railroad corruption

Warm Up:

Identify a company that you think has unfair practices (to either its workers or customers).

Explain why they are able to be unfair and how this should be changed.

Railroad Corruption

• The worst case was the Crédit Mobilier• Jay Gould boomed and busted railroad stock,

making profit for himself all the way along. • “Stock Watering" where railroads would

artificially talk up the companystock would increase.

Railroad Corruption

• “Pools:" competitors agreed to cooperate as if they were one company.

• Rebates were given to large companies that shipped large quantities of goods.

Interstate Commerce Act/Commission (1887)

• Outlawed Rebates and Pools

Vertical Integration

• Ex. Sears, Roebuck and Company

Horizontal Integration

Andrew Carnegie• Son of Scottish

immigrantsclassic rags-to-riches story. – Carnegie entered the steel

industry. – Carnegie's U.S. Steel Corp.

• U.S. Steel produced 1/4 of the nation's Bessemer steel.

• Carnegie made $25 million, tax free.

• Gospel of Wealth: rich had a moral duty to spread the wealth

John Rockefeller • Standard Oil Company • Used vertical integration • Controlled 90-95% of the

oil in the U.S. • “Let us prey" (on the little

companies). • Interlocking directorates

own men would be placed on the board-of-directors for "competitors.".

J.P Morgan

• Banker/Financer • Insider Trading• Disregarded Workers• Gold Speculation• J.P. Morgan bought

Carnegie Steel and built U.S. Steel into the world's first billion dollar company ($1.4 billion).

Cornelius Vanderbilt

• Railroads and Shipping

• Built Grand Central Station

• Gave money for Vanderbilt University

Sherman Anti-Trust Act

• Enacted in attempt to outlaw trusts or monopolies.– Effected Labor Unions– Didn’t become as effective until 1914

Formation of Labor Unions

• Low Wages• Unsafe Conditions• Long Hours• Management lack of concern for workers– Unions formedoften got entangled in violent

strikes

Knights of Labor

• skilled and unskilled, women and blacksonly banned "non producers"

• The Knights sought workers' cooperatives, better working conditions, and the 8 hour workday.

• Got 8 hour day in several places• BUT the Haymarket Square Incident damaged

them.

American Federation of Labor

• The AF of L was made up of skilled craftsmen, made up of small, independent unions.