SECTION 3: BIG BUSINESS
AND LABOR
Andrew Carnegie was
one of the first
industrial moguls
 He entered the steel
industry in 1873
 By 1899, the Carnegie
Steel Company
manufactured more
steel than all the
factories in Great
Britain combined

CARNEGIE BUSINESS
PRACTICES
Carnegie initiated many
new business practices
such as;
 Searching for ways to
make better products
more cheaply
 Accounting systems to
track expenses
 Attracting quality people
by offering them stock &
benefits

ANDREW CARNEGIE
1835 -1919
CARNEGIE’S VERTICAL INTEGRATION
Carnegie attempted to
control as much of the
steel industry as
possible
 How? Vertical
integration; he bought
out his suppliers (coal
fields, iron mines, ore
freighters, and rail lines)
in order to control
materials and
transportation

HORIZONTAL INTEGRATION
Additionally, Carnegie
bought up the
competition through
friendly and hostile
takeovers
 This is known as
Horizontal Integration;
buying companies that
produce similar
products – in this case
other steel companies

MERGERS
Iron & Steel Production
New Type of Business Entities
1.
Pool
1887 Interstate Commerce Act
 Interstate Commerce
Commission created.
2.
Trust  John D.
Rockefeller
 Standard Oil Co.
New Type of Business Entities
2.
Trust:
 Horizontal Integration  John D.

Rockefeller
Vertical Integration:
o Gustavus Swift  Meat-packing
o Andrew Carnegie  U. S. Steel
New Type of Business Entities
U. S. Corporate Mergers
BUSINESS GROWTH &
CONSOLIDATION




Mergers could result in a
monopoly (Trust)
A monopoly is complete
control over an industry
An example of
consolidation: In 1870,
Rockefeller Standard Oil
Company owned 2% of the
country’s crude oil
By 1880 – it controlled 90%
of U.S. crude oil
CHICAGO’S STANDARD OIL BUILDING
IS ONE OF THE WORLD’S TALLEST
New Business Culture
1.
Laissez Faire  the ideology of the
Industrial Age.
 Individual as a moral and economic
ideal.
 Individuals should compete freely in
the marketplace.
 The market was not man-made or
invented.
 No room for government in the
market!
SOCIAL DARWINISM

DARWIN (RIGHT)
LIMITED HIS
FINDINGS TO
THE ANIMAL
WORLD

SPENCER WAS
THE ONE WHO
COINED THE
PHRASE
“SURVIVAL OF
THE FITTEST

The philosophy known as
Social Darwinism has its
origins in Darwin’s theory
of evolution
Darwin theorized that
some individuals in a
species flourish and pass
their traits on while others
do not
Social Darwinists (like
Herbert Spencer) believed
riches was a sign of God’s
favor, and being poor was
a sign of inferiority and
laziness
2. Social Darwinism
 British economist.
 Advocate of
laissez-faire.
 Adapted Darwin’s
ideas from the
“Origin of Species”
to humans.
 Notion of “Survival
of the Fittest.”
Herbert Spencer
2. Social Darwinism in America
$ Individuals must
have absolute
freedom to struggle,
succeed or fail.
William Graham Sumner
Folkways (1906)
$ Therefore, state
intervention to
reward society and
the economy is
futile!
New Business Culture:
“The American Dream?”
3.
Protestant (Puritan) “Work Ethic”
 Horatio Alger [100+ novels]
Is the idea of the “self-made man” a MYTH??
New Financial Businessman
The Broker:
 J. Pierpont Morgan
Wall Street – 1867 & 1900
The Reorganization of Work
Frederick W. Taylor
The Principles of Scientific Management (1911)
ROBBER BARONS
Alarmed at the cutthroat tactics of
industrialists, critics
began to call them
“Robber Barons”
 Famous “Robber
Barons” included
Carnegie, Rockefeller,
Vanderbilt, Stanford,
and J.P. Morgan

J.P
MORGAN
IN PHOTO
AND
CARTOON
% of Billionaires in 1900
% of Billionaires in 1918
Cornelius [“Commodore”] Vanderbilt
Can’t I do what I want with my money?
William Vanderbilt
$ The public be
damned!
$ What do I care
about the law?
H’aint I got the
power?
The Gospel of Wealth:
Religion in the Era of Industrialization
$ Wealth no longer
looked upon as bad.
$ Viewed as a sign of
God’s approval.
$ Christian duty to
accumulate wealth.
$ Should not help the
poor.
Russell H. Conwell
“On Wealth”
$ The Anglo-Saxon race
is superior.
$ “Gospel of Wealth”
(1901).
$ Inequality is inevitable
and good.
$ Wealthy should act as
“trustees” for their
“poorer brethren.”
Andrew Carnegie
ROBBER BARONS WERE
GENEROUS, TOO



