The Rise of Industrial America The Rise of Corporate America In the essentials of life the boy of 1854 stood nearer to the year one than to the year 1900 New Features of Business 1. Coal resources = energy source 2. New technology 3. Need for more workers 4. Constant competition to cut costs and prices, eliminate competitors 5. Drop in prices 6. $ supply cant keep up with productivity Switch from AG to Industry 1/3 of the worlds manufactured goods came from U.S. 25% of workers in mfg. 50% to 1/3 of workers in AG. The Railroad Industry New Business Practices Needed lots of $$ Sold stocks and bonds to the public Bond holders earn a fixed interest rate Stock holders make $ if the company makes $ Better organization Use telegraph lines Hierarchical organization Good accounting The Railroad Industry Consolidation & Robber Barons By 1900s, 7 giant companies control most of the countrys rail network Buy out smaller lines Biggest businesses in the world Standardized practices Create time zones Often unfair pricing The Railroad Industry Impact & Regulation: Farmers and small businesses hurt cant afford the rates Wanted to outlaw rate discrimination Interstate Commerce Act Sets up the ICC to oversee the railroads But the Supreme Court always sided with the railroads The Steel Industry Andrew Carnegie Immigrates from Scotland in 1848 Rags to riches Invests $ wisely, builds his own steel mill The Steel Industry Business Practices Vertical Integration controlling all aspects of manufacturing, from raw materials to finished product Mass production Can charge low prices Worlds biggest corporation The Steel Industry The Carnegie Dream Carnegie says his success is from hard work Inspires others to do the same But not that easy! Sells business to J.P. Morgan for $1 billion Gives most of it away - philanthropy The Oil Industry The Trust John D. Rockefeller The goal: reduce costs, lower prices, drive competitors out of the market Buys his first oil refinery in 1863 Head of Standard Oil by 1873 Great at integration The Oil Industry The Trust Standard Oil Trust New way to eliminate the competition Creates an umbrella trust that controls competing companies Can control prices, create a monopoly Controls 90% of the countrys oil Other industries copy this The Oil Industry The Trust Government Regulation Big public outcry against trusts Sherman Anti-Trust Act outlawed trusts and monopolies that fixed prices Not effective! Doesnt define what a trust is Government only prosecutes 18 cases U.S. v. E.C. Knight Company Stimulating Economic Growth New Technology New inventions stimulate manufacturing and consumer demand Light bulb, telephone, sewing machine, etc. Thomas Edison New style of inventing: know what product you want, do experiments until you find it Advertising and Marketing The problem: output exceeded demand in many industries The solution: Advertise! Brand names, trademarks, slogans, etc. Builds consumer loyalty Create new products (flour mills make cakes and cereal) Costs & Benefits of Economic Growth Costs: Lots of bankrupt companies Workers in terrible conditions Environmental damage Benefits: U.S. is leading industrial nation Huge companies, also small specialized ones Lower prices, labor- saving products Better transportation & communication Factories and the Workforce New Working Conditions Old way = skilled laborers making one product at a time New way = unskilled workers in mass production Conditions: $1.30 a day, 12 hour shifts, unsafe No disability insurance Always replaceable Child Labor Children work in coal mines and cotton mills Start at 8 or 9 Prone to injury and sickness Women in the Workforce Upper class women Separate spheres stay at home Married women Work from home laundry, sewing Unmarried young women Many work in factories Paid less than men Most people see the work as temporary Responses to Poverty & Wealth The Gospel of Wealth: Hard work and perseverance lead to wealth So helping the poor wont help They have to do it themselves Wealthy should set a good example Popular with industrialists, politicians Responses to Poverty & Wealth Social Darwinism Applies Darwins theory of evolution to human society The fit survive, the weak perish Wealth = youre fit Poverty = youre weak Governments or charities shouldnt interfere with this natural process Labor Unions & Industrial Conflict New Organizations The Knights of Labor Combines skilled and unskilled workers Demand equal pay for women, end to child labor, joint ownership of businesses, graduated income tax Successes: Railroad strike Elect local officials to office But failed strikes decline by the 1880s New Organizations American Federation of Labor (AFL) Led by Samuel Gompers - more practical tactics Organize skilled workers to bargain for better conditions 8 hour work day, safety laws But limited impact New Organizations Industrial Workers of the World International labor union Recent immigrants spread it here Want militant action to bring about equality Radical socialists, marxists, etc. Want to unionize all workers All businesses should be owned by the workers Persecuted in the U.S. Strikes & Labor Violence The Great Uprising Panic of 1873 lay offs, wage cuts Railroad strike spreads across the country President Hayes has to call out troops to stop it 2 weeks later Railroads crippled Excuse for owners to crack down on unions Strikes & Labor Violence Haymarket Square 1886 340,000 workers walk off the job demanding an 8 hour day Chicago police kill 4 strikers at McCormick plant Protest rally the next day someone throws a bomb, kills or wounds 7 policemen Police fire, kill demonstrators More crackdowns on organized labor Strikes & Labor Violence The Homestead Strike Strike at the Carnegie Steel Co. in Penn. Managers cut wages, locked out workers Pinkerton detectives guard the building Workers fire on the Pinkertons National guard is sent, strike is crushed Social Thinkers Look for Alternatives Business leaders believe in laissez-faire No government interference Socialism Everyone works for the common welfare, everyone is equal Centralized government distributes the wealth Marxism Workers would eventually rise up, overthrow the rich, take control and divide wealth equally Immigration The New Immigrants Migration within the country From the countryside to the cities for jobs New immigrants from Southern and Eastern Europe Bad conditions in their home countries New jobs in America Ellis Island in New York Immigrant Life in Cities Immigrants settle in ethnic neighborhoods in cities Easier to adjust Most have bad living and working conditions Dangerous factory jobs Tenements & slums Nativism New wave of prejudice against immigrants Targets Catholics and Jews of southern and eastern Europe Believe in a hierarchy of race New laws to exclude Asian immigrants: Naturalization Act Chinese Exclusion Act 1882 Private groups formed to discriminate: American Protective Association, Immigration Restriction League The Great Migration African American families start to move from the South to Northern and Midwestern cities Want better jobs, a better life Compete with immigrants for jobs often lose Black women have very few options Restricted to segregated urban ghettos New Cities Cities and Suburbs City centers grow Business headquarters, skyscrapers, shopping and entertainment Downtown Residential areas move to the outskirts of the cities Suburbs only for the wealthy and small middle class The New Middle Class New people enter the middle class Merchants, skilled labor, supervisors, managers, white collar office workers Move out of small apartments New consumer society Buying new products, new kinds of entertainment Department stores, baseball, amusement parks