Transcript Ch_ 3 Big Business and Labor

The modern United States was
created by social changes
associated with the growth of
big business and advances in
technologies.
After Reconstruction, railroad
companies and the steel and oil
industries expanded and major
inventions changed how people
lived.
Factors Contributing to the Second
Industrial Revolution (SIR)
1. wealthy Europeans & Americans eager to invest
2. Government maintained high tariffs (taxes) to
protect US industries against foreign competition
3. Laissez-Faire Policy (not interfering with the
economy) to promote business expansion; providing
companies with land grants & loans.
4. Growing Population of laborers & consumers;
5. technology & inventions; improved transportation &
communications
Growth of Big Business
• Small; privately owned enterprises lacked
the financial resources to build huge
factories.
• To enable companies to raise large amounts
of working capital (cash) the corporate form
of business came into use.
• Corporation is a company usually owned by
many people; each of whom becomes a part
owner by purchasing shares
of stock in the company.
Growth & Consolidation
• A firm that bought
out all its
competitors could
achieve monopoly.
• Monopoly is the
complete control
over its industry’s
production; wages;
and prices.
What is the goal of the
game?
Growth & Consolidation
New Forms of business combination &
practices emerged
• Trust- was a
giant business
combination
consisting of a
number of
corporations
engaged in the
same field or in
related field.
• Holding Company- did
not engage in the
production &
distribution of goods &
services.
• It controlled stock
interest in a number of
related enterprises
called subsidiaries &
devoted itself to
directing their
operations
Growth & Consolidation
New Forms of business combination &
practices emerged
Vertical Integration
Horizontal Integration
• A single company
• Bringing together the
owns & controls the
many firms in the same
entire process of
business.
product’s
• Ex: Rockefeller’s
development.
Standard Oil--- UNFAIR
• From the raw
MONOPOLIES giant
materials to
company bought up all
manufacturing &
competition.
sale of the finished
product.
• Ex: Carnegie Steel
Company
Pros & Cons of Big
Business
Advantage
Disadvantage
1. Build modern
efficient plants
2. Up to date
machinery
3. Purchase of raw
materials in large
quantity
4. A nationwide or
worldwide
distribution network
5. Increase sales
through advertising
1. Can become
monopolistic
2. Destroy competition
3. Drive out small
business
4. Enormous wealth &
power in hands of few
5. Excessive control
power over government
officials
Results of Industrial Growth
Mass Production: More efficient Production Methods
• Assembly Line-manufactured goods assembled
on a conveyor belt; each worker assigned to doing
one particular thing. When product reaches the end
of the line; it is complete and ready to use. This was
popularized by Henry Ford (Model T automobile).
• Labor Saving Machinery- machine operator could
do a job that previously required the work of many
workers.
• Division of Labor- each worker performed only one
operation; making the process cheaper; efficient but
also more repetitive.
Assembly Line
Results of Industrial Growth
New Marketing Techniques
Department Stores Catalog Sales
• Goods of every
description were
sold under one
roof and featured
in separate
departments.
• Pioneered by two
companies: Montgomery
Ward (1872) & Sears (1895)
• Illustrated catalogs listing
variety of merchandise and
customers chose what they
wanted and sent their order
by mail.
Robber Barons or Captains of Industry
• Robber barons: business leaders who
built fortunes from unfair trade practices
or overcharging the public.
• Captains of Industry: business leaders
served their nation in a positive way.
Emergence of Captains of
Industry
Cornelius Vanderbilt
J. Pierpont Morgan
• Owner of the largest private
• Became famous
banking & securities house of
for consolidating a
America. He reorganized many
number of short
bankrupt railroads
railroad lines
between NYC & • In 1901; Morgan & his
associates purchased the
Buffalo to the
country’s first great Carnegie Steel Co & merged it
with other steel producers to
railroad system;
form enormous monopoly
the NY Central
known as US Steel Corp
Station
(nation’s first billion-dollar Co.)
Emergence of Captains of
Industry
Philip D. Armour;
Nelson Morris &
Gustavus Swift
James Duke
• Formed the American
Tobacco Company.
• Pioneers in the
development of meat
packing industry.
• They absorbed their
• Great numbers of pigs &
competitors by
cows were slaughtered &
threatening to ruin
prepared for market.
them through price
• The waste part of the
wars
animals were converted
into by products such as
glue; soap & fertilizer.
Andrew Carnegie
$ Scottish businessman
$ One of the first
industrial moguls to
make his own fortune.
$ Owned the Carnegie
Steel Company
$ Passion for supporting
charities
80% of fortune went to
education.
$ At time of death, he
had given away – 350
million.
$
Andrew
Carnegie
John D. Rockefeller
$ Standard Oil Co.
$ Eventually owned all oil
companies in US.
$ He bought out
competitors or drove
them out of business.
$ He hated competition
(he saw it wasteful)
John D.
Rockefeller
Standard Oil Co.
So what happens?
Workers who keep industry afloat while big business
rests and reaps the rewards of the work completed.
Inventors: Notable AfricanAmerican & Women
• Elijah McCoy- An African-American
who developed an automatic
lubricator for steam engines.
• Others tried to copy but it didn’t work.
