CHAPTER 17 KEY TERMS
Bessemer Process – It was the first highly effective way of mass-producing steel. William Kelly in the United States and Henry Bessemer in Great Britain, discovered that blasting air at high velocities through molten iron produced high-quality steel; by doing this it would rid the steel of impurities and allow it to be stronger yet more flexible.
Bessemer Process

Corporations – This is a group of companies that unites to form one large group under the leadership of one company owner.

Andrew Carnegie – He grew up a poor Scottish immigrant in the 1850s and became the superintendent of a Pennsylvania railroad. In the 1870s, he started
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Andrew Carnegie
manufacturing steel in Pittsburgh and not long after Carnegie outgrew his competitors with his salesmanship abilities and usage of the latest technologies. He used a strategy called vertical integration and by the 1900, Carnegie Steel dominated the free market, employing over 20,000 workers and producing more steel than all the steel mills in Britain combined. Carnegie believed that the wealthy had the responsibility to finance projects for cities, and he gave $350 million for the construction of libraries, universities (Carnegie-Mellon), and various public institutions.


Horizontal & Vertical Integration – Vertical Integration johndrockefeller a way in which a company could control all stages of the industrial process, from the mining the raw materials to transporting the finished product (Carnegie). Horizontal Integration was a way in which former competitors were consolidated into one large company. This allows the company to control the prices and supplies of the item (Rockefeller).

John D. Rockefeller – He was the owner of Standard Oil, an oil refinery business that applied new technology and new practices to produce more oil and stay competitive. As the company grew, he could extort rebates from railroad companies and cut prices on his own kerosene, causing the rival company to lose business and eventually die out. By 1881, Standard Oil Trust controlled 90% of the oil refinery business. The trust that he created consisted of many different companies, some of which are still around today, such as Chevron, Marathon, Du Pont, Exxon, Mobil and BP. Also, Rockefeller's fortune by the time of his retirement was close to $900 million.
John D. Rockefeller

Trusts – It is a corporation, normally owned by an independent partnership, a bank, or a law firm. Rockefeller's Standard Oil Company became a trust after the government decided that he had too much direct control over the industry of oil.

Holding Company – It is a company or firm that owns the majority of another companies' stocks, but is not necessarily a company that specializes in something, most of the time their business is buying stocks. Holding companies allow owners' risk to be reduced and allows ownership and control of many different companies.newyorkcentralvig7.jpg

Cornelius Vanderbilt - He used the millions of dollars that he earned from a steamboat business to merge all of the localized railroads together to create one large, transcontinental railroad, called the New York Central Railroad (1867). This railroad ran from New York City to Chicago and operated more than 4,500 miles of track.
Social Darwinism – English social philosopher Herbert Spencer was the most influential of the Social Darwinists who thought that Darwin's ideas of natural selection and survival of the fittest should be applied to the marketplace. He concluded that the concentration of wealth in the hands of the "fit" was a benefit to the future of the human race. American social Darwinist, Professor Graham Sumner of Yale University, argued that help for the poor was wrong because it interfered with the laws of nature and would only weaken the evolution of the species.
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Adam Smith & Classical Economics – 1776, economist Adam Smith argued in The Wealth of Nations that business should be regulated, not by government, but by the "invisible hand" of the law of supply and demand. This was the origin of the concept of laissez-faire. The theory was that if government did not step in and try to take control, business would be motivated by self-interest to offer high quality goods and services at low prices. American industrialists appealed to laissez-faire theory as a justification of their method for doing business. However the rise of monopolistic trusts in the 1880s undercut the competition needed for self-regulation.

