Bad Big Business Tactics Legislation/Regulation & Unionization

Andrew Carnegie, 1835-1919

Scottish Immigrant

Came to United States 1848, age 12

“When fate hands us a lemon, let’s try to make lemonade.”

- At 18 - a clerk for the Superintendent the Pennsylvania Railroad

* Impressed his boss - offered chance to purchase stock

* Carnegie impressed by ability to earn from capital - builds investments

At 24 - he was Superintendent of the Railroad

First jobs

Opens a New Steel Business- 1873: opens a steel mill

- 1899: producing more steel than all of Britain

- 1901: Sells out to U.S. Steel

Carnegie’s Business Strategy

1. Worked to make products better and cheaper

2. Attracted good people with stock options

3. Control steel industry

a. Horizontal Integration

“As I grow older, I pay less attention to what men say, I just watch what they do”

Vertical Integration:Vertical Integration:

• control production bottom to top

(your own company provides all “parts”)

Horizontal Integration:Horizontal Integration:

• buy out competing producers

(you are the only company offering a specific type of service)

See graphic on pg. 242

Social DarwinismSocial Darwinism

Expanded upon Charles Darwin’s theory of the evolution where “survival of the fittest” was a

natural law

• Herbert Spencer suggested evolution in human societyhuman society – the fittest rise to the top

• Used to justify “laissez-faire” (hands-off) economics: econ. should not be regulated or interfered with - it followed natural laws

Consistent with “Protestant work ethic”

Material success =Sign of God’s grace

John D. RockefellerJohn D. Rockefeller

(July 8, 1839 – May 23, 1937)(July 8, 1839 – May 23, 1937) • American born

“I believe in the dignity of labor, whether with head or

hand; that the world owes no man a living but that it owes every man an opportunity to

make a living.”

Rockefeller and the Standard Oil Trust

Rockefeller took Standard Oil from 2-3% of oil market to 90%

Tactics

1. Paid very low wages

2. Drove competition out of business by

a. selling at a loss

b. buying out competitors’ supplies

c. refusing to lease oil tankers to comp.

d. arranging cheaper shipping with the railroad

Robber Barons:Robber Barons: businessmen and bankers who dominated their industries and became very wealthy, typically as a direct result of pursuing anti-competitive or unfair business practices

Carnegie- steel Rockefeller- oilMorgan- banker

Gould- RRVanderbilt- RRStanford- RR

or Philanthropists?

“Gospel of Wealth” - essay by Andrew Carnegie

“…the duty of the man of wealth: first, to set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and after doing so to consider all surplus revenues which come to him simply as trust funds which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community—the man of wealth thus becoming the mere agent and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves....

The man who dies … rich dies disgraced.”

Government Reaction to “robber baron” TacticsGovernment Reaction to “robber baron” Tactics

Wanted to protect free market: fear big business stifling competition

Passed Sherman Anti-trust Act, 1890 - made it illegal to form a trust that interfered with free trade between states or other countries

- proved difficult to enforce, courts rejected majority of cases

Problems in the workplaceProblems in the workplace

Terms of employment poor: 6-7 day weeks, 12+ hour days, no vacation, no sick leave

Physical conditions poor: polluted and often dangerous

Wages low: so low that millions of women and children forced to work

Name of Union Date and Organizer

Member- ship

Goals/

Beliefs

Tactics

Knights of Labor

(Craft Unions)

AFL (American Federation of Labor)

(Industrial Unions)

Example: ARU

American Railway Union

IWW

International Workers of the World

1869, Uriah

Stephens

men, women, black, white,

skilled, unskilled

8 hour day, equal pay for equal work

arbitration, strike last

resort

1886, Samuel

Gompers

skilled workers (male, white)

wages, work hours, work conditions

strikes major tactic

1893, Eugene V.

Debs

male, skilled and unskilled

workers

wages, work hours, work conditions

strikes major tactic

1905, Eugene V.

Debs

male, skilled, unskilled,

white, black

Usual + international worker unity

(socialist)

strikes major tactic

Worker Reaction - UnionsWorker Reaction - Unions

In 1905 radical unionists and socialists formed the Industrial Workers of the World (IWW) to organize unskilled labor and semi-skilled workers such as western miners, migrant farm workers, lumbermen, and some eastern textile workers. IWW members, known as Wobblies, pasted small posters like this one on fence posts or in RR boxcars to call attention to their cause.

1. What impression of the IWW do you get from this poster? 2. What message do the images in this poster convey to you? 3. What do you find the most persuasive about this poster? Why? 4. Why do you think IWW posters were often called “silent agitators”?

Strikes become violent Strikes become violent (Great- Hay- Home- Pull)(Great- Hay- Home- Pull)

Government and business respond with force

- see strikes as undermining economic system

- fear will turn into revolution and anarchy

Sherman Anti-trust Act works in favor of business

- businesses only had to claim a strike was interfering with interstate commerce and government would send in troops

Great Strike of 187780,000 railroad workers strike

Shut down most railroad traffic for week

Joined by many other workers

President Hayes authorize use of federal troops to stop the violence

Haymarket Riot, May 4, 1886Haymarket Riot, May 4, 1886

3,000 gather to protest police killing of striker

police sent in to disperse rioters

someone throws bomb into police line - 7 police killed

Public opinion begins to turn against unions and strikes, connecting them to violence

Homestead Strike, 1892At Carnegie Steel Plant in

Homestead, PA

Supervisor Henry Clay Frick announces wage cuts, calls in Pinkerton detectives to

protect strike breakers (“scabs”)

Pinkerton detectives battle strikers and townspeople-

12 die

Union loses support

Pullman Strike, 1893Pullman Strike, 1893

Pullman lays off half of workers, cuts wages of rest - refuses to reduce rent

ARU, with Eugene Debs as spokesman, wants arbitration - Pullman refuses

Pullman hires strikebreakers “scabs”

President Cleveland orders in federal troops

Women and UnionsWomen and Unions

Leading figure: Mary Harris Jones

-supported strikes, help start unions

- showed horrors of child laborers

-lead to restrictions in child labor

Women’s Unions formed:

ILGWU (International Ladies Garment Workers Union)

- founded Pauline Newman, 19 years old

Triangle Shirtwaist Factory

Factory located on 8th, 9th, and 10th floors of Asch Building in New York City

March 25, 1911 about 4:45 PM fire breaks out on 8th floor

Most doors were locked and elevator soon failed

Unable to escape, young women burned to death, died of smoke inhalation, or jumped to their death

It took only about half an hour to bring the fire under control

This is what they foundinside…

The final count: 146 young teenage women dead

Public fury over the deaths and the acquittal of the building’s owners led to thirty-six new laws

reforming the state’s labor code.

Aftermath

Rose Schneiderman, a young union organizer, spoke for many workers when she said:

“I would be a traitor to those poor burned bodies, if I were to come here to talk good fellowship. We have tried you good people of the public—and we have found you wanting.”

Please answer the questions in your notebook

1. Do you think the tycoons we’ve talked about (Carnegie, Morgan, Rockefeller) are ruthless robber barons or effective captains of industry?

2. If the government had supported unions instead of management (factory owners) in the late 19th century, how might the lives of workers have been different?

3. Do you think more gov’t involvement could’ve slowed down the industrialization of America? How or why?