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Incorporation of America

Incorporation of America



Emergence of Big Business Around the Turn-of-the-Century

Emergence of Big Business Around the Turn-of-the-Century



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    Incorporation of America Incorporation of America Presentation Transcript

    • The Incorporation of America
    • Essential Question
      • Industrialization increased the standard of living and the opportunities of most Americans, but at what cost?
      • Remember Key Economic Concepts:
      • Opportunity Costs and Benefits
        • Rational people maximize benefits and minimize costs
      • Decision making at the margin
    • Causes of Rapid Industrialization
      • Steam Revolution of the 1830s-1850s .
        • The Railroad fueled the growing US economy
          • Growth in railroad industry possible because of advances in steam technology.
    • Railroads- America’s first big business
      • Seen as investment opportunity by bankers and speculators
        • Aided the development of other industries.
      • Open road to West
      • Massive increase in mileage
        • 30600 miles in 1862
        • 200000 in 1900
      • Many subsidized in one way or another by the state (opportunity for corruption)
    • Railroads- America’s first big business
      • Track put down largely by immigrants- esp. Chinese
        • More than 10,000 in 1880
        • Very dangerous work- explosions and exposure
        • Low pay but better than home
        • ‘ Hell’ on wheels- name for towns that followed them across the West. Gambling, saloons, prostitution
      • Much corruption in the industry
        • Politicians bought “like sacks of potatoes”
    • Causes of Rapid Industrialization
      • Technological innovations.
      • Bessemer and open hearth process
      • Refrigerated cars
      • Edison - “Wizard of Menlo Park”
        • light bulb, phonograph, motion pictures.
    • Manufacturing and inventions
      • Patent office: 276 patents in 1790s; 235000 in 1890s
      • 1790-1860: 36,000 patents
      • 1897: 22,000 patents
      • 1860-1930: 1.5 million patents
      • Refrigerated car, Bessemer converter; barbed wire; light bulb; record player (of sorts); motion pictures, etc.
    • Manufacturing and inventions
      • 3 important technological developments that changed manufacturing:
        • Electric power and electric powered machines
          • light bulb
          • sewing machines
        • Chemicals
        • Internal combustion engine
    • Thomas Alva Edison
      • “ Wizard of Menlo Park”
    • The Light Bulb
    • The Phonograph (1877)
    • The Ediphone or Dictaphone
    • The Motion Picture Camera
    • Alexander Graham Bell Telephone (1876)
    • Alternate Current George Westinghouse
    • Alternate Current Westinghouse Lamp ad
    • The Airplane Wilbur Wright Orville Wright Kitty Hawk, NC – December 7, 1903
    • Causes of Rapid Industrialization
      • Unskilled & semi-skilled labor in abundance.
      • Abundant capital.
      • New, talented group of businessmen [ entrepreneurs ] and advisors.
      • Market growing as US population increased.
      • Government willing to help at all levels to stimulate economic growth.
      • Abundant natural resources.
    • Consolidations and Corporations
      • Capital investment in business increase dramatically
          • 1850: $750,000
          • 1900: $1.9 million
          • This increase puts an emphasis on the need for corporation. Small businesses forced out.
      • State laws favored corporations
        • Almost anyone could begin a corporation
        • Stockholders share profits
        • Personal risk limited to investment
        • 14th Amendment judged to protect corporations
      Consolidations and Corporations
    • New Types of Businesses
      • Pools - competing companies try to control the market by agreeing how much to produce and sharing profits. “Gentlemen’s agreements.”
      • Trusts - Rockefeller lawyer Sam Dodd creates trusts. A legal arrangement. One company could control an industry by luring or forcing stockholders of smaller companies to give control of their stock “in trust” to a larger companies board of trustees. Used to create monopoly power.
