Late 19th Century

Vertical Integration

Controls all phases of development; less expensive to own than to rent

Horizontal Integration

Companies producing similar products merge; Gain control over suppliers by limiting competition through buy-out or control of the market

JP Morgan

American banker, financier, and businessmen.

• (1871) Created JP Morgan & CO: Invested in railroads, merged small railroad companies into one dominant one to crush competition

• Financed the largest transaction in railroad bonds of $40 million in bonds to finish the Northern PA Railroad

  • Able to get away with his practices with close relationship with President Mckinely, Roosevelt charged the company by violating the Sherman AntiTrust Act & split it up

• Bought Carnegie Steel (1901) to create U.S. Steel & controlled 60% of American steel production

JP Morgan (Impact)

• The Panic of 1907: Morgan & other bankers used their funds to deposit large sums of money in banks to pay off depositors and avoid bankruptcy

  • The Pujo Committee established the Federal Reserve in 1913 to not rely on one man

• JP Morgan merged with Chase Bank. → JP Morgan Chase & Co: $3 trillion in assets, the largest bank in the world by market capitalization

Cornelius Vanderbilt

• 1794-1877

• Used $100 loan from mom to create his own ferry service from sailboats, then reinvested his profits to buy more (“The Commodore”)

  • Govt gave him a contract to transport soldiers on his ships during the War of 1812

• 1820: Invested in Steamboats w/ cheap prices to bankrupt businesses & pay-offs to leave certain areas

  • Transported people to CA for the Gold Rush w/ new route by Nicaragua (faster/cheaper)

• About 60 yrs: Sold steamboats to invest in railroads → Reinvested profits to buy more railroads, creating largest railroad in the world

Vanderbilt (Impact)

• Established Vanderbilt Uni for $1 million, largest charitable gift in America (at the time)

  • William Vanderbilt gained 90% of wealth & continued his legacy

• “The public be damned” - He mainly worked his whole life for profits, not interests

Andrew Carnegie

• 1835-1919

• Scottish-American, moved to Pittsburg, PA (1848) where he got a job as a telegrapher (1850) → Thomas Scott hired him to work at the PA Railroad Company & mentored him to invest in stocks then left his job to invest in steel (1865)

  • 1873: New Bessemer Process allowed Carnegie to build America’s first steel plants → hired best engineers & architects + used latest tech (replaced workers’ w/ machines) → 1899: CARNEGIE STEEL

  • Manufactured more steel than all factories in G. Britain

Andrew Carnegie (Impact & Why)

• He wanted to dominate the steel indsutry and built a profitable business producing high-quality steel → used vertical integration to own the entire supply chain to give greater control over his business

• 1901: Sold to JP Morgan for $492 million → dedicated himself to fund the arts and learning (Carnegie Hall, NYC + Carnegie Mellon University, PA + 2,811 Libraries + Carnegie Music institute)

John D. RockeFeller

• When the oil rush was discovered in 1859, John assembled a team of chemists and engineers to refine oil and created Rockefeller Refinery (1863)

• 1865: Refinery bought off most competitors → developed Standard Oil → Convinced competitors for positions in company + lowered prices by 80% to buy them out

• 1880: Refined over 90% of America’s oil production + Negotiated with railroad friends for discounts on his oil, only if they sold his oil

• 1890: Govt passed Sherman AntiTrust Act, broke up Standard Oil Trust in 1911 into 43 companies (first US Company to break up)

Rockefeller (Impact & Why)

• To create a monopoly in the oil industry by elminating competition and control the market

• Donated over $500 million to the UC Chicago + Rockefeller Foundation → His practices established the Sherman AntiTrust Act + influenced the Clayton Anti-Trust Act

Sherman Anti-Trust Act

1890

• Illegal to form a trust that interfered with free trade between states or with other countries (not easy to prosecute companies that violated the act)

• Used more against labor unions than big businesses

Clayton Anti-Trust Act

1914

• Expands Sherman Act

• Outlaws price-fixing + Exempts unions from Sherman Act

The Haymarket Affair

May 4, 1886

• 3,000 workers gathered at Chicago’s Haymaket Square to protest police brutality & for eight-hour workdays

  • 6 workers were kiled at a plant the day before @ McCormick Reaper Works → someone tossed a bomb in the police line

• Police fired at workers, 7 officers and several workers killed → 3 speakers and 5 radicals were charged with inciting a riot

• Increased fear of anarchists and radicals that lead to the execution of 4 anarchist leaders → The Noble Knights of Labor was also falsely associated with the bombing and declined

Pullman Company Strike

May 11, 1894

• Pullman laid off 3,000 workers & refused to lower rents/store prices → 2,800 workers were cut wages

• American Railway Union began to boycott Pullman luxury car trains affecting over 27 states

  • Workers’ walked out of the company as Pullman fired most strikers

  • Disrupting mail delivery and commerce

• President Grover Cleveland sent federal troops to break the strike (July 3) that resulted in dozens of deaths & arrests

• President Cleveland signed a bill making Labor Day a national holiday + Debs arrested leading him to advocate for socialism & run for president

The Homestead Strike

Summer 1892 (5 months)

• HomeStead Works, Homestead, PA

  • Carnegie’s largest steel-mill → to keep profiting, he cut labor costs

  • Carnegie had H.C Frick to do his dirty work → demanded longer hours and reduced pay

• On July 6, 1892: Workers’ and the whole town attempt to block the entrance to not allow scab workers to replace them → H.C Frick hired the Pinkertons to protect them

  • Several killed on both sides

  • PA’s governor sends in 8,500 national guard troops to restore order and protect the plant

• Steel Unions lose power throughout the country → management refuse to recognize unions (Carnegie’s reputation tarnished)

Triangle Shirtwaist Fire

March 25, 1911

• A fire engulfs the factory in New York City (the worst industrial accident in the history of NY, at the time)

• Advertised as fireproof, known to develop shirtwaist clothing (8th, 9th, 10th) → mostly Italian and Jewish women and girls

• 4:40 PM - fire spreads through oil-soaked machines & piles of cloth → no sprinkler system, single fire escape collapsed, all doors locked to prevent theft, fire departments ladders only reached 6 floors

  • 146 women died (many jumped to death)

• Company’s owners Max Blanck and Issac Harris charged with manslaughter (not guilty)

• The American Society of Safety Professionals founded the same year to develop and install safe working practices!

The Johnstown Flood

May 31, 1889

• Heavy rains brought collapse to South Fork Dam on Little Conemaugh River released 14.5 million tons of water

  • The entire town was submerged, the worst disaster by dam failure in history

  • Flood carries huge debris & swallows the town in 10 minutes

• A group of investors turned the lake into a resort (1879) formed the South Fork Fishing and Hunting Club (modified the dam to meet the needs of the resort) → lead to the cause of the flood with insufficient repairs

• Clara Barton established the American Red Cross providing disaster relief for future disaster responses + helped survivors for five months by providing needs

Manufacturing and Industry

1882

• 675 workers killed in job accidents

• 20% boys & 10% girls under 15 were in the workforce

William “Boss” Tweed

1869 NYC (after election)

• American Politician → climbed the ranks of the Democratic Party of Tammany Hall

  • The Tweed Ring (his loyal group) : Manipulated elections, embezzled funds, and ensured lucrative contracts (stole from $20-$30 million)

  • Decisions made in the NYC City Hall were made of the Tweed Ring’s best interests, not the city

• Thomas Nast (political cartoonist) - Published in Harper’s Weekly depicted Tweed as corrupt → Journalism sparked

  • 1873: Tweed was arrested & died in prison 1878

• examples of investigative journalism