Growth of Big Business Brought to you by Local Sweatshop Laborers Mr. Hyer Room 108

Take Careful Notes Today I’m Giving You the Secret Formula of How to become a GazillionMillionBillionaire

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. Learning Objectives

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.

Causes of Rapid Industrialization Steam Revolution of the 1830s-1850s The Railroad fueled the growing US economy: * First big business in the US. * A magnet for financial investment. * The key to opening the West. * Aided the development of other industries.

Steam Revolution of the 1830s-1850s

The Railroad fueled the growing US economy:

* First big business in the US.

* A magnet for financial investment.

* The key to opening the West.

* Aided the development of other industries.

Causes of Rapid Industrialization Technological innovations. * Bessemer Process (Steel) * Refrigerated cars * Edison  “Wizard of Menlo Park”  light bulb, power plants * Extension of Work day

Technological innovations. * Bessemer Process (Steel)

* Refrigerated cars * Edison  “Wizard of Menlo Park”  light bulb, power plants

* Extension of Work day

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.

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.

U. S. Patents Granted 1790s  276 patents issued. 1990s  1,119,220 patents issued.

Late 19 th Century Business Ideology Laissez Faire Social Darwinism Laissez Faire Power to the Individual Market Not Man-made or invented Individuals Compete Freely in Marketplace No room from government interference

Laissez Faire

Social Darwinism

Laissez Faire

Power to the Individual

Market Not Man-made or invented

Individuals Compete Freely in Marketplace

No room from government interference

Social Darwinism A Dubious Business “Theory” based on the Work of Naturalist Charles Darwin. The Origin of Species (1859)

Darwin’s “The Origin of Species.” This is a first edition.

Based on the research of Charles Darwin Earth is billions of years old All life forms, including humans, developed gradually over several million Natural selection Mutated genes create changes over time Meaning the organisms best adapted to their environment survive above others EVOLUTION

Based on the research of Charles Darwin

Earth is billions of years old

All life forms, including humans, developed gradually over several million

Natural selection

Mutated genes create changes over time

Meaning the organisms best adapted to their environment survive above others

“ Survival of the Fittest” ??? Society, like the jungle, fostered a ruthless struggle for survival The fit survive and spread The weak perish Instead of tooth and claw, the struggle is economic Government interference to reward society and the economy is futile This “natural selection” necessary for the advancement of human race Carnegie adds to this grim concept: “ Gospel of Wealth :” the economic winners have a responsibility to those below. (What a guy!) Individuals must have absolute freedom to struggle, succeed or fail Hello, Little People

Society, like the jungle, fostered a ruthless struggle for survival

The fit survive and spread

The weak perish

Instead of tooth and claw, the struggle is economic

Government interference to reward society and the economy is futile

This “natural selection” necessary for the advancement of human race

Carnegie adds to this grim concept: “ Gospel of Wealth :” the economic winners have a responsibility to those below. (What a guy!)

Carnegie I’m so full of Contradictions The “theory” he loved so dearly lacked consistency He argued against Government Regulation He welcomed Government Assistance (tax abatements, grants, tariffs, etc.

Economies of Scale With faster machines, businessmen discover: Cost per unit decrease as number of units produced increase More raw product purchased, the cheaper suppliers’ asking price The closer capacity they kept new, faster machines running, the less the cost of labor and electricity The lower their costs, the cheaper they could sell their products The cheaper the product, the more they sold Huge Profits

Cost per unit decrease as number of units produced increase

More raw product purchased, the cheaper suppliers’ asking price

The closer capacity they kept new, faster machines running, the less the cost of labor and electricity

The lower their costs, the cheaper they could sell their products

The cheaper the product, the more they sold

Horizontal Integration John D. Rockefeller (Standard Oil Company)

Vertical Integration Andrew Carnegie (U.S. Steel) Gustavus Swift  Meat-packing

Vertical Integration Holding Company Own controlling interest in: Production of raw material Transportation to factory The factory itself Distribution network of product Monopoly of Entire Industry

Own controlling interest in:

Production of raw material

Transportation to factory

The factory itself

Distribution network of product

Horizontal Integration Purchase or Put out of Business Competing Firms Trusts Ex: Oil, Whiskey, Sugar, Lead, Railroads

U. S. Corporate Mergers

World’s Industrial Output

Who’s Winning? Who’s Losing?