    • New Types of Businesses
      • Horizontal Integration:
        • Control all business producing same product
        • John D. Rockefeller- Standard Oil
      • Vertical Integration:
        • Control all business in entire chain of production (from raw materials, to transport, to final production and distribution)
        • Andrew Carnegie- US Steel
      • Horizontal Integration:
        • Control all business producing same product
        • John D. Rockefeller- Standard Oil
      • Vertical Integration:
        • Control all business in entire chain of production (from raw materials, to transport, to final production and distribution)
        • Andrew Carnegie- US Steel
      New Types of Businesses
    • New Type of Business Entities
    • Standard Oil Co.
    • U. S. Corporate Mergers
    • Industrial Consolidation: Iron & Steel Firms
    • Iron & Steel Production
    • Entrepreneurs
      • Rockefeller (oil)
        • Destroyed his competition by flooding the market and other ‘cut-throat measures’.
        • Got rebates from railroads- by threat
        • Bought out or crushed his competition
        • 90-95% of refining under his control
        • 1899- $200 million fortune ($4.672B ); $45 million/year in profit ($1.09B )
    • Entrepreneurs
      • Andrew Carnegie (steel)
        • Develops a philosophy of business that becomes conventional wisdom. More on this later
        • 1900- $40 million/year income ( $925M ).
        • Sold his company at a dinner party for a price written on a scrap of paper- $492,000,000 ($11.4B).
    • Entrepreneurs
      • JP Morgan (investment banking)
        • Bought 5000 rifles for $3.50 each during Civil War and sold them to generals for $22 @. In addition to the overcharge, they malfunctioned and blew soldiers thumbs off.
        • Morgan, Rockefeller, Carnegie, Philip Armour (meat packing), Jay Gould (rr), James Mellon all paid $300 ($7000) for substitutes during Civ. War. Mellon’s dad: “a man may be a patriot without risking his life or sacrificing his health. There are plenty of lives less valuable .”
        • He bought Carnegie’s company. Then consolidated it with other steel companies to form US Steel. Took a $150 million ( $3.5B )fee for the transaction.
        • He influenced Cong. to put tariffs on foreign steel so he could keep his prices high.
    • New Financial Businessman
      • The Broker: * J. Pierpont Morgan
    • Cornelius [“Commodore”] Vanderbilt Can’t I do what I want with my money?
    • William Vanderbilt
      • The public be damned!
      • What do I care about the law? H’aint I got the power?
    • Model T Automobile Henry Ford I want to pay my workers so that they can afford my product!
    • “ Model T” Prices & Sales
    • Wealth Concentration Held by Top 1% of Households
    • % of Billionaires in 1900
    • % of Billionaires in 1918
    • The “Robber Barons” of the Past
    • “ The Protectors of Our Industries”
    • The “Bosses” of the Senate
    • Workers
      • Distribution of Wealth
        • 1900: 2% own 33% of nations wealth. Top 10% own 75%.
        • 1891: 120 Americans worth at least $10 million ($231.3M).
        • Rags to riches was rare- although some upward mobility was possible. Rags to riches “mostly myth, and a useful myth for control.” Horatio Alger stories.
    • New Business Culture: “The American Dream?”
      • Protestant (Puritan) “Work Ethic” * Horatio Alger [100+ novels]
      Is the idea of the “self-made man” a MYTH??
    • Workers
      • Standards of Living
      • If affluence measured by conversion of luxuries into commonplace, then US affluent in years between 1880 and 1920s.
      • Many new products available, but not affordable to all.
      • Incomes rise broadly, but not equally. Income increases did not keep pace with increase in cost of living.
        • Teacher made approx $492/year ($11,333 ). Rent would consume approximately 50% of that salary.
        • Wages increase approximately 30%, but cost of living increased approximately 47%.
      • Many families had to rent out portions of their homes (houses and apartments) to borders to raise extra money. Make about $200/year this way ( $4,625 ).
    • Workers
      • High demand for low skilled and unskilled labor resulted in many immigrants, women, and children in work place.
        • 1880-1900: women employment up from 2.6 to 8.6 million.
        • # of children in non-agricultural occupations triples 1870-1900
        • 1890-1900: >18% of children ages 10-15 work
      • Wages reflect low-skill work: $0.22/hr.; $490/yr. Average wages. ($5.09/hr; $11,333/yr.)
