Industrial Giants: Captains vs. Robber Barons

1. Chapter 6 Part 3 Pages 231-249

2. Big Business • Robber Barons or Captains of industry? • “Captains of industry” offers a positive impression of the achievements of men of inventiveness who through hard work and ingenious strategies transformed the American economy of the post-Reconstruction era and the early 20th century. These men are to also be honored for their charitable activities (philanthropy). • “Robber baron” emphasizes the cruel and self-centered entrepreneurs who took advantage of the worker, whether it be immigrant, female, or child to accumulate wealth. The factory was a place where the worker experienced harsh conditions and poor pay.

3. The Industrialists • Cornelius Vanderbilt Railroads • Jay Gould Railroads • Andrew Carnegie Steel • J.P. Morgan Banking, Railroads, Steel • John D. Rockefeller Oil

4. Most inherited wealth • Exception was Andrew Carnegie • He really was rags to riches • Came to the U.S. from Scotland at age 12 • Worked in a cotton factory • To telegraph office • To Railroads

5. Was awarded RR stock • Bought land containing oil but sold it to begin steel mill • Had been introduced to the Bessemer process • After great success sold Carnegie Steel to J.P. Morgan in 1901

6. Gospel of Wealth • Carnegie’s book outlining his philosophy: Men of wealth had an obligation to provide opportunities to others • Carnegie Hall, Carnegie-Melon University, Carnegie scholarships

7. Carnegie’s business strategies • Tried to make better products more cost-efficiently • Attracted talented workers, paid them partly with stock, encouraged competition among them • Gather as much of the industry as he could

8. Vertical Integration • Bought out his suppliers so he owned all aspects of the industry • Coa; fields • Iron mines coal freighters • RR lines • Steel Plant

9. Horizontal Integration • Buy or Force competitors out ti have a monopoly of the product

10. Social Darwinism • A new way to justify shady business practices • Darwin in Origin of Species gave us the notion of survival of the fittest • Species that could adapt to their surroundings had a good chance of survival

11. Herbert Spencer • Applied Darwin’s idea to big business • Businessmen (and impeialists) used this to justify shady business practices used to drive competitors out of the market place • Supported Laissez-faire

12. Laissez Faire • Success or failure of a business was determined by natural law • So the government should stay out of it • (some believed that the government had an obligation to protect its citizens from abuse…farmers, workers)

13. The Growth of Big Business • Created a wider gap between the rich and poor

14. Consolidation • Last half of the 19th century saw many business mergers • One corporation might buy out the stock of another to acquire a monopoly of the product • Sometimes a holding company was formed to buy up the stock of other companies

15. J.P. Morgan • Bought Carnegie Steel in 1901 for $492 million and combined it with his own steel interests to form U.S. Steel

16. John D. Rockefeller • Standard Oil Co. • By 1911 Standard Oil controlled 98% of the oil refining business in the U.S. • The Trust • Competing companies would call in their individual stock and give it to a Trust

17. The Trust • Would issue new stock shares representing all member companies • The companies would receiv e dividends based on profits earned by the trust • Rockefeller had both a horizontal and vertical organization

18. Rockefeller • Paid workers poorly • Sold his product at a loss until competitors were driven into bankruptcy • Then, when competitors were gone, Rockefeller raised his prices and make a killing

19. The term, Robber Barons • Was given to these industrialists because of their unethical and illegal business practices • BUT many of the “Robber Barons” gave huge sums as charatible organizations like Carnegie did

20. Rockefeller • Gave over $500 million away through the Rockefeller Foundation • The University of Chicago and other institutions

21. 1890 The Sherman Antitrust Act • Ws passed due to concern many had that the lack of competition was hindering economic growth • Was also supported by farmers who were victims of the McCormick Harvesting Co.

