The Rise of
Big Business
…and robber –barons,
unions, and more.
Background
Info
• When?
- 2nd Industrial Revolution/Gilded Age
- late 1800’s
• Marked by
- rise of big business and corporations
- disparity of wealth
- ultra wealthy industrialists
- monopoly
• Gilded Age: Gold plated but cheap on the
inside
Background Info
• Capitalism
- economic system in which private
businesses run most industries
- competition determines price and
wage
Background Info
• Corporation: Business organization
that raises money by selling stock to
the public
• Trust: merging of companies
turning over control to a board of
trustees
Big Business Vocabulary
• Corporations – companies sell shares of ownership
called stocks to raise money
• Entrepreneurs – people who take risks & organize
new businesses
• Capitalism – private businesses dominate the
economy & promote competition
• Laissez Fairre – govt. does not interfere in
economic affairs (hands off big business)
• Patent – exclusive right to manufacture or sell an
invention
III. Monopolies and Trusts
•
•
Monopolies - characterized by a lack of
competition to produce a good or service
- Goal is to control the market for a
product by destroying the competition
- Achieved by controlling production and
distribution of a good or service
Trust – consolidate corporations under a
Board of Trustees to control the market
What is a
monopoly?
A Trust with
complete control
over an industry
How do you create a monopoly?
Vertical
Integration
acquiring
companies
that supply
your
business
Horizontal Integration:
buying out the competition
How did Industrial Tycoons create
monopolies?
• Vertical Integration:
acquiring
companies
that supply your
business
• Horizontal
Integration:
buying out the
competition
Robber Barons
powerful industrialists who amassed huge
personal fortunes, typically as a direct
result of unfair business practices
Carnegie
Ford
Morgan
Rockefeller
Vanderbilt
Andrew Carnegie
• Steel industry
• Horizontal
integration: bought
out his competitors
• Vertical Integration:
bought coal mines,
iron ranges, shipping,
and railroads
• Controlled from mine
to market
John D.
Rockefeller
• Oil Industry: Standard
Oil
• Horizontal Integration:
bought out competitors
• Vertical Integration:
built barrel factories,
warehouses, pipelines.
Owned freight cars and
developed own
marketing
• Controlled 90% of oil
in US
What do you think
the cartoonist was
trying to
communicate with
this image?
How about this
image? What was
the cartoonist
trying to
communicate
here?
Owned interests in all parts of
the industry, including
drilling, refining, and storage
of oil
Received special rates from
railroad companies, lowering
his transport costs
His fortune rests
on Standard Oil
What a Funny Little Government
How did men like Carnegie and
Rockefeller (robber barons)
justify ownership of monopolies
and the lavish lifestyle their
wealth provided for them?
Let’s talk about this as a class!
“And while the law of
competition may be sometimes
hard for the individual, it is
best for the race, because it
ensures the survival of the
fittest in every department.”
Andrew Carnegie
Social Darwinism (SD)
• SD - idea that “survival of the
fittest” determines success of
people in society & marketplace
– Strong survive & the weak
fail
– “Survival of the fittest”
strengthens society as a whole
– Justification for industrialists
• Social Darwinists and capitalists
agree that competition promotes
progress
Review
1. Describe laissez-faire economic policies.
2. A monopoly can best be characterized as ________
3. Horizontal integration is
_______________________
4. Vertical integration is _________________________
5. Describe three aspects of a monopoly.
6. What is a trust?
7. Describe “Robber Barons.”
8. Social Darwinists believed in the idea that
_________
Were the Robber
Barons good guys or
bad guys?
• Carnegie believed
the wealthy should
give back to the
community
• By the time he died, Carnegie
had given away $350,695,653
(approximately $4.3 billion,
adjusted to 2005 figures). At
his death, the last $30,000,000
was likewise given away to
foundations, charities, and to
pensioners.
• Rockefeller gave away over ½
of his $900 million including
over $80 million to the
University of Chicago
Funded the
building of
over 300
libraries
Labor Unions
• Advantages of unions
– Greater bargaining power (pay, hours &
conditions)
– Strength in numbers
• Main purpose of a union is collective
bargaining
– Negotiations between management and a
union about pay and work conditions on
behalf of all the workers in the union
• 2011: NFL & NBA
Knights of Labor
• Welcomed unskilled
laborers including blacks,
immigrants & women
– 1869 first major national
labor organization
– Opened to all who “toiled”
– Accepted all workers
– Encouraged collective
bargaining
American Federation of Labor
• Represented skilled labor only;
most effective & enduring
union
– Main purpose was collective
bargaining
– Negotiated for better pay,
fewer hours & safer
conditions
• 1886-present: most powerful
leader was Samuel Gompers &
strike was a ready tool
Strikes
• Haymarket Square Riot (Chicago, IL 1886)
strikers clashed w/ police: several killed, 100's
hurt
– May 1, 1886 – Strikes & demonstrations were held
nationwide, to demand an eight-hour workday for
industrial workers
– May 3, 1886 -- McCormick Reaper Works factory went on
strike; unarmed strikers, police clash; several strikers
were killed
– Evening of May 4, 1886 -- A meeting of workingmen is
held near Haymarket Square, Chicago. Police arrived to
disperse the peaceful assembly; a bomb is thrown into the
ranks of the police; the police open fire; workingmen
evidently return fire; police and an unknown number of
workingmen killed; the bomb thrower is not identified
• Significance: Americans
linked unions w/ radicals
Homestead Strike
• Wages were cut & workers
went on strike in 1892
• Amalgamated union
workers went on strike
• 300 Pinkertons called in
- 3 guards & 10 strikers
killed
• Significance: state govt.
supported corporation (big
business)
State militia entered Homestead, PA to put down the
strike of July 1892
Pullman Strike (1894)
• Pullman Palace Car Co.
(Chicago) cut wages but did
not reduce workers rent
• Largest strike in US history
had interrupted US mail
service
– Eugene V. Debs (future
Socialist Party of America)
got involved
• Significance: President
Cleveland sent in the
national guard & sided w/
corporation
Govt. favored
business in most
disputes w/ labor in
late 19th century
Industry
• Advantages of US in world market Raw materials, expanding markets &
favorable govt. policies (LF)
• Growth of manufacturing - Natural
resources, investment capital and cheap
labor
• People left farms and moved to cities
for jobs in industry
Frederick Olmsted
• Landscape architect - designed Central Park
(Manhattan) and Prospect Park (Brooklyn)
– also Boston, Chicago, Capital grounds in DC and
Stanford Univ.
Mass transit
• Cities created forms of mass
transit such as the subway and
cable car
Inventions
• Nikolaus Otto
invented the horseless
carriage by using an
internal combustion
engine
• Orville & Wilbur
Wright were bicycle
makers who invented
the airplane after a
12 second flight
Inventions
• Alexander Graham Bell invented the telephone which
transmitted voices using electricity
• Thomas Edison-invented the light bulb and brought
electricity to NYC
Gold Standard
• - money was backed by gold in the
treasury (1882-1933)
• Free Silver - some people wanted $
to be backed by silver as well to get
more $ flowing in the economy
Review
9. The main purpose of a labor union is ________________.
10. Unions negotiate about _______ and ________________.
11. The American Federation of Labor (AFL) represented
______________ and was the most _________________.
12. What type of workers did the Knights of Labor accept?
13. What was the significance of the Homestead strike?
14. The Pullman Strike ended when President Grover
Cleveland ____________________.
15. What was the significance of the Haymarket bombing?
16. The govt. would usually support (business / labor) during
strikes in the Industrial Revolution.
Questions?