    • Workers
      • Working conditions very poor- unhealthy, unsafe, difficult
        • 1904: 27,000 job fatalities; 50,000 injuries in NY alone.
        • 1914: 35,000 job fatalities + 700,000 injuries that resulted in at least 4 weeks off work. This is after some safety measures have been taken.
          • p. 327 in Zinn regarding injuries.
      • p. 335 regarding work conditions in mill.
    • Workers
      • Triangle Shirtwaist fire on Fire sweeps through 8-10th floor; ladders reach only 7th floor. ½ of all NY workers above the 7th floor.
        • Doors locked to control workers.
        • 146 die. Many from jumping or crushed at doors.
      p. 326-7 in Zinn
    • Workers
      • 12 hr. day common. Swing shift every other week.
      • 84 hr. week common in America.
    • Workers
      • Modern factory separated worker from owner- bureaucracy.
      • Status of laborer changed dramatically in a generation:
        • Fewer workers produce more in less time.
        • Workers no longer termed producers- just laborers. Employees.
        • Workers lose independence on assembly line. Must keep pace and perform in a particular way. Be on time.
        • Ford Motor Company: behavior codes. Other companies did this too.
    • The Reorganization of Work The Assembly Line
    • Workers
      • Employment of women and children way up.
        • 1880-1900: women employment up from 2.6 to 8.6 million.
        • 1890: >18% of children between 10-15 were employed. Parents forced to sign their children into contracts in mill areas. Age laws were passed in some areas, but difficult to enforce because parents lied because needed money.
    • The Reorganization of Work Frederick W. Taylor The Principles of Scientific Management (1911)
    • Workers
      • Frederick W. Taylor. Efficiency expert. Makes workers more a part of the machine. Every move is regulated. Efficiency is science and workers objects of study and regulation. Stopwatches a common sense.
        • Workers lost jobs to this:
          • One case Taylor cut jobs from 600 to 140 in a plant.
    • Urbanization
      • 1860-1910: Pop. in towns of 2,500 or more grew from 6 million to 45 million (20% to 40% of population)
      • Between 1870 and 1920 # Americans living in cities increased 550%.
        • NY grew from 850,000 to 4 million; Chi. 110,000 to 2 million
        • Chicago had to be lifted up out of mud
    • Urbanization
    • Urbanization
      • Housing: one of most persistent problems of cities
      • inexpensive housing scarce
      • landlords split up existing housing- smaller space for families. One family apartment used by 2-3 families.
      • 1890 NY: 702 people per acre. One of highest population densities in the world.
      • Largest rooms in tenements only about 10 feet wide.
      • Interior rooms lack windows.
      • Air shafts breeding gournd for rats; filled with rotting trash.
    • Jacob Riis' How the Other Half Lives (1890)
    • Mulberry Street Bend, 1889
    • 5-Cent Lodgings
    • Men’s Lodgings
    • Women’s Lodgings
    • Immigrant Family Lodgings
    • Dumbbell Tenement Plan Tenement House Act of 1879 , NYC
    • Dumbbell Tenement Plan
    • Blind Beggar, 1888
    • Italian Rag-Picker
    • 1890s ”Morgue” – Basement Saloon
    • ” Bandits’ Roost”
    • Mullen’s Alley ”Gang”
    • The Street Was Their Playground
    • Lower East Side Immigrant Family
    • A Struggling Immigrant Family
    • Another Struggling Immigrant Family
    • Child Labor
    • Urbanization
      • Poverty
      • Employment rose and fell with seasons.
      • Many feared aiding the poor: they would be unwilling to work, according to this reasoning.
      • Assistance was often not very practical- preaching rather than food. Attempt to get poor to reform their habits. Charity Organization Society in 92 cities.
    • Urbanization
      • New Immigration
      • Their labor was needed, but they were not wanted
      • 1900-1910: 41% of new arrivals in cities were immigrants
      • Many lived in ethnic neighborhoods- this both wanted and resented by Americans
      • America pulled immigrants in with lure of jobs; homelands sometimes pushed them out with economic, political, social situations.
      • Began coming from a different place- East and South Europe. Culturally more different from Americans.
