Big Business and Labor

Section 14-3pp. 447 – 455

January 13, 2010

Preview Questions

• How did Carnegie take control of the steel industry?

• How did entrepreneurs try to control competition?

• What were the two major types of unions?

Carnegie’s Innovations

• Industrial mogul who made his fortune in steel companies

Carnegie’s Innovations

• Vertical Integration: – Company buys out its suppliers– Control quality and cost of product– Created monopolies

• Horizontal Integration: – Company merges with similar companies– Created monopolies

Social Darwinism

• Theory that taught “only the strong survive”

• Promoted competition, hard work, and responsibility

• Used as justification for exploitation of workers and immense wealth

Fewer Control More

• Monopoly: – Complete control over an industry’s production,

quality, wages, and prices– Eliminated competition and increased profits

• Holding Company:– Corporation that buys out the stock of other

companies– Helped create monopolies – Ex: J.P. Morgan and U.S. Steel

Fewer Control More

• Trusts: – A large corporation made

up of many companies that receive dividends on profits earned by all the companies combines

– Helped to create monopolies

– Ex: John D. Rockefeller and Standard Oil

– “Robber Barons”

Fewer Control More

• Sherman Antitrust Act– Made it illegal to form trusts– Not effective

Labor Unions

• National Labor Union– Won 8 hour work days in

1868

• Knights of Labor – Open to all workers – Promoted negotiation

over strikes

Union Movements Diverge

• American Federation of Labor – Led by Samuel Gompers – Used strikes and collective bargaining

• Industrial Workers of the World – Based on the work of Eugene Debs – Made up of Socialists and political radicals – Wanted to include skilled and unskilled workers

Strikes Turn Violent

• Strike Breakthroughs – Great Strike of 1877 – President Hayes used

federal troops to break up the strike

– Haymarket Square Riot – Caused public opinion to turn against workers and strikes

– Pullman Strikes - After strikers turned violent, President Cleveland sent in troops.

Strikes Turn Violent

• Trends in Labor Organization – Women began to

organize – Employers refused to

recognize union leaders – “Yellow Dog” Contracts

forbid union membership

– Government break-ups of strikes