Economies of scale = the more you produce the less each next one costs – M&Ms
Limited Liability – stockholders only lose what they put in
Stability – death in corporation doesn’t affect the stockholders
Section 2-14
Section 2-15
Section 2-16
Andrew Carnegie
Lives the ultimate American Dream – immigrant to extremely rich
1872 – visits Great Britain and steals the Bessemer Process, quits his job in the railroad and starts U.S. Steel
Carnegie uses vertical integration to eliminate competition
Vertical Integration
Carnegie secures all phases of production to make sure he can produce the cheapest goods possible.
So he buys up coal mines, iron mines, railroad and shipping lines, and all the steel mills he can afford.
This way he can avoid the middle man and produce and sell the cheapest, highest quality steel in the world.
Success in Steel
By 1900 he earned $40 million in a year
He also produced more steel in his mills than all of Great Britain combined.
John D. Rockefeller
Founder of Standard Oil
Rockefeller used vertical integration – buys up oil fields, barrel making companies, pipelines, railroads, petroleum plants, refineries, and gas stations.
He also uses horizontal integration to destroy his competition
Horizontal Integration
Bribed railroad officials not to ship any other company’s oil.
Would set up gas stations across the street from existing ones – and because of vertical integration (he has cheaper gas) – he can undercut the other station’s prices and either buy them out or drive them out of business.
J.P. Morgan
Morgan is the first real monopoly player.
Morgan is a banker whose genius lies in merging companies together.
Convinces Carnegie to sell US Steel for $500 million (Carnegie becomes the richest man in the world). Then buys out the next 5 biggest companies also.
Morgan becomes a billionaire overnight.
Monopolies
What Morgan did was technically illegal.
The government did force the break-up of US Steel after +10 years.
Monopoly is when there is no competition – Morgan bought the competition out.
Democracy is competition – this ensures a cheaper, safer product. Ex > airplanes
Kellogg, Post and the Cereal Wars
Both invent and intend to sell cornflakes.
Kellogg invents promotions (advertising) and takes the early lead.
This advertising evolves into commercials etc…
Making both extremely successful and rich.
Isaac Singer
Singer Sewing Machines – not the first sewing machine – but the first with only and up and down needle.
This led to patent wars – everybody started to steal his invention – but the courts didn’t back him so he has to make money some other way.
Installment Plan
This is Singer’s way to make money.
Installment Plan = payoff over time
Singer also made stores, mechanics, and salespeople available for help – kind of the first people friendly warranty.
Singer becomes quite rich.
The Governments Response
Will be covered in more detail later.
Quickly though, the government saw that the American public was getting the short end of the stick in the business world and decides to take action.
This brings about the idea on the next page.
The Gilded Age
Gilded Age – coined by Mark Twain – means “Gold covered” but what it covers is rotten
Example – an apple with a worm
The U.S. looks good on the outside but the real story is rotten.
This is an extremely important idea that guides the U.S. for the next 30 years.
Section 2-18
Section 2-19
Section 2-17
Working Conditions
American History
Working Conditions
Labor – racism, sexism etc…
- lots of people are coming to the city to live and work
o small depression in late 1870’s-80’s
- lots of extra workers, unemployed, for factories = owners could cut corners
-Women went to work for ½ pay
- Children also went to work
Workday is usually 14 hours and at least 6 days a week
Jacob Riis, Upton Sinclair
Upton Sinclair “The Jungle” – meatpacking terrors
Jacob Riis “How the Other Half Lives” – photos of inner city terrors
Workplace has NONE OF THE FOLLOWING; Office of Housing and Urban Development, building codes, social services, child labor laws, 40 hr work week, unions, minimum wage, benefits, OSHA etc…
Company town
Especially with mining.
Company owns the town – monopoly over the workers
Workers paid in scrip (paper money good only at the company store)
No place for workers to go (no money, argue=fired etc…)
Knights of Labor
Started in 1869 – Uriah Stephens
1st Union, originally for only white males, however when they included all skilled workers (men, women, blacks, etc…) membership and power flourished
Great Upheaval - 1886
The Knights have successful strikes in ’77 ’84 and look to make their mark in ’86
Two chief outcomes of unemployment = crime, break-up of families
Theory – prohibit alcohol those things decrease. Alcohol is the downfall of society.
By 1900 avg. person consumed over 2 gallons of alcohol a year.
+50% of Chicago and Boston visited a bar at least once a day.
Anti-Saloon League and the Women’s Christian Temperance Union pushed for reform. (This is a male vs. female thing)
By 1917 ¾ of the population live in dry counties and 2/3 of states prohibited the manufacture and sale of alcohol.
18th Amendment - Prohibition
Passes in 1917 ratified by states in 1919
Saloons were the social center of town, this didn’t change.
Why?
Why? Answered.
Bootlegging, gambling, prostitution, and organized crime all increased due to prohibition.
Prostitution – social evil of the cities
Chicago had almost 15,000
Birth of the “red-light” district
Poverty causes prostitution
Movies
Movies were forced to clean up their act.
No kissing on TV till the 50’s, twin beds etc…
Women’s Suffrage
Suffrage = voting rights
Began in the west where women were seen as equals.
19th Amendment proposed in 1919, ratified in 1920.
Limits of Progressivism
The U.S. is still extremely racist. Help the poor usually only applied to help the white poor.
Eugenics – immigrants were biologically inferior.
Nativism – a preference for native born citizens.
Madison Grant wrote and popularized the idea of the “lesser breeds” are threatening to “mongolize” America. Very popular idea, convinced Margaret Sanger.
Jane Addams wasn’t quite convinced = Melting Pot = America. Education the only key to helping people.
Native Americans
Progressives supported the Dawes Act of 1887. This act was to help Native Americans become private land owners and end reservation life.
The act was a failure for Native Americans.
The next step was just as bad…assimilation – try to mold into a different culture.
Immigration
Split the progressives…to help or not. After all the immigrants were the ones causing the social problems. (drinking, gambling, gangs, political machines)
Americanization was the answer – viewed as similar to breaking a horse…painful but necessary
Progressivism in the States
Rural states felt like they couldn’t help reform.
Robert Lafollette Gov. of WI comes up with the “Wisconsin Idea” – regulate RR’s, control corruption, expand civil service, and a direct primary.
Also leads to the 17th Amendment – the direct election of Senators.
Progressivism goes to Washington
9/6/1901 – President McKinley was assassinated by Leon Czolgosz who was unemployed and upset.
The two bullets took 8 days to kill the President.
Teddy Roosevelt takes over, although a conservative he supports reform.
FYI – Lincoln 1865, Garfield 1881, McKinley 1901, TR 1912 – but he finished his speech.
Teddy Roosevelt
Wealthy family in NY.
Born very sick = became physically fit
Rodeo, judo, Mt. climber, hunter, explorer etc..
Rough Rider hero of the Spanish-American War
Named the White House, the first Prez. to ride in a car, fly, and be in a submarine.
Environmentalist
Trustbuster – “Speak softly and carry a big stick”
Teddy Bear
Square Deal
Regulate Big Business – not destroy it, just clean it up.
Government job is to mediate and find solutions
Anthracite Coal Strike – workers agreed with owners, owners change mind. TR leaks info to Wall St. that he’d have the army take over…owners caved right away.
Conservation
TR sets up National Parks – Yellowstone and many others.
This is mainly because of his love of nature and because of John Muir