    • Urbanization
      • Ellis Island
      • 12 million immigrants first came here.
      • Not a comforting atmosphere
        • Eye hook to look for trachoma
        • Crowded
        • Held for inspection
        • Bureaucrats did not speak language so often people found their names “Americanized”
    • Urbanization
      • Nativism rises
      • Immigrants seen as driving down wages and taking jobs from Americans (neither completely true)
      • Immigrants seen as drunks, criminals, charity cases, moral problem
      • Restrictions began to be placed around 1900 (compare to Jefferson’s complaint in D of I that king kept immigrants out). 1880’s: Chinese Exclusion Act.
    • New Business Culture
      • Laissez Faire  the ideology of the Industrial Age.
      • “ Let it alone” “Leave it be”
      • Individual as a moral and economic ideal.
      • Individuals should compete freely in the marketplace.
      • The market was not man-made or invented.
      • Government hands off the market.
    • Laissez Faire Economics and the Supreme Court
      • S Ct interpreted Sherman Act to make interstate strikes illegal- restraint of trade
      • S Ct interpreted 14th Amend. to protect industry, not blacks-
        • Regulations of railroad rates, hours, wages, work conditions all struck down.
        • Corporations viewed as people under the law and they had a right to do what they liked with their property.
        • Freedom of contract- management and labor free to make decisions w/o govt. interference. Assumes that on equal footing.
        • 1890-1910: only 19 14th A. cases in S Ct dealt with blacks; 288 with corporations.
    • Social Darwinism
      • British economist.
      • Advocate of laissez-faire.
      • Adapted Darwin’s ideas from the “Origin of Species” to humans.
      • Notion of “Survival of the Fittest.”
      New Business Culture Herbert Spencer
    • Social Darwinism in America William Graham Sumner Folkways (1906)
      • Individuals must have absolute freedom to struggle, succeed or fail.
      • Therefore, state intervention to reward society and the economy is futile!
    • The Gospel of Wealth: Religion in the Era of Industrialization Russell H. Conwell
      • Wealth no longer looked upon as bad.
      • Viewed as a sign of God’s approval.
      • Christian duty to accumulate wealth.
      • Should not help the poor.
      speech by R Conwell- p. 262 of Zinn
    • “ On Wealth”/“Gospel of Wealth” Andrew Carnegie “ Gospel of Wealth” (1901).
      • Carnegie’s “Gospel of Wealth”- hard work leads to wealth (not cheating and influence of govt.);
      • Rich are deserving; are benefactors of America.
      • The Anglo-Saxon race is superior.
      • Inequality is inevitable and good.
      • Wealthy should act as “trustees” for their “poorer brethren.”
    • Competing Ideal
      • Reform Darwinism- Lester Frank Ward
      • People differ from animals with their brains. Not simply the pawns of evolution. Can impact the process. Think and take action.
      • Govt can be useful to reduce poverty and promote education (impact the brain).
      • Settlement Houses
      • To help and teach the poor and (esp.) immigrants.
      • Social control through Americanization?
      Competing Ideal Hull House Jane Addams
    • Regulating the Trusts
      • 1877  Munn. v. IL
      • 1886  Wabash, St. Louis & Pacific Railroad Company v. IL
      • 1890  Sherman Antitrust Act * in “restraint of trade” * “rule of reason” loophole
      • 1895  US v. E. C. Knight Co.
    • The Triangle Shirtwaist Factory Fire, March 25, 1911
    • Triangle Shirtwaist Factory Asch Building, 8 th and 10 th Floors
    • Typical NYC Sweatshop, 1910
    • Typical NYC Sweatshop, 1910
    • Typical NYC Sweatshop, 1910
    • Typical NYC Sweatshop, 1910
    • Typical NYC Sweatshop, 1910
    • Typical NYC Sweatshop, 1910
    • Inside the Building After the Fire
    • Crumpled Fire Escape, 26 Died
    • 10 th Floor After the Fire
    • Dead Bodies on the Sidewalk
    • Scene at the Morgue
    • Relatives Review Bodies 145 Dead
    • Page of the New York Journal