H102 Lecture 05_ Businessmen and _That Creature_ the Corporation

H102 Lecture 05_ Businessmen and _That Creature_ the Corporation

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Unformatted text preview: 12/22/11 H102 Lecture 05: Businessmen and "That Creature" the Corporation Stan ley K. Sch u ltz, Pro fes s o r o f His to ry W illiam P. Tis h ler, Pro d u cer Lec re 05 Businessmen and "That Creature" the Corporation Names like James J. Hill, A n d rew Carn eg ie, Co rn eliu s Van d erb ilt, an d Jo h n D. Ro ckefeller h av e s tru ck terro r in th e h earts o f man y , y et th es e s ame n ames h av e in s p ired millio n s o f o th er A merican s . Between 1870 an d 1900, th e Un ited States b ecame a wo rld in d u s trial p o wer, in p art, b ecau s e o f th e trailb lazin g b u s in es s p ractices o f th es e in d iv id u als . W ere th es e early in d u s trialis ts " Ro b b er Baro n s " o r " Cap tain s o f In d u s try ?" W h at ab o u t " th at creatu re" th e co rp o ratio n an d its mo n o p o lis tic co u s in , th e t Th e d eb ate o v er wh eth er th e b u s in es s p ractices o f th e Gild ed A g e were co rru p t o r b en eficial rag es o n ev en to th is d ay . Ev en in o u r o wn times , co rp o rate merg ers , mas lay o ffs , d ereg u latio n , an d En ro n remin d u s th at th e lin e b etween co rru p tio n an d p ro g res s is in d eed a fin e o n e. S ome ques tions to k eep in mind: 1 . Who were s ome of the "new" bus ines s men of the era and how did the operate? Is it bes t to refer to them as "Robber Barons " or "Captains of Indus tr ? W wh not? 2 . What was the corporation revolution? How did it trans form the American econom ? 3 . In our opinion, did Gilded Ag e bus ines s men mak e the United S tates better or wors e? Wh ? Th e Gild ed A g e was a time o f eco n o mic tran s fo rmatio n in th e Un ited States . Immed iately fo llo win g th e Civ il W ar, A merica's in d u s trial o u tp u t p aled in co mp aris o n to th mig h ty in d u s trial p o wers o f W es tern Eu ro p e, es p ecially Great Britain . Ho wev er, b y 1900, o n ly Great Britain 's in d u s trial p ro d u ctio n exceed ed th e to tal in d u s trial p ro d u c th e Un ited States . Two majo r facto rs p recip itated th e ris e o f in d u s try : New Bu s in es s men New W ay s o f Do in g Bu s in es s Ne w Busine ssme n His to rian s o ften d es crib e n in eteen th -cen tu ry b u s in es s men in two co n trad icto ry way s : " Cap tain s o f In d u s try " --s o me s ch o lars d es crib e n in eteen th -cen tu ry in d u s trialis ts as in g en io u s an d in d u s trio u s cap italis ts wh o tran s fo rmed th e A merican eco n with th eir b u s in es s acu men . Th es e " Cap tain s " were th e fo lk h ero es o f th eir d ay ; faces o f men like A n d rew Carn eg ie wo u ld h av e g raced th e b o xes o f Gild ed A g W h eaties rath er th an Oly mp ic g o ld med al win n ers . Th es e men s eemed to emb o d y th e A merican d ream o f " Rag s to Rich es ." " Ro b b er Baro n s " --o th er h is to rian s h av e v iewed th e Gild ed A g e in d u s trialis ts as immo ral, g reed y , an d co rru p t, an d h av e mu s tered amp le th e ev id en ce to s u p p o a v iew. Brib ery , illeg al b u s in es s p ractices , an d cru elty to wo rkers were n o t u n co mmo n d u rin g th is p erio d , an d man y o f th e mo s t res p ected in d u s trialis ts were al feared an d h ated . Th e Erie Railro ad W ars o f th e 1860s p ro v id e an examp le o f th e u n s cru p u lo u s an d o ften illeg al b u s in es s activ ities th at tran s fo rmed th e n atio n d u rin g th e Gild ed A g e. Th " W ars " in v o lv ed fo u r men : Dan iel Drew Jay Go u ld Jim Fis k Co rn eliu s Van d erb ilt Danie l Dre w (1797-1879), fin an cier. Bo rn in Carmel, New Yo rk, Drew s erv ed b riefly in th e W ar o f 1812 b efo re b eg in n in g a liv es to ck b u s in es s , d riv in g cattle an d h o rs es to New Yo rk C fro m u p s tate, an d later fro m as far away as Illin o is . He q u ickly acq u ired a rep u tatio n fo r s h arp d ealin g an d was kn o wn to feed s alt to h is cattle an d th en let th em d rin k