Big Business and Organized Labor

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Big Business and Organized Labor

• Chapter 6

Bethlehem Steel Works, 1896 Library of Congress
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Industrialization Introduction

• What made America in the 1880s so different from
  the 1860s was a new industrial order.
• The process of industrialization had begun at
  least three decades before the Civil War.
• Small factories had produced light consumer goods
  like clothing, shoes, and furniture. They catered
  to local markets in an economy of farmers and
  merchants.
• They could not meet the demands of the rapidly
  growing national market.

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Industrialization Introduction

• After the 1850s the industrial economy matured,
  with large factories, more machines, greater
  efficiency, and national markets.
• Entrepreneurs developed systems of mass
  production and distribution. Huge corporations
  came to dominate the economy.
• Ordinary Americans scrambled to adjust and an
  organized labor movement would emerge.

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The Second Industrial Revolution

• The first had occurred in Britain during the late
  18th century.
• Coal-powered steam engine Textile machines for
  spinning thread and weaving cloth Blast furnaces
  to produce iron
• The second occurred in the the U.S. and Germany
  during the second half of the 19th century.
• National transportation and communication
  network that created a national and even
  international market.
• The use of electric power.
• The application of scientific research to the
  industrial process. Example the production of
  steel and chemicals. Also inventions.

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Natural Resources and Industrial Technology
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National Markets and the Expansion of the Railroad

• Railroads helped tie the nation together by
  lowering transportation costs railroads.
• Allowed manufacturers to reduce prices, attract
  more buyers, and increase business.

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RailroadsAmericas First Big Business

• Railroads stimulated economic growth simply
  because they required so many resources to build
  coal, wood, glass, rubber, brass, and steel.
• As Americas first big business they devised new
  techniques of management that would soon be
  adopted by other companies.
• Railroads establish standard time zones (1883)

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Railroads Americas First Big Business

• Financing the railroads
• Built by private companies.
• Raised money for construction by selling bonds to
  American and foreign investors.
• Also received federal land grants, as well as
  loans and tax breaks from federal, state, and
  local governments.
• Cornelius Commodore Vanderbilt and others made
  fortunes on the railroad.

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Manufacturing and Inventions Electricity

• Thomas Edison invented the first successful
  incandescent light bulb, making electric light
  available. (1879)
• His company, General Electric, created a unified
  electrical power system.
• By 1898 he had setup 3000 power stations lighting
  more than 2 million bulbs as well as powering
  trolley cars, subways, and factory machinery.
• Factories no longer had to cluster around
  waterfalls and coal supplies.

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Manufacturing and Inventions

• Edison also patented the phonograph, the motion
  picture, and hundreds of other devices.
• Alexander Graham Bell invented the telephone in
  1876, vastly improving communication.
• Even small inventions such as typewriter (1867),
  mimeograph machines (1892), and carbon paper
  (1872) helped ease business transaction.

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Improvements in Industrial Technologies

• Steel could be refined from iron (cheaply)
  (Bessemer process developed in 1850s)
• Allowed for the production of telephones,
  typewriters, adding machines, sewing machines,
  cameras, elevators, and farm machinery and
  lowered consumer prices.
• New distilling methods allowed kerosene and
  gasoline to be refined from crude oil.

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The Corporation

• The growing scale of enterprise led to the use of
  the corporation, which was a form of ownership.
• A corporation could raise large sums quickly by
  selling stock certificates or shares in its
  business.
• It could also outlive its owners.
• It limited liability owners were no longer
  responsible for corporate debts.
• Professional managers now operated complex
  businesses because owners were no longer
  responsible for day-to-day management of the
  company.

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Finance Capital

• As national wealth increased, people began to
  save and invest more of their money.
• The New York Stock Exchange (around since 1792)
  linked eager investors with money-hungry firms.
• By the end of the 19th century the stock market
  had established itself as the basic means of
  making capital available to industry.

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Entrepreneurs(Robber Barons)

• John D. Rockefeller Standard Oil (oil refiner
  who took advantage of the Pennsylvania oil rush
  of the 1860s)
• By 1879, he controlled 90 to 95 percent of oil
  refined throughout the country (Horizontal
  growth)
• Used vertical integration so that he would not
  have to depend on the middlemen.
• Made its own barrels, cans, and whatever else it
  needed. Pay nobody a profit
• Rockefeller made a fortune, but also became a
  leading philanthropist donating more than 500
  million during his 98 year-life.

