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Chapter 24 Questions Write down and 2-3 questions you had or have about anything in Chapter 24 Be prepared to ask them in class when the late bell rings Gallery Walk Activity: 15 Minutes to plan In 4 equal groups of students select 1 of the following sets of topics and create a poster [with brief but clear points] with the following info: [1] Transcontinental Railroads p. 530-533 [Explain what they were, how they acquired land, and operated] [2] Commodore Cornelius Vanderbilt p. 534-5, 537 [Explain his personality and business tactics] [3] Steel Rail p. 534-535 [Explain how this innovation improved railroads] [4] The Pullman Palace Car p. 535 [Explain what was special about this train car and what were its problems] What to look for Transcontinental Railroads [what were they? Why were they Land grants [what were they? why were they given?] Subsidies [what were they? why were they given?] Obstacles to buildings railroads [what were they? How were they Innovations [what were they? Why were they important?] Commodore Cornelius Vanderbilt [who was he? What did he do? Pullman Palace Cars [what were they? What was their purpose? important? Who built them? overcome?] What type of businessman was he? What were their challenges? Transcontinental Railroad Train companies and train tracks laid from East to West and North to South throughout the United States. Construction of lines exploded in the 1870s. The rail lines connected the nation and helped grow country-wide commerce. Farmers’ crops found larger markets. People such as Vanderbilt, Gould and the Big Four were early railroad pioneers. Costs and problems of building railroads Building railroads was expensive. Stocks were sold to raise cash. The U.S. government gave subsidies [free money] to fill budget gaps. To make the expansion faster the U.S. government gave land grants [free land]. More railroads meant a better national economy. The labor was very difficult and completed by Irish and Chinese workers for low wages under poor conditions. Innovations to the railroads Steel rails replaced early iron rails for strength, durability and permanence. Another innovation or improvement was the addition of passenger cars to transport people [Pullman cars] Cornelius Vanderbilt Wealthy railroad tycoons who made his fortune on boat ferries and steamboats in New York. Highly uneducated with regard to schooling but a ruthless, shrewd business strategist. Created a monopoly and used strategic pricing. Team with partners with similar interests. Pullman Palace Cars Prior to George Pullman created his sleeper cars freight [raw materials and finished goods] was the main cargo. By 1867 passenger service was made more comfortable for wealthier people to travel. Immigration and population spread as a result. More money was made by railroads because of more customers. Chapter 24 Questions Write down and 2-3 questions you had or have about anything in Chapter 24 Especially p. 536-545 Be prepared to ask them in class when the late bell rings Relay “Righters” Graft is best described as ________________________. _______________ are types of farmers who do not own the land but pay rent as a percentage of their crops. Two types of voter disenfranchisement would be _________ and _________. How did the Pendleton Act undermine patronage?_________ __________________________. The Spoils System is _________ _________________________. Pullman Palace were ___________ ___________________________. Railroad entrepreneurs could acquire land even without their own money by receiving ____________ From the U.S. government. A subsidy is best described as ___ __________________________. Three obstacles to building the Transcontinental Road were _________________________ ___________________________ __________________________. What to look for, what you must know… What was Vanderbilt’s attitude toward competitors and customers? What is a monopoly and is it a good thing? Why was the Interstate Commerce Act passed? Why was the Grange formed? What was the purpose of the ICC? Describe the pros and cons of a Captain of Industry What is a robber baron? How did vertical and horizontal integration work to benefit a captain of industry? What was the benefit of the Bessemer Process? Why was Standard Oil’s business tactics dangerous? How did a trust work? Was the Gospel of Wealth justifiable? Was Social Darwinism justifiable? Why was the Sherman AntiTrust Act of 1890 needed? W.H. Vanderbilt and Cyrus Field W.H. Vanderbilt inherited a vast fortune from his father Commodore Vanderbilt and seemed to be even more focused at amassing a fortune than him. "The railroads are not run for the benefit of the 'dear public' — that cry is all nonsense — they are built by men who invest their money and expect to get a fair percentage on the same.” During his lifetime he double the family fortune to 200 million. Vanderbilt drew wealthy investors such as Cyrus Field, the first person lay telephone cable across the Atlantic Ocean, and Jay Gould. The aggressive and monopolistic tactics of the railroad tycoons attracted the attention of the U.S. government. Monopoly A monopoly is a business or organization that seeks to dominate a specific type of business by eliminating competitors. Monopolists seek to corner the market [take complete control of the goods, services and prices] Railroad tycoons were unfairly forcing farmers who paid freight fees to railroads to pay exorbitant fees for crop transportation. In 1887 the U.S. Government intervened and passed the Interstate Commerce Act to stop the financial abuses of the railroads. The U.S. Government had been pressured into passing the law by a group called the Grange. The Grange was a consortium of U.S. farmers who gathered to combat the tactics of the railroads. Regulation and the ICC American wanted the railroads to be controlled by government regulation [rules/laws]. The ICC Interstate Commerce Commission was charged with carrying and enforcing the Interstate Commerce Act. The agency had agents who investigated reports of violations of the law and forced the railroads to comply. The Captains of Industry Captain of Industry is a term used to describe a person who takes absolute control over a business and uses aggressive tactics to get his way. Tactics-[a] undersells competitors, [b] joins into trusts, [c] financially bribes the government into compliance. Andrew Carnegie-Steel magnate during the 1800s and early 1900s. J.P. Morgan-Financier and banker [invested in businesses/lent money for interest/share of ownership. J.D. Rockefeller-Oil baron who controlled oil & gasoline production. Carnegie Morgan Rockefeller Robber Baron #1 Andrew Carnegie was a steel magnate who owned the largest steel company in the