Robber Barons
or
Captains of Industry?
Panic of 1893
• corporation abuses, mismanagement, over building,
and competition pushed many railroad to brink of
bankruptcy
• panic was worst depression up to that time
• 500 banks and 15000 businesses failed
• 3 million people lost jobs
• large firms seized many railroads
• began trend of big business
Wealthy business leaders in the 19th
century were glamorized and villianized
One view glorified their abilities and contributions
1. "Captains of Industry”
Industrial leaders were viewed as ingenious and
industrious capitalists who transformed the American
economy with their business skills. These "Captains" were
the heroes of their day who embodied the American dream
of rags to riches.
A second view questioned their tactics and ethics
2. "Robber Barons”
Industrial leaders were viewed as immoral, greedy, and
corrupt, using bribery, illegal business practices, and cruelty
to workers to get ahead. Many of the most respected
industrialists were also feared and hated. While not all of
these men were unethical, many used questionable tactics
to achieve their goals of wealth and power.
How rich were the “robber barons”
compared to Microsoft founder Bill Gates?
200
180
160
140
120
100
80
60
40
20
0
Rockefeller
Carnegie
Vanderbilt
Bill Gates
Jay Gould
JP Morgan
James H. Hill
$ billions
Created $
by Katherine Lacks
Contemporary political cartoon comparing robber barons of
the 19th century with robber barons from the Middle Ages
Created by Katherine Lacks
The millions made by the robber barons is at the expense of the
workers
Created by Katherine Lacks
Andrew Carnegie
• 1835 – 1919
• Federal Steel Co.
(Pittsburgh), and
many more
• Sold FSC to Morgan
and it became US
Steel
• 2nd richest man in
history
Andrew
Carnegie
Created by Katherine Lacks
Created by Katherine Lacks
Carnegie Hall and
Carnegie Hall Tower,
Seventh Street,
New York, NY
Carnegie attacks the rich, presumably because of his belief
that the rich have a duty to help the poor, as he advocated
in Gospel of Wealth.
Created by Katherine Lacks
J.P. Morgan
• 1837 – 1913
• US Steel
• Banking Industry
J.P. Morgan lived his life on a large scale, spending massive
amounts of money, gambling, on “toys” like yachts, huge
parties, palatial homes and art. One of his famous quotes,
“If you have to ask how much it costs you can’t afford it”,
typifies his beliefs about money.
Created by Katherine Lacks
Morgan as the piper that people of various professions &
nationalities, including some countries in the distance, are
following.
Created by Katherine Lacks
John D. Rockefeller
• 1839 – 1937
• Standard Oil
• Considered richest
man of all time
John D. Rockefeller
Standard Oil
The Standard Oil Octopus reaching out it’s tentacles
Created by Katherine Lacks
Cornelius Vanderbilt
1794-1877
Vanderbilt and his descendents, like many other robber barons,
built massive mansions and spent huge amounts of money known
as conspicuous consumption (spending money to show off one’s
wealth).
Vanderbilt mansion today
in Hyde Park, NY
This bedroom
is a
reproduction
of a French
Queen's
chamber
from the
Louis XV
period.
William
Vanderbilt
took over the
family
business
Big Business Emerges
• Principles of Social Darwinism
Charles Darwin’s - theory of evolution
• "survival of the fittest“
• natural selection
• Darwinism agreed with Protestant principles of work - riches a sign
of God's favor and poverty a sign of laziness or inferiority
• Laissez Faire - "allow to do" - absence of regulation
to ensure free competition (little government
interference
• Individualism – it is up to you to make something of
yourself; use of personal talents and ideas
Created by Katherine Lacks
Major terms defined
Capital: the amount and type of resources a person or a
company has access to including money, property, and other
valuables
Corporation: a type of business organization created when a
group of individuals apply for a license or charter from a state
legislature
Dividends: a share of the profits issued to investors from a
corporation
Pool: a group of companies in the same industry would get
together to fix prices and otherwise manipulate the industry to
their advantage
Trust: major stockholders of many different corporations give
their stock to “trustees” who promise dividend payments in
return. This allowed the trust to operate on a large scale on
behalf of several companies at once and entire industries
Monopoly: domination of all aspects of an entire industry by a
trust, individual, or corporation
Created by Katherine Lacks
Large corporations developed in two major ways:
horizontal or vertical integration
•Horizontal integration is the growth of a business
through acquiring additional business activities in the
same industry.
