John m. Murrin, et al.

Liberty, Equality, PowerA History of the American People

Chapter 19The Emergence of Corporate America

1865-1900

The Gilded Age

• Mark Twain

• Prosperity (for some), Corruption & Greed

Industrial Revolution in America

• Capital

• Natural Resources– Iron > Mesabi Range, MN– Oil > “Drake’s Folly” in PA– Coal > Appalachia

• Cheap Labor– Immigration– Lack of Regulation

Industrial Revolution in America

• New Technology– Bessemer (Kelly) Process– Refrigerated Car– Edison

• Centralized Power Grid• Light bulb

Business Organization

• New business practices – Prevent “wasteful” competition– Maximize profits– Lack of regulation

• Labor Abuse• Unfair business practices• Monopolizing of markets• Consumers & Workers hurt

Vertical Integration

• Combined all phases of the manufacturing process into one company

Horizontal Integration

• Controlling through ownership or alliance to monopolize one (or more) phase of production

Interlocking Directorate

• Incestuous relationship involving the boards of director of companies and their financiers

Trusts

• Combination through asset (stock) reassignment to boards of trustees to control prices and competition

• Created many de facto monopolies in many industries to include oil, sugar, meat, tobacco, leather and copper

Robber Barons & Captains of Industry

• Cornelius Vanderbilt - Railroads

Robber Barons & Captains of Industry

• Andrew Carnegie – Steel“Put all your eggs in one basket. Then watch that

basket.”

Robber Barons & Captains of Industry

• John D. Rockefeller – Oil“Let us prey.”

Standard Oil's headquarters at 26 Broadway

Robber Barons & Captains of Industry

• J.P. Morgan – Banking

Philosophies

• Social Darwinism– Hubert Spencer – William Sumner

• Gospel of Wealth– Andrew Carnegie

Government Regulation

• Interstate Commerce Act– 1st Attempt at governmental regulation of

business

• Sherman Anti-Trust Act (1890)– Forbid business combinations in restraint of

trade• Initially weak – 7 out of first 8 anti-trust cases failed• Used against unions

Effects of Industrialization

• Increased standard of living• Over-growth of cities• Women and children in the

workplace– Gibson Girl

• Growing gap between rich and poor “Socialists and other radicals…”

• Depersonalization of the workplace

• Capital v Consumer goods

Journalism

• Growing market with urbanization

• Business v. Political decisions by editor

• Yellow Journalism – sensationalized journalism

• Joseph Pulitzer and William Randolph Hearst

Joseph Pulitzer

William Randolph Hearst

http://teachpol.tcnj.edu/amer_pol_hist/thumbnail267.html

Literature

• Mark Twain• Henry George

– Distribution of wealth based on private ownership of land

• Edward Bellamy– Socialism over capitalism

• Horatio Alger – “Rags to riches” stories for juveniles

• Bret Harte– The “wild west”

• Walt Whitman– Oh Captain, My Captain

Horatio Alger

Oh Captain! My Captain!O Captain! my Captain! our fearful trip is done, The ship has weather'd every rack, the prize we sought is won, The port is near, the bells I hear, the people all exulting, While follow eyes the steady keel, the vessel grim and daring;

But O heart! heart! heart! O the bleeding drops of red,

Where on the deck my Captain lies, Fallen cold and dead.

O Captain! my Captain! rise up and hear the bells; Rise up--for you the flag is flung--for you the bugle trills, For you bouquets and ribbon'd wreaths--for you the shores a-crowding, For you they call, the swaying mass, their eager faces turning;

Here Captain! dear father! This arm beneath your head!

It is some dream that on the deck, You've fallen cold and dead.

My Captain does not answer, his lips are pale and still, My father does not feel my arm, he has no pulse nor will, The ship is anchor'd safe and sound, its voyage closed and done, From fearful trip the victor ship comes in with object won;

Exult O shores, and ring O bells! But I with mournful tread,

Walk the deck my Captain lies, Fallen cold and dead.

Walt Whitman (1819-1892)

Recreation

• Evolution of Jazz and Blues• Social clubs and societies• Vaudeville & Wild West shows• Circus

– Barnum and Bailey’s The Greatest Show on Earth

• Sports– Baseball, Football, and Basketball

• Bicycles

Labor Unions

• Knights of Labor• American Federation of Labor (AF of L) 1860

– Leader- Samuel Gompers– Skilled workers only– Goals limited to

• better hours• Wages• working conditions• Closed shops• i.e. avoided social reform/politics

Labor Unions

• Corporate tactics to stop unions– Lockouts– Yellow dog contracts– Blacklists– Scabs

Labor Unions

• Prior to 1900, government sided with the corporations

– Injunctions– Federal troops

• Jacob Coxey led a march of the unemployed from Ohio to DC to protest the plight of the poor.