th ems elv es fu ll in o rd er to in creas e th eir weig h t; th is p ractice b ecame kn o wn as " s to ck waterin g " an d Drew was its mas ter. In 1857, Drew b ecame d irecto r an d treas u rer Erie Railro ad lin e. A s h rewd man , Drew u s ed " watered s to ck" an d o th er to o ls to try an d s q u eeze ev ery p o s s ib le d o llar o u t o f th e railro ad an d in to h is o wn co ffers . Ja Gould us.histor .wisc.edu/hist102/lectures/lecture05.html 1/4 12/22/11 H102 Lecture 05: Businessmen and "That Creature" the Corporation Ja Gould (1836-1892), .G .N .H 1856, E S .A , , Histo r o f Dela wa re Co u n t , a n d Bo rd er Wa rs o f New Yo rk ER 1867. G C ' "B " W M. T , , P . B 1860, D D, " W . I 1872, G W " ,G JF R " " N Y , , , . Jim Fis k (1834-1872), S " ,B .F , 6, 1872. J .F .W - W S , ,F .A , "B , " , J M F ," , E S. Cornelius Vanderbilt (1794- 1877), .A V S .V H . B 1846, "C I N W Y C .T 1812 1829. T R, "V . Co neli Vande b il (1794-1877), financ ie and ind iali C 1997 S H S W V D D N G Y C N - -C T NY H YC $100 us.histor .wisc.edu/hist102/lectures/lecture05.html N R H R R 1862, H .I C, Y J , 1863, N .T N R , R 1869. V Y C R L ' , S , P Y . V M , 1873. H S .B R V 4, 1877. 2/4 12/22/11 H102 Lecture 05: Businessmen and "That Creature" the Corporation The Erie Railroad Wars Beg a h e C e i Va d e b i b eg a b i g h a e i h e E ie Rai ad C . i a C ., Da ie D e , a a i i d e Va d e b i f ii fd a ce ifica e , h ich Va d e b i b gh , a h gh he ea i ed h e c Ai ' I g he e ?" h e a ea ge e a h i ie a e Fi , G d , a ae d i e hi c eii f b i e . Th e ea e f h e E ie . D e , a g i h Ja G d a d Ji Fi , i ed 100,000 he c h ad a e. A h g h Va d e b i h ad ce aid , " La , h a d I ca e ab he dDe . Fi , G d , a d D e , h ea i g f h ei i e d i g a e , ah aca i Ne Je e h e e h e a f Ne Y , f a e f h e , d id a h ei i a i . Fi ad e a b ic a e e c ai i g h a h ei i Ne Je e h ad b ee ed b a d e i e d b e e b i e . M ea h i e, G d " e c ag ed " e be f h e Ne Y a e eg i a e a aa a i g h e a e f a e ed c Va d e b i eg a (a h a f i i d a ad e h e " e c ag e e " a h a h e ea ie ). Th e e a h a D e , Fi , a d G d e d ed $7 i i ich e h i e Va d e b i a ea ed h e b ic a a i ic ege . Ne w Wa s of Doing Busine ss A h g h A e ica b i e a d a i i e h ei fi . e h ad a a i ed ae e , h e Gi d ed A g e a he i e f e eh d f ca i a i ha a " Bef e h e Gi d ed A g e, i d i id a h ad ed cie . B h e ch a ac e i ic ec ic i i i f h e Gi d ed A g e a a c ec i f i d i id a g e h e ca ed he co rp o ra io n" (P fe Sch , id e a e ec e # 5). ed i d i id a ge a i i h ei h e i d i id a . I The Corporation Re volution 1. Ke fea e 2. W h a 3. C 4. C fc a ac ai bi a i ai ai i ? he a fc ai Ke features of corporations O e f h e e fea e f c h i e h ei e ec i e e a i e e fg e e h ad b ec ai a d h e Gi d ed A g e, i g e e a , a a i c ea i g c ce a i b eca e i e i ed . E e i ce h e fed e a g e e h ad ed i e ei ed i h e a i ' ec ic e fa e. f e i a g e e i ie . B i e a d g ead e e c ag e b i e e e e b eca e b b i d ai ad , a What was a corporation? Ac e liabilit iab e f ie e h ei ai af ed h e a g fe ib i i ie . S a e a ea ed h e c ai . Li i ed iab i i a e i d i id a i e a a d i g d eb . I c ai f h e b i f a e ce ag e c e if id e be fe e i e f he c ai e i a ha c id e i . I d i id a i e ac e e e ed a ch a e f h e a e eg i a e h a id ed h e iha e a a i d i id a . U i e a a e h i , i h ich iab i i a h ig h f i d i id a eg a iab e f h ei h a e f h e i e e . I a e h i , if a a , if a i d i id a i e d ie he i e a e affec ed . If h e c ai di g he i f h ei i e e . A c ai b eca e ec i b i e g ea e a d ed , f i d i id a i e cd ie ih ai b eca e " i a ." M ae a a ed c ai b ,e e a d g , b he c a i h a a i d efi i e ife a . f eg a ig h a d ( e ab ) ie , he c ai i ed ei d ie , h e h e a e g e ba , he a e i ed i h e id - i e ee h ce ,h h e fea f a iab i i . A h e i , a d i he i e ; h , he Corporations in the pas t C ai ee ae Ci i W a . B h e 1850 , h he c a i . W h e ea a ag e a d d i ec d i ec fi e iei f h e Gi d ed A g e. Th e fi A e ica c ie e e h e e fc a e ac i i . C ai b eg a c e b ef e e e , A e ica b i e e b eg a i gc ai ie a . A f e h e Ci i W a , e hi f a