Rise of Industrial Giants: Carnegie and Rockefeller

1. Get your work out! • Vocabulary 233 and 240 • First Fives!

2. DWU #1 • What is monopoly? When you play monopoly, what is the goal? • Should any one company have the right to control an entire industry? Why?

3. Big Business and Labor

4. Richest Man in the World: Andrew Carnegie

5. Andrew Carnegie • Born in Scotland to poor parents • Came to America at 12 years old • Rose quickly up the ranks at a railroad • Buys railroad stock • Makes a small fortune

6. Carnegie • Leaves the railroad • Enters the steel business (1873) • (1899) Carnegie Steel produces more steel than Great Britain. • Largest steel company in the world

7. Carnegie’s Business Strategy • Make better products cheaply • New machinery • New accounting methods • Track costs better • Offers stock to good workers • Makes company success help everybody

8. Vertical Integration • Control as much of steel process as possible • Vertical Integration: • Buy out suppliers (iron mines/coal fields/railroads) • Control every aspect of production • You don’t have to pay any other company

9. Horizontal Integration • Carnegie wants to eliminate competition • Horizontal Integration: • Buying out your competing companies • Merging them into your own • Carnegie almost controls the entire American steel industry

10. Social Darwinism • Darwin: Natural selection weeds out the weakest of the species • Only the strong survive • Social Darwinism (Herbert Spencer): • Market should not be regulated • The best businesspeople win out • Losers fade away

11. Growth and Consolidation • Others sought to merge with big boys • Get bought out by a big company • Create a monopoly • You’re the only supplier in any area

12. John D. Rockefeller

13. John D. Rockefeller • Rockefeller owns Standard Oil • Joined with competing companies • Trusts • People turn their stock over to trustees • Different companies run as one big company • Profits are shared • Rockefeller uses trusts to control oil

14. Government fights trusts • (1890) Sherman Antitrust Act • Illegal to form a trust that stops free trade • Hard to prosecute • Most cases thrown out

15. Labor Unions Emerge • Industrial work is brutal • Long hours, unsafe conditions, low wages • 1882: Nearly 700 killed per week • People worked 12-14 hours/day • Sweatshops pay very little

16. Early Labor • Skilled labor had unionized long ago • By late 1800’s unions become larger • 1866: National Labor Union • 1869 Knights of Labor

17. Craft Unionism • Craft Unionism • Skilled workers • Samuel Gompers leads skilled labor • Cigar makers join other skilled laborers • Create American Federation of Labor

18. Gompers leads the AFL • AFL uses strikes • Strikes lead to higher wages, shorter work weeks

19. Industrial Unionism • Some leaders think unions should be skilled and unskilled labor in an industry • Eugene Debs - creates American Railway Union (ARU) • Lead the Pullman Strike • Union becomes huge, but fades • Leader of the Socialist Party of America

20. Labor turns to Socialism • Based on gov’t control of economy • Equal distribution of wealth • German philosopher Karl Marx • Capitalism will be overthrown • Communism will follow

21. Karl Marx

22. Strikes Turn Violent • 1877: Workers on B&O Railroad strike • Federal troops intervene • Haymarket Affair (1886) • 3,000 protest police brutality • Bomb tossed at police • Police open fire • Eight convicted, four executed