• He wanted a public works program through deficit spending (the New Deal).

• President Cleveland arrested the protesters for walking on the White House grass

Coxey’s Army

• Andrew Carnegie instituted an across-the-board pay cut at Homestead steel plant near Pittsburgh, PA

• The Union went on strike and 300 armed Pinkerton detectives sent in to break it.

• Strikers forced Pinkerton’s private police force to surrender.

• National Guard activatedto restore order

• Strike and Union busted

Homestead Patrols

Homestead Strike

• Pullman Palace Car Company instituted a 33% pay cut

• Workers went on strike – blocking the railways• Supported by the American Railway Union, but

NOT the AF of L• Led by Eugene V. Debs• Strikers ignored court injunction to end strike• Troops sent in by President Cleveland over the

protest of IL Gov. Atgeld“If it takes the entire army and navy to deliver a post card in Chicago, that card will be delivered.”

• Debs jailed – Strike ended by force• Workers claim big business & courts had joined

against them

Pullman Strike

Lewis Hine

• Greenback Movement

• The Grange

• Farmer’s Alliance

• Populists

Farmer Discontent

The Grange

• Organization of Farmers’ and Agricultural Interests

• Gained rapid success in Midwest – controlled some state legislatures

• Attempted to regulate the railroad industry• Wabash v Illinois – Supreme Court stated that

‘Granger Laws’ or state laws regulating interstate trade was unconstitutional

• Evolved into the Populist Party

Interstate Commerce Act (1787)

• First attempt by the federal government to regulate private industry for the public good

• Established the Interstate Commerce Commission

• Initially weak with little power – “stabilized not revolutionized” the railroad industry

Populist (People’s) Party

                                                       

• Australian (or Secret Ballot) – public voting in many areas which subjected some voters to pressure from landlords or employers

Adopted by all states in 1900s• Popular Election of U.S. Senators – believed that

business lobbies had too much control over the state legislatures (Art. 1, Sect. 3)

Became the 17th Amendment in 1913• Direct Democracy – urged use of initiative, referendum

and recall as a means of giving people a more direct voice in government

Adopted my many states in 1900s; still practiced extensively in western states

Populist (People’s) Party

• Banking Reform – felt the hardships of the working class caused by a national banking system

Populists lost this plank with the adoption of the Federal Reserve System in 1913.

• Government Ownership of the Railroads, Telegraph, and Telephone – price abuse led this belief critics charged Populists as being socialists

No public support for government ownership, but regulation increased.

• Graduated Income TaxAfter initial setbacks by Supreme Court, power to apply a graduated income tax granted by the 16th Amendment in 1913.

Populist (People’s) Party

• Free and Unlimited Coinage of Silver – wanted inflationary measures to ease debts

This idea will meet a natural death with increased prosperity and increased gold supply.

• One Term Limit for PresidentA Republican congress in 1951 will pass a two term limit in the 22nd Amendment.

• Shorter Work DayUnions will help accomplish this in the 1850s with a 7 day work week. The 5 day, 40 hour work week will not come until 1948.

• Immigrant Restrictions – gained support from western and mid-western states from the influx of Chinese immigrants

A flood of European immigrants and growing prosperity kept severe restrictions at bay.

Populist Members of Nebraska Legislature - 1890

Populist (People’s) Party

McKinley Bryan

Election of 1896

• Main issues– Currency (Gold v. Silver)– Tariff (D & P = low; R = high)

• William McKinley (R-OH)– ‘Front Porch’ campaign

• William Jennings Bryan (D & P-NB)– Cross of Gold speech secured nomination– Energetic Campaign – 27 states, 600 speeches, 1800 miles

• McKinley victory provided proof of:– Cities as the political epicenter– The triumph of conservative monetary policy

Election of 1896

A Second Gilded Age?

1st 2nd

Rich/Poor Gap boomers, > 1 million millionaires

Robber Barons Gates, Walton, Buffett

Capital Goods IT, Finance Industry (401K)

Consolidation AOL/Time Warner, Gillette/P&G, Daimler-Chrysler, Bank of America/Merrill Lynch

Ruthless Business Microsoft

Corporate Scandal Enron, Tyco, World Com, Martha

Immigrants / Labor Mexico / NAFTA / CAFTA

B & B in business B & B in _______?

Yellow Journalism Sensationalized or Biased TV news?