two column notes chapter 5 2010-2011
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Corporations WHAT: business owned by many investors (stockholders) who buy shares of stock and risk only the
amount of their investment.
WHY:
Businesses are expensive to start and maintain!
Reduce the potential loss if a business fails!
TYPES BEFORE: Sole proprietorship, Partnership
Stock
WHAT: A share of ownership in a businessBUSINESS METHODS
Monopoly
Trusts
Cartels
Pool
Interlocking Directorates
MONOPOLY
One company controls an entire industry
TRUSTS
business organization meant to control act like a monopoly
One company controls the stock of a majority of other companies in the same industry
That one company then makes all decisions for that industry
CARTELS
A group of independent producers whose goal it is to fix prices, to limit supply and to limit
competition POOL hurt consumers!
An agreement to divide the business in a given area and share the profits
Rail lines would not waste money competing against one another so they could concentrate on other
areas
INTERLOCKING DIRECTORATES
Practice of members of corporate board of directors serving on the boards of multiple corporations.
Holding Company WHAT: a form of business which does not create anything itself
WHAT DOES IT DO: it owns stock of companies that do produce goods
EXAMPLE: GE OWNS - RCA, NBC, MSNBC, Universal Pictures and Studios
ROBBER BARONS? Built their fortunes by stealing from the public
Drained natural resources, Abused and mistreated workers
Rockefeller, Vanderbilt, Carnegie, etc
CAPTAINS OF INDUSTRY? Helped make the country better
Built businesses, Provided jobs, Founded museums and universities
Rockefeller, Vanderbilt, Carnegie, etc
BESSEMER Process:
a new process to make steel removed impurities from iron by shooting hot air through it!
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lighter, stronger, cheaper steel made mass production possible
Andrew Carnegie
CARNEGIE STEEL
Vertical or Horizontal?
Poor boy from Scotland, made a $1.20 a week
Largest steel maker, produced of nations steel, Company brought in $40 million a year, Carnegie
got $25 million
Business model: - Vertical consolidation
LATER LIFE:
became a philanthropist and gave millions of dollars away
Sold his company to J.P. Morgan in 1900 for $400 million
Gospel of Wealth
Carnegie Libraries (over 2,500)
Vertical consolidation/integration combined all phases of manufacturing a product from start to finish
mine the ore, ship the ore in his ships, deliver the ore on his railroads, turn the iron ore into steel
EXAMPLE Carnegie Steel
J. P. Morgan WHAT: wealthy Wall Street banker
saved federal government in 1895 by loaning the Treasury more than $60 million
U.S. Steel Corporation
Morgan purchased Andrew Carnegies steel company for nearly $400 million
used it to form the U.S. Steel Corporation in 1901.
First billion dollar corporation (1.4 billion)
John D. Rockefeller
STANDARD OIL
Vertical or Horizontal?
FORMED BY: John D. Rockefeller
WHAT: Trust
Rockefeller formed an oil trust when smaller oil companies turned over their stock to the board of
directors of Standard Oil
controlled the oil refinery business
Business Model:
Horizontal consolidation
one company allies itself with other companies in the same industry to control that industry
LATER LIFE:
Became a philanthropist
Horizontal consolidation one company allies itself with other companies in the same industry to control that industry
DUPONT CHEMICALS WHAT: Monopoly that controlledExplosives, Gun powder, Dynamite
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OTHER BUSINESS LEADERS??
Cyrus McCormick
George Pullman
Milton Hershey
Gustavus Swift/Philip Armour
Cyrus McCormick - mechanical reapers
George Pullman -designed Pullman sleeping car for r&r
Milton Hershey Chocolate, gave much to charities
Gustavus F. Swift and Philip Armour - meat packers
Working in the U.S.
Conditions?
STAT: 1900 average worker made 22 cents/hour and worked 59 hours a week!
PROBLEMS: Terrible conditions
long hours, low pay, dangerous working conditions, few safety mechanisms, no health care or
benefits
Tactics used against unions?
Scabs
Lockouts
Blacklists
Yellow dog contracts
Pinkertons
Court injunctions
strikebreakers/scabs (replacement workers)
lockout - (close the factory to stop organizing workers)
blacklists (lists of those who tried to organize so they wouldn't be hired)
yellow dog contracts (an agreement not to become join unions)
private guards - Pinkertons (think rent-a-cop) and state militia
court injunctions - (orders to end strikes)
Unions WHAT: organization of workers seeking to improve their wages, working conditions, and benefits.
Labor Unions
Knights of Labor
Haymarket Square Incident
American Federation of Labor
National Labor Union (1866) 1st attempt to organize all workers (skilled/unskilled), higher wages,
8 hour day
Knights of Labor (1869)
Led by Terence Powderly
Included African Americans and women
Used boycotts and arbitration (negotiating with help)
Haymarket Square Incident (1886) labor violence in Chicago over McCormick Harvester plant, a bomb killed 7 police officers
RESULT:
Knights of Labor blamed and lost membership American Federation of Labor (1886)-
Led by Samuel Gompers
skilled workers only
wanted higher wages and improved working conditions, used strikes, collective bargaining, and
closed shops (Businesses who could only employ unionized labor)
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Strikes - EXAMPLES:
Great Railroad Strike
Homestead Strike
Pullman Strike
Eugene V. Debs
Great Railroad Strike (1877)
caused by cut wages, shut down 2/3 of railroads, Rutherford B. Hayes sent in federal troops to end
the strike over 100 dead
Homestead Strike (1892)
Carnegie Steel plant near Pittsburgh
Henry Frick (manager) cut wages by 20 percent in 1892 Frick used lockout, Pinkertons, and scabs to break the strike, major setback for union movement
Pullman Strike (1894) - 1894
wage cut and firing of workers who attempted to bargain
workers went on strike,
railroad owners linked Pullman Palace cars to mail trains,
ended by a federal court injunction!
Eugene V. Debs - head of American Railway Union - imprisoned for 6 months, turned to socialism
RESULT - by 1900, only 3 percent of American workers belonged to unions!In re Debs (1895) WHAT: Supreme Court case that backed the use of court injunctions against strikes!
Other Unions - IWW IWW Industrial Workers of the World
Called the Wobblies
Goal - unite all workers (skilled/unskilled) in an industry - ONE BIG UNION
Women and unions
Mother Jones
WOMEN: 1/3 domestic servants, 1/3 teachers, nurses, sales clerks, 1/3 industrial workers
PROBLEM:
women paid less than of men
couldnt join unions!
Mother Jones:
Mary Harris Jones great speaker and organizer - the most dangerous woman in America
Impacts of Industrialization WHAT: standard of living rose, cities grew, agriculture declined
from independence to dependence (on wages)
lives dominated by factory whistle
women affected by new industry
new opportunities and discrimination
greater class division - rich get richer
Growth of the middle class
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