Rise of Big Rise of Big BusinessBusiness

Giants of Early U.S. Giants of Early U.S. IndustrializationIndustrialization

Bessemer ProcessBessemer Process Henry BessemerHenry Bessemer – –

new method for new method for making steelmaking steel known as the known as the Bessemer ProcessBessemer Process

Made production of Made production of steel quickersteel quicker

Faster expansion of Faster expansion of railroads and railroads and construction of construction of buildingsbuildings

Man of SteelMan of Steel Andrew Carnegie – dominated Andrew Carnegie – dominated

steel industrysteel industry Vertical integrationVertical integration – business – business

strategy in which one entity strategy in which one entity owns the final product as well owns the final product as well as the other companies that as the other companies that supply the materials to make supply the materials to make up the final product up the final product

Monopoly – control over the Monopoly – control over the supply of a particular product supply of a particular product with no competitionwith no competition

Carnegie give much of his Carnegie give much of his wealth to public causeswealth to public causes

Gospel of Wealth (Wealth)Gospel of Wealth (Wealth) – – responsibility of the wealthy responsibility of the wealthy to make sure their money was to make sure their money was put to good use helping put to good use helping othersothers

Carnegie even owned the railroads and ships that transported the needed coal and iron ore. Wrote essay known as Wealth.

OILOIL Edwin L. Drake found oil in Edwin L. Drake found oil in

PAPA John D. RockefellerJohn D. Rockefeller – became – became

one of the richest and most one of the richest and most powerful men in the nationpowerful men in the nation

Standard Oil was one the Standard Oil was one the nation’s first trustnation’s first trust

Trust is a business Trust is a business arrangement under which a arrangement under which a number of companies unite number of companies unite into one systeminto one system

Trusts serve to destroy Trusts serve to destroy competition and create competition and create monopoliesmonopolies

Under the trust, Rockefeller could dictate prices, eliminate competition & control the US oil industry

Cornelius Vanderbilt – great Cornelius Vanderbilt – great impact on the railroad industryimpact on the railroad industry

New York central railroad was New York central railroad was extended to Chicago, Illinoisextended to Chicago, Illinois

Made travel faster and easierMade travel faster and easier

His son George built the famous Biltmore house in Ashville NC

J.P. Morgan – was an J.P. Morgan – was an American financier and American financier and banker who dominated banker who dominated corporate finance and corporate finance and industrial consolidation industrial consolidation during his time during his time

Exercised control over Exercised control over banks, insurance banks, insurance companies, and various companies, and various stock-market stock-market organizationsorganizations

Bought out Carnegie and Bought out Carnegie and formed a new company formed a new company US SteelUS Steel

Worth $22 Billion in 1913Worth $22 Billion in 1913

George George Westinghouse – Westinghouse – Westinghouse Westinghouse Electric Company Electric Company

Invented Invented transformer that transformer that enabled electricity enabled electricity to be transmitted to be transmitted as alternating as alternating currents to points currents to points far away.far away.

Lit the Columbian Exposition

Chicago 1893

First to use hydroelectric power from Niagara Falls to power lights in Buffalo 22 miles away

Robber barons – people who loot an Robber barons – people who loot an industry and give nothing back (Jay Gould)industry and give nothing back (Jay Gould)

The terms "The terms "mogulmogul", "", "tycoontycoon" and "" and "baronbaron" " were often attributed to late 19th and early were often attributed to late 19th and early 20th century North American business 20th century North American business magnates in extractive industries such as magnates in extractive industries such as mining, logging and petroleum, mining, logging and petroleum, transportation fields such as shipping and transportation fields such as shipping and railroads, and manufacturing: this includes railroads, and manufacturing: this includes steelmaking, banking, and newspaper steelmaking, banking, and newspaper publishing. publishing.

This era was known as the Second This era was known as the Second Industrial Revolution or the Gilded Age.Industrial Revolution or the Gilded Age.

Gilded Age 1877-early Gilded Age 1877-early 1900s1900s

The name refers to the The name refers to the process of gilding an process of gilding an object with a superficial object with a superficial layer of gold and is layer of gold and is meant to make fun of meant to make fun of ostentatious display ostentatious display while playing on the while playing on the term "golden age."term "golden age."