22. The Sherman Antitrust Act • Said that it was illegal to form combinations in restraint of trade • The Act was rarely used as it was intended • Companies could reorganize at the drop of a hat

23. In 1911 • The Supreme Court ruled that Standard Oil be broken up into smaller companies. • It was • Rockefeller remained the major stock holder in the smaller companies

24. The Sherman Antitrust Act • Was used more often against striking workers than it was against big business until the turn of the century when Teddy Roosevelt became President

25. The North v the South • Most industrial growth occurred in the North • The South was still recovering from the Civil War • Southerners had little money to invest in new industries

26. BUT • Some industrial growth in the South • Textiles • Tobacco • Iron and coal mining

27. Labor Problems • Poor wages • Long Hours • Poor (dangerous) working conditions

28. Most workers • 12 hour days • 6 days a week • No vacation or sick time • No workman’s compensation • No unemployment insurance • No child labor laws • No Social security or job security

29. Labor Problems • On the job injuries were common • Machinery not well maintained • Filth, cold, hot • Repetitive movements • Mindless • No pride in workmanship

30. Injuries • 1882 675 workers were killed due to job-related injuries a week!

31. Wages • So low that all members of the family had to contribute • Women and children…some as young as 5!

32. Between 1890- 1910 • The number of women workers doubled from 4 million to over 8 million • 20% of boys and 10% of girls under 15 worked full time • Women and children had special problems especially in sweatshops

33. Wages • On average a full time male adult worker made $498 a year • Women made $267 a year • Children who worked 14 hour days made 27 cents a day

34. Labor Organizations • Note: skilled workers had an easier time of it as they had a special skill • Some skilled unions around in the 1700s

35. 1866 The National Labor Union • Was the first large-scale union • Was organized by Sylvis (an iron worker) • No women, no Blacks • By 1868 had over 640,000 members • Blacks organized their own: the Colored National Labor Union

36. The Panic of 1873 • Ended this union • People were too desperate for work • BUT by 1868 some government workers had an 8-hour day

37. 1869 The Knights of Labor • Open to everyone except professionals • Fought for an 8-hour day and equal pay for women (why?) • At first it was organized in secret so did not fall as a result of the Panic of 1873

38. By 1886 Powderly in charge • And it came out into the open with over 700,000 members • But became involved in a series of unsuccessful strikes in the 1880s and 90s and it fell apart

39. Craft Unions • Were for skilled workers • Sam Gompers combined several craft unions to form the AFL • American Federation of Labor

40. The AFL • Focused on collective bargaining • Wanted an end to child labor (why?) • An end to the use of injunction in labor disputes • Injunction: a court order ordering workers back to work

41. Some early success • Wages were up and hours were down • 1890 54.5 hours weekly • 1910 49 hours weekly • 1890 wages up from $17. 5 to $24

42. The AFL • Was harmed in a big way in 2890’s strikes but managed to stay alive into the 20th century

43. Industrial Unions • Some believed that unions should represent all workers (skilled and unskilled) in a single industry

44. The ARU • Eugene Debs founded the American Railway Workers Union in 1894 • This union died during the Pullman strike (later)

45. The International Workers of the World • The IWW (Wobblies) were a socialist group • Founded by Big Bill Haywood • Open to everyone • Had a communist agenda and only 100,000 members • Gone by 1912

46. Socialists • Wanted government control of business and property • They also wanted an equitable division of wealth • Karl Marx envisioned a world-wide uprising of workers who would take control

47. Most “socialists” in the U.S. • Were not committed to a workers’ violent revolution but DID want a society where people could earn a living wage in decent working conditions with reasonable hours

48. Minorities • Formed their own unions with similar agendas: wages, hours, conditions • BUT they also demanded equal pay without regard to race or color

49. The Strikes • 1877 The Great Strike • Railroad workers for the Baltimore and Ohio railroad had a work stoppage that spread. • Freight and passenger traffic came to a standstill covering 50,000 miles for over a week

50. The Great Strike • Ended when federal troops were sent. • Many state governors put pressure on President Hayes to send in troops • Governors insisted that the strikers were impeding interstate commerce