c ai g e ea c i h e Ci i W a i e h ad e ai ed a g ea d ea f e e h e ea f d c i , h e e c ce fc ai a ed ae e , hi e i e ea ed h e b e efi f i i ed d i id e d . Th i e a ag e e c ea ed a h a d f fc ae f h e e e' e ih i e e ai. Combinations of corporations O e f he a ie ch a ac e i ic f h e Gi d ed A g e a h e c i a c b i a i fc a i .S a c ai b eg a e ge i h efficie c a d fi . A e ica e h e e e " eg a c a i " a trus ts . I ch ,a a b a d f ee a ag ed h e ea d i ib i . Th g h e e ce ai a ge , e efficie , a d e fi ab e h a aec a i , he a de ed h e h ea h c ca i a i a iab e ec ic d e . us.histor .wisc.edu/hist102/lectures/lecture05.html e a he i c ea f d ci a d eii ha f e 3/4 12/22/11 H102 Lecture 05: Businessmen and "That Creature" the Corporation Standard Oil of New Jers ey In 1879, John D. Rockefeller and a handful of associates founded Standard Oil of New Jersey, the prototypical example of corporate consolidation and efficiency. Rockefeller was so successful that at his death, his personal fortune was estimated at $815,647,796.89, not to mention the $40 million in profits that the Standard Oil trust averaged every year. However, his methods of persuading small companies to join his trust were often less admirable than we might expect of an American folk hero. Although Rockefeller often gained control by purchasing smaller companies in public, he also seized power privately or through proxy to hide the fact that his behemoth trust would soon destroy the smaller company. Moreover, if buying stock proved too arduous, Rockefeller sometimes hired armed Pinkerton Agents to "persuade" his competition to relinquish control. The Pinkerton Agents were famed for their club- wielding ability, and many a small business owner became familiar with the wrong end of those clubs. J ohn D. Roc k efelle (1839-193 ind iali and philan h opi C opyright 1997 S tate Historical S ociety of W is Th e n ew b u s in es s men an d th e n ew meth o d s o f d o in g b u s in es s th at b ecame p ro min en t d u rin g th e Gild ed A g e were n o t alway s s h in in g examp les o f mo rality an d d emo c A s th e Gild ed A g e wo re o n , A merican s b eg an to realize th e s o cial p ro b lems th at wen t h an d -in -h an d with u n trammeled b u s in es s g ro wth . Th e fed eral g o v ern men t p as s e firs t fed eral law to s lo w th e g ro wth o f tru s ts in 1890. Th e Sh erman A n titru s t A ct, h o wev er, remain ed little mo re th an a to ken law, an d fed eral o fficials rarely in v o ked after W W I. A mo re imp o rtan t s ig n o f th e g ro win g d is illu s io n men t with Gild ed A g e p o litical an d b u s in es s co rru p tio n came fro m th e A merican p eo p le, th ems elv es . A lth man y A merican s s till reg ard ed men like Jo h n D. Ro ckefeller as " Cap tain s o f In d u s try ," mo re an d mo re p eo p le b eg an to q u es tio n th e tactics o f " Ro b b er Baro n s ." A s tru g rew ev er mo re p o werfu l an d wealth b ecame co n cen trated in fewer h an d s , p u b lic an imo s ity in creas ed to ward s th e b u s in es s men . Th e s to ry o f th is g ro win g an imo s ity , w is an in cred ib ly fas cin atin g as p ect o f A merican h is to ry , ju s t h ap p en s to b e th e to p ic o f th e n ext lectu re: Lectu re # 06: Th e So cial Ph ilo s o p h y o f A merican Bu s in es s men Lecture 05 Content Rela ed Web Link Presentation Audience Link High School The Riche st Ma n in the W orld: Andre w Ca rne gie Colle ge Corne lius Va nde rbilt High School The Bre a ke rs Ma nsion Colle ge Info Lubrica ting the Na tion in the Gilde d Age Skip Dire ctly To Le cture : || 01 02 03 04 05 06 07 08 09 10 || || 11 12 13 14 15 16 17 18 19 20 || || 21 22 23 24 25 26 27 28 29 30 || Home Cours e Guide Bios Photos Exams Calendar Comments /S ig n-in 1999 Bo ard o f Reg en ts o f th e Un iv ers ity o f W is co n s in Sy s tem us.histor .wisc.edu/hist102/lectures/lecture05.html 4/4 ...
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This note was uploaded on 12/25/2011 for the course HIST 058 taught by Professor Babice during the Fall '10 term at Everglades.

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