Despite being labeled as
greedy barons, rich
industrialists did have a
generous side
When very rich people give
away lots of money it is
called “Philanthropy”
Carnegie built libraries,
Rockefeller, Leland
Stanford, and Cornelius
Vanderbilt built schools
ROCKEFELLER CHAPEL –
UNIVERSITY OF CHICAGO
SHERMAN ANTI-TRUST ACT



In 1890, the Sherman AntiTrust Act made it illegal to
form a monopoly (Trust)
Prosecuting companies under
the Act was not easy – a
business would simply
reorganize into single
companies to avoid
prosecution
Seven of eight cases brought
before the Supreme Court
were thrown out
WORKERS HAD POOR
CONDITIONS
Workers routinely
worked 6 or 7 days a
week, had no
vacations, no sick
leave, and no
compensation for
injuries
 Injuries were common
– In 1882, an average of
675 workers were killed
PER WEEK on the job

Workers Protest the
Industrial Age
A Psychology/Sociology
“Birdwalk” - Autonomy

Definition
– Having control of one’s own life and fate
– A deep-seated human need
– Lack of autonomy leads to feelings of
helplessness and frustration
– Causes stress
A Psychology/Sociology
“Birdwalk” - Autonomy

Reactions to lack of autonomy
– 1. Group formation
• Joining forces with others in similar
circumstances
• Organizing groups to gain collective power
– 2. Opinion appeal
• Publicize their feelings of being treated unfairly in
order to gain wider support
• Public demonstrations and marches
A Psychology/Sociology
“Birdwalk” - Autonomy

Reactions to lack of autonomy
– 3. Economic pressure
• Strikes
• Boycotts
– 4. Violence
• Directed at people or property of those who are
seen as causing the problems
A Psychology/Sociology
“Birdwalk” - Autonomy

Reactions to lack of autonomy
– 5. Scapegoats
• Blame problems on individuals or groups with
little or no responsibility for the situation
– 6. Over-conformity
• Conform as closely as possible to what are
assumed to be the desires of the dominating
group
• Especially if the dominating group has
overwhelming power
A Psychology/Sociology
“Birdwalk” - Autonomy

Reactions to lack of autonomy
– 7. Escape
• Alcohol, drugs, entertainment
• Physically move away from the problem
– 8. Hope for supernatural intervention
• Turn to religion or superstitions
• Seeking God’s intervention to bring justice
– 9. Statis
• Do nothing; paralysis
Use this typology to analyze
groups under pressure

Reconstruction
– Southern whites
– Freedmen

Gilded Age
– Workers
– Immigrants
A. Pros
1. Higher Average Incomes
2. New Technologies and
Consumer Goods
B. Cons
1. Long Hours – 6-7 day work weeks, 60+ hour weeks
2. Low Wages  Increasing Female & Child Labor Outside Home
3. Sweatshops and Poor Safety
4. Loss of Independence &
Creativity in the Workplace
3 Approaches to Improving Worker
Conditions (or not)
A. Approach #1: Social Darwinists Say “Do
Nothing”
Approach #2: Violent Revolt!
The Molly Maguires
(1875)
James
McParland
The Corporate
“Bully-Boys”: Pinkerton
Agents
Approach #3: Unions
& Non-Violent Protest
Knights of Labor
Terence V. Powderly
An injury to one is the concern of all!
Knights of Labor
Knights of Labor trade card
Goals of the Knights of
Labor
 Eight-hour workday.
 Workers’ cooperatives.
 Worker-owned factories.
 Abolition of child and prison labor.
 Increased circulation of greenbacks.
 Equal pay for men and women.
 Safety codes in the workplace.
 Prohibition of contract foreign labor.
 Abolition of the National Bank.
LABOR UNIONS EMERGE
As conditions for
laborers worsened,
workers realized they
needed to organize
 The first large-scale
national organization of
workers was the National
Labor Union in 1866
 The Colored National
Labor Union followed

CRAFT UNIONS




Craft Unions were unions of
workers in a skilled trade
Samuel Gompers led the Cigar
Makers’ International Union to
join with other craft unions in
1886
Gompers became president of
the American Federation of
Labor (AFL)
He focused on collective
bargaining to improve
conditions, wages and hours
How the AF of L
Would Help the Workers
 Catered to the skilled worker.
 Represented workers in matters of national
legislation.
 Maintained a national strike fund.
 Evangelized the cause of unionism.
 Prevented disputes among the many craft
unions.
 Mediated disputes between management
and labor.
 Pushed for closed shops.
INDUSTRIAL UNIONISM
Some unions were
formed with workers
within a specific industry
 Eugene Debs attempted
this Industrial Union with
the railway workers
 In 1894, the new union
won a strike for higher
wages and at its peak
had 150,000 members

