STANDARD(S):
11.1 Students analyze the significant events in
the founding of the nation.
LESSON OBJECTIVES/ GOALS/ SWBAT
1. Identify management and business strategies that
contributed to the success of business tycoons such
as Andrew Carnegie.
2. Explain Social Darwinism and its effects on society.
3. Summarize the emergence and growth of unions.
4. Explain the violent reactions of industry and
government to union strikes.
Section 3
Big Business and Labor
The expansion of industry results in the growth of
big business and prompts laborers to form unions
to better their lives.
NEXT
SECTION
3
Big Business and Labor
Carnegie’s Innovations
Carnegie Makes a Fortune
• Andrew Carnegie one of first moguls to make
own fortune
NEXT
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
SECTION
3
Big Business and Labor
Carnegie’s Innovations
New Business Strategies
• Carnegie searches for ways to make better
products more cheaply
• Hires talented staff; offers company stock;
promotes competition
• Uses vertical integration—buys out suppliers to
control materials
• Through horizontal integration merges with
competing companies
• Carnegie controls almost entire steel industry
NEXT
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
1. Vertical
integration
a. The process. by which a
company buys out all of its
suppliers;
b. Gave a company total
power over the quality and
cost of its product;
helped to create a monopoly
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
2. Horizontal
integration
a. The process in
which a company
buys out, or merges
with, its competitors;
b. Gave a company
control over its
competition;
helped to create a
monopoly
Chapter 6; Section 3
• A – What were Andrew Carnegie’s
management and business strategies?
– Carnegie’s used horizontal and vertical
integration, buying out competitors as well as
suppliers.
– He also strove to improve machinery and
manufacturing techniques.
SECTION
3
Social Darwinism and Business
Principles of Social Darwinism
• Darwin’s theory of biological evolution: the bestadapted survive
• Social Darwinism, or social evolution, based on
Darwin’s theory
• Economists use Social Darwinism to justify
doctrine of laissez faire
NEXT
SOCIAL DARWINISM
• The philosophy
known as Social
Darwinism has its
origins in Darwin’s
theory of evolution
CHARLES DARWIN
LIMITED HIS FINDINGS
TO THE ANIMAL WORLD
• Darwin theorized
that some
individuals in a
species flourish and
pass their traits on
while others do not
SECTION
3
Social Darwinism and Business
A New Definition of Success
• Idea of survival, success of the most capable
appeals to wealthy
• Notion of individual responsibility in line with
Protestant ethic
• See riches as sign of God’s favor; poor must be
lazy, inferior
NEXT
SOCIAL DARWINISM
• Social
Darwinists
like Spencer
believed
riches was a
sign of God’s
favor, and
being poor
was a sign of
inferiority
HERBERT SPENCER WAS THE
and
laziness
ONE WHO COINED THE PHRASE
“SURVIVAL OF THE FITTEST”
3. Social
Darwinism
a. An economic theory based on
Darwin's theory of biological
evolution;
it asserted that free competition
would ensure success or failure in
business;
b. Glorified big business and
tycoons;
also discouraged government
interference with big business
Complete
control of all
aspects of
production.
Why are monopolies dangerous to
business, consumers, and government?
4. Monopoly
a. Complete control over an
industry's production,
quality, wages, and prices;
b. Eliminated a company's
competition, allowing it to
increase profits
SECTION
3
Fewer Control More
Growth and Consolidation
• Businesses try to control industry with mergers— buy out
competitors
• Buy all others to form monopolies—control production, wages,
prices
• Holding companies buy all the stock of other companies
• John D. Rockefeller founds Standard Oil Company, forms trust
- trustees run separate companies as if one
Continued . . .
NEXT
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
A holding company is a company or firm that owns other
companies' outstanding stock.
The term usually refers to a company that does not produce
goods or services itself; rather, its purpose is to own shares of
other companies.
Holding companies allow the reduction of risk for the owners
and can allow the ownership and control of a number of
different companies.
5. Holding
company
a. A corporation that
does nothing but buy
out the stock of other
companies;
b. Helped to create
monopolies
(REAL TRUST)
6. Trust
a. A large corporation made up
of many companies that
receive certificates entitling
them to dividends on profits
earned by all the companies
combined;
b. Helped to create
monopolies
Chapter 6; Section 3
• B – What strategies enabled big
businesses to eliminate competition?
– Big business formed partnerships to create
monopolies.
– They merged small companies into large
corporations.
– They aimed for total control of an industry,
so that they could fix prices and wages to
their advantage.
SECTION
3
continued
Fewer Control More
Rockefeller and the “Robber Barons”
• Rockefeller profits by paying low wages,
underselling others
- when controls market, raises prices
• Critics call industrialists robber barons
- industrialists also become philanthropists
Continued . . .
NEXT
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
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
7. The perception Put tycoons on the
defensive;
of tycoons as
“robber barons”
turned public opinion
against them and their
businesses;
finally, encouraged
government regulation
of big business
Chapter 6; Section 3
• C – Do you agree with Carnegie’s
defense of millionaires? Why or why
not?
– Agree – Everyone is independent on the
millionaires to run businesses efficiently
and to provide for the needs of the
surrounding communities.
– Disagree – if the millionaires’ control
everything, they will always make people
work unfairly and pay unfair prices.
SECTION
3
continued
Fewer Control More
Sherman Antitrust Act
• Government thinks expanding corporations stifle
free competition
• Sherman Antitrust Act: trust illegal if interferes
with free trade
• Prosecuting companies difficult; government stops
enforcing act
Continued . . .