United States. Created a business strategy called vertical integration. Vertical integration-strategy to combine separate elements of a business under one organization. The efficiency could not be matched and competitors were eliminated •Sale •Production •Labor •Raw materials The Bessemer process of eliminating impurities in steel created a superior quality of steel which eliminated the need to import foreign steel Ironically Carnegie gave most of his money away before he died [created public libraries, funded the arts] about $350 million Robber Baron #2 John D. Rockefeller was an oil baron who monopolized the oil industry His pricing model and trust strategy drove competitors out of business Combined his operations with willing competitors and reduced his prices below cost [losing money temporarily] When all competition was eliminated he raised prices of gasoline to whatever he wanted. Customers had no other options and had to pay Horizontal integration was used by Rockefeller to dominate an entire industry by allying with selected competitors into trusts. Robber Baron #3 Railroad and banking tycoon who financed numerous businesses and formed trusts He cleverly acquired ownership in companies that were often considered unfair He purchased U.S. Steel Corporation from Carnegie for $400 million He forced companies to dissolve when profits were siphoned off [workers lost jobs] J.P. Morgan Questions for Chapter 24 Write down any questions you have on anything in the readings I will take 5-10 minutes to answer any questions Problematic Words Entrpreneur-__________________ ____________________________ Consolidate-__________________ ____________________________ Insatiable-____________________ ____________________________ Oligarchy-____________________ ____________________________ Supplanted-__________________ ____________________________ Rapacity-_____________________ ____________________________ Denounce-___________________ ____________________________ Obsolescence-________________ ____________________________ Content Terms Vertical integration is best described as _____________ ________________________ A trust seeks to ___________ ________________________ 2-3 characteristics of a Monopoly include __________ _______________________. The Interstate Commerce Act sought to _______________ _____________________. Role of Tariffs To protect American business the U.S. Congress [with the strong encouragement from Big Business imposed tariffs on foreign goods. Cheaper imports [goods brought in from overseas] were taxed with tariffs to make domestic goods more price competitive. Gospel of Wealth The belief that wealthy individuals had a moral and ethical responsibility was known as the Gospel of Wealth. Captains of Industry has a duty to amass fortunes and control the nation’s financial fortunes. Plutocrats influenced governments and the passage of legislation. Social Darwinism The Robber Barons were criticized for the uneven distribution of wealth. Newspaper and magazine articles were scathing in their attacks on the Captains of Industry Rockefeller countered that “the good Lord gave me my money.” The fittest of the fit made fortunes because they worked hardest and were smartest. The poor or “have nots” were simply too lazy. Sherman Anti-Trust Act The U.S. Government in 1890 tried to rein in the power of business trusts. The shrewdest of businessmen hired lawyers who were able to find loopholes in the law and avoid compliance. Trusts were sometimes forced to break up into separate companies. Best example of a break-up was the 1911 break up of Rockefeller’s Standard Oil Corporation. U.S. Government was bent on Trust busting after passage Lewis Hine’s child labor exposes Graphic photos of very young children [2-5] doing highly dangerous work under poor conditions got the attention of the U.S. Government. The Fair Labor Standards Act of 1938 banned child labor. Women in the workforce The stigma of public work was eradicated by Charles Dana Gibson’s image of the Gibson Girl whose sleek, athletic and attractive look inspired women’s confidence. Women during the 1880s were entering the workforce improved by technological advances such as phones. Hello girls worked switch boards for telephone companies, governments and corporations Labor Unrest and Unionization Unions were organizations created to fight for better wages, working conditions and working hours. The National Labor Union was formed after the Civil War in 1866 and collected over 600,000 workers in different trades [Chinese, blacks and most women were excluded]. Economic depression in the 1870s ended up folding the group. Biggest accomplishment was the 8-hour workday for government employees. The Knights of Labor was a labor union that included blacks and women. The Chinese Exclusion Act was passed by Congress to help protect American workers from unskilled, cheap, foreign labor [Chinese immigration was heavily curtailed] Labor Strife and Unrest Business/Labor conflicts were not always peaceful. On May 4, 1886 rioting in Chicago’s Haymarket Square led to multiple deaths and a bad reputation for unions. The greatest mistake by the Knights of Labor was including skilled and unskilled workers under one group. Unskilled workers could be replaced by strike breaking scabs while craftsmen [skilled workers] were not. Skilled workers believed their jobs were unprotected. Samuel Gompers Gompers learned from the failures of other unions. Led the American Federation of Labor [A.F.L.] for over 40 years. Federation=Group of separate entities [in his case unions] His most important strategy was to pool the resources of different types of unions. The funds were used to support workers during prolonged strikes. He also championed closed shops which did not allow non-union workers to work in union dominated jobs. Mother Jones Jones was originally a labor organizer for coal mines in Iowa. She was popular for promoting inclusion and tolerance of black workers [this was in the 1870s1880s!] However she was ambivalent about foreign workers from Ireland and China. By exerting pressure on the U.S. Congress the Contract Labor Law of 1885 [banning aliens and foreign contract laborers] and the Chinese Exclusion Act of 1882. Most notable of all was that a woman was a key labor official Horatio Alger Horatio Alger wrote a series of inspirational novels telling various rags to riches tales. The stories focused on how kids from impoverished beginnings were able to pull themselves by their bootstraps Very few of these stories were real but they offered hope. Homework What was the role of Samuel Gompers in the labor movement? How did “Mother Jones” inspire the labor movement? How did tariffs benefit American big business? 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