Transcript GildedRiseofBigBusiness

Gilded Age
• 1877-1900, Compromise 1877 to Turn of century, Teddy
Roosevelt becomes President
• Time of tremendous business growth and labor conflict
• Mark Twain coined the term
• Gilded= gold plated
• Age glittered with new technology, but at its core was
corruption and human suffering
• Growth of monopolies and trusts
• Labor strikes: Great RR, Haymarket, Pullman, &
Homestead
• New Stock immigrants from Eastern & Southern Europe
• Urbanization
• 2nd Industrial Revolution, (ROSE), Railroads, Oil, Steel, &
Electricity
What were the Causes of Rapid
Industrialization?
1. Steam power from 1st IR of the
1830s-1850s.
2. The Railroad fueled the growing US
economy:
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First big business in the US.
A magnet for financial investment.
The key to opening the West.
Aided the development of other
industries.
Causes of Rapid
Industrialization
3. Technological innovations.
* Bessemer Steel Process
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Puts air into iron to remove carbon to make steel
New Uses for Steel:
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Steel used in railroads, barbed wire, farm machines
Changes construction: Brooklyn Bridge; steel-framed
skyscrapers
* Refrigerated cars
America wasn’t discovered; it
was built
Iron & Steel Production
Thomas Alva Edison
“Wizard of Menlo Park”
The Light Bulb
The Phonograph (1877)
The Ediphone or Dictaphone
The Motion Picture Camera
Alexander Graham Bell
Telephone (1876)
Alternate Current
George Westinghouse
Alternate Current
Westinghouse Lamp
Advertisement
Causes of Rapid
Industrialization
4. Unskilled & semi-skilled
labor in abundance.
5. Abundant capital.
6. New, talented group of businessmen
[entrepreneurs] and advisors.
7. Market growing as US population increased.
8. Abundant natural resources.
9. Government Support
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tariffs
private property laws
railroad land grants
little governmental taxation of corporate
profits
• armed protection of companies with federal
troops
• Supreme Court rulings
Relative Share of World
Manufacturing
New Business Culture
1. Laissez Faire
 the ideology of the
Industrial Age.
* Individual as a moral and
economic ideal.
* Individuals should compete freely
in the marketplace.
* The market was not man-made
or invented, rather it was a
state of nature.
* No room for government in the
market!
2. Social Darwinism
 British economist.
 Advocate of
laissez-faire.
 Adapted Darwin’s
ideas from the
“Origin of Species”
to humans.
Herbert Spencer
 Notion of “Survival
of the Fittest.”
2. Social Darwinism in
America
$ Individuals must
have absolute
freedom to
struggle, succeed
or fail.
William Graham Sumner
Folkways (1906)
$ Therefore, state
intervention to
reward society and
the economy is
futile!
New Business Culture:
“The American Dream?”
3. Protestant (Puritan) “Work Ethic”
* Horatio Alger [100+ novels]
Is the idea of the “self-made man” a MYTH??
New Type of Business
Entities
1. Pool
1887  Interstate Commerce Act
 Interstate Commerce
Commission created.
2. Trust  John D.
Rockefeller
* Standard Oil Co.
Trust
Holding Company
Standard Oil Co.
2009 World Robber Baron List
Rank Name Citizenship Age Net Worth ($bil) Residence
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1 William Gates III United States 53 40.0 United States
2 Warren Buffett United States 78 37.0 United States
3 Carlos Slim Helu & family Mexico 69 35.0 Mexico
4 Lawrence Ellison United 64 22.5 United States
5 Ingvar Kamprad & family Sweden 83 22.0 Switzerland
6 Karl Albrecht Germany 89 21.5 Germany
7 Mukesh Ambani India 51 19.5 India
8 Lakshmi Mittal India 58 19.3 United Kingdom
9 Theo Albrecht Germany 87 18.8 Germany
10 Amancio Ortega Spain 73 18.3 Spain
11 Jim Walton United States 61 17.8 United States
12 Alice Walton United States 59 17.6 United States
13 Christy Walton & family United States 54 17.6 United States
14 S Robson Walton United States 65 17.6 United States
15 Bernard Arnault France 60 16.5 France
2.
New Type of Business
Entities
Trust:
* Horizontal Integration  John D.
Rockefeller, oil
* Vertical Integration:
A. Gustavus Swift  Meat-packing
B. Andrew Carnegie  U. S. Steel
C. James Duke  tobacco
New Type of Business Entities
Industrial Consolidation:
Iron & Steel Firms
New Financial
Businessman
The Broker:
* J. Pierpont Morgan
Wall Street – 1867 & 1900
The Reorganization of Work
Frederick W. Taylor
The Principles of Scientific Management (1911)
The Reorganization of Work
The Assembly Line
Robber Barons
or
Captains of
Industry?
Wealth Concentration Held by
Top 1% of Households
(Rockefeller at his height was worth 1.4 billion $, or 665
billion in today’s $, Gates worth 56 Billion)
% of Billionaires in 1900
% of Billionaires in 1918
William Vanderbilt
$ The public be
damned!
$ What do I care
about the law?
H’aint I got the
power?
Religion in the Era of Industrialization
$ Wealth no longer
looked upon as bad.
$ Viewed as a sign of
God’s approval, the
Protestant (Puritan)
Work Ethic
$ Christian duty to
accumulate wealth.
Russell H. Conwell
The Gospel of Wealth:
Andrew Carnegie
$ “On Wealth,” 1889
Andrew Carnegie article
$ “Inequality is inevitable
and good.
$ Wealthy should act as
“trustees” for their
“poorer brethren.” God
given responsibility
$ “The man who dies rich
dies disgraced.”
$ Philanthropy, Gave away
$350 Million
5 minute intro
• http://www.history.com/topics/andrewcarnegie/videos/the-men-who-built-americaandrew-carnegie
• http://www.history.com/shows/men-who-builtamerica/season-1/episode-3
• Carengie Episode 3
• Rockefeller Episode 1, 25 minutes
• Electricity Wars Episode 6
Philanthropy
1st
Carnegie
library
Regulating the Trusts
1877  Munn. v. Illinois: Upheld granger laws (made it
illegal for RR to fix prices by pools or rebates) for a
state to regulate business of a public nature
1886  Wabash V. Illinois: overturned Munn, states
could not regulate interstate commerce
1886  Interstate Commerce Act
-Response to Wabash, said RR rates must be
“reasonable and just”
-Set up Interstate Commerce commission to regulate
& prosecute RR’s
-Helped RR’s more, stabilized rates, curtail
destructive competition
Regulating Trusts
1890  Sherman Antitrust Act
* Made trusts illegal and other acts
of in “restraint of trade”
* Hard to obtain convictions
* First used against Labor Unions!
1895  US v. E. C. Knight Co.
Sugar company controlled 95% of
the market, yet was not ruled a
monopoly because it was
manufacturing, not commerce
U. S. Patents Granted
1790s  276 patents issued.
1990s  1,119,220 patents issued.