markets and the Expansion of the Railroad • Railroads helped tie the nation together by lowering transportation costs railroads. • Allowed manufacturers to reduce prices, attract more buyers, and increase business.

7. Railroads:America’s First Big Business • Railroads stimulated economic growth simply because they required so many resources to build – coal, wood, glass, rubber, brass, and steel. • As America’s first big business they devised new techniques of management that would soon be adopted by other companies. • Railroads establish standard time zones (1883)

8. Railroads: America’s First Big Business • Financing the railroads • Built by private companies. • Raised money for construction by selling bonds to American and foreign investors. • Also received federal land grants, as well as loans and tax breaks from federal, state, and local governments. • Cornelius “Commodore” Vanderbilt and others made fortunes on the railroad.

9. Manufacturing and Inventions: Electricity • Thomas Edison invented the first successful incandescent light bulb, making electric light available. (1879) • His company, General Electric, created a unified electrical power system. • By 1898 he had setup 3000 power stations lighting more than 2 million bulbs as well as powering trolley cars, subways, and factory machinery. • Factories no longer had to cluster around waterfalls and coal supplies.

10. Manufacturing and Inventions • Edison also patented the phonograph, the motion picture, and hundreds of other devices. • Alexander Graham Bell invented the telephone in 1876, vastly improving communication. • Even small inventions such as typewriter (1867), mimeograph machines (1892), and carbon paper (1872) helped ease business transaction.

11. Improvements in Industrial Technologies • Steel could be refined from iron (cheaply) (Bessemer process developed in 1850s) • Allowed for the production of telephones, typewriters, adding machines, sewing machines, cameras, elevators, and farm machinery – and lowered consumer prices. • New distilling methods allowed kerosene and gasoline to be refined from crude oil.

12. The Corporation • The growing scale of enterprise led to the use of the corporation, which was a form of ownership. • A corporation could raise large sums quickly by selling “stock certificates” or shares in its business. • It could also outlive its owners. • It limited liability – owners were no longer responsible for corporate debts. • Professional managers now operated complex businesses because owners were no longer responsible for day-to-day management of the company.

13. Finance Capital • As national wealth increased, people began to save and invest more of their money. • The New York Stock Exchange (around since 1792) linked eager investors with money-hungry firms. • By the end of the 19th century the stock market had established itself as the basic means of making capital available to industry.

14. Entrepreneurs(Robber Barons) • John D. Rockefeller –Standard Oil (oil refiner who took advantage of the Pennsylvania oil rush of the 1860s) • By 1879, he controlled 90 to 95 percent of oil refined throughout the country (Horizontal growth) • Used vertical integration so that he would not have to depend on the middlemen. • Made its own barrels, cans, and whatever else it needed. “Pay nobody a profit” • Rockefeller made a fortune, but also became a leading philanthropist donating more than $500 million during his 98 year-life.

15. Entrepreneurs(Robber Barons) • Andrew Carnegie • Made his fortune in the steel industry. • Used economic depressions to buyout his competitors and expand. • Carnegie Integrates Steel

16. The Growth of Big Business • J.P. Morgan – financier (investment banker) – bought up railroads during the Panic of 1893 • Merger movement - bought out Carnegie’s steel holdings for $500 million and created United States Steel Corporation (1st billion-dollar corporation) • Richard Sears and Alvah Roebuck dominated the mail-order industry and helped create a truly national market (1890s) The catalog (6 million distributed per year) became second most read book in the nation (Bible was 1st)

17. The Growth of Big Business • Corporate Defenders • The Gospel of Wealth - “super wealthy demonstrated the superiority of the free enterprise system” • Social Darwinism and “survival of fittest” • Rising standard of living for most • Corporate Critics - Working conditions • Average workweek: 59 hours. (6 – 10 hour workdays). Many worked 12 hours a day, 7 days a week. • Poor health and safety conditions in factories. • 1913 – 25,000 factory fatalities & 700,000 injuries that required at least a month’s disability.

18. Labor • 1860 – 4.3 million industrial workers • 1900 – 20 million industrial workers • The pool of labor came from a huge influx of European immigrants as well as a massive migration of rural Americans. • Also, growing number of women and children.

19. Labor Unrest • It was difficult for workers to organize. • Property rights were respected more than labor rights. • Workers were a diverse group that resisted forming unions. • Disorganized Protest • Even without unions, workers staged spontaneous protests over long working hours and wage cuts. • Often became violent.

20. Incidents in the 1870s • Molly McGuires • An Irish group in Pennsylvania coal fields. • Aimed to improve working conditions by intimidation, beatings, and killings. • Arrested and put on trial, 20 were hanged and wages at the mines were reduced. • Railroad Strike of 1877 • First major interstate strike. Caused by wage cuts. • Workers waked off the job, picketed, and burned railroad property from Maryland to San Francisco. • Over 100 people killed and millions of dollars in property destroyed. • The strikes failed because they lacked organized bargaining power.

21. Toward Permanent Unions • National Labor Union (1866) • Persuaded Congress to enact an 8-hour workday for federal employees and repeal the 1964 Contract Labor Law, which bound immigrants to employers in exchange for passage to America. • Died out in the 1870s after the death of its president. • The Knights of Labor • Started in 1869 but became a national organization in 1878. • 700,000 members by 1886. • Liberal membership policy. • Preferred boycotts to strikes as a way to pressure employers.

22. Haymarket Square Riot • May 3, 1886, strikers and policemen clashed at Chicago’s International Harvester plant. • One striker killed. • May 4, 1886, leaders of an anarchist movement held a protest to the killing in Haymarket Square. • When policemen arrived to disperse the crowd, someone threw a bomb, killing one and injuring others. • Police fired into the crowd killing 4 demonstrators. Six policemen were also killed. • Americans associated alien anarchists and labor radicals with the Knights of Labor, which disappeared by the turn of the century.

23. The American Federation of Labor (AFL) • Crafts unions (skilled workers) organized the AFL in 1886. • A federation of independent crafts unions. • Samuel Gompers served as president until his death in 1924. • Focused on concrete aims rather than politics. • Worked with management for agreements on union recognition. • Closed shops could hire only union members. • 1900 – 500,000 members; 1920 – 2 million.

24. Labor Unrest • Homestead Steel Strike (1892) • 300 Pinkerton detectives were used to barricade the plant and bust the unions. • 9 workers and 7 Pinkerton agents killed. • 8,000 state militiamen called in to put down the strike. The union was dead. • Pullman strike (1894) • Started in Chicago 3,000 railway workers were laid off and wages cut 25-40 percent. • President Cleveland sent in federal troops to protect interstate commerce. • Eugene V. Debs and the Socialist Party • Industrial Workers of the World (Wobblies)

25. Significant Events 1859 First oil well drilled in Pennsylvania 1866 National Labor Union founded  1870 Rockefeller incorporates Standard Oil  1876 Alexander G. Bell invents telephone  1879 Edison develops incandescent lightbulb  1882 Standard Oil Company becomes nation’s first trust  1883 Railroads establish standard time zones  1886 Haymarket Square bombing  1894 Pullman Strike Chapter 19