Rise of Industrialization, Urban Migration, and Immigration: Big Business and Labor

1. STANDARD(S) ADDRESSED: 11.2 Students analyze the relationship among the rise of industrialization, large-scale rural to urban migration, and massive immigration from Southern and Eastern Europe. LESSON OBJECTIVES/ GOALS/ SWBAT • Identify management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie. • Explain Social Darwinism and its effects on society. • Summarize the emergence and growth of unions. • Explain the violent reactions of industry and government to union strikes.

2. A BULLDOG ALWAYS Commitment Attitude CARES Respect Encouragement Safety

3. Section 3 Big Business and Labor The expansion of industry results in the growth of big business and prompts laborers to form unions to better their lives. NEXT

4. SECTION 3 Big Business and Labor Carnegie’s Innovations Carnegie Makes a Fortune • Andrew Carnegie one of first moguls to make own fortune NEXT

5. BIG BUSINESS AND LABOR Andrew Carnegie was one of the first industrial moguls He entered the steel industry in 1873 By 1899, the Carnegie Steel Company manufactured more steel than all the factories in Great Britain combined

6. CARNEGIE BUSINESS PRACTICES Carnegie initiated many new business practices such as; Searching for ways to make better products more cheaply Accounting systems to track expenses Attracting quality people by offering them stock & benefits ANDREW CARNEGIE 1835 -1919

7. SECTION 3 Big Business and Labor Carnegie’s Innovations • New Business Strategies • Carnegie searches for ways to make better products more cheaply • Hires talented staff; offers company stock; promotes competition • Uses vertical integration—buys out suppliers to control materials • Through horizontal integration merges with competing companies • Carnegie controls almost entire steel industry NEXT

8. CARNEGIE’S VERTICAL INTEGRATION Carnegie attempted to control as much of the steel industry as possible How? Vertical integration; he bought out his suppliers (coal fields, iron mines, ore freighters, and rail lines) in order to control materials and transportation

11. HORIZONTAL INTEGRATION Additionally, Carnegie bought up the competition through friendly and hostile takeovers This is known as Horizontal Integration; buying companies that produce similar products – in this case other steel companies MERGERS

14. Chapter 6; Section 3 • A – What were Andrew Carnegie’s management and business strategies? • Carnegie’s used horizontal and vertical integration, buying out competitors as well as suppliers. • He also strove to improve machinery and manufacturing techniques.

15. SECTION 3 Social Darwinism and Business Principles of Social Darwinism • Darwin’s theory of biological evolution: the best-adapted survive • Social Darwinism, or social evolution, based on Darwin’s theory • Economists use Social Darwinism to justify doctrine of laissez faire NEXT

16. SOCIAL DARWINISM The philosophy known as Social Darwinism has its origins in Darwin’s theory of evolution Darwin theorized that some individuals in a species flourish and pass their traits on while others do not CHARLES DARWIN LIMITED HIS FINDINGS TO THE ANIMAL WORLD

17. SECTION 3 Social Darwinism and Business • A New Definition of Success • Idea of survival, success of the most capable appeals to wealthy • Notion of individual responsibility in line with Protestant ethic • See riches as sign of God’s favor; poor must be lazy, inferior NEXT

18. SOCIAL DARWINISM Social Darwinists like Spencer believed riches was a sign of God’s favor,and being poor was a sign of inferiority and laziness HERBERT SPENCER WAS THE ONE WHO COINED THE PHRASE “SURVIVAL OF THE FITTEST”

20. Completecontrolof all aspects of production.

21. Why are monopolies dangerous to business, consumers, and government?

23. SECTION 3 Fewer Control More Growth and Consolidation • Businesses try to control industry with mergers— buy out competitors • Buy all others to form monopolies—control production, wages, prices • Holding companies buy all the stock of other companies • John D. Rockefeller founds Standard Oil Company, forms trust - trustees run separate companies as if one Continued . . . NEXT

24. BUSINESS GROWTH & CONSOLIDATION Mergers could result in a monopoly (Trust) A monopoly is complete control over an industry An example of consolidation: In 1870, Rockefeller Standard Oil Company owned 2% of the country’s crude oil By 1880 – it controlled 90% of U.S. crude oil CHICAGO’S STANDARD OIL BUILDING IS ONE OF THE WORLD’S TALLEST

25. A holding company is a company or firm that owns other companies' outstanding stock. The term usually refers to a company that does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

28. (REAL TRUST)

30. Chapter 6; Section 3 • B – What strategies enabled big businesses to eliminate competition? • Big business formed partnerships to create monopolies. • They merged small companies into large corporations. • They aimed for total control of an industry, so that they could fix prices and wages to their advantage.

