BUSINESS GROWTH &

PROGRESSIVE REFORM

LESSON 24

What actions hurt consumers?

I. Turning to monopoliesA. Business leaders controlled

prices, production, and sales territories eliminated competition and hurt consumers

• Higher prices• Poor working conditions

Why did Big Business succeed?E. Advantages of Big Business

1. MASS PRODUCTION: Assembly line, standardization of parts (interchangeable parts) more products produced at lower prices

2. WIDE DISTRIBUTION OF GOODS: More money was invested in advertising and distributing products

3. EFFICIENT MANAGEMENT: Capital invested in hiring most capable leaders and researchers greater focus on raising capital for reinvestment

Why did Big Business succeed?F. Abuses of Big Business

1. ELIMINATION OF COMPETITION: Buyouts and underselling of competitors helped successful corner markets

2. POWER OVER THE CONSUMER: Consumers hurt by raising of prices after monopolies were formed (“price gouging”)

3. EXPLOITATION OF WORKERS: Low wages, long hours, unsafe workplaces

4. INFLUENCE OVER GOVERNMENT: Bribes of politicians for the “buying” of votes

How did government treat Big Business?

III. Government and Big BusinessA. 1865-1900: LAISSEZ-FAIRE CAPITALISM

Governments employed a “hands-off” approach with Big Business little regulation; tariffs established and land subsidies (grants) given, but that was it!

B. 1900-1920: GOVERNMENT INVOLVEMENTGovernment focused upon regulating business to help the consumer the public demanded it!

Railroads get busted!

IV. Regulation of Railroads: The First Regulation

A. Abuses by railroad owners1. High rates: “What the traffic will bear.” railroad

owners charged as much as they could, and consumers had no choice but to pay

2. Discrimination: Rebates to large shippers, low prices to large cities farmers charged full rates (“Long haul costs less than a short haul!”)

3. Political corruption: Legislatures were bribed in return for free rates campaign contributions, etc.

Railroads get busted!

B. Beginning of regulation: INTERSTATE COMMERCE ACT (1887)

1. Provisions Discrimination of rates: no rebates or special

rates for special customers Pooling agreements banned Rates cannot be changed without notice: 10-

day freeze required on all rates Rates must be “reasonable and just” Interstate Commerce Commission (ICC)

established to enforce the Act

What were the strengths and weaknesses of Interstate Commerce Act?

2. Weaknesses of the Interstate Commerce Act Vague language of law Shortage of workers Inability to enforce laws without courts

courts favored Big Business

3. Significance of Interstate Commerce Act It established a precedent for government regulation, and paved the way for more regulation in the future

FAMOUS MUCKRAKERS OF THE EARLY 20TH CENTURYWHO? IMPACT ON AMERICAN SOCIETY

Jacob RiisPhotojournalist (How the Other Half Lives)

who showed the ills and poor living conditions of NYC

Ida Tarbell Social researcher who investigated problems with trusts (History of Standard Oil)

Upton Sinclair

Novelist who introduced public to public health hazards of Chicago meatpacking plants (The

Jungle)

Thomas NastPolitical cartoonist who exposed political

machines and criticized American government (“yellow press”)

Lincoln Steffens

Released investigative analysis of corrupt relationship between Big Business and city

government

How did the growth of college education affect the Progressive movement?

C. SOCIAL RESEARCHERS: Development of social sciences led to analysis of human society

1. Social problems are caused by humans and can be resolved by humans

2. Rejection of Social Darwinism

D. SOCIAL GOSPEL: Impact of faith led to development of settlement house, the Salvation Army, and the YMCA/YWCA

How did the focus shift to women and children in the 1900s?

E. CRUSADERS FOR WOMEN & CHILDREN: Improvement in living conditions and labor reform in cities

1. HULL HOUSE (Jane Addams): Settlement house became center of women’s activist movement

2. Florence Kelley: Championed reform for women, blacks, consumers leading advocate for child labor laws

How did the focus shift to women and children in the 1900s?

3. Triangle Shirtwaist Fire (1911): Event which changed government’s response to female and child labor 148 women and girls killed• Led to NYC regulating

hours and conditions in workplaces

• By 1916, 32 states set child labor laws

• Many laws eventually overturned by Supreme Court

YouTube - Triangle Shirtwaist Fire (History)

How did the Progressive movement impact other political movements?