• Customers would ask for (the real
McCoy) that’s where the famous
expression comes from.
Inventors: Notable AfricanAmerican & Women
• Madam
• Sarah Goods-invented
C.J.Walker- An
cabinet bed
African-American • First African-American
woman who
woman to receive a
invented a hair
patent
growing lotion for • Patent-a document that
black women to
certifies that invention &
use to relax hair.
has been registered
• She became the
with the government to
first female
protect rights of the
African-American invention
millionaire
Labor Unrest
Major Strikes of the Late 1800s
Strike
Year/City
Industry or
Company
Causes
Effects
Great
Railroad
Strike
1877 at
Martinsburg
West VA
Baltimore &
Ohio RR
Wages cut
by the RR
Workers
destroyed
rails; train
stations and
train cars.
Federal
troops were
called in to
end strike.
Haymarket
Riot
1886 at
Chicago IL
Factory
workers
across
Chicago
Workers
protested
police
actions
7 police
were killed
by a bomb.
The Knights
of labor were
blamed
Labor Unrest
Strike
Major
Strikes ofIndustry
the Late
Year/City
or1800s
Causes
Effects
Company
Homestead
Strike
1892 at
Homestead
PA
Carnegie
Steel
Company
Wage Cuts
and a 70hour work
week.
Workers &
private
guards were
killed.
State militia
broke up the
strike.
Union broke
up
Pullman
Strike
1894 at
Pullman IL
Pullman
Company
Wages cut
without
cutting cost
of employee
housing
Chicago had
no trains for
2 months; 27
states had
partial or no
train
services
Government Regulations
These big businesses acquired enormous
financial wealth. They often used this wealth to
dominate and control many aspects of
American cultural and political life, and as a
consequence of these practices, by the
beginning of the 20th century big business
became the target of government reform
movements at the state and national levels.
Why The Labor Movement/ Unions?
Factory workers worked 12 or more hours a day; six days a
week (long workdays)
Employees were not entitled to vacation; sick leave;
unemployment compensation; or reimbursement for
injuries suffered on the job (no benefits)
They worked in dirty; poorly ventilated factories; workers
had to perform repetitive mind dulling tasks; sometimes
with dangerous or faulty equipment (no safety)
Wages were so low that most families could not survive
unless everyone held a job (low pay)
In sweatshops or workshops rather than in
factories; workers had little choice but to put up
with the conditions.
Sweatshop employment required few skills; it
was often open to women and children.
Sweatshop paid the lowest wages: 27 cents for a
child’s 14 hour day. Women earned an average
of $267 a year; nearly half of men’s average pay
of $498
Child Labor
• Many of the child laborers were orphans that had no other
way of getting food. These children were especially
subject to slave-like labor. Most of the time, they were
not paid. Employers justified this by saying that they
were already providing the children with food, clothing,
and shelter.
• Children suffered freezing temperatures, breathed bad air
quality (in the mines), and worked around dangerous
machinery. They had to work long hours, sometimes up
to 19 hours a day.
• Children were subject to harsh forms of punishment,
especially for being late or for not meeting their quota.
One type of punishment was to be “weighted.” The
overseer would tie a heavy weight to a worker's neck,
and have them walk up and down the factory aisles in
front of the other children as an example.
• With little time or energy left for school; child laborers
gave up their futures to help their families make ends
meet.
Though some saw child labor as an advantage, Lewis
Hine’s photos of thousands of children awakened society
to the cruelties of child labor. The children’s
circumstances slowly started changing as the government
began making new laws.
Child Labor
Where does most child
labor occur?
NIKE
Nike has been accused of using
child labor in the production of its
soccer balls in Pakistan. While Pakistan
has Laws against child labor and
slavery, the government has taken very
little action to combat it. Only a boycott
by the United States and other nations
will have any impact on slavery and
child-based industries.
Child labor is still an issue today. Many
countries use children in their factories to
make their products. Even some U.S.
companies receive their products from
factories that employ children.
1904
The National Child Labor Committee forms. It is not
until 1938 that federal law preventing the labor of
children under the age of 14 goes into effect. (One
Hundred Years Toward Suffrage: An Overview)
(The History Place: Child Labor in America 1908-1912 )
“Galley Labor”
The Knights of Labor
The first successful labor organization
A secret organization made up of
skilled craft workers
Accepted African-Americans, women
and immigrants
Goals of the Knights of
Labor
ù Eight-hour workday.
ù Abolition of child and prison
labor.
ù Equal pay for men and women.
ù Safety codes in the workplace.
ù Prohibition of contract foreign
labor.
The American Federation
of Labor (AFL): 1886
The AFL was not one union
but groups of crafts and
trade unions.
Only skilled workers as
members
Samuel Gompers favored
collective bargaining over
strike. It was attempt to
negotiate contracts between
workers and employers.
Samuel Gompers-President of AFL
How the AF of L
Would Help the Workers
ù
Catered to the skilled worker.
ù
Eight hours workday
ù
Maintained a national strike fund.
ù
Higher wages
ù
Safer working conditions and benefits for
injured workers
ù
Mediated disputes between management
and labor.
ù
Pushed for closed shops.