The Rise of Big Business

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The Rise of Big Business

• The Beginning of the Gilded Age

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The Gilded Age

• Describes period of U.S. history from 1865-1905.
• Mark Twains novel The Gilded Age (1873) America
  glittered on the outside while rotting to the
  core.
• Corporate power
• Government corruption
• Social injustices

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Post-Civil War Economy

• Second Industrial Revolution
• Between 1869-1899 nations population tripled,
  farm production doubled, value of manufactures
  grew sixfold.
• Rural society dominated by household production
  and seasons became worlds preeminent economic
  power.
• Bigness became the standard of corporate and
  industrial life.

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Creation of Big Business

• Old economy was dependent on small business and
  craftspeople.
• Could not keep up with demands of growing market
• Entrepreneurs developed systems of mass
  production and distribution.
• Technological innovations
• Integration of processes into single companies
• Industrial combination and concentration
• Certain companies grew larger and larger and more
  powerful

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Railroads in the United States, 1870
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The First Big Business

• Railroads opened the West, connected raw
  materials to factories, created a national
  market.
• Railroad mileage 30,600 in 1862 to 53,000 in
  1870 to 94,000 in 1880 199,000 by 1900.
• Received federal land grants and tax breaks
• Transcontinental Railroad, built by Union Pacific
  and Central Pacific
• Finance profiteering, speculation, and robber
  barons
• Jay Gould and Cornelius Vanderbilt
• 1900 2/3 of railroad mileage controlled by 7
  people

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Jay Gould
Cornelius Vanderbilt
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Invention and Manufacturing

• Patent Office recorded 276 inventions in 1790s
  234,965 in 1890s
• Invention was the mother of new industry
• Barbed wire, farm implements, air brakes for
  trains, typewriter, vacuum cleaner
• Telephone (1876) by Alexander Graham Bell
  American Telephone and Telegraph Company
• Electrical inventions by Thomas Edison
  (phonograph, light bulb, motion picture) Edison
  General Electric Company
• Alternating current by George Westinghouse
  brought electricity to nation

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Entrepreneurs

• Most captains of industry not inventors but
  entrepreneurs
• John D. Rockefeller and oil industry
• Andre Carnegie and steel industry
• J. P. Morgan and banking industry

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Rockefeller and the Oil Trust

• Pennsylvania oil rush in 1860s
• Rockefeller opened refinery in Cleveland,
  Standard Oil Company of Ohio
• Alliance with railroads rebates and info
• Vertical integration and the trust

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The Trust

• Trusts enabled individuals to legally manage the
  property of others.
• 1882 all 37 stockholders in Standard Oil
  companies conveyed stock to 9 trustees, who gave
  direction to the companies
• Form of illegal monopoly prosecuted by state
  courts
• Interlocking directorates and holding companies

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The growing power of Standard Oil
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Carnegies Gospel of Wealth

• typical American success story
• From railroads to steel Carnegie Steel
• Price of steel dropped, but demand grew
• 1860 13,000 tons 1880 1,400,000 tons
• Buys out competitors, creates monopoly
• Vertical integration

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Gospel of Wealth

• Gospel of Wealth published in 1899
• Drew on Darwinism and Spencers survival of the
  fittest.
• Evolution of society, progress measured by
  contrasts between millionaires and laborers
• Sermon on the proper use of wealth
• Wealthy should provide for public good
• Universities, libraries, hospitals, parks,
  meeting halls, concert halls, swimming pools, and
  churches (in that order)
• Shamed the Vanderbilts, Rockefellers, and Dukes
  to do likewise

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Carnegie on the Gospel of Wealth
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Morgan and Finance Capitalism

• Banking power and mergers
• Laissez-faire Capitalism involving speculation
• Invested in RR, oil, steel, other industries.
• Buys Carnegie Steel for 500 million
• Worth 1.4 billion by Morgans death
• The money trust

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Progressive Era

• Period of U.S. history from 1905-1920.
• Attempt of reformers to correct the strife and
  corruption prevalent throughout the Gilded Age
• Corporate power anti-trust laws, labor unions
• Sixteenth Amendment
• Government corruption third parties, civil
  service examinations
• Seventeenth Amendment
• Social injustice anti-lynching societies,
  prohibition, womans suffrage, labor unions
• Eighteenth Nineteenth Amendments

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Challenging Trusts

• Interstate Commerce Act (1887)
• Federal regulation of railroads
• Sherman Antitrust Act (1890)
• United States v. E. C. Knight Company (1895)
• Standard Oil Co. of New Jersey v. United States
  (1911)
• Clayton Antitrust Act (1914)
• Federal Trade Commission (1914)

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Early Labor Protest

• Molly Maguires in Pennsylvania coal mines
• Great Railroad Strike of 1877
• Wage cuts led to strike in Martinsburg, W.V.
• Spread from Maryland to San Francisco
• Ended by Federal troops at Pittsburgh
• Haymarket Riot of 1886
• Strike at Chicagos International Harvester
  plant one striker killed
• Anarchists organize large-scale protest
• Represented union of alien anarchists and labor
  radicals in the publics mind

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Haymarket Riot, Chicago
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Unionization

• National Labor Union (NLU), 1866-1872
• 8-hour workday for Federal employees
• Repealed Contract Labor Law of 1864
• Knights of Labor, 1869-1917
• Uriah S. Stephens as a fraternal society
• Terence V. Powderly, opposed to strikes
• American Federation of Labor (AFL), 1886
• Samuel Gompers

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Labor Wars

• Homestead Lockout of 1892
• Cripple Creek Miners Strike of 1894
• The Pullman Strike of 1894
• The Jungle (1906)
• Fulton Bag and Cotton Mill Strike of 1912-13