F. RADICAL GROUPS SOCIALIST PARTY

1. Organized in 1901 by labor leaders including Eugene V. Debs

2. Wanted government takeover of Big Business, laws regulating business as well as a minimum wage and laws setting the length of the work week to 40 hours

3. Established the International Workers of the World (a.k.a., Wobblies)

How did progressivism affect political debate in America?VI. POLITICAL PROGRESSIVISM

A. Progressive platform of the 1900s geared at increasing democracy

INITIATIVE Voters could directly propose legislation

REFERENDUM

Direct vote on laws affecting people

RECALL Removal of corrupt officials from office

SECRET BALLOT

Efforts were made to ensure voters were secure in their ability to cast

votes

How did progressivism affect political debate in America?

B. How progressive politics worked in the states

1. City-manager system: Attempted to leave urban affairs to expert staffers against patronage

2. Leading Progressives fought political clout of trusts• ROBERT LA FOLLETTE: Tried

to cut ties between trusts and municipal government (WI)

• HIRAM JOHNSON: Fought railroads and trusts

• CHARLES EVANS HUGHES: Investigated malpractices of gas and insurance industries in NY

How did progressivism affect political debate in America?

3. Efforts of Progressives led to further federal reform

• 16th Amendment (1913): Graduated income tax

• 17th Amendment (1913): Direct election of U.S. Senators

How did Teddy Roosevelt develop a progressive domestic policy?

VII. THE PRESIDENCY OF TEDDY ROOSEVELT AND CONTINUED PROGRESSIVISM

A. THEODORE ROOSEVELT (The “Trustbuster”)

President (1900-1909)

He believed U.S. must grow industrially

Not in favor of unfair trusts they eliminated competition

Broke up over 40 trusts during his administration in defense of Sherman Antitrust Act (1890)

How did Teddy Roosevelt develop a progressive domestic policy?

B. TR’s SQUARE DEAL1. The “Square Deal”: Roosevelt believed in

strong Presidential leadership to combat the problems of Big Business all Americans deserved a Square Deal (honesty, fairness, and economic opportunity)

2. Progressivism: Reforms essential to the growth of the United States moderate reforms that would help business grow

How did Teddy Roosevelt develop a progressive domestic policy?

3. Key elements of Roosevelt’s progressive domestic policy

Control of corporations

Consumer protection

Conservation of natural resources

Cleaning up government

How did Teddy Roosevelt develop a progressive domestic policy?

B. Examples of TR’s corporate activism

1. ANTHRACITE COAL STRIKE (1902): 140,000 coal miners demanded 20% pay hike and 9-hour day• TR threatened to seize mines when

owners refused to negotiate• RESULT: Workers got 10% hike and

9-hour day, but union not recognized2. Government strengthened controls

over Big Businessa. ELKINS ACT (1903): Fines against

railroads that continued to use rebates

b. HEPBURN ACT (1906): Extended power of ICC by restricting railroads’ use of free passes

How did Teddy Roosevelt develop a progressive domestic policy?

3. “TRUSTBUSTING”: TR broke over 40 trusts that hurt consumers he wasn’t anti-business, but against bad trustsa. NORTHERN SECURITIES CO.:

TR forced JP Morgan to dissolve investment house angered Wall St., but helped TR’s reputation

b. Helped dissolve various agricultural trusts, but did not aim at big trusts (“good trusts”)

c. WILLIAM HOWARD TAFT: TR’s successor cracked down on more trusts than TR tarnished TR’s image

How did Teddy Roosevelt develop a progressive domestic policy?

C. Consumer issues addressed in TR’s Administrations

1. MEAT INSPECTION ACT (1906): Meat shipped across state lines subject to government inspection

2. PURE FOOD & DRUG ACT (1906): Prevented adulteration and mislabeling of food products

Each law pushed by TR after the public reaction to The Jungle

Why was TR so interested in the environment?

D. TR’s focus on conservation: Roosevelt concerned with overdevelopment of timber and mineral resources utilized federal statutes to protect many acres of available land

1. FOREST RESERVE ACT (1891): TR set aside over 125 million acres of forests most enduring achievement as president

2. NEWLANDS RECLAMATION ACT (1902): Set forth irrigation projects in West