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Industrial Revolution
Working Conditions
Division of Labor Changes ManufacturingWhen someone
completes one task as part of the job
Positive: increases productivity for businesses
Negative: workers no longer take pride in work and removes creativity
Think About Making Shoes
He may never work on shoes!
Growing Work Force
ImmigrantsFormer Farm FamiliesWomen and ChildrenDoes not include
African Americans
Survival Guide for Poor Families (aka, immigrants!)
Send children as young as age 6 to work
Force children to leave school
Ask for aid from a private charity (church, etc.) Government Welfare is non-existent at this time!
Workday Length
Typically 12 hours/day, 6 days/week
The Growth of Big Business
The Good and The Bad
Robber Barons
Business leaders who made fortune by taking advantage of others.
Drained natural resources, paid low wages to workers, required long hours of employees
“Robber Barons”
They persuaded public officials to interpret laws in their favor.
They ruthlessly drove their competitors to ruin.
• Paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.
Captains of IndustryThe business leaders served their
nation in a positive way.
Increased the supply of goods by building factories.
Raised productivity and expanded markets.
Created jobs that enabled many Americans to buy new goods and
raise their standard of living.
• Also created museums,
libraries, and universities, many of which still serve the public today.
Carnegie Hall
Robber Baron – negative
Robber Baron versus Captain of Industry
Captain of Industry – positive
Andrew Carnegie
Andrew CarnegieCaptain of Industry for steel
production in Pittsburgh
Used Bessemer Process to produce stronger steel
Utilized vertical integration or consolidation
Scottish Immigrant
Carnegie as a PhilanthropistA Philanthropist uses
wealth to improve societyCarnegie funded the
building of libraries, education facilities, and music/arts facilities
“Gospel of Wealth”Carnegie’s philosophy
- A person should be able to make as much money as they can, BUT they should also use their wealth to improve society.
Social Darwinism
Based on Darwin’s Theory of Evolution (1859) regarding natural selection and survival of the fittest
Businessmen are justified in using any means to become rich and powerful – the government should stay out!
American businessmen adopted eagerly the ideology of Social Darwinism in order to defend their business practices as "natural."
James J. Hill, a leading "Robber Baron" of the railroad-building era, saw the chance to justify his actions with "scientific" terminology:
"The fortunes of railroad companies are determined by the law of the survival of the fittest." --James J. Hill
Monopoly vs. Cartel
Monopoly – one company with complete control of a product or a service
Cartel – a loose association of businesses in a similar field or that make the same product and agree to limit supply to drive up prices
John D. RockefellerFormed Standard
Oil Company
John D. Rockefeller and the Standard Oil Company
Wealthy individual who saw the oil industry as a way to get richer
Made illegal deals with railroads to transport oil cheaper, thus weakening other refineries that he would eventually buy
Utilized horizontal integration or consolidation for business purposes
Also important re: Standard Oil ... Trusts
A group of separate companies that are placed under the control of a single managing board (Board of Directors)
Trusts limit competition and cause prices to rise
What’s so bad about Monopolies?
They underpay workers and drive competitors out of business
They offer consumers NO CHOICE!
Prices rise and quality falls!
Which Led to the Sherman Antitrust Act
Enacted in 1890Effort by Congress to end trusts
Ineffective due to lack of enforcement
How Do I Get a Monopoly?
Vertical Integration/Consolidation
Buying out or controlling businesses related to various phases of production for one product
Carnegie Steel/Andrew Carnegie
Controlling the Market
Bob’s Pizza
Using Vertical Integration, Bob could control the Pizza market in
town by controlling many
of the costs associated with
making his pizza!Bob’s Farm
Bob’s Cheese Factory
Bob’s Trucking Company
Horizontal Integration/Consolidation
When you buy out all of your competitors (firms that are part of the same business)
Standard Oil Company/John D. Rockefeller
Controlling the Market
Bob’s Pizza
Delaware
Pizza
Pizza PizzaHappy Time PizzaUsing Horizontal Integration, Bob could
control the Pizza market in town by buying the other Pizza shops!
Bob’s Pizza Bob’s Pizza Bob’s Pizza
Bob’s Pizza
Business CycleThe growth and
contraction of a nation’s economy
A new concept in the mid-late 1800s