EUGENE DEBS
SOCIALISM AND THE IWW
Some unionists (including
Debs) turned to a socialism
– an economic and political
system based on
government control of
business and property and
an equal distribution of
wealth among all citizens
 The International Workers of
the World (IWW) or
Wobblies, was one such
socialist union

PROMOTIONAL
POSTER FOR THE IWW
International Workers of the
World (“Wobblies”)
“Big Bill” Haywood of the
IWW
 Violence was justified to
overthrow capitalism.
I W W & the Internationale
The Hand That Will Rule the
World One Big Union
Management vs. Labor
“Tools” of
Management
“Tools” of
Labor
 “scabs”
 boycotts
 P. R. campaign
 sympathy
demonstrations
 Pinkertons
 lockout
 blacklisting
 yellow-dog contracts
 informational
picketing
 closed shops
 court injunctions
 organized
strikes
 open shop
 “wildcat” strikes
STRIKES TURN VIOLENT
Several strikes turned
deadly in the late 19th
century as workers and
owners clashed
 The Great Strike of 1877:
Workers for the Baltimore
and Ohio Railroad struck to
protest wage cuts
 Other rail workers across
the country struck in
sympathy
 Federal troops were called
in to end the strike

THE HAYMARKET AFFAIR



Labor leaders continued to
push for change – and on
May 4, 1886 3,000 people
gathered at Chicago’s
Haymarket Square to
protest police treatment of
striking workers
A bomb exploded near the
police line – killing 7 cops
and several workers
Radicals were rounded up
and executed for the crime
THE HOMESTEAD STRIKE





Even Andrew Carnegie could
not escape a workers strike
Conditions and wages were
not satisfactory in his Steel
plant in Pennsylvania and
workers struck in 1892
Carnegie hired Pinkerton
Detectives to guard the plant
and allow scabs to work
Detectives and strikers
clashed – 3 detectives and 9
strikers died
The National guard restored
order – workers returned to
work
Big Corporate Profits!
Attempted Assassination!
Henry Clay Frick
Alexander Berkman
THE PULLMAN STRIKE
After the Pullman Company
laid off thousands of
workers and cut wages, the
workers went on strike in
the spring of 1894
 Eugene Debs (American
Railroad Union) tried to
settle dispute which turned
violent
 Pullman hired scabs and
fired the strikers – Federal
troops were brought in
 Debs was jailed

Pullman Palace Car
Company
• Railway car
company owned by
George Pullman
• Over 6,000 workers
• Workers lived in
“company town”
• Rent was 25%
higher than other
areas
Interior of a Pullman
Sleeper Car
Reasons for the Strike
• Historical Context:
Depression of
1893
• Pullman cut
workers’ wages
but didn’t cut rent
for apartments
• On May 10, 1894,
workers walked
out of their factory
ARU Supports Pullman Workers
• American Railway Union was a
national union of railway workers
• Eugene Debs, ARU leader, decided
to support Pullman strikers
• Across the nation, railway workers
refused to run trains that had
Pullman cars attached to them
• The country was paralyzed
69
Eugene Debs
Eugene V. Debs, the rail union president at the time of the strike,
later campaigned as the American Socialist presidential candidate
The Socialists
Eugene V. Debs
President Grover Cleveland
If it takes the entire army and navy to
deliver a postal card in Chicago, that card
will be delivered!
Violence Erupts
• Presence of
federal troops
set off riots
• Rioters
burned
buildings
• Troops killed 4
people and
wounded 20
End of Strike
• By August the strike fell apart
• 1000 union workers were fired
• New workers had to sign
contracts promising not to join
a union (yellow dog contract)
• Debs was arrested and jailed
for 6 months
74
WOMEN ORGANIZE




Although women were barred
from most unions, they did
organize behind powerful
leaders such as Mary Harris
Jones
She organized the United
Mine Workers of America
Mine workers gave her the
nickname, “Mother Jones”
Pauline Newman organized
the International Ladies
Garment Workers Union at
the age of 16
Mother Jones:
“The Miner’s Angel”
 Mary Harris.
 Organizer for the
United Mine
Workers.
 Founded the Social
Democratic Party
in 1898.
 One of the
founding members
of the I. W. W. in
1905.
EMPLOYERS FIGHT UNIONS





The more powerful the unions
became, the more employers
came to fear them
Employers often forbade
union meetings and refused
to recognize unions
Blacklists
Employers forced new
workers to sign “Yellow Dog
Contracts,” swearing that
they would never join a union
Despite those efforts, the AFL
had over 2 million members
by 1914