Robber Barons or

Captains of Industry?

Panic of 1893

• corporation abuses, mismanagement, over building, and competition pushed many railroad to brink of bankruptcy

• panic was worst depression up to that time• 500 banks and 15000 businesses failed• 3 million people lost jobs• large firms seized many railroads• began trend of big business

One view glorified their abilities and contributions

1. "Captains of Industry” Industrial leaders were viewed as ingenious and industrious capitalists who transformed the American economy with their business skills. These "Captains" were the heroes of their day who embodied the American dream of rags to riches.

A second view questioned their tactics and ethics

2. "Robber Barons” Industrial leaders were viewed as immoral, greedy, and corrupt, using bribery, illegal business practices, and cruelty to workers to get ahead. Many of the most respected industrialists were also feared and hated. While not all of these men were unethical, many used questionable tactics to achieve their goals of wealth and power.

Wealthy business leaders in the 19th century were glamorized and villianized

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$ billions $

Rockefeller

Carnegie

Vanderbilt

Bill Gates

Jay Gould

JP Morgan

James H. Hill

How rich were the “robber barons” compared to Microsoft founder Bill

Gates?

Created by Katherine Lacks

Contemporary political cartoon comparing robber barons of the 19th century with robber barons from the Middle Ages

Created by Katherine Lacks

The millions made by the robber barons is at the expense of the workers

Created by Katherine Lacks

• 1835 – 1919• Federal Steel Co.

(Pittsburgh), and many more

• Sold FSC to Morgan and it became US Steel

• 2nd richest man in history

Andrew Carnegie

Andrew Carneg

ieCreated by Katherine Lacks

Created by Katherine Lacks

Carnegie Hall and Carnegie Hall Tower,

Seventh Street,

New York, NY

Carnegie attacks the rich, presumably because of his belief that the rich have a duty to help the poor, as he

advocated in Gospel of Wealth.

Created by Katherine Lacks

J.P. Morgan

• 1837 – 1913• US Steel• Banking Industry

J.P. Morgan lived his life on a large scale, spending massive amounts of money, gambling, on “toys” like yachts, huge parties, palatial homes and art. One of his famous quotes, “If you have to ask how much it costs you can’t afford it”,

typifies his beliefs about money.

Created by Katherine Lacks

Morgan as the piper that people of various professions & nationalities, including some countries in the distance, are

following.

Created by Katherine Lacks

• 1839 – 1937• Standard Oil• Considered richest

man of all time

John D. Rockefeller

John D. Rockefeller

Standard Oil

The Standard Oil Octopus reaching out it’s tentaclesCreated by Katherine Lacks

Cornelius Vanderbilt 1794-1877

Vanderbilt and his descendents, like many other robber barons, built massive mansions and spent huge amounts of money known as conspicuous consumption (spending money to show off one’s

wealth).

This bedroom is a

reproduction of a French

Queen's chamber from the Louis XV period.

William Vanderbilt

took over the family

business

Vanderbilt mansion today in Hyde Park, NY

Big Business Emerges

• Principles of Social DarwinismCharles Darwin’s - theory of evolution• "survival of the fittest“• natural selection• Darwinism agreed with Protestant principles of work - riches a sign

of God's favor and poverty a sign of laziness or inferiority

• Laissez Faire - "allow to do" - absence of regulation to ensure free competition (little government interference

• Individualism – it is up to you to make something of yourself; use of personal talents and ideas

Created by Katherine Lacks

Major terms defined

Capital: the amount and type of resources a person or a company has access to including money, property, and other valuables

Corporation: a type of business organization created when a group of individuals apply for a license or charter from a state legislature

Dividends: a share of the profits issued to investors from a corporation

Pool: a group of companies in the same industry would get together to fix prices and otherwise manipulate the industry to their advantage

Trust: major stockholders of many different corporations give their stock to “trustees” who promise dividend payments in return. This allowed the trust to operate on a large scale on behalf of several companies at once and entire industries

Monopoly: domination of all aspects of an entire industry by a trust, individual, or corporation

Created by Katherine Lacks

Large corporations developed in two major ways: horizontal or vertical integration

•Horizontal integration is the growth of a business through acquiring additional business activities in the same industry.