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Entrepreneurs(Robber Barons)

• Andrew Carnegie
• Made his fortune in the steel industry.
• Used economic depressions to buyout his
  competitors and expand.
• Carnegie Integrates Steel

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The Growth of Big Business

• J.P. Morgan financier (investment banker)
  bought up railroads during the Panic of 1893
• Merger movement - bought out Carnegies steel
  holdings for 500 million and created United
  States Steel Corporation (1st billion-dollar
  corporation)
• Richard Sears and Alvah Roebuck dominated the
  mail-order industry and helped create a truly
  national market (1890s) The catalog (6 million
  distributed per year) became second most read
  book in the nation (Bible was 1st)

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The Growth of Big Business

• Corporate Defenders
• The Gospel of Wealth - super wealthy
  demonstrated the superiority of the free
  enterprise system
• Social Darwinism and survival of fittest
• Rising standard of living for most
• Corporate Critics - Working conditions
• Average workweek 59 hours. (6 10 hour
  workdays). Many worked 12 hours a day, 7 days a
  week.
• Poor health and safety conditions in factories.
• 1913 25,000 factory fatalities 700,000
  injuries that required at least a months
  disability.

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Labor

• 1860 4.3 million industrial workers
• 1900 20 million industrial workers
• The pool of labor came from a huge influx of
  European immigrants as well as a massive
  migration of rural Americans.
• Also, growing number of women and children.

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Labor Unrest

• It was difficult for workers to organize.
• Property rights were respected more than labor
  rights.
• Workers were a diverse group that resisted
  forming unions.
• Disorganized Protest
• Even without unions, workers staged spontaneous
  protests over long working hours and wage cuts.
• Often became violent.

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Incidents in the 1870s

• Molly McGuires
• An Irish group in Pennsylvania coal fields.
• Aimed to improve working conditions by
  intimidation, beatings, and killings.
• Arrested and put on trial, 20 were hanged and
  wages at the mines were reduced.
• Railroad Strike of 1877
• First major interstate strike. Caused by wage
  cuts.
• Workers waked off the job, picketed, and burned
  railroad property from Maryland to San Francisco.
• Over 100 people killed and millions of dollars
  in property destroyed.
• The strikes failed because they lacked organized
  bargaining power.

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Toward Permanent Unions

• National Labor Union (1866)
• Persuaded Congress to enact an 8-hour workday for
  federal employees and repeal the 1964 Contract
  Labor Law, which bound immigrants to employers in
  exchange for passage to America.
• Died out in the 1870s after the death of its
  president.
• The Knights of Labor
• Started in 1869 but became a national
  organization in 1878.
• 700,000 members by 1886.
• Liberal membership policy.
• Preferred boycotts to strikes as a way to
  pressure employers.

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Haymarket Square Riot

• May 3, 1886, strikers and policemen clashed at
  Chicagos International Harvester plant.
• One striker killed.
• May 4, 1886, leaders of an anarchist movement
  held a protest to the killing in Haymarket
  Square.
• When policemen arrived to disperse the crowd,
  someone threw a bomb, killing one and injuring
  others.
• Police fired into the crowd killing 4
  demonstrators. Six policemen were also killed.
• Americans associated alien anarchists and labor
  radicals with the Knights of Labor, which
  disappeared by the turn of the century.

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The American Federation of Labor (AFL)

• Crafts unions (skilled workers) organized the AFL
  in 1886.
• A federation of independent crafts unions.
• Samuel Gompers served as president until his
  death in 1924.
• Focused on concrete aims rather than politics.
• Worked with management for agreements on union
  recognition.
• Closed shops could hire only union members.
• 1900 500,000 members 1920 2 million.

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Labor Unrest

• Homestead Steel Strike (1892)
• 300 Pinkerton detectives were used to barricade
  the plant and bust the unions.
• 9 workers and 7 Pinkerton agents killed.
• 8,000 state militiamen called in to put down the
  strike. The union was dead.
• Pullman strike (1894)
• Started in Chicago 3,000 railway workers were
  laid off and wages cut 25-40 percent.
• President Cleveland sent in federal troops to
  protect interstate commerce.
• Eugene V. Debs and the Socialist Party
• Industrial Workers of the World (Wobblies)

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Significant Events
? 1859 First oil well drilled in Pennsylvania
? 1866 National Labor Union founded
? 1870 Rockefeller incorporates Standard Oil
? 1876 Alexander G. Bell invents telephone
? 1879 Edison develops incandescent lightbulb
? 1882 Standard Oil Company becomes nations
first trust
? 1883 Railroads establish standard time zones
? 1886 Haymarket Square bombing
? 1894 Pullman Strike
Chapter 19