31. SECTION 3 continuedFewer Control More Rockefeller and the “Robber Barons” • Rockefeller profits by paying low wages, underselling others - when controls market, raises prices • Critics call industrialists robber barons - industrialists also become philanthropists Continued . . . NEXT

32. ROBBER BARONS • Alarmed at the cut-throat tactics of industrialists, critics began to call them “Robber Barons” • Famous “Robber Barons” included Carnegie,Rockefeller, Vanderbilt, Stanford, and J.P. Morgan

33. ROBBER BARONS WERE GENEROUS, TOO Despite being labeled as greedy barons, rich industrialists did have a generous side When very rich people give away lots of money it is called “Philanthropy” Carnegie built libraries,Rockefeller, Leland Stanford, and Cornelius Vanderbilt built schools ROCKEFELLER CHAPEL – UNIVERSITY OF CHICAGO

35. Chapter 6; Section 3 • C – Do you agree with Carnegie’s defense of millionaires? Why or why not? • Agree – Everyone is independent on the millionaires to run businesses efficiently and to provide for the needs of the surrounding communities. • Disagree – if the millionaires’ control everything, they will always make people work unfairly and pay unfair prices.

36. SECTION 3 continuedFewer Control More Sherman Antitrust Act • Government thinks expanding corporations stifle free competition • Sherman Antitrust Act: trust illegal if interferes with free trade • Prosecuting companies difficult; government stops enforcing act Continued . . . NEXT

37. SHERMAN ANTI-TRUST ACT In 1890, the Sherman Anti-Trust Act made it illegal to form a monopoly (Trust) Prosecuting companies under the Act was not easy – a business would simply reorganize into single companies to avoid prosecution Seven of eight cases brought before the Supreme Court were thrown out

39. SECTION 3 continuedFewer Control More • Business Boom Bypasses the South • South recovering from Civil War, hindered by lack of capital • North owns 90% of stock in RR, most profitable Southern businesses • Business problems: high transport cost, tariffs, few skilled workers NEXT

40. South Lags Behind • Business involves innovation and competition, the south was crippled by its use of slaves. • They were not particularly interested in changing their attitude. • In the North with the absence of slavery there was a generally far greater degree of ambition and inventiveness in the workers of the north.

41. Chapter 6; Section 3 • D – How did economic factors limit industrialization in the South? • The south had a devastated economy from the civil War. • It was at the mercy of Northern railroads companies for transporting goods to market. • It also paid added costs for raw materials due to high tariffs.

42. SECTION 3 Labor Unions Emerge • Long Hours and Danger • Northern wages generally higher than Southern • Exploitation, unsafe conditions unite workers across regions • Most workers have 12 hour days, 6 day workweeks • - perform repetitive, mind-dulling tasks • - no vacation, sick leave, injury compensation • To survive, families need all member to work, including children • Sweatshops, tenement workshops often only jobs for women, children • - require few skills; pay lowest wages Continued . . . NEXT

43. WORKERS HAD POOR CONDITIONS Workers routinely worked 6 or 7 days a week, had no vacations, no sick leave, and no compensation for injuries Injuries were common – In 1882, an average of 675 workers were killed PER WEEKon the job

44. SECTION 3 continuedLabor Unions Emerge • Early Labor Organizing • National Labor Union—first large-scale national organization • 1868, NLU gets Congress to give 8-hour day to civil servants • Local chapters reject blacks; Colored National Labor Union forms • NLU focus on linking existing local unions • Noble Order of the Knights of Labor open to women, blacks, unskilled • Knights support 8-hour day, equal pay, arbitration NEXT

45. LABOR UNIONS EMERGE As conditions for laborers worsened, workers realized they needed to organize The first large-scale national organization of workers was the National Labor Union in 1866 The Colored National Labor Union followed

46. SECTION 3 Union Movements Diverge Craft Unionism • Craft unions include skilled workers from one or more trades • Samuel Gompers helps found American Federation of Labor (AFL) • AFL uses collective bargaining for better wages, hours, conditions • AFL strikes successfully, wins higher pay, shorter workweek Continued . . . NEXT

47. CRAFT UNIONS Craft Unions were unions of workers in a skilled trade Samuel Gompers led the Cigar Makers’ International Union to join with other craft unions in 1886 Gompers became president of the American Federation of Labor (AFL) He focused on collective bargaining to improve conditions, wages and hours

48. SECTION 3 Union Movements Diverge Industrial Unionism • Industrial unions include skilled, unskilled workers in an industry • Eugene V. Debs forms American Railway Union; uses strikes Continued . . . NEXT

49. INDUSTRIAL UNIONISM Some unions were formed with workers within a specific industry Eugene Debs attempted this Industrial Union with the railway workers In 1894, the new union won a strike for higher wages and at its peak had 150,000 members EUGENE DEBS

50. SECTION 3 continuedUnion Movements Diverge Socialism and the IWW • Some labor activists turn to socialism: - government control of business, property - equal distribution of wealth • Industrial Workers of the World (IWW), or Wobblies, forms 1905 • Organized by radical unionists, socialists; include African Americans • Industrial unions give unskilled workers dignity, solidarity NEXT