NEXT
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
8. Sherman
Antitrust Act
Made trusts (and
monopolies) illegal
in interstate and
international trade;
made…
SECTION
3
continued
Fewer Control More
Business Boom Bypasses the South
• South recovering from Civil War, hindered by lack
of capital
• North owns 90% of stock in RR, most profitable
Southern businesses
• Business problems: high transport cost, tariffs,
few skilled workers
NEXT
South Lags Behind
• Business involves
innovation and
competition, the south
was crippled by its use of
slaves.
• They were not particularly
interested in changing
their attitude.
• In the North with the
absence of slavery there
was a generally far
greater degree of
ambition and
inventiveness in the
workers of the north.
Chapter 6; Section 3
• D – How did economic factors limit
industrialization in the South?
– The south had a devastated economy from
the civil War.
– It was at the mercy of Northern railroads
companies for transporting goods to
market.
– It also paid added costs for raw materials
due to high tariffs.
SECTION
3
Labor Unions Emerge
Long Hours and Danger
• Northern wages generally higher than Southern
• Exploitation, unsafe conditions unite workers
across regions
• Most workers have 12 hour days, 6 day workweeks
- perform repetitive, mind-dulling tasks
- no vacation, sick leave, injury compensation
• To survive, families need all member to work,
including children
• Sweatshops, tenement workshops often only jobs
for women, children
- require few skills; pay lowest wages
Continued . . .
NEXT
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
SECTION
3
continued
Labor Unions Emerge
Early Labor Organizing
• National Labor Union—first large-scale national
organization
• 1868, NLU gets Congress to give 8-hour day to
civil servants
• Local chapters reject blacks; Colored National
Labor Union forms
• NLU focus on linking existing local unions
• Noble Order of the Knights of Labor open to
women, blacks, unskilled
• Knights support 8-hour day, equal pay, arbitration
NEXT
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
SECTION
3
Union Movements Diverge
Craft Unionism
• Craft unions include skilled workers from one or
more trades
• Samuel Gompers helps found American
Federation of Labor (AFL)
• AFL uses collective bargaining for better wages,
hours, conditions
• AFL strikes successfully, wins higher pay, shorter
workweek
Continued . . .
NEXT
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
SECTION
3
Union Movements Diverge
Industrial Unionism
• Industrial unions include skilled, unskilled workers
in an industry
• Eugene V. Debs forms American Railway Union;
uses strikes
Continued . . .
NEXT
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
SECTION
3
continued
Union Movements Diverge
Socialism and the IWW
• Some labor activists turn to socialism:
- government control of business, property
- equal distribution of wealth
• Industrial Workers of the World (IWW), or
Wobblies, forms 1905
• Organized by radical unionists, socialists; include
African Americans
• Industrial unions give unskilled workers dignity,
solidarity
NEXT
SOCIALISM AND THE IWW
• Some unionists (including
Eugene V. 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
SECTION
3
continued
Union Movements Diverge
Other Labor Activism in the West
• Japanese, Mexicans form Sugar Beet and Farm
Laborers’ Union in CA
• Wyoming Federation of Labor supports Chinese,
Japanese miners
NEXT
Chapter 6; Section 3
• E – How did industrial working conditions
contribute to the growth of the labor
movement?
– Poor working conditions and low wages
forces workers to organize into unions to
demand fair treatment.
Chapter 6; Section 3
• F – How did craft unions and industrial
unions differ?
– A craft union included skilled craftsmen from
many industries.
– An industrial union included skilled and
unskilled workers from a specific industry.
SECTION
3
Strikes Turn Violent
The Great Strike of 1877
• Baltimore & Ohio Railroad strike spreads to
other lines
• Governors say impeding interstate commerce;
federal troops intervene
Continued . . .
NEXT
STRIKES TURN VIOLENT
• Several strikes
turned deadly in
the late 19th century
as workers and
owners clashed
• The Great Strike of
1877: Supported by
Mary Harris Jones
• Workers for the
Baltimore and Ohio
Railroad struck to
protest wage cuts
STRIKES SPREADS
• Other rail workers across the
country struck in sympathy
• Federal troops were called in to end
the strike
SECTION
3
Strikes Turn Violent
The Haymarket Affair
• 3,000 gather at Chicago’s Haymarket Square,
protest police brutality
• Violence ensues; 8 charged with inciting riot,
convicted
• Public opinion turns against labor movement
Continued . . .
NEXT
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
Chapter 6; Section 3
• G – How did the 1877 strike and
Haymarket cause the public to resent the
labor movement?
– The public began to associate lobar activist
with violence and danger.
SECTION
3
continued
Strikes Turn Violent
The Homestead Strike
• 1892, Carnegie Steel workers strike over pay cuts
• Win battle against Pinkertons; National Guard
reopens plant
• Steelworkers do not remobilize for 45 years
Continued . . .
NEXT
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
SECTION
3
continued
Strikes Turn Violent
The Pullman Company Strike
• Pullman lays off 3,000, cuts wages but not rents;
workers strike
• Pullman refuses arbitration; violence ensues;
federal troops sent
• Debs jailed, most workers fired, many blacklisted
Continued . . .
NEXT
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
SECTION
3
continued
Strikes Turn Violent
Women Organize
• Women barred from many unions; unite behind
powerful leaders
• Mary Harris Jones— most prominent organizer in
women’s labor
- works for United Mine Workers
- leads children’s march
• Pauline Newman—organizer for International
Ladies’ Garment Workers
• 1911 Triangle Shirtwaist factory fire results in
public outrage
NEXT
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
SECTION
3
continued
Strikes Turn Violent
Management and Government Pressure Unions
• Employers forbid unions; turn Sherman Antitrust Act
against labor
• Legal limitations cripple unions, but membership rises
NEXT
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
• 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
Triangle Shirtwaist Company
Chapter 6; Section 3
• H- What factors made the Triangle
Shirtwaist fire so lethal?
– The factory had only one fire escape and no
sprinklers.
– The factory was full of cloth and oil.