Chapter 18

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Chapter 18 Section 2

• Big Business and Organized Labor

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New Ways of Doing BusinessEntrepreneurs and
corporations

• An entrepreneur is a person who sets up a new
  business to make a profit.
• In order raise capital (money) entrepreneurs
  became corporations ? meaning they sold stocks or
  shares of their company.
• Why would anyone just give a company money?
• They expected a profit from the sale of that
  stock when the company did well!
• Only risk? the money you initially pay for the
  stock. (much less risky than before!)

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Wall Street 1867 1900
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New Financial Businessman

• The Broker
• J. Pierpont Morgan

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Growth of Big BusinessNew Business Culture

• Laissez Faire ? the ideology of the
  Industrial Age.

• Individuals should compete freely in the
  marketplace.
• No room for government in the market
• Laissez Faire attitude of the government toward
  business created companies that were monopolies.
  They controlled most or all business in a
  particular industry!

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The New Way of Business Business

• Trust ? John D. Rockefeller

• His company ? Standard Oil Co.
• Was a trust because his group of corporations was
  run by one single board of directors!

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Standard Oil Co.
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New Type of Business Entities

• Two ways of creating Trusts
• 1. Horizontal Integration ? John D.
  Rockefeller

• 2. Vertical Integration
• Gustavus Swift ? Meat-packing
• Andrew Carnegie ? U. S. Steel

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New Type of Business Entities
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Iron Steel Production
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U. S. Corporate Mergers
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Are Trusts Good or Bad?

• Some people saw trusts as bad because
• They said it was a threat to the free enterprise
  system and limited competition.
• Also business leaders used their influence and
  wealth to control the government.
• Some people saw trusts as good because
• They built up the economy and created jobs.
• They said that by limiting costly competition
  they would be able to lower their price to the
  consumer.

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The Robber Barons of the Past
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Social Darwinism

• Comes from Charles Darwins ideas from the
  Origin of the Species to humans
• Charles Darwin applied his ideas of Survival of
  the fittest to the species of the world, but in
  the early 1900s it was applied to big business!
• Those who survived and drove out competition must
  be the fittest and deserve it

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Social Darwinism in America

• Individuals must have absolute freedom to
  struggle, succeed or fail.
• Therefore, state intervention to reward society
  and the economy is futile!
• In other words ? the philosophy of the times was
  that government needs to keep their hands off and
  out of the way of Big Business!

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The Bosses of the Senate
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of Billionaires in 1900
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of Billionaires in 1918
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The Gospel of WealthReligion in the Era of
Industrialization

• Wealth no longer looked upon as bad.
• Viewed as a sign of Gods approval.
• Christian duty to accumulate wealth.
• Should not help the poor.

Russell H. Conwell
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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
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Relative Share of World Manufacturing
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Changes in the Workplace

1. The relationship between the workers and their
   boss became much less personal when industry
   grew.
2. In some industries, such as textile mills, the
   majority of the workers were women.
3. It was not uncommon for children as young as
   eight to work in mills, mines, factories, and
   sweatshops.
4. Many dangers in factories and every worker was
   replaceable!

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Workers Organize!

• Had to be secretive because you could be fired
  for joining if you boss found out!
• Fought for
• Safer working conditions
• Higher wages
• Shorter hours

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Two types of Unions

• Knights of Labor (Terence Powderly) became
  biggest union in the nation because it allowed
  women, blacks, immigrants, and unskilled workers!
• 2. American Federation of Labor or AFL (Samuel
  Gompers) skilled workers only because this
  allowed for collective barganing which led to
  more of an ability to meet demands of the union.

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Labor Strikes

• 1893 ? economic depression caused many people to
  be without a job, and those who had a job were
  paid less than before.
• This resulted in strikes all over.
• Pullman strike one of the most famous.

George Pullman cut his workers wages by 25, but
expected them to pay the same for the mandatory
housing they lived in. Angry workers went on
strike to protest.
Not all labor disputes were peaceful, some were
violent and associated with being the fault of
radicals that belong to unions By 1900 only 3 of
Americans belonged to a union.