The Rise of CapitalismCarnegie, Rockefeller, Marx, Spencer,& Labor Unions
TN Curriculum Standards:Standard 1.0>Understand how industrial development affected the United States culture.>Understand how the influx of immigrants after 1880 affected the U. S. culture.Standard 2.0Investigate how the modernization of agriculture and capitalist industrial development affectedthe economy of the United States.Standard 5.0:>Investigate the dynamics of the post-Reconstruction era and the people and events thatinfluenced the country.Standard 6.0>Appreciate the diversity of various cultures and their influences on the U. S. Investigate theeffect of big business upon the lives of farmers and wage earners.
The Economy“Laissez-fare”- French phrase that refers to a hands-off approach by thegovernment.Capitalism- theory that COMPETITION determines the price of goods and salaries.Supporters of this approach believed in limited interference by the governmentunless t deals with protecting private property and maintaining peace.They believe that government interference hurts the economy and increasesprices overall.
Supporters of laissez-fare approach
The EconomySupporters also believe in letting the rules of supply and demandregulate the economy.If three companies are selling the exact same product for threedifferent prices, customers are going to generally flock to thestore that has it for the cheapest price.In this case, the government did not have to force the other twocompanies to lower their price, the loss in sales would cause them todo so automatically.
Supply & Demand
Big Government?• Opponents of this argument believe that thegovernment has to involve itself in the affairsof private businesses to prevent everydayworkers from being taken advantage of.• They believe(d) that the only way to keepcorporations/business owners from takingadvantage of their workers was to imposeregulations (rules) on those businesses.
Who reaps the benefits?This is one of the mainarguments in our politicstoday in 2013.As it stands, the CEOs ofmajor corporations haveseen their profits triplewhile the averageworker has not seen asubstantial increase inpay in 10 years (withinflation).Opponents of laissez-fare government will saythat withoutgovernment interference“big business” willcontinue to profit whilethe common manstruggles to meet theirbasic needs.
Let’s Check for Understanding• Supporters of______believe that thegovernment should notinterfere in the economyother than to protectprivate property rights.A. High tariffsB. Laissez-fareC. Industrial regulationsD. High taxes for privateindividuals
Rags to Riches• Andrew Carnegie was a Scottish immigrant who cameto the U.S. at the age of 12.• He began work in a textile factory where he earned$1.20 a WEEK. He worked his way up toSuperintendent of the Pennsylvania Railroad Company.• He used the money that he earned from hissupervisor’s salary to invest in companies that servedthe RR industry ( iron mills, sleeping car factories, andlocomotive factories).• By the time he reached his 30s, he was earning$50,000 a year.
Carnegie & Bessemer join forces• Carnegie met HenryBessemer in Europe.• Bessemer told him abouthis new product forproducing steel cheaper& faster.• Carnegie was soimpressed with Bessemerthat he bought a steelcompany and began usingthe Bessemer process.
We’re in the $$$$Carnegie was able to increase his profits by using vertical integration. He boughtall of the companies that owned the resources that he would need to create hisproducts.This cut out the middle man and allowed him to make and sell his productcheaper than any of his competitors.Carnegie was extremely generous. He gave the vast majority of his wealth awayto charities.For EXTRA CREDIT, you can research and find at least three charities that he gavefreely to. Also, find the amount that he sold his company to J. P. Morgan for. Besure to cite your sources!!!
Gospel of Wealth
Check for Understanding
Check 4 Understanding• Laissez-fare relies onA. The government toregulate wages andprices.B. High taxes andgovernment debt tofund businesses.C. High tariffs on foreigngoods.D. Supply and demand toregulate wages andprices.
John D. Rockefeller
Rockefeller & Standard Oil• John D. Rockefeller was an extremely shrewdbusinessman.• He used horizontal integration and bought out allof his competitors. People that refused to selland become a part of his corporation were runout of business.• Rockefeller made deals with the middle man (tosell their products higher to his competitors) tomake sure that other companies couldn’tcompete with him.
Rockefeller & Oil• Rockefeller owned about 90%of the nation’s oil refineries.• He had a monopoly on the oilindustry (monopoly- a singlecompany achieves control ofan entire market).• For example, When Verizonwas the only service that couldbe picked up in the McKenziearea, residents there had tobecome Verizon customers. Atthe time, Verizon definitelyhad a monopoly on cell phonecoverage.