The Gospel of Wealth – To some Americans, finding a religious justification for wealth was more successful. John D. Rockefeller, because he applied Protestant work ethic to business and in his personal life, came to the conclusion that "God gave me my riches". Russell H. Conwell, a Baptist minister made his millions by preaching his "Acres of Diamonds" sermon that stated that everyone had the right to become rich and there are opportunities for everyone to obtain it.
Gospel of Wealth

Horatio Alger – Horatio Alger's novels always portrayed a young man who grows up poor and becomes a rich and successful man by honest means, hard work, and, of course, luck. However, Alger's books were not based on reality. Opportunities for riches were few and far between, though there were some stories of this nature (Carnegie), but they were the exception, not the rule. The typical wealth of the day was a white, Anglo-Saxon, Protestant male who came from an upper- or middle-class background.
Alger

Monopolies – It is when a single company buys out the rest of their competition or is the only business that has control of the market of their item. For example, Rockefeller's control of all aspects of oil throughout the United States was considered a monopoly which had to be broken up to create fair competition and prices for oil.
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Immigration – There were more and more poor European people migrating from their home countries to America searching for freedom, economic opportunity, and jobs. Also, in their country, they were trying to get away from poverty, overcrowding, and joblessness.

Labor Unionslabor-union-3.jpg These are organizations devoted to giving laborers better working conditions, shorter hours, and more pay. Labor Unions, such as the American Federation of Labor, still exist today.

National Labor Union – The first attempt to organize all workers in all states (both skilled and unskilled labor), both agricultural workers and industrial workers, was the National Labor Union. It was founded in 1866, it had 640,000 members by 1868. Besides championing the goals of higher wages and the 8 hour workday. It also had a broad social programming, such as equal rights for women and blacks, monetary reform, and workers cooperatives. Its chief victory was winning the 8 hour workday for employed by the federal government. It lost support after a depression began in 1873 and after the unsuccessful strikes of 1877.

Railroad Strike of 1877 – In 1877, when the railroad companies cut wages in order to reduce costs. A strike on the Baltimore and Ohio Railroad quickly spread throughout 11 states and shut down 2/3 of the country's rail trackage. Railroad workers were joined by about 500,000 workers from other industries in an escalating strike that was quickly becoming national. For the first time since 1830s, the president used federal troops to end labor violence but not before a hundred people had been killed.

Knights of Labor – This was the second national labor union created in 1869 as a secret society in order to avoid detection by employers. It was under the leadership of Terence V. Powderly and the union went public in 1881, opening its membership to all workers, including African Americans and women. He advocated a variety of reforms including worker cooperatives "to make each man his own employer", abolition of child labor, and abolition of trusts and monopolies. he favored settling labor disputes by means of arbitration rather than resorting to strikes, however he could not control local units that decided to strike. They grew rapidly in the early 1880s and attained a peak membership of 730,000 workers in 1886. After the violence of the Haymarket riot.

American Federation of Labor – The American Federation of Labor was different than other labor unions such as the Knights of Labor and the National Labor Union because it concentrated on attaining practical goals and being reasonable. It was founded in 1886.

Samuel Gompers
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Haymarket Square
He led the American Federation of Labor from 1886 to 1924. He wanted to attain higher wages and improved working conditions. He told his union to walk out on their employers until the employer agreed to negotiate a new contract through collective bargaining.
Samuel Gompers

Haymarket Square – On May 4, 1886 at Haymarket Square in Chicago, the Knights of Labor were having a strike to achieve an eighty hour day. As police attempted to break up the meeting, an unknown person launched a bomb at the police officers, killing seven. The bomber was never found, however, eight anarchist leaders were tried for the crime, seven were sentenced to death by hanging. After this incident, many Americans began to believe that the reformers were far too radical and violent. The Knights of Labor lost a lot of membership and popularity after the incident.

AnarchismIt is the belief that society should have no government, laws, police, or other authority, but should be a free association of all its members. Followers advocated the violent overthrow of all government.

Homestead Strike – Henry Clay Frick, manager of Carnegie's Homestead Steel plant near Pittsburgh, began a strike in 1892 by cutting wages by almost 20%. He used weapons of the lockout, private guards, and strikebreakers to deffeat the steelworkers' walkout after 5 months. The failure of this strike set back the union movement in the steel industry until the New Deal in the 1930s.
Homestead Strike