History 7.5-7.6 Review

History 7.5-7.6 Review - Industrialization, Big Business, and Unions; Rockefeller and Carnegie

Blacklist

Fired workers who tried to strike or unionize and was used by companies to not hire them

Monopoly

Total control of a type of industry by one person or one company

Horizontal Integration

Ownership of firms in the same industry into one corporation which was used Rockefeller

Vertical Integration

Ownership of all the different businesses that a company depended on for operation which was used by Carnegie

Pools

When multiple people put their money together for a cause or company

Closed Shop

An agreement in which a company agrees to hire only union members

Operating and Fixed costs

Costs to run a company

Entrepreneur

One who organizes, manages, and assumes the risks of a business or enterprise

Boycott

Unions used this to try to get better conditions and wages

Corporation

An organization that is authorized by law to carry on an activity but treated as though it were a single person

Trust

A combination of firms or corporations formed by a legal agreement, especially to reduce competition

Laissez Faire

Economic philosophy that government should interfere as little as possible in a nation's economy

Gross National Product (GNP)

The total value of goods and services produced by a country during a year

Economies of Scale

The reduction in the cost of a good brought about by increased production at a given facility

Consumer

A person who buys what is produced by an economy

Holding Company

A company whose primary business is owning a controlling share of stock in other companies

Investor

One who puts money into a company in order to gain a future financial reward

Land Grant

A grant of land by the federal government, especially for roads, railroads, or agricultural purposes

Deflation

A decline in the volume of available money or credit that results in lower prices, and therefore increases the buying power of money

Industrial Union

An organization of common laborers and craft workers in a particular industry

Lockout

A company strategy to fight union demands by refusing to allow employees to enter its facilities to work

Injunction

A court order whereby one is required to do or to refrain from doing a specific act

Marxism

• Karl Marx argued that the basic force shaping capitalist society was the class struggle between workers and owners.

• He believed that workers would one day revolt, seize control of factories, and overthrow the government, and eventually a society without classes would develop.

• While many labor supporters agreed with Marx, a few supported anarchism - the belief that society does not need any government. 

• In the late 1800s, anarchists were prominent in causing Chaos in Europe and coincided with more European immigrants coming to the US

• People began to associate immigrant workers and unions with radical ideas.

• These fears often led officials to use the courts, the police, and the army to end strikes and break unions.

Immigration

• People arrived from many European countries and China to the US

• Between 1870 - 1910 more than 17 million immigrants arrived

• This helped contribute to an increased work force which helped during industrialization

• Scott Carnegie was a famous immigrant at the time

Railroad Building

• The construction of the transcontinental railroad encouraged faster settlement of the West. It allowed for increased trade.

• Railroads stimulated growth by spending money on steel, coal, timer, and other materials related to building the rails

• Railroads led congress to develop time zones to allow for safety and accuracy of trains. We have 4 time zones in the U.S.

Robber Barons

• Building the rails was an expensive project. As an incentive, the federal government often used land grants to railroad companies. The more track laid, the more land the company received. This resulted in miles of extra railes built so the rail owners would receive more government land.

• Jay Gould became the most infamous “robber baron” for his use of bribery, cheating, and manipulating stocks to gain his fortunes.

Great Northern Railroad

• James J. Hill was not a “robber baron”

• He built the Great Northern Railroad from Wisconsin and Minnesota in the East to Washington in the West

• He offered low fares to people homesteading close to his route. He also sold many homesteads to Norwegian and Swedish immigrants.

• The only transcontinental railroad that was not eventually forced into bankruptcy.

Haymarket Riot

• Supporters of the 8 hour work day called for a nationwide strike on May 1st. Knights of Labor organized over 70,000 workers to go on strike in Chicago

• May 3rd - Police tried to stop a fight - violence began and police fired on the strikers, killing 4.

• Local anarchists organized a meeting in Haymarket Square to protest the shooting. 3,000 people came to hear the speeches and police were there to keep order. Someone threw a bomb, killing a police officer and wounding others. 100 people were injured. 8 anarchists were arrested, 7 were German immigrants. One was a member of the Knights of Labor, which ruined their reputation.

Pullman Strike

• Led by Eugene V. Debs: American Railway Union - this industrial union also united the Pullman car workers.

• When the company slashed wages and fired workers, workers had a hard time paying rent and buying goods at the company store. They went on strike as a result.