Mark Twain referred to Mark Twain referred to the era as a time in the era as a time in which it appeared that a which it appeared that a thin layer of prosperity thin layer of prosperity was covering the was covering the poverty and corruption poverty and corruption that existed in much of that existed in much of society.society.

Horatio Alger – Horatio Alger – wrote wrote Ragged Dick Ragged Dick andand Mark, The Mark, The Match BoyMatch Boy

Alger’s characters Alger’s characters went from poverty went from poverty to wealth through to wealth through hard work and hard work and diligencediligence, rather , rather than because of an than because of an inherited social inherited social status.status.

Andrew Carnegie Andrew Carnegie

John D. RockefellerJohn D. Rockefeller

Cornelius Cornelius VanderbiltVanderbilt

J.P. MorganJ.P. Morgan

George George WestinghouseWestinghouse

STEEL

OIL

RAILROAD

Banking, Stocks and Bonds Electricity

Social Social DarwinismDarwinism

Herbert Spencer Herbert Spencer Life was a battle Life was a battle

for “survival of for “survival of the fittest” the fittest” borrowed ideas borrowed ideas from Charles from Charles DarwinDarwin

Many thought Many thought businesses is no businesses is no differentdifferent

Laissez-faire economics Laissez-faire economics – govt. should not – govt. should not interfere with the interfere with the market or regulate market or regulate businessesbusinesses

Workers and Labor Workers and Labor UnionsUnions

Conditions of the WorkerConditions of the Worker

No sense of pride No sense of pride Long hoursLong hours Low wagesLow wages ($2.00 ($2.00

per week) mid per week) mid 1800s1800s

Very dangerous Very dangerous factory conditionsfactory conditions

Child laborChild labor very very common (5 yr old)common (5 yr old)

The UnionsThe Unions Organization of Organization of

workers formed to workers formed to protect the interests protect the interests of its membersof its members

Craft unions – skilled Craft unions – skilled workersworkers

Trade unions – less Trade unions – less skilled workersskilled workers

Labor UnionsLabor Unions Knights of LaborKnights of Labor – labor – labor

organization that help organization that help workers spirit (didn’t last workers spirit (didn’t last long)long)

American Federation of Labor American Federation of Labor (AFL)(AFL) - - Led by Samuel Led by Samuel Gompers 1886Gompers 1886

Focused on wages, working Focused on wages, working hours, and working hours, and working conditionsconditions

Focused on strikes and Focused on strikes and boycotts boycotts

Believed in Believed in collective collective bargaining and mediationbargaining and mediation

““closed shops” factories closed shops” factories could only hire union could only hire union membersmembers

Eugene DebsEugene Debs

Most influential Most influential union leadersunion leaders

Organized Organized American Railway American Railway Union 1893Union 1893

Led Pullman Strike Led Pullman Strike of 1894of 1894

Ran for president Ran for president under American under American Socialist PartySocialist Party

Response to UnionsResponse to Unions Employers hated unionsEmployers hated unions Forced employees to sign Forced employees to sign yellow-dog yellow-dog

contractscontracts which which forbade workers from joining forbade workers from joining unionsunions

Blacklists – list of workers who employers Blacklists – list of workers who employers would refuse to hirewould refuse to hire

Lockouts – would not allow workers to return Lockouts – would not allow workers to return to workto work

During strikes, employers would hire During strikes, employers would hire scabsscabs or or replacement workersreplacement workers

Injunctions – court orders that forbade strikesInjunctions – court orders that forbade strikes because they violated the law or threatened because they violated the law or threatened public interestspublic interests

Some employers used violence and Some employers used violence and intimidation to deal with labor unrestintimidation to deal with labor unrest

Panic of 1873Panic of 1873

Of the country's 364 railroads, 89 Of the country's 364 railroads, 89 went bankrupt.went bankrupt. A total of 18,000 A total of 18,000 businesses failed between 1873 and businesses failed between 1873 and 1875. 1875.

Unemployment reached 14% by Unemployment reached 14% by 1876.1876. Construction work halted, Construction work halted, wages were cut, real estate values wages were cut, real estate values fell and corporate profits vanished.fell and corporate profits vanished.