The “Robber Barons” of the Past

“ The Bosses of the Senate”

“ The Protectors of Our Industries”

Time for Government Intervention? Gov’t: Expansion of Mergers and Trusts Stifling Free Market Sherman Anti-Trust Act (1890) This federal law forbid any “combination…or conspiracy in the restraint of trade” between states or with other countries. Difficult to enforce (“Trust” not clearly defined.) Supreme Court overturned 7 of 8 cases against Trusts Companies reorganized to avoid “Trust” designation Better laws to come (Watch out for Teddy and Taft)

This federal law forbid any “combination…or conspiracy in the restraint of trade” between states or with other countries.

Difficult to enforce (“Trust” not clearly defined.)

Supreme Court overturned 7 of 8 cases against Trusts

Companies reorganized to avoid “Trust” designation

Better laws to come (Watch out for Teddy and Taft)

Coming Attraction Workers of the World Unite

Labor Unions Emerge

Summarize the emergence and growth of unions. Explain the violent reactions of industry and government to union strikes. Learning Objectives

Summarize the emergence and growth of unions.

Explain the violent reactions of industry and government to union strikes.

The Changing American Labor Force

Why Labor Unions? Seven Day Workweeks 12 -14- hour workdays Low Wages No Vacation Time No Sick Leave No Disability Insurance No Healthcare No Unemployment Compensation Dangerous Working Conditions

Seven Day Workweeks

12 -14- hour workdays

Low Wages

No Vacation Time

No Sick Leave

No Disability Insurance

No Healthcare

No Unemployment Compensation

Dangerous Working Conditions

The Tournament of Today: A Set-to Between Labor and Monopoly

What Are Labor Unions? Trade Union = Group of SKILLED workers within single trade American Federation of Labor (Led by Samuel Gompers ) – Confederation of trade unions (Skilled workers) Unskilled Workers Unions would form a few years later – one of these is led by Eugene V. Debs (Socialist) Early Labor Unions excluded immigrants and blacks

Trade Union = Group of SKILLED workers within single trade

American Federation of Labor (Led by Samuel Gompers ) – Confederation of trade unions (Skilled workers)

Unskilled Workers Unions would form a few years later – one of these is led by Eugene V. Debs (Socialist)

Early Labor Unions excluded immigrants and blacks

Labor Unions = Dangerous Ideas Unions Considered Radical Organizations Utopian or Socialistic Leanings Government Wary of Supporting Them Businesses and Courts Hostile to Them Socialism – An economic system in which the government owns most of the major means of production and distribution. (Coal, steel, transportation) Other industries privately owned. Reduces inequality among citizens.

Unions Considered Radical Organizations

Utopian or Socialistic Leanings

Government Wary of Supporting Them

Businesses and Courts Hostile to Them

“Bread and Butter” Issues Higher Wages and Shorter Workdays Avoid Larger Political Issues Easier to Achieve Reform with Business Owners than through Gov’t Sponsored Reform Laws Samuel Gompers

Higher Wages and Shorter Workdays

Avoid Larger Political Issues

Easier to Achieve Reform with Business Owners than through Gov’t Sponsored Reform Laws

Haymarket Square Riot – Public Begins to Turn Against Unions (1886)

Only organized a small fraction of workers (Not enough members to push business owners to change) Business owners had too much money and power to bend to union demands Government tended to support corporations and not the unions It won’t be until the 1930s when the Union’s gain real power Unions’ Weaknesses

Only organized a small fraction of workers (Not enough members to push business owners to change)

Business owners had too much money and power to bend to union demands

Government tended to support corporations and not the unions

It won’t be until the 1930s when the Union’s gain real power

Mary Harris Jones “ Mother” Jones Helped Push for Child Labor Reform Organized Women Workers

Helped Push for Child Labor Reform

Organized Women Workers

Triangle Shirtwaist Factory Fire! Shirtwaist Tragedy Leads to Better Workplace Conditions 3 or 4 doors locked to prevent theft Faulty Fire Escape No Sprinklers – too expensive Owners avoid jail – pay $75 per death (146 x $75 = $10,975)

3 or 4 doors locked to prevent theft

Faulty Fire Escape

No Sprinklers – too expensive

Owners avoid jail – pay $75 per death (146 x $75 = $10,975)

Asch Building 8th, 9th & 10 th Floors

Thank Goodness, the Firemen have arrived!! OOPS! Ladders only reach to six floor – fire is on 8,9 & 10 Pumps can raise water to 9 & 10 Don’t worry – building is “fire proof”

Ladders only reach to six floor – fire is on 8,9 & 10

Pumps can raise water to 9 & 10

Don’t worry – building is “fire proof”