The Rise of Big Business

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US as a consumer society

  • Major shift from units of production to consumerism.
  • Was due to the rise of mass-production techniques, industrialisation, etc.
  • Sears and Roebuck - first catalogue.
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Importance of steel/rail road/oil

  • All benefited and complemented each other.
  • Allowed for the growth of monopolies, and thus the super-rich.
  • Steel
    • Ship building, factories, trains, etc.
  • Rail road
    • Transportation links across America for trade, passengers, etc.
  • Oil
    • Abundances of it - allowed machinery to work efficiently. (Mechanisation).
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The 'Gilded Age'

  • Mark Twain.
  • The period was glittering on the surface, but decrepid and corrupt underneath.
  • Shady business practices, scandal-plagued politics, and vulgar displays = capitalism.
  • Rich showed off their wealth.
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Fast industrialisation

  • Improved production methods.
    • Machinery.
    • Each labourer operated different machines - division of labour.
  • Development of new products.
    • Electric light (1879), petrol-engine car (1885).
  • Natural resources.
    • Timber, water, oil, and steel.
  • Growing population.
    • 25 million immigrants between 1870 and 1916.
  • Distribution and communication.
    • American railway became nationwide transport network - 320,000km in 1900.
    • World's first transcontinental railway - coast to coast.
  • Railways for economic growth.
    • Supplies and products.
  • Investment and banking.
    • Investments and bonds.
    • Banks sprung up everywhere.
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Panic of 1893

  • Serious economic depression.
  • Overbuilding and shaky financing of railroads, resulting in a series of bank failures.
  • 500 banks were closed.
  • 15,000 businesses failed.
  • Numerous farms ceased operation.
  • Estimated peak of 18 million unemployed.
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Examples of businessmen - 1

  • John D. Rockefeller
    • Standard Oil Company.
    • Controlled 88% of oil refineries.
    • Ruthlessly eliminated competitors, used fixed prices, great negotiator, and studied manufacturing processes very well.
    • 1916 - world's first billionaire.
    • Gave away $530 million - black educational institutes, medicine, and Baptist Church.
  • Andrew Carnegie
    • Steel industry.
    • Gave away $350 million - "the man who dies rich dies disgraced".
    • Sold steel empire to J. P. Morgan for $480 million.
    • Criticised because he preached philanthropy, but achieved his wealth through the destruction of the lives of competition and through harsh working conditions.
  • Henry Ford
    • Model T Ford Car
    • Perfected the assembly line - employed unskilled workers.
    • 1924 - produced a car every 24 seconds.
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Examples of businessmen - 2

  • J. P. Morgan
    • Inherited $12 million.
    • Increased wealth through the creation of large companies and complicated finance deals.
    • The US Steel Corporation - first billion dollar company.
  • William Randolph Hearst
    • American newspaper publisher who built the nation's largest newspaper chain.
    • Published stories of municipal and financial corruption.
    • Yellow Press - presents little or no legitimate well-researched news and instead uses eye-catching headlines to sell more newspapers.
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Robber barons

  • Derogatory term applied to some wealthy and powerful businessmen (24 of them).
  • Businessmen who used what were considered to be exploitative practices to amass their wealth.
  • Carnegie, Morgan, and Rockefeller are among the list.
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Robber barons

  • Derogatory term applied to some wealthy and powerful businessmen (24 of them).
  • Businessmen who used what were considered to be exploitative practices to amass their wealth.
  • Carnegie, Morgan, and Rockefeller are among the list.
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  • Progressive 'insurgent' Republicans.
  • Campaigned for rights of ordinary people and against big business.
  • Example: Ted Roosevelt - Bull Mouse Progressive Party (running against Taft).
  • Believed in government intervention (against laissez-faire) and strong central authority was needed to prevent corruption and exploitation.
  • Definition: groups of people who worked to influence and improve social welfare.
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  • Any of a group of American writers, identified with reform and exposé literature.
  • They were basically journalists who exposed the corruption and exploitation fo big businesses in the early 1900s.
  • Examples:
    • Ida Tarbell
      • Exposé - The History of the Standard Oil Company.
    • Upton Sinclair
      • The Jungle (1906) - the US meat-packing industry, and the books in the "Dead Hand" series that critique the institutions (journalism, education, etc.), that could, but did not prevent these abuses.
    • Samuel Hopkins Adams
      • The Great American Fraud (1905) - exposed false claims about patent medicines.
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Anti-trust laws, square deal, and labour unions

  • Sherman Anti-Trust Act 1890
    • Oppose the combination of entities that could potentially harm competition, such as monopolies or cartels.
    • Basically put in place to end monopolies.
  • The Square Deal 1904 (T. Roosevelt)
    • Enacted to regulate business.
    • 1 - Railroads rates were controlled by the government.
    • 2 - 1906 = Federal program of meat inspection.
    • 3 - 1906 = Pure Food and Drug Act
      • Forbade the sale and manufacture of fraudulently labelled food and drugs.
  • Labour Unions
    • Improving the social conditions of workers.
    • The Knights of Labour Union.
    • The American Federation of Labour (AFL).
    • The Industrial Workers of the Worlds (IWW).
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Success of the prev. slide

  • Sherman Anti-Trust Law
    • Failed - use was patchy and the wording of the actual legal document was too vague. However, it was used to break up Standard Oil into 36 baby companies.
  • Square Deal
    • Could have gone further but in general was innovative and successful.
  • Knights of Labour
    • Failed.
  • AFL and IWW
    • Reasonably successful in becoming powerful, however they didn't achieve much because they couldn't amount to the power of their bosses.
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Political influence of big business

  • Owned many newspapers and influenced Republicans a lot.
  • Hears controlled many newspapers - press baron.
  • Politics was laissez-faire, so had no control over business.
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