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• By 1900, America was the leading industrial power
• A rapid economic transformation of American society impacted the country economically, socially, and politically
• Manufacturing replaced agriculture as the primary source of economic growth
• The rise of big business encouraged massive migrations and urbanization

Inventions & innovations of the time

• A large number of new inventions were developed during this period, with a high rate of patents issued
• Alexander Graham Bell invented Telephone
• Thomas Edison invented Electric light
• Inventions and innovations changed daily lives and created new jobs with social consequences

Introduction to the gilded age

• The gilded age had a booming private economy due to the industrial revolution which resulted in PROFIT!
• Until 1870, agriculture was the leading industry
• Imports were more than exports until the end of Civil War in 1865

Factors for Industrial Change

• Foreign investment
• Foreign labor as immigrants
• Foreign/Domestic Trade in new markets
• Technology through inventions and revolutions
• Society and American lives changed with industry

Land and Loan Subsidies

• Land and loan subsidies were given by the federal government to the railroad companies
• RR companies introduced new business practices, such as establishing the modern stockholder corporation and implementing business management strategies, financing, and regulation of competition
• Consolidation leads to standardization of the industry with steel rail and standard gauges

Western Expansion

• The age of railroads happened concurrently with the settlement of the Great Plains

Railroad Impact

• Railroads unified the domestic market and created a national market for goods
• Allowed for mass distribution of raw materials and manufactured goods
• Encouraged mass production, mass consumption, and economic specialization
• Helped promote the growth of other industries like coal and steel, also leading to the growth of new cities
• Facilitated immigration both internally and externally
• American Railroad Association divided the country into 4 time zones in 1883, changing daily life

The Rise of Railroads

• The Civil War increased industrial development
• Railroads promised greater national unity, with the Union needing to link California or risk losing it
• Railroads could also bring prosperity to frontier towns

The Problem with Railroads

• Railroads were very expensive to build
• It was required government subsidies (land/money)

Two Railroad Corporations

• Union Pacific RR started in Omaha, NE and went West, measuring 1,086 miles
  • Irish immigrant workers
• Central Pacific RR began in California and went East, measuring 689 miles
  • Chinese immigrant workers
  • it was Harder to cross the Sierra Nevada's

Railroad Unification

• The Union Pacific and Central Pacific connected at Ogden, Utah in 1869
• This connected the east and west with the creation of a transcontinental railroad which opened new markets
• Western lines were welding together with existing eastern lines

Railroad Consolidation

• Cornelius Vanderbilt, owner in NY (NY Central Line), implemented two great improvements
  • Introduced Steel Rails that were safer and more economical
  • Introduced Standard gauge of track width (universal)

Railroad Mechanization

• Westinghouse Air Brakes increased efficiency and safety, resulting in fewer RR accidents
• Pullman Palace "sleeping" Cars created comfort for travel, making long trips possible

Accomplishments of Railways

• Spurred the economic growth of the US
• Opened up the West and it's resources with mining, agriculture, and new markets
• Led to urbanization at the end of the 19th century
• Stimulated immigration with new ideas and population
• Changed the land
• Changed Time through standard time (time-zones)

Railroads: Ideals vs. Reality

• Railroads represented adventure, fresh starts, and land ownership
• However, in reality there was horrible working conditions, disease, and death

Worker Discrimination

• White men would earn $40-$60 for a ten hour day
• Chinese men worked from dawn until dusk and earned only $35 a month

Railroads and Time

• Before 1883, each community still operated on its own time
• In 1869, Professor C.F. Dowd proposed dividing earth into 24 time zones to remedy this problem
• The U.S. was divided into 4 zones which are Eastern, Central, Mountain, Pacific
• In 1883 the RRs synchronized their watches across the U.S.

Railroad Problems

• Railroad Tycoons became extremely powerful
• Federal land grants and friendly loans led rampant corruption within the government
• Frequent speculative bubbles occurred where speculators attempted to sell overvalued stock to the public
  • Overbuilding and mismanagement plagued the industry
• Rebates which are discounts were often given to favored shoppers, which meant that small farmers were charged much higher rates
• "Pools” also known as secret agreements occurred between companies to fix and share profits

Government Regulation

• Demands for the government to intervene arose, at a time when the dominate philosophy was Laissez Faire which dictates to Leave alone and no regulation
• Farmers were the most vocal group calling for reform, also known as the Grange Movement
• Munn v. Illinois in 1877 meant that the state could regulate business
• The Wabash case meant that the States could not regulate interstate commerce
• Interstate Commerce Act set up Interstate Commerce Commission
  • Federal government would oversee
  • Banned pooling, rebates, and rate fixing
  • Companies had to publish rates
• The Interstate Commerce Act was the first large scale attempt by the Federal Government to regulate business in the interest of society at large
  • However The ICC was initially not very effective

