Big Business History

Economic Panic

• In 1873, America started using the Gold Standard.

  • The gold standard means that for every dollar out in circulation, we have gold to back it up.

  • In 1973, we got off the Gold Standard. 

  • 100 years between the superpower era, didn’t matter what we use for economic principle. 

• Then, we switched to Basket Economy— where we buy currency from different countries (allies and enemies). 

  • Allows us to stabilize our economy

  • We can destroy the economy of others if they piss us off, vice versa.

Middle Class

• Middle class is the tax base for America. During this time frame it started to come together. 

Immigrants

• In Promontory Point, Utah, is where the railroads from the east and west meet.

• Mining — 1 in 30 would get injured, and 1 in 90 would die. 

• Italian Grandmas are the immigrant class that would have the most success.

  • They would make good food which was often sought after.

  • As a result: Saloons, hotels, and brothels end up being created, which all assisted in forming the Middle Class. 

Business Models:

Vertical Integration

• Company starts with an idea and controls the market idea from the beginning.

• Modern day example: Apple

  • Apple is known for its technology; phones, I pads, streaming services, etc.

  • Stores — Apple would actually sell the products to stores like Target, which would be cheaper. However, it is Target who is paying for the rest of the cost. 

  • Offsets losses to make more money somewhere else:

    • Foxconn was a business owned by Apple, and was exposed for having terrible working conditions, that even required suicide safety nets.

    • After the controversy, Apple cut them off. 

Andrew Carnegie— also used Vertical Integration

• Created the Carnegie Steel — a steel company.

• Works out deal with Cornelius Vanderbilt aka “King of the Rails”:

  • Steel was needed for railroads, so Carnegie would give Vanderbilt steel which in return would allow Carnegie to use the rail lines. 

• Consumer —-> Sells directly to consumers.

  • Main labor source was Irish Immigrants, and he can fire them if he wants to.

• Brutal man, turned gunmen on his workers —-> called out by daughter for being awful. 

  • Creates Gospel of Wealth as a result.

• Gospel Wealth:  A competition to give as much money as you can.

  • Rockefeller develops cultural centers

  • Carnegie builds university and public libraries. 

• Party Incident:

  • Andrew Carnegie and John D. Rockefeller were talking shit about J.P Morgan— who is the creator of Chase Bank.

  • J.P. Morgan wanted revenge. 

Horizontal Integration

• Comes up with a concept and absorbs everything around it — it’s pretty much a monopoly.

• Modern day example: Disney:

  • Disney owns many things and businesses including: Streaming services, merchandise, hotels, TV shows, etc. 

  • Disney would keep buying different businesses. 

John D. Rockefeller

• Created the Standard Oil company. 

  • It all started out when Rockefeller decided to steal and drill into his neighbor’s oil reserves (which was legal because the property line is up, not down) —---> became extremely wealthy. 

  • At one point owned 90% of the oil industry 

• Shady business practices:

  •  Rockefeller signs contracts with small companies, waits for them to go bankrupt, and then buys them. 

• Rockefeller would also find ways to separate different oil and create different oil types. 

• Rockefeller used rebates and kickbacks 

  • Rebates: Discounts, gives you SOME money back for something that you paid too much money for.  

    • Company makes you buy in bulk, thinking that you saved money— company gives you some money back. 

  • Kickbacks: Bribery; illegal exchange 

• Eventually gets exposed by Ida Tarbell

  • Changes names of Standard Oil as a result.

  • Esso —> Exxon —> Mobil —> Exxon Mobil 

Jay Gould— Number #1 Hated man and Stock Speculator:

• He was a stock speculator: guesses if the stock will go up or down.

• Did insider trading, and can bankrupt any business that he wants by saying “this is not a good financial investment.”

• Insider Trading: Tricking people to buy stocks by telling people that it will go up even though it may not, this would enhance a company. 

  • As a result, the SEC [Securities Exchange Committee] was created to monitor the market. 

  • 50 cent and Martha Stewart are examples of insider trading.

Laissez Faire: 

• During this time Laissez Faire was used, however, it failed due to the many shady business practices and monopolies. 

• Monopolies: Controlling everything in a specific market, able to determine the prices because there is NO competition. 

• Holding Company: Illegal when it reaches a certain. percentage. Owning lots of the shares/stocks of a company, to the point where you “hold” or “threaten” the company. 

• Trusts: Similar businesses band up together and decide the price and outcome. 

  • OPEC — Oil Producing Economic Countries— modern day example of Trusts.

  • Determines how much a barrel of oil goes up each day.

