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Big Business & Labor

Big Business & Labor. How do the “Robber Barons” make their fortunes?. The Robber Barons. Businessmen and bankers who amassed huge personal fortunes, by using unfair business practices.

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Big Business & Labor

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  1. Big Business & Labor How do the “Robber Barons” make their fortunes?

  2. The Robber Barons • Businessmen and bankers who amassed huge personal fortunes, by using unfair business practices • They see themselves as “Captains of Industry” and justified their actions using Social Darwinism – survival of fittest! 2) JP Morgan- Banking/Steel 3) John Rockefeller - Oil 1) Andrew Carnegie - Steel

  3. Andrew Carnegie • Carnegie immigrates from Scotland in at age 12, becomes Clerk for the Superintendent the Pennsylvania Railroad by age 18 • Become Superintendent of RR at age 24, starts investing money in other companies (oil, metal, cables) • 1870: Buys many steel cos, combines them into Carnegie Steel • Sells Carnegie Steel to JP Morgan for HUGE profit & gives Morgan monopoly on steel (US Steel)

  4. Carnegie’s Business Strategy • Vertical Integration: Buy out suppliers of needed products and services so you control production top to bottom 2. Horizontal Integration: buy out competing producers so you are only company that offers that service 3. Pay workers low wages

  5. John Rockefeller’s Standard Oil Trust • Rockefeller’s Standard Oil one of the biggest & profitable cos. • Rockefeller’s tactics: 1. paid very low wages 2. lowered prices to force competition to sell 3. avoid monopoly laws by forming trusts • A trust is a group of people that buys a company. However, Rockefeller actually controlled the trust

  6. Government Reaction to “robber barons” -Dilemma: Govt wants to protect free market, but feared “trusts” are hurting competition -Congress passes Sherman Anti-trust Act, makes it illegal to form a trust that interfered with free trade/competition - Result: Nearly impossible to enforce

  7. Rise of Unions • Robber Barrons take advantage of millions of American workers: 1) 6-7 day weeks, 12+ hour days, no vacation/sick leave, low pay 2) Poor physical conditions: polluted and often dangerous 3) Use child labor because its cheaper! Discuss: Govt has no laws to help, what should you do? • Govt does nothing to help workers, so many form unions that use strikes and collective bargaining - Ex: AFL (craft unionism), CIO (industrial unionism), IWW (Socialists accepting all workers)

  8. Unions Fight Back 1. Great RR Strike of 1877 -80K strikers shut down most railroad traffic for week -When others join strike it becomes violent, Pres Hayes sends in army 2. Haymarket Riot, 1886 - 3,000 gather to protest police killing of a striker -Anarchist throws bomb into police line, killing 7 police, public turns against unions, equates them with violence

  9. 3. Homestead Strike, 1892 -President of Carnegie Steel Henry Frick announces wage cut - Workers strike, Frick hires strike breakers(“scabs”) and brings in the Pinkerton Detectives to protect the scabs -Pinkertons, strikers & townspeople clash, 12 die 4. Pullman Strike, 1894 • Pullman Rail announces wage & job cuts, so union strikes & shuts down freight delivery west of Michigan • Pullman hires strike breakers (scabs), violence ensues, union leader Eugene V. Debs sent to prison

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