APK What was the cultural impact of the Dawes Act (1887)? Name an economic impact of the completion of the transcontinental railroad? Now name a cultural impact? What was the significance of one of the inventions that you learned about on Friday?
The Gilded Age Objective: Analyze economic issues • Industrialization • Growth of Labor Unions • Rise of Entrepreneurship • Free Enterprise • Pros & Cons of Big Business
THE GILDED AGE • A time from 1865 to 1900 when immense wealth was held by a few individuals who lived extravagant and lavish lifestyles. • During the Gilded Age 99% of the wealth was controlled by 1% of the population. • Characterized by disparity of wealth & the struggles of the “have nots”
Captains of Industry or Robber Barons? Significant individuals, such as, Carnegie, Rockefeller, Morgan & Vanderbilt, were viewed as either… Captains of IndustryRobber Barons Successful Entrepreneurs Ruthless Tactics Masters of Free Enterprise Destroyed Competition Advanced Society Low wages to employees Philanthropist Greedy
Captains of Industry • Andrew Carnegie – Steel • Cornelius Vanderbilt – Railroads • JP Morgan – Banking industry • Rockefeller – Oil • These men are considered “Captains of Industry” by some because they were successful leaders of the American economy.
ROBBER BARONS • Undersold competition then raised prices. • They drove smaller companies out of business and eliminated competition. • They could set their own prices. • Low wages and unsafe work conditions for employees.
Monopoly • Complete control over an industry. • A.K.A. a Trust. • Caused by reduction of competition & mergers. • PROBLEM: High prices & limited choices for consumers.
The Business of America • Free Enterprise: System in which individuals are free to produce and sell whatever they wish; they are also free to buy and use whatever they can afford. Individuals make their own economic decisions.
Free Enterprise System • Entrepreneurs • Start businesses & assume risks. • Encouraged by the incentive of PROFIT. • Develop new industries that impact our country. • Contributed to America’s economic growth and transformation.
The Business of America • Laissez-faire – The theory that government should not interfere in the operation of the free market. • Many believed the economy worked best when it was not burdened with government regulations. • The government will eventually begin to regulate businesses. Why do you think that is???
ANDREW CARNEGIE • One of the first industrial moguls • Entered the steel industry in 1873 • By 1899, the Carnegie Steel Company manufactured more steel than all the factories in Great Britain combined • Used the Bessemer process
CARNEGIE’S VERTICAL INTEGRATION • He bought out his suppliers (coal fields, iron mines, ore freighters, and rail lines) in order to control materials and transportation. • Reduced competition & expansion of his company. • What does reduced competition lead to?
HORIZONTAL INTEGRATION • Additionally, Carnegie bought up the competition through friendly and hostile takeovers • This is known as Horizontal Integration • Again…competition is reduced…and Carnegie could set his own prices. MERGERS
Employee Relations?? In order to maximize profits… Carnegie paid his workers low wages and forced them to work 12 hour shifts. He crushed attempts by workers to form labor unions.
Philanthropy • Despite being labeled as greedy barons, rich industrialists did have a generous side • When very rich people give away lots of money it is called “Philanthropy” • Carnegie built libraries and had a love for music…thus Carnegie Hall. • Rockefeller: Churches, University of Chicago, American Red Cross. • Vanderbilt built schools ROCKEFELLER CHAPEL – UNIVERSITY OF CHICAGO
GOSPEL OF WEALTH Critics attacked Carnegie for not paying his workers more, while using his wealth to build libraries and universities. Carnegie published an article called “the Gospel of Wealth” in which he said that wealth is a sign of God's approval but that a millionaire should be a “trustee for his poorer brethren . . . doing for them better than they would or could for themselves.” Carnegie also believed the wealthy should donate their money to causes that they believed in. Carnegie gave away $350 million during his lifetime.
JOHN D ROCKEFELLER • In 1870, Rockefeller Standard Oil Company owned 2% of the country’s crude oil • By 1880 – it controlled 90% of U.S. crude oil • Undersold his competition and then raised prices once they went out of business. • What is this an example of? CHICAGO’S STANDARD OIL BUILDING IS ONE OF THE WORLD’S TALLEST
Concept Question… Do you think the Gilded Age entrepreneurs were Captains of Industry or Robber Barons? Justify your response…
INTERSTATE COMMERCE ACT • In 1887, Congress passed the Interstate Commerce Act. This law prohibited unfair practices by railroads. • This was the first time that congress stepped in to regulate business in America. 1887 – CONGRESS PASSED THE ICA
SHERMAN ANTI-TRUST ACT • Sherman Anti-Trust Act (1890) Made it illegal to form a monopoly (Trust) • This is another example of government regulation of business.
Concept Question… Do you believe it was the correct move for the government to step in and regulate business? Or should they have continued with a Laissez Faire approach?
A CHANGE IS COMING • On average, employees worked 12-14 hours a day, 6-7 days a week. • No vacations, no sick leave, & no compensation for injuries. • Injuries were common – In 1882, an average of 675 workers were killed PER WEEKon the job • Average pay was between $3 and $12 per week. • Women and children were often paid less.
LABOR UNIONS EMERGE • As conditions for laborers worsened, workers realized they needed to organize • The Knights of Labor formed in 1869. They pushed for an 8 hr workday, higher wages and safety codes. They were opposed to child labor and wanted equal pay for women.
CRAFT UNIONS • Craft Unions were unions of workers in a skilled trade • Samuel Gompers led the Cigar Makers’ International Union to join with other craft unions in 1886 • Gompers became president of the American Federation of Labor (AFL) • He focused on collective bargaining to improve conditions, wages and hours
THE PUBLIC AND UNIONS • Many Americans were against unions because they feared workers wage demands would lead to higher prices. • Union ideas were often associated with violence and radical ideas.
THE HAYMARKET AFFAIR • Labor leaders continued to push for change – and on May 4, 1886 3,000 people gathered at Chicago’s Haymarket Square to protest police treatment of striking workers • A bomb exploded near the police line – killing 7 cops and several workers • Radicals were rounded up and executed for the crime
THE HOMESTEAD STRIKE • Even Andrew Carnegie could not escape a workers strike • Conditions and wages were not satisfactory in his Steel plant in Pennsylvania and workers struck in 1892 • Carnegie hired Pinkerton Detectives to guard the plant and allow scabs to work • Detectives and strikers clashed – 3 detectives and 9 strikers died • The National guard restored order – workers returned to work
THE PULLMAN STRIKE • After the Pullman Company laid off thousands of workers and cut wages, the workers went on strike in the spring of 1894 • Pullman hired scabs and fired the strikers – Federal troops were brought in