•A business either combines with other similar
companies or buys them, called “mergers and
acquisitions”.
•The benefits to the firms that horizontally integrate
include cheaper operating costs because production is on
a larger scale, increased market control of the product
including over suppliers and distributors, and greater
control over treatment of workers.
•An example of this form of expansion would be Standard
Oil’s acquisition of almost all oil refineries around the
U.S.
Large corporations developed in two major ways:
horizontal or vertical integration
•Vertical integration is the growth of a business
through the acquisition of the materials that
make the product, the factories that
manufacture the products including the
machines needed to produce the product, as
well as the distribution channels to take the
product to market.
•This allows the business to control all aspects
of the industry and provides large profits.
•An example would be Carnegie Steel’s control
of raw materials, production of steel,
transportation, and companies that made
products out of steel.
The South gets Left Behind
• industry still concentrated in the
north - south still mostly agriculture
• south still trying to recover from Civil
War devastation
• north owned 90% of southern
railroads
Created by Katherine Lacks
The South gets Left Behind
• southern entrepreneurs suffered at
hands of high transportation costs, tariffs
on raw materials and manufactured
goods
• skilled workers attracted to the north
• south did have growth in forestry,
mining, tobacco, furniture, textiles
Created by Katherine Lacks
The Sherman Anti-Trust Act
The government attempted to intervene to
prevent the “Barons” from “Robbing”
the wealth!
• any attempt to interfere with free trade
among states or internationally by forming a
trust was illegal
• enforcement nearly impossible
• not supported by the Supreme Court
Created by Katherine Lacks
Organized Labor
Workers of the Nation Unite
• exploitation of workers
– work day: 6-7 days/week, 12+ hours/day
– no sick time, vacation, unemployment compensation,
compensation for job-related injuries
– high rate of accidents
– poor working conditions: dirty, poorly lit or ventilated
– repetitive work - boring
– equipment often dangerous and faulty
– whole families forced to work because of low wages
– number of women working doubled 1890-1910
– kids as young as 5 worked all day for very low pay
Created by Katherine Lacks
Labor Unions Emerge
• National Labor Union (NLU)
– 1866 - William Sylvis
– formed Labor Reform Party (political party)
– convinced Congress to legalize 8-hour work day for gov. workers
• Colored National Labor Union (CNLU)
– 1869 - Isaac Meyers
– avoided strikes-preached cooperation between management and
labor
– committed to political reform
– support the Republican party
Created by Katherine Lacks
Labor Unions Emerge
• Knights of Labor
–
–
–
–
–
1868 - Uriah Stephens - expanded under Terence Powderly
open to all workers (women, blacks, skilled, unskilled)
support 8-hour workday, equal pay for equal work
strikes were last resort
advocate arbitration (settlement thru impartial 3rd party)
Created by Katherine Lacks
Many professions were represented by the Knights of
Labor
Created by Katherine Lacks
Labor Unions Emerge
• American Railway Union (ARU)
– Eugene Debs
– unskilled and semiskilled laborers plus skilled
engineers and firemen -no women or blacks
– used strikes
– got higher wages
Created by Katherine Lacks
Eugene V.
Debs
American Railway
Union
Created by Katherine Lacks
Labor Unions Emerge
• American Federation of Labor (AFL)
– 1886 - Samuel Gompers
– joining of trade and craft unions
– strikes were a major tactic used
– earned higher wages and shorter work week (just
under 49 hours)
Created by Katherine Lacks
Labor Unions Emerge
• Industrial Workers of the
World (IWW) - "Wobblies"
– 1905 - William Haywood
– radical unionists and
socialists in the West
– miners, lumberers, cannery
and dock workers
– welcomed women and
African Americans
Haywood, Industrial
Workers of the World
Samuel Gompers,
A.F.L.