  • Since this is happening in the middle eastern, the SEC can’t do anything. 

• Pools: Combining stock shares to boot people out. 

  • J.P. Morgan got his rich friends to buy the stock shares and pool them together to kick out Carnegie. 

• Social Darwinism: Concept of survival of the fittest.

  • Leads to more competitions. 

Results of these: 

• The common people will suffer as a result because prices were fluctuating, and when people buy from companies that got exposed (Standard Oil) the prices go down. 

Business Acts:

• Sherman Antitrust Act of 1890:

  • Monopolies and artificial restrictions on businesses are illegal. 

  • It was a vague law because of artificial restrictions because nobody knows what that means.

  • However, it would stop businesses from abusing each other. 

• Interstate Commerce Act:

  • There is federal authority over interstate traffic on railroads.

    • Allows for equitable distribution between taxation 

  • Created because train with items went through different states — each state wanted to tax it. 

People

• Heinz = Pickle Company

• Singer =  Created typewriters

• Swift = Meat packaging

• Thomas Edison = “Wizard of Menlo Park” and created the lightbulb.

• Alexander Graham Bell = Created the telephone

•  Quakers = Oats— created product for sealing & closing grains. 

• Campbells = Known for their soups

  • Tomatoes were often acidic, and it would corrode metal cans.

  • As a result created a liner that would prevent the aluminum from being eaten. 

Business 

• Proprietorship = 1 person owns a business

  • If your business fails —> you lose all of your assets

• Partnership = 2 people or more own business together 

  • If your business fails —> you lose all of your assets

• Corporation 

  • Selling pieces of your business

  • Only lose what you put in

• LLC  [Limited Liability Company]:

  • In the case if something goes wrong, it separates business from personal life. 

  • Meaning that you won’t lose everything. 

Reforms: 

Women

• Florence Kelley: Creates the National Consumers League:

  • If you don’t agree with a business, just DON’T support/buy from them. 

• Elizabeth Cady Stanton & Susan B. Anthony:

  • Forms NAWSA [National American Woman Suffrage Association]

  • Suffrage Association that wanted ONLY white women to have voting rights.

  • Saying that this would take time in order for this to happen. 

• Alice Paul:

  • A radicalist that didn’t want to wait, wants to get her voting rights now. 

  • Creates an organization that protested in front of the White House. 

  • She and her group were arrested —> went on a hunger strike. 

    • It would be bad if that happened because the president’s reputation would go down. 

    • Force fed the women. 

  • Eventually women would get it in 1920, with the 19th Amendment. 

Children:

• In 1904, the National Labor Committee would address how children were being misused in labor, and see how they were treated.

• It wasn’t until 10 years later, in 1914,  where they established limitations on what work children can do.

  • Age, limitations, and working conditions.

• However, when a war broke out, children were required to make bullets.

Education:

• Science challenges religion. 

Social Gospel: 

• The point of society is to help out the poor and impoverish.

• Red Cross: Created by Clara Barton. 

• Salvation Army: Religious organization that take cares of the poor. 

• Hull House &  Settlement House:

  • Hull House — founded in Chicago

    • This was for battered women [widowed, abused, etc] and was incredibly successful.  

  • Settlement House – in NY:

    • This was meant to help the homeless, however, it failed. 

• Johnstown, PA, a town that Carnegie created:

  • Carnegie created a South Fork fishing and Hunting Company that was for the rich, and was for exotic animals.

  • The fishing location would need to be maintained, however, Carnegie refused to do so. 

    • The state usually maintains a town, however this town was owned by Carnegie. 

  • A 35’ and 40’ flood came in, killing 2,200 people, and there were 750 people missing. 

  • The Red Cross and Salvation Army came to assist.

  • State ended up being sue. 

Consumers

• Zoning Laws: Created to prevent businesses from doing whatever they want. 

• Department of Agriculture: 

• Pure Food and Drug Act: Created to prevent quackery.

  • Ends becoming the FDA— which determines the issues of organics, non gmos, etc. 

Government:

• Initiative — From the Bottom to the Government

• Referendum — From the Government to the People

  • Basically sends out a vote to the people to decide how to enact something

  • Politics wouldn’t be blamed for the results. 

• The 17th Amendment was created, allowing for direct primaries.

  • Direct primaries = Narrowing down the candidates list. 

Workers:

• Muller vs Oregon:

  • Court case that established the  amount of working hours for women.

  •  8 hours.

• Workman’s Compensation:

  • If you get hurt on the job, you are compensated. 

  • Each part of your body is worth something.

Business:

• 16th Amendment: Allows government to collect income tax.