•A business either combines with other similar companies or buys them, called “mergers and acquisitions”.

•The benefits to the firms that horizontally integrate include cheaper operating costs because production is on a larger scale, increased market control of the product including over suppliers and distributors, and greater control over treatment of workers.

•An example of this form of expansion would be Standard Oil’s acquisition of almost all oil refineries around the U.S.

•Vertical integration is the growth of a business through the acquisition of the materials that make the product, the factories that manufacture the products including the machines needed to produce the product, as well as the distribution channels to take the product to market.

•This allows the business to control all aspects of the industry and provides large profits.

•An example would be Carnegie Steel’s control of raw materials, production of steel, transportation, and companies that made products out of steel.

Large corporations developed in two major ways: horizontal or vertical integration

The South gets Left Behind

• industry still concentrated in the north - south still mostly agriculture

• south still trying to recover from Civil War devastation

• north owned 90% of southern railroads

Created by Katherine Lacks

The South gets Left Behind

• southern entrepreneurs suffered at hands of high transportation costs, tariffs on raw materials and manufactured goods

• skilled workers attracted to the north• south did have growth in forestry,

mining, tobacco, furniture, textiles

Created by Katherine Lacks

The Sherman Anti-Trust Act

The government attempted to intervene to prevent the “Barons” from “Robbing”

the wealth!• any attempt to interfere with free trade

among states or internationally by forming a trust was illegal

• enforcement nearly impossible• not supported by the Supreme Court

Created by Katherine Lacks

Organized Labor

Workers of the Nation Unite• exploitation of workers

– work day: 6-7 days/week, 12+ hours/day– no sick time, vacation, unemployment compensation,

compensation for job-related injuries– high rate of accidents– poor working conditions: dirty, poorly lit or ventilated– repetitive work - boring– equipment often dangerous and faulty– whole families forced to work because of low wages– number of women working doubled 1890-1910– kids as young as 5 worked all day for very low pay

Created by Katherine Lacks

Labor Unions Emerge• National Labor Union (NLU)

– 1866 - William Sylvis – formed Labor Reform Party (political party)– convinced Congress to legalize 8-hour work day for gov. workers

• Colored National Labor Union (CNLU)– 1869 - Isaac Meyers– avoided strikes-preached cooperation between management and

labor– committed to political reform– support the Republican party

Created by Katherine Lacks

Labor Unions Emerge

• Knights of Labor– 1868 - Uriah Stephens - expanded under Terence Powderly– open to all workers (women, blacks, skilled, unskilled)– support 8-hour workday, equal pay for equal work– strikes were last resort– advocate arbitration (settlement thru impartial 3rd party)

Created by Katherine Lacks

Many professions were represented by the Knights of Labor

Created by Katherine Lacks

Labor Unions Emerge

• American Railway Union (ARU)– Eugene Debs– unskilled and semiskilled laborers plus skilled

engineers and firemen -no women or blacks– used strikes– got higher wages

Created by Katherine Lacks

American Railway Union

Eugene V.Debs

Created by Katherine Lacks

Labor Unions Emerge

• American Federation of Labor (AFL)– 1886 - Samuel Gompers– joining of trade and craft unions– strikes were a major tactic used– earned higher wages and shorter work week (just

under 49 hours)

Created by Katherine Lacks

Labor Unions Emerge

• Industrial Workers of the World (IWW) - "Wobblies"– 1905 - William Haywood– radical unionists and socialists

in the West– miners, lumberers, cannery

and dock workers– welcomed women and

African Americans

Samuel Gompers, A.F.L.