• This boycott threatened the economy of the U.S. To end the strike, railroad managers attached the mail to the Pullman cars, therefore, forcing workers to deliver the mail because failure to do so would be in violation of federal law

Goals of American Federation of Labor

• Focus: Wages, hours, and working conditions

• 3 Main Goals: Companies agree to collective bargaining, pushed for companies only hiring union workers (“closed shop”) and the use of an 8 hour work day

Goals of Knights of Labor

• They called for an eight-hour workday, equal pay for women, no child labor, and worker-owned factories.

Women’s Work

• Made up 18 percent of the workforce but only one third were industrial workers which were mostly food processing plants or the garment industry

• Women were mostly not in Unions due to discrimination

• Mary Harris Jones was a famous labor leader for the Knights of Labor and was known for her public speaking abilities

• A separate union called the Women's Trade Union League (WTUL) which pushed for an 8 hour workday, minimum wage, end to evening work for women, and an end to child labor

Women's Trade Union League (WTUL)

Pushed for an 8 hour workday, minimum wage, end to evening work for women, and an end to child labor.

Pacific Railway Act

Signed into law by Lincoln in 1862 to construct a transcontinental railroad by Union Pacific and Central Pacific.

Union Pacific

• Started in Nebraska and moved west under the leadership of Grenville Dodge.

• Blizzards, extreme heat, and Native Americans were all concerns of the Union Pacific.

• It employed 10,000 workers-veterans, Irish immigrants, miners, ex-cons.

Collective Bargaining

Negotiation of wages and other conditions of employment by an organized body of employees.

Central Pacific

• Under the direction of the “Big Four” this rail began in CA and worked castward to meet the Union Pacific.

• Over 10,000 immigrants from China worked on this railroad for very little pay.

Knights of Labor

• Took a different approach to labor issues. 

• Its leader, Terence Powderly, used boycotts and arbitration, in which a third party helps workers and employers reach an agreement. 

• The Knights welcomed women and African Americans. 

• They called for an eight-hour workday, equal pay for women, no child labor, and worker-owned factories.

• Reputation ruined after Haymarket Riot

Successes of Industrialization

• Longer lifespans and better living conditions

• Faster trade and settlement, Great Northern Railroad, Grand Central Station

• Inventions like A/C, refrigerators, canned food, communication devices; leisure activities and department stores were developments of the time

• Discovery of vast natural resources like iron, coal, copper, timber, limestone, and petroleum

John D Rockefeller

• Rockefeller used horizontal integration to put his competitors out of business. 

• Rockefeller’s business was the refinery of oil. As he built his empire, Standard Oil, he started to buy out his smaller competitors. 

• Eventually, he controlled over 80% of the oil refining industry and his company became a monopoly.

Samuel Gompers

• Leader of the AFL that focused on the needs of skilled workers, including wages, hours, and working conditions.

• It became the biggest union in the U.S. by 1900, but represented less than 15 percent of non farm workers

• It also discriminated against African Americans and women and mostly consisted of White men

Cornelius Vanderbilt

An industrialist who consolidated smaller railroads and built the Grand Central Terminal in NYC.

Credit Mobilier

• Credit Mobilier was a construction company set up by stockholders of the Union Pacific Railway (some of these stockholders were members of Congress - creating a conflict of interest).

• Investors representing both the construction company, Credit Mobilier, and the Pacific Railroad signed contracts with themselves and purposely overcharged the railroads. 

• This allowed the investors to make millions of dollars, while causing the railroad to lose a lot of money. Then many congress members bought shares of the railroad at reduced prices.

JP Morgan

An investment banker who bought Carnegie Steel and named it US Steel, creating the first billion-dollar business.

Natural resources

Vast resources like iron, coal, copper, timber, limestone, and petroleum discovered during industrialization.

Effects of Marxism

Rise of Anarchists in Europe Coincided with more European immigrants and led to distrust of them.

Andrew Carnegie

• Carnegie is a “rags to riches” story. He came to the U.S. as a poor child and created an empire of wealth.

• Carnegie knew he could make a lot of money in building a company that served the railroad industry. He produced steel cheaply and efficiently using the Bessemer process.

• He used the process of vertical integration. This allowed him to control production and efficiency while allowing his company to expand while smaller companies struggled.