The Growth of Big Business

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  • The Growth of Big Business
    • Reasons for support
      • Companies used new technologies to turn raw materials into goods
      • Employed growing workforce to fill extensive jobs trusts created
      • Philanthropy
        • Carnegie invested in a New York music hall (opened in 1891) and later named Carnegie Hall
        • Rockefeller founded Rockefeller Foundation in 1913
        • Carnegie gave millions to good causes (e.g. hospitals, libraries, universities)
      • Robber barons able to stabilise the market for goods
        • E.g. before Rockefeller, companies could never rely on a consistent price for raw materials
      • Robber barons able to invest greatly for development of new techniques and methods of production - made America highly competitive
      • Industrial workers saw wages rise from $532 to $687 pa in fifteen years
    • Reasons for opposition
      • Exploitation of workers
        • Wages kept low
        • Dangerous working conditions
        • Average working day was 9.5 hours a day, six days a week
        • American Federation of Labour (AFL) membership rose from 0.5 million (1897) to 4 million in (1920)
      • Too much political influence
        • The Homestead Strike (1982)
          • Workers striking due to wage cuts and destruction of trade union
          • Frick (general manager of Carnegie's Homestead plant) brought in Pinkerton Detective Agency's private army
          • Gunfire exchanged for 14 hours and three detectives and nine workers left dead or dying
          • Government sided with Carnegie - strike leaders charged with murder and 160 others with lesser crimes but none were convicted
      • Ruthlessness towards competitiors
        • By 1904, top 4% American companies owned 57% total US industry
        • 4,000 small companies taken over by corporations (1897 - 1904)
        • Carnegie built steel mills and factories around Pittsburgh
        • Economic depression in 1893 led to many bankruptcies
        • Ruthlessly drove competitors out of business
        • Prices kept artificially high through use of tariffs
          • Farmers faced higher rail road prices than major companies
  • Reasons for opposition
    • Exploitation of workers
      • Wages kept low
      • Dangerous working conditions
      • Average working day was 9.5 hours a day, six days a week
      • American Federation of Labour (AFL) membership rose from 0.5 million (1897) to 4 million in (1920)
    • Too much political influence
      • The Homestead Strike (1982)
        • Workers striking due to wage cuts and destruction of trade union
        • Frick (general manager of Carnegie's Homestead plant) brought in Pinkerton Detective Agency's private army
        • Gunfire exchanged for 14 hours and three detectives and nine workers left dead or dying
        • Government sided with Carnegie - strike leaders charged with murder and 160 others with lesser crimes but none were convicted
    • Ruthlessness towards competitiors
      • By 1904, top 4% American companies owned 57% total US industry
      • 4,000 small companies taken over by corporations (1897 - 1904)
      • Carnegie built steel mills and factories around Pittsburgh
      • Economic depression in 1893 led to many bankruptcies
      • Ruthlessly drove competitors out of business
      • Prices kept artificially high through use of tariffs
        • Farmers faced higher rail road prices than major companies
  • Developed idea of 'vertical integration' - his companies control whole process of creating steel

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