Ida TarbellIda Tarbell (nicknamed the “terror of trusts”)launched a life –long crusade to ExposeRockefeller ‘s corrupt business practices.Her dad was a former oil refiner thatRockefeller had run out of business with hisshrewd business practices.
“Terror of Trusts”- Ida Tarbell
The PhilosophersHerbert Spencer promoted the idea of SOCIAL DARWINISM.This is a “survival of the fittest type of mentality”. He believedthat only the fittest businesses, people, and nations will survive.Proponents of this argument believed that people were poorbecause they just weren’t “fit enough”.Business owners loved this way of thinking. It gave them anexcuse to exploit their workers. They also believed thathaving wealth was a sign of being a good Christian.
“Spreading the Wealth”• Karl Marx (German philosopher) believed in theopposite of Herbert Spencer’s theory.• He believed in having an equal distribution ofwealth in a society. He felt that this would puteveryone on an equal playing field. His line ofthinking became known as “MARXISM”. It is mostcommonly aligned with Socialism & Communism.• During the 2008 and 2012 Presidential election,President Barack Obama was repeatedly accusedof being a Marxist.
Image circulated during 2008 of GermanPhilosopher Karl Marx with a Obama“change we can believe in” pin
Theory vs. Real Life• A popular message during the 19th centurywas that everyone had the ability to succeedin an economy driven by free enterprise andopportunity.• By the early 1900s, workers were beginning tohave their doubts.
The Working PoorWork conditions were terrible in the late 1800s. Wages were low and the hourswere long (the average pay for a white male was $1.50 a day or about $500 ayear).The standard of living for a family of four was about $700 a year ( so the avg.family was already in the hole at least $200). Everyone in the family worked(including women and children- although there are reports of them earning aslittle as 10 cents a day).Workers often worked 12 hours a day (sometimes 7 days a week). Workconditions were unsafe. There was no workmen’s compensation (if you got hurtor maimed, you were just out of luck). By 1900, there was an estimated 35,000deaths in industry alone. Jobs in the RR industry were the most dangerous.
No Rest 4 the WearyBetween 1890and 1917, therewas an estimateof 230,000casualties and 2million injured injobs related torailroads.In the West, manyof these groupswere Asianimmigrants (thislabor group builtmost of the RRs inthe West).Workers oftenheld jobs thatcaused them toinhale toxic fumesin unsanitaryconditions. Theyalso worked withheavy machinerywithout any safetyregulations.In n effort toimprove theirworkingconditions, theytried to unite andform labor unions.
Conflicts and UnionsWorkers routinely went on striketo protest their workingconditions. While the strikesweren’t necessarily new, thelevel in terns of numbers anddestruction was new.Between 1878 and 1900, therewere tens of thousands ofstrikes involving millions ofworkers.Cleveland & Ohio were almostcompletely burned to theground. Large sections ofChicago, Pittsburgh, Detroit, andNY were also destroyed. The U.S. Army had to be called in toput out strikes regularly.
2 Types of Unions• The main 2 types of labor unions wereMainstream & Radical.• Mainstream unions wanted: pay raises, shorterhours, and better working conditions.• They believed in using a process called collectivebargaining. This simply meant that instead ofeveryone who worked for the company going into complain to the boss about what they wereupset about, they sent in representatives.
Samuel Gompers-AFL• The representativeswould negotiate for all ofthe workers.• Samuel Gompers was thefounder of this technique.He was a part of themainstream unionAmerican Federation ofLabor (AFL).• It was labor adopted byother unions (still usedtoday).
The American Federation of Labor(AFL)The AFL had 3 main goals:• It tried to convince companies to recognizeunions and to agree to collective bargaining.• It pushed for closed shops (tried to forcecompanies to hire only union members.• It promoted an 8 hour workday.
Radical Unions• Radical Unions: argued that capitalismcreated exploitation of the masses (believedthe rich kept getting richer while the poorkept getting poorer). Many advocated foreither a Socialist/Communist economy thatwould be fair to everyone and help to create amore socially equal structure.• Mainstream unions hated the way radicalunions operated.
The Wobblies• An example of a radicalunion would be the IWW(Industrial Workers for theWorld) or Wobblies.• They advocated theCommunist system andoften used arson and mailbombs to scare capitalistjudges who ruled againstthem in labor cases(involving workers who hadbeen arrested for violenceduring demonstrations).
Trouble on the homefrontThe labor movement had a number of problemswithin their own structure like: ethnic and racialconflicts, jealousy over membership, and sharpdivisions between skilled and unskilled laborMost unions excluded women industrialworkers.