Strikes and ConfrontationsStrikes and Confrontations ““Great Strike” President Rutherford Great Strike” President Rutherford

B. Hayes sent federal troops to put B. Hayes sent federal troops to put down two separate protests over down two separate protests over railroad industryrailroad industry

Protest in Chicago Haymarket Square Protest in Chicago Haymarket Square led a radical group to explode a led a radical group to explode a bomb that killed seven police bomb that killed seven police officers. A riot broke out and gunfire officers. A riot broke out and gunfire killed police and striking workerskilled police and striking workers

Haymarket Riot turned public opinion Haymarket Riot turned public opinion against unions and led to the demise against unions and led to the demise of the Knights of Laborof the Knights of Labor

Haymarket RiotHaymarket Riot

Homestead Strike Homestead Strike 18921892

Broke out among Broke out among steel workers at steel workers at Carnegie Steel plantCarnegie Steel plant

Private police force Private police force (Pinkertons) called to (Pinkertons) called to put down strikeput down strike

Shoot out left several Shoot out left several dead or wounded dead or wounded

Union had to call off Union had to call off strikestrike

Carnegie was in Europe during the strike, his partner left in charge

Pullman StrikePullman Strike Involved railroad industryInvolved railroad industry George Pullman fired 3 George Pullman fired 3

labor rep. who asked about labor rep. who asked about the laying off of workersthe laying off of workers

Eugene Debs led a boycott Eugene Debs led a boycott of Pullman cars nationwideof Pullman cars nationwide

120,000 workers rallied to 120,000 workers rallied to the strikethe strike

Fed. govt. responded with Fed. govt. responded with a court injunction against a court injunction against the unionthe union

Fed. troops sent to make Fed. troops sent to make sure it was enforcedsure it was enforced

Established a precedent for Established a precedent for factory owners appealing factory owners appealing to the courts to end strikesto the courts to end strikes

The Role of The Role of Government in Government in Economic and Economic and Political AffairsPolitical Affairs

Corruption in GovernmentCorruption in Government After Lincoln’s death, After Lincoln’s death,

corruption of federal govt. corruption of federal govt. beganbegan

Grant and the Whiskey Grant and the Whiskey RingRing

Credit Mobilier ScandalCredit Mobilier Scandal (govt. officials and (govt. officials and stockholders in the stockholders in the Union Union Pacific railroadPacific railroad))

Many blamed the Many blamed the corruption on the spoils corruption on the spoils systemsystem

1881 Garfield assassinated 1881 Garfield assassinated by a man who was upset by a man who was upset over not receiving the over not receiving the political position he wantedpolitical position he wanted

Pendleton Pendleton ActAct

Garfield’s death led to the Garfield’s death led to the passage of the Pendleton passage of the Pendleton ActAct

Created a Created a Civil Service Civil Service CommissionCommission that required that required applicants to pass a civil applicants to pass a civil service exam prior to service exam prior to being considered for any being considered for any official position.official position.

Based on merit, rather Based on merit, rather than his/her political than his/her political loyaltiesloyalties

Ended the Spoils SystemEnded the Spoils System

Political MachinesPolitical Machines Fast growth of urban populationsFast growth of urban populations Govt. had to improve police and fire dept., Govt. had to improve police and fire dept.,

transportation systems, sewage systems, etc…transportation systems, sewage systems, etc… Public money and greater role for govt.Public money and greater role for govt. Made the battle for govt. positions more Made the battle for govt. positions more

intenseintense Political machines was an unofficial entity to Political machines was an unofficial entity to

keep a certain party or group in power.keep a certain party or group in power. Led by a boss, who may or may not hold a Led by a boss, who may or may not hold a

political office himself.political office himself. Graft – use of one’s political position or job to Graft – use of one’s political position or job to

gain wealthgain wealth

Boss William TweedBoss William Tweed

Most notorious boss in New York CityMost notorious boss in New York City Ran Ran Tammany HallTammany Hall (political club (political club

that controlled the city’s Democratic that controlled the city’s Democratic party)party)

Tweed stole over $100 million from Tweed stole over $100 million from the city treasurythe city treasury

Political cartoonist Political cartoonist Thomas NastThomas Nast helped expose Tweed and bring him helped expose Tweed and bring him down.down.

““Stop those Stop those damned damned pictures! I pictures! I don’t care what don’t care what the papers say the papers say about me; my about me; my constituents constituents can’t read. But can’t read. But damn it, they damn it, they can see can see pictures!”pictures!”

