Era of Big BusinessEssential Questions:1.Who were the leaders of industry in the early 1900s?2.How did the leaders of industry acquire their fortunes?3.What was Social Darwinism?4.How did laborers respond to their working and living conditions and treatment by leaders of industry?5.What was the Great Strike of 1877, the Haymarket Affair, and the Homestead Strike?

Captain of Industry or Robber Baron?• Robber Baron

▫ An American capitalist of the 19th century who became wealthy via ethically questionable tactics through use of natural resources, governmental influence, or low wage scales

• Captain of Industry▫ An American business leader

whose means of amassing a personal fortune contributes positively to the country in some way

Vertical and Horizontal IntegrationHorizontal Integration Vertical Integration

• A strategy used by a business that seeks to sell a type of product in numerous markets

• Horizontal integration occurs when a company in the same industry and in the same stage of production is being taken-over or merged with another company at the same stage of production

• Example: when one steel company takes over another steel company

• Vertically integrated companies are united through a hierarchy and share a common owner

• Each member of the hierarchy produces a different product or service, and the products combine to satisfy a common need

• Carnegie used Vertical Integration

Vertical Integration: Carnegie

Coal Mines

Ovens where coal was coked

Railroads used to

transport Coal

Steel Mills that Manufactured

Steel

Ships used to transport Iron

Ore

Iron Ore Mines

Used vertical integration Controlled railroads and banks

Disliked monopolies

By 1900s was creating a 25% of the nation’s steel

Made his fortune through control of oil

In 1877 he controlled 95% of refineries nation

Hiked oil prices far above original levels

Gave over $500 million to charity

Bought out Carnegie for $400 million

Dedicated his life to donating money to charity

By his death, in today's figures, he gave away about $4.3 billion dollars

A New Level of Wealth• The wealthy proclaimed they

were justified by God to have so much wealth

• God gave them their money or they were a product of natural selection

• Many fear a plutocracy would eventually form, or a government that is controlled by the wealthy

Social Darwinism• Took Darwin’s theory of

biological evolution and applied it to the social classes▫ Said there were certain species,

or individuals, that flourished and passed their traits along to the next generation

▫ Those that failed, died out, or did not succeed

• The wealthy used it to justify why they were so rich and others were so poor

Gospel of Wealth by Andrew Carnegie• Wealthy must distribute their fortune

in a way that it will be put to good use

• Poverty in a society could be eliminated by wealthy men and women

• Softened his theory of Social Darwinism

• Said ostentatious living and amassing private treasures was wrong

• Said the wealthy were responsible for the recirculation of money back into society where it could be used to support the greater good

In 1882 675 laborers were killed on the job

Employers demanded 12 hour days; 7 day work

weeks

No sick or vacation days

Women made $267 a yearMen made $498 a year

In 1900 Carnegie made $23 million dollars

Great Railroad Strike of 1877• Response to wage cuts for second time in

a year by the Baltimore & Ohio Railroad

• Strike spread over 50,000 miles in the East

• Pittsburgh strikers clashed with militia▫ 20 people died and 29 were wounded

• This infuriated Pittsburgh strikers▫ They forced the militiamen to take

refuge in a railroad roundhouse▫ They set fire to buildings and trains▫ Militia mounted an assault on strikers

• After a month President Hayes sent in federal troops to end the strikes

Haymarket Affair• Took place in Chicago (1886)

• A rally in support of striking workers

• Person threw a bomb at police as they dispersed the gathering

• The blast and gunfire resulted in the deaths of 7 police officers and a number of civilians

• In the legal proceedings that followed 8 anarchists were tried and convicted▫ 5 were sentenced to death and 3 were

sent to jail

• Considered to be the origin of international May Day, or the day to observe the achievements of workers

Homestead Strike• 1892 strike culminating in a

battle between strikers and private security agents

• One of the most serious labor disputes in U.S. history

• Between Iron and Steel Workers and Carnegie Steel Company

• Carnegie won and the Iron and Steel Labor Union lost power and influence

The Aftermath• More powerful unions became

the more the company leaders refused to recognize them

• Employers forbade union meetings, fired union members, and forced new employees to sign “yellow-dog contracts” swearing they would not join a union

• Unions did emerge to protect workers but the powerful forces of industry prevented them from gaining real power to implement change