Rise of American Business 1865-1920

• Single owner of a business--Weaknesses 1. Inability to raise large sums of $ 1. Single proprietor 2. Unlimited financial responsibility of the owners 3. Disruption of business on death of owner

Securing Capital: Selling of Stocks and Bonds 2. Corporation Limited Liability: liability ends w/resources of business Perpetual Life: Business continues beyond owners death

Following the Civil War Business combined businesses to control: prices, 3. Monopoly production, and sales territory to raise prices and profits.

Companies formed a trust pool. Stockholders received trust certificates. The 4. Trust board of trustees of the trust effectively ran all the corps to control pricing.

5. Pool A secret agreement between companies to set prices output and wages.

• Abuses 1. High Rates 6. Growth of the Railroad 2. Discrimination among customers 3. Political corruption

Forms the Standard Oil Company of Ohio. Accumulated cash, fought price wars, 7. John D. Rockefeller: oil received secret rebates on RR, and drove out competitors and bought them out. By 1879 controlled over 90% of oil refineries.

Andrew Carnegie ex Railroad executive: Noted need for steel rails in railroads, used Bessemer process to make steel more effectively. By 1900 Owned 25% of 8. Andrew Carnegie: steel steel business. Bought out by J. Pierpont Morgan who created US Steel Company (60% of business).

Henry Ford using the Assembly Line (system of mass manufacture) revolutionizes the US. 9. Henry Ford: auto  Mass industrialization begins  Creates the suburbs  Allows travel and recreation

Government does not interfere in business. US official policy through most of the 19th 10.Laissez-faire century until the populist and progressive movements.

Made illegal trusts and other forms of restraint of trade. This law languished w/little enforcement 11.Sherman Antitrust Act, Supreme court favored big business Laissez Faire was the philosophy of the day Vague wording 1869: Admitted all skilled and unskilled workers Urged an 8 hour workday, abolition of child labor, and safer conditions 12.Knights of Labor Decline of the Knights: Unsuccessful strikes, Tensions between skilled and unskilled workers, Haymarket Affair of 1886 (riot blamed on union) AFL founded by Samuel Gompers 1881 Shunned political crusades, emphasized “bread and butter” unionism 13.AFL Mostly skilled workers, made it more effective to strike Created Craft unions (workers of same type all together) 1935: Founded by AFL leaders (John L Lewis) who felt non-skilled workers needed representation. Made up of unskilled and semi-skilled laborers Used the 14.CIO Sit-Down Strike Pushed out of the AFL, became its own union w/ 5M members by 1950’s 1955: They merge to form the AFL-CIO. About 100 unions w/ 13.5 M workers

1892: Workers at Carnegie Steel works had wages cut. They fought w/300 Pinkerton 15.Homestead Steel Strike detectives (hired thugs). PA national guard called in. Union ran out of resources and the strike ended.

Pullman Strike 1894: Pay cut of 40% (w/out rent reduction at company controlled town). American Railway Union led by Eugene V. Debs refused to handle Pullman 16.Pullman Strike cars to support the strike. Attorney Gen Richard Olney (former railroad lawyer) put an injunction on strike that was ignored. Debs went to jail and Pres. Cleveland sent in federal troops.

1902 UMW (United Mine Workers) struck for Union recognition, more pay and shorter hours. President Roosevelt threatens to seize the mine, Gov arbitrates and 17.Anthracite Strike gives higher wages, but no union recognition.

 Strike  Picketing 18.Tools of Labor  Boycott  Publicity  Law (contract)

 Strikebreakers (Scabs): hire workers to replace strikers  Financial Resources: Corporations have deep pockets 19.Tools of Management  Lockout: Keep workers from their jobs until they break the union  Injunction: Court order to stop the strike.

Prevented special rates or rebates Prevented pooling 20.Interstate Commerce Act, Rates needed to be “reasonable and just.” 1887 Created federal commission ICC (Interstate Commerce Commission). 1st step toward regulating monopolies

The Patrons of Husbandry (1867) Protest against railroads and storage fees (elevators) 21.Grange Movement Form Cooperatives to run their own elevators. Granger Laws-passed by state legislatures

Application of Darwin’s (misquoted) idea of the survival of the fittest. Strongest 22.Social Darwinism businesses and people will survive and the weakest will die. Late 19th century concept.

• Problems of Urbanization 1. Slums (ghettoes) 23.Urbanization 2. Increased crime 3. Disease 4. Poor public sanitation 5. Inadequate services (fire, police, water, garbage)

Laissez Faire Gov policy leads to underage workers and women being abused in 24.Child Labor factory systems. Reform movements finally end this with the Progressive movement.