Boss William Boss William TweedTweed

Government RegulationGovernment Regulation Presidential Campaign of Presidential Campaign of

1884 –Scandals1884 –Scandals Rep. James Blaine – believed Rep. James Blaine – believed

to be a corrupt politicianto be a corrupt politician Dem. Grover Cleveland – Dem. Grover Cleveland –

father of a child out of father of a child out of wedlock wedlock

Because he admitted the fact, Because he admitted the fact, Cleveland seemed the better Cleveland seemed the better of the two and wonof the two and won

Mugwumps – Republicans Mugwumps – Republicans who helped the Democratwho helped the Democrat, , Cleveland, win the electionCleveland, win the election

President Grover Cleveland (only president to serve two terms that were non-consecutive)

Interstate Commerce Interstate Commerce ActAct

Under Cleveland, the Under Cleveland, the govt. took steps to govt. took steps to regulate businessregulate business

He signed the He signed the Interstate Commerce Interstate Commerce Act – Interstate Act – Interstate Commerce Commerce Commission to Commission to regulate railroad regulate railroad ratesrates for trains for trains traveling between traveling between statesstates

Sherman Antitrust ActSherman Antitrust Act In 1890, President Benjamin Harrison In 1890, President Benjamin Harrison

passed the Sherman Antitrust Actpassed the Sherman Antitrust Act Made monopolies illegal to ensure Made monopolies illegal to ensure

competitioncompetition United States vs. EC Knight CompanyUnited States vs. EC Knight Company Court ruled that the government could Court ruled that the government could

not use the Sherman Antitrust Act to not use the Sherman Antitrust Act to break up monopolies in manufacturingbreak up monopolies in manufacturing

This proved to be a victory for This proved to be a victory for business and a setback in the battle business and a setback in the battle against monopoliesagainst monopolies

Populist Response to Populist Response to CorruptionCorruption

Populism – Populism – political reform political reform movementmovement created due to corruptioncreated due to corruption of big business and industrializationof big business and industrialization– Secret BallotSecret Ballot – known as Australian – known as Australian

ballotballot– ReferendumReferendum – populists wanted a – populists wanted a

popular referendum by which the popular referendum by which the president would be elected by popular president would be elected by popular vote rather than by the Electoral College vote rather than by the Electoral College and and direct election of US Senatorsdirect election of US Senators..

– They believed elections should be They believed elections should be decided by the people rather than by decided by the people rather than by political deals and favors.political deals and favors.

– RecallRecall – people would have the – people would have the power to power to remove corrupt officials from officeremove corrupt officials from office before before their term had endedtheir term had ended

– InitiativeInitiative – people could force a vote on an – people could force a vote on an issue provided they could issue provided they could petitionpetition enough enough signatures from registered voters.signatures from registered voters.

Populism faded as a political movement Populism faded as a political movement after the election of 1896, however, after the election of 1896, however, Populists helped to create momentum for Populists helped to create momentum for changes in govt. and its role in regulating changes in govt. and its role in regulating business. business. The The Progressive Movement would pass Progressive Movement would pass Populist goals in the early 1900s.Populist goals in the early 1900s.

QUIZ 1QUIZ 11.This eliminated competition during the

late 1800s.2. Who created the 1st Trust known as

Standard Oil Trust 3. Steel tycoon4. Strategy used to create a monopolies

by controlling companies that supply goods to make final product

5. Robber baron that controlled banks, insurance companies, and stock market

6. Mark Twain used this phrase to define US prosperity covering up poverty and corruption

7. Idea of the strongest companies should survive and take over other businesses

8. Created to help workers get better pay, working conditions, and shorter work days

9. 1st Labor union that lost popularity due to the Haymarket Square Riot

10. List of workers that employers refused to hire due to association with labor unions

Quiz 2Quiz 21. Name for replacement workers2. court order that forbid strikes

because it threatened public interests

3. President whose reputation was plagued by Whiskey Ring and Mobilier Scandal

4. President who was assassinated because he wanted to end the spoils system

5. This ended the spoils system and created the Civil Service Commission

6. Led by a boss which uses his influence to ensure a political party will remain in power

7. Ring leader of Tammany Hall8. Used political cartoons to get

the public to see the corruption of Boss Tweed

9. Created to help regulate railroads

10. Created to bring down monopolies and trusts