Big Business and the Labor
Movement
Intro Slip Quiz
•
Monday, Aug. 24, 2015
You may use any notes that you have taken, but not the actual
reading. Make sure you put your name on top of the page.
1. Explain and give an example of a business fixed cost.
2. Briefly explain the idea behind Carnegie’s vertical integration of
the steel industry. How did he get it organized to keep his costs
as low as possible?
3. Which of the following was a mail-order company?
A. Wanamaker’s Grand Depot
B.
Sears, Roebuck
C.
Woolworth’s
“Big
Business”
• Very large, powerful
corporations began to
emerge in the late 1800s
in an era known as the
Gilded Age.
•
This is occurring at a
time when the gap
between rich and poor is
widening.
•
Some people argued that
the government needed
to regulate businesses
and their business
practices.
A corporation is an organization owned by many people but treated by law as though it was a
single person.
Stockholders, the people who own the corporation, own shares of ownership called stock.
Issuing stock allows a corporation to raise large sums of money but spreads out the financial
risk.
From the sale of stock, corporations could invest in new technologies to increase their
efficiency.
By making goods quicker and cheaper, these corporations achieved economies of scale.
Big corporations had an
advantage over small
manufacturing companies.
Big corporations could
produce more cheaply, and
they could continue to
operate even in poor
economic times by cutting
prices to increase sales.
Many small businesses with
high operating costs were
forced out of business.
Two New Models of Big Business
Two methods were used by corporate
entrepreneurs to maximize market share and
eliminate competition: Vertical Integration and
Horizontal Integration
Vertical Integration
Integration
•
Horizontal
A process by which all
aspects of a given
product’s
creation are combined
into one company.
•
Incorporating competing
businesses into your
company. This can be
done through hostile
takeovers, corporate
mergers, etc.
• What advantages does
this give to the company?
•
Increases market share,
decreases competition
The Labor Movement
Responses to Industrial Challenges
The Trees, by Rush
•
Read the lyrics to the song while you listen.
•
When finished, review the discussion
questions.
The Trees, by Rush
There is unrest in the forest
There is trouble with the trees
For the maples want more sunlight
And the oaks ignore their pleas
There is trouble in the forest
And the creatures all have fled
As the maples scream `oppression!`
And the oaks, just shake their heads
The trouble with the maples
(and they’re quite convinced they’re
right)
They say the oaks are just too lofty
And they grab up all the light
But the oaks can’t help their feelings
If they like the way they’re made
And they wonder why the maples
Can’t be happy in their shade?
So the maples formed a union
And demanded equal rights
the oaks are just too greedy
We will make them give us light
Now there’s no more oak oppression
For they passed a noble law
And the trees are all kept equal
By hatchet,
Axe,
And saw ...
The Trees, by Rush
Questions for Discussion:
1. What might the trees represent in general? What
about the oaks and maples in particular?
2. What argument do the oaks use to justify their
position? What about the maples?
3. How are they made equal?
Working in the United States, late 1800s
Workers in industrial America faced monotonous work,
dangerous working conditions, and an uneven division of
income between the wealthy and the working class.
Between 1865 and 1897, the United States experienced
deflation, or a rise in the value of money.
Relations between workers and employers were made more
difficult by deflation.
Deflation caused prices to fall and increased the buying power of workers’
wages. Companies cut workers’ wages but prices fell even faster, so that
wages were really still going up in buying power. Workers were angry,
however, because they were being paid less for the same amount of work.
Tactics Used to Discourage Labor
Unions
• Blacklists
•
Strike Breakers (scabs)
•
Lockouts
•
Injunctions
Negative Public Perception & the Labor
Movement
• The public identified the
movement with
immigrants, socialists,
and radicals.
•
Haymarket Square
Bombing gave
movement a black eye.
•
American wages were
highest in the industrial
world.
Haymarket Square Bombing
Early Labor Unions
•
National Labor Union (1866)
•
Noble and Holy Order of the Knights of Labor
(1878)
•
American Federation of Labor (1881)
Knights of Labor
•
First nationwide industrial union
•
Allowed skilled & unskilled workers, blacks, women
•
Called for 8-hour workday, health and safety codes
•
Supported boycotts at first, later on strikes
•
Utilized arbitration to settle disputes
•
Declined rapidly after Haymarket Square bombing in 1886
•
Part of its failure was in its scope- too broad
American Federation of Labor
•
Founded by Samuel Gompers
• Trade union, as opposed to an industrial union (skilled
craftsmen only)
•
“plain and simple” goals - stay out of politics
•
Three goals: have companies recognize unions and
agree to collective bargaining, closed shops, 8- hour
workday
•
By 1900, largest union in the country - 500,000
members
Labor Summary
• Slow but steady progress was made from 1860-1900 in the area
of labor unions.
•
Many obstacles stood in the way of the growth of the movement.
•
8-hour workday, 40-hour workweek, better health and safety
codes would eventually be long-term successes.
• By 1900, less than 18% of the workforce in the U.S. was
unionized.
•
During the Progressive Era efforts would be made to unionize
women and end child labor.
•
Labor Day, established in 1894, marks the achievements of the
American labor force.