Haywood, Industrial Workers of the

World

Strikes Turn Violent

• Haymarket Affair - May 4, 1886– workers protest killing of striker by police– police arrive and bomb is tossed at police – police fire guns into crowd– 7 cops and several workers died– people begin turning against the unions

Strikes Turn Violent

• Homestead Strike– Carnegie's Homestead Plant - wage cuts lead to

strike– Pinkerton armed guards hired so scabs could keep

plant going– battle left 3 Pinkertons and 6 workers dead– workers took over plant– National Guards sent in - plant reopened and

union lost support

Created by Katherine Lacks

Strikes Turn Violent

• Pullman Strike– Pullman company laid off 3000 employees and cut

wages of the rest by 25-40% but did not cut cost of housing

– after depression company hired back 2000 workers but didn't restore wages or lower rent

– workers call strike - spring 1894

Created by Katherine Lacks

Strikes Turn Violent

• Pullman Strike– Pullman refused to negotiate with Debs so ARU

began boycotting Pullman trains– Pullman hired strikebreakers - violence broke out– Pres. Grover Cleveland sent federal troops to end

strike– Debs was put in jail– Pullman fired most strikers and railroads blacklist

others

Created by Katherine Lacks

Created by Katherine Lacks

Women in the Labor Movement

• Mary Harris "Mother" Jones– most prominent organizer in

women's labor movement– 1903 - led children (many

disfigured) on a march to home of Pres. T. Roosevelt to expose cruelties of child labor - influenced passing of child labor laws

• International Ladies' Garment Workers' Union (ILGWU)– 1909 - Pauline Newman

Actions Against Unions

• management refused to recognize or negotiate with unions as the representatives of the workers

• many employers forbid union meetings, fired union members, and force new employees to sign "yellow-dog contracts" (swear not to join union/strike)

Created by Katherine Lacks

Actions Against Unions

• turned Sherman Antitrust Act against labor by calling actions interference with interstate trade

• public angry if strikes cause shortage of goods• legal limitations makes organizing more difficult• many fear disorder, chaos, socialist revolution• unions begin losing members

Created by Katherine Lacks

ONE REASON THERE ARE SO MANY IDLE YOUNG MEN

CAUSESkilled Workman, “ Want to learn the trade, eh? No, no we can’t encourage apprentices. The Union won’t allow it. They would cheapen the price of labor.”

EFFECTIgnorant, Intemperate, and dishonest young men. Inferior work through the employment of incompetent workmen.

Unions are blamed for juvenile delinquency and shoddy workmanship

Created by Katherine Lacks

A common theme of anti-labor publications was that of showing union leaders as selfish,

wealthy “businessmen” out for their own gain.

AN AMERICAN AUTOCRAT He Ties Up Railroads and Exposes the Public to Inconveniences and Danger

whenever He is Obligated to DO Something to Earn his Salary

Union leaders salary is shown as $5,000 a

year at a time when the average worker was making $300 to

$400

Knights of Labor leader Terrence Powderly

Created by Katherine Lacks

Industrialization Review• Technological change spurred

growth of industry primarily in northern cities.

• This growth resulted in great changes throughout every avenue of our nation!

Industrialization Review

• Inventions/Innovations– Corporation (limited liability)– Bessemer steel process– Light bulb (Thomas Edison) and electricity as a source of

power and light– Telephone (Alexander Graham Bell)– Airplane (Wright Brothers)– Assembly line manufacturing (Henry Ford)

Industrialization Review

• Industrial leaders– Andrew Carnegie (steel)– J.P. Morgan (finance/banking)– John D. Rockefeller (oil)– Cornelius Vanderbilt (railroads)

Industrialization Review

• Reasons for economic transformation• Government policies of laissez-faire capitalism and

special considerations (e.g., land grants to railroad builders).

• The increasing labor supply (from immigration and migration from farms).

• America’s possession of a wealth of natural resources and navigable rivers.

• Technological advancements that lead to new industries and changes in old industries.