Strikes Turn Violent
• Haymarket Affair - May 4, 1886
– workers protest killing of striker by police
– police arrive and bomb is tossed at police
– police fire guns into crowd
– 7 cops and several workers died
– people begin turning against the unions
Strikes Turn Violent
• Homestead Strike
– Carnegie's Homestead Plant - wage cuts lead to
strike
– Pinkerton armed guards hired so scabs could keep
plant going
– battle left 3 Pinkertons and 6 workers dead
– workers took over plant
– National Guards sent in - plant reopened and
union lost support
Created by Katherine Lacks
Strikes Turn Violent
• Pullman Strike
– Pullman company laid off 3000 employees and cut
wages of the rest by 25-40% but did not cut cost
of housing
– after depression company hired back 2000
workers but didn't restore wages or lower rent
– workers call strike - spring 1894
Created by Katherine Lacks
Strikes Turn Violent
• Pullman Strike
– Pullman refused to negotiate with Debs so ARU
began boycotting Pullman trains
– Pullman hired strikebreakers - violence broke out
– Pres. Grover Cleveland sent federal troops to end
strike
– Debs was put in jail
– Pullman fired most strikers and railroads blacklist
others
Created by Katherine Lacks
Created by Katherine Lacks
Women in the Labor Movement
• Mary Harris "Mother" Jones
– most prominent organizer in
women's labor movement
– 1903 - led children (many
disfigured) on a march to home
of Pres. T. Roosevelt to expose
cruelties of child labor influenced passing of child
labor laws
• International Ladies' Garment
Workers' Union (ILGWU)
– 1909 - Pauline Newman
Actions Against Unions
• management refused to recognize or
negotiate with unions as the representatives
of the workers
• many employers forbid union meetings, fired
union members, and force new employees to
sign "yellow-dog contracts" (swear not to join
union/strike)
Created by Katherine Lacks
Actions Against Unions
• turned Sherman Antitrust Act against labor by calling
actions interference with interstate trade
• public angry if strikes cause shortage of goods
• legal limitations makes organizing more difficult
• many fear disorder, chaos, socialist revolution
• unions begin losing members
Created by Katherine Lacks
Unions are blamed for juvenile delinquency and shoddy
workmanship
ONE REASON THERE ARE SO MANY IDLE YOUNG MEN
CAUSE
EFFECT
Skilled Workman, “ Want to learn the trade, eh? Ignorant, Intemperate, and dishonest
No, no we can’t encourage apprentices. The
young men. Inferior work through the
Union won’t allow it. They would cheapen the
employment of incompetent workmen.
price of labor.”
Created by Katherine Lacks
A common theme of anti-labor publications was
that of showing union leaders as selfish,
wealthy “businessmen” out for their own gain.
Knights of Labor leader
Terrence Powderly
Union leaders salary is
shown as $5,000 a
year at a time when
the average worker
was making $300 to
$400
AN AMERICAN AUTOCRAT
He Ties Up Railroads and Exposes the
Public to Inconveniences and Danger
whenever He is Obligated to DO
Something to Earn his Salary
Created by Katherine Lacks
Industrialization Review
• Technological change spurred
growth of industry primarily in
northern cities.
• This growth resulted in great
changes throughout every
avenue of our nation!
Industrialization Review
• Inventions/Innovations
– Corporation (limited liability)
– Bessemer steel process
– Light bulb (Thomas Edison) and electricity as a source of
power and light
– Telephone (Alexander Graham Bell)
– Airplane (Wright Brothers)
– Assembly line manufacturing (Henry Ford)
Industrialization Review
• Industrial leaders
– Andrew Carnegie (steel)
– J.P. Morgan (finance/banking)
– John D. Rockefeller (oil)
– Cornelius Vanderbilt (railroads)
Industrialization Review
• Reasons for economic transformation
• Government policies of laissez-faire capitalism and
special considerations (e.g., land grants to railroad
builders).
• The increasing labor supply (from immigration and
migration from farms).
• America’s possession of a wealth of natural resources
and navigable rivers.
• Technological advancements that lead to new
industries and changes in old industries.