Railroad Corruption

• Big Businesses and especially RRs were very corrupt
• There was fleecing: defraud of money/property, to swindle
  • ex: Credit Mobilier Construction Company
• Stock Watering: RR promoters inflated their claims on assets and profitability and sold stock and bonds in excess of RR actual value
• Bribes were used by Judges and Legislators

Results of Railroading - Corruption

• Big Businesses were industrial monarchs
• They used the government to benefit themselves through alliances to protect profits
• Small farmers were hurt and wanted action taken, they form the Grange
• They had to pay higher shipping rates and it cost more to ship from South to North then from North to South

Government Bridles Iron Horse

• The Railroads were the leader in Big Business and a few had a lot of control over many
• Dedicated to free enterprise Americans were slow to action
• Believed that competition is key to trade success and economic growth, which feeds the American Dream
• States couldn't regulate interstate commerce, per the Wabash St. Louis and Pacific RR Company v Illinois

Interstate Commerce Act of 1887

• The Federal Government got involved in Wabash vs. Illinois 1886
• Interstate Commerce Act of 1887
  • Required rates being "reasonable and just”
  • They made Railroads publish their rates and allow no rate discrimination on short haul/long haul
  • The ICC was set up to be in charge of making sure railroads obeyed this legislation
• It was the first large scale attempt by Federal Gov. to regulate business in the interest of society at large

Rapid Industrial Expansion Drivers

• Liquid Capital in forms of a Millionaire class / Foreign investment
• Natural resources could reach factories like coal, oil, iron, etc
• A newer larger market encouraged mass-producing inventions
• New machines meant you could replace skilled labor with unskilled labor (cheaper labor)
• Inventions flourished

The Trust Titan Emerges

• Vertical Integration combines into a single business organization all phases of manufacturing, from mining to manufacturing
  • Andrew Carnegie became a Steel King this way
• Horizontal Integration allys with competitors to monopolize given markets
  • John D. Rockefeller was a standard oil magnate, and owned 90% of countries oil refineries
• Interlocking Directorates have members of a corporate board of directors serve on the board of multiple corporations
  • J.P. Morgan controlled Banking

Supremacy of Steel

• Shift from agriculture to industrial products, steel became the new standard
• Steel is seen in skyscrapers, machines, railing road and bridges
• From 1870-1900, US went from being a scarce producer to producing a 1/3 of the worlds supply of steel

Driving Factors for US Steel Dominance

• Cornelius Vanderbilt owned NY Central RR and built them from steel
• The Bessemer Process created new cheaper way to make steel that removed impurities, resulting in steel being stronger than iron

Andrew Carnegie: The Steel Leader

• Formed US Steel in Pittsburgh, "Steel City”
• Used Vertical integration to monopolize the market
• He was producing a 1/4 of nations steel by 1900
• J.P. Morgan bought out Carnegie for $400 million USD
• US Steel Corp became the first billion dollar company in US
• Carnegie gave away $350 million because he thought he would die disgraced with so much wealth
  • Carnegie Mellon University
  • Carnegie Hall
  • Carnegie Library and more were established

Rockefeller Rise

• There was a New Industry in Oil
  • "Drake's Folly" in 1859 in PA, known as "black gold"
  • Kerosene was the 1st Major Product, cheaper than Whale Oil
• Oil industry revived by invention of internal combustion engine and automobile for use of gasoline

Oil Monopoly

• Rockefeller's Oil King = John D. Rockefeller (Standard Oil Company)
• He controlled 95% of oil refineries in the country by 1877, creating a monopoly through horizontal integration
• He created a TRUST in 1882 for consolidation and the control of prices, and became extremely powerful
• Rockefeller and his family donated a total of $500 million to
  • Medical research and hospitals
  • Education, colleges and universities
  • The arts, music and theater

Nouveau riche emerged

• Nouveau riche were an arrogant class of new rich after the Civil War
• Older American aristocracy of successful merchants and professionals were highly resentful and concerned about the change in the order of society
• Patrician families were losing power and prestige in the face of the new rich
• Economic liberty and community was being overshadowed by monopoly and political machines
• Antitrust crusaders were made up primarily of genteel old-family do-gooders

The Industrial Social order

• A belief that the fittest survive, in social darwinisim
• Industrial/urban problems are thought to be a product of natural evolutionary process that humans cannot control
• Industrial Darwinism was created by Herbert Spencer and William Graham Su
• The wealthy industrial and business leaders (Rockefeller, Carnegie, Morgan, etc) used Social Darwinism to justify their success
• The Gospel of Wealth dictates that as guardians of societies wealth the rich have duty to serve society with philanthropy
• The Social Gospel reform movement was based on the belief that Christians has a responsibility to confront social problems

Government Tackles Trusts

• At the onset of corruption, local and state legislatures tried to tackle the issue of railroads and other trusts
• States could not control interstate commerce; only the Congress could per the Constitution of the United States
• Government was unable to get involved with railroad trusts People thought they could rise to the top like the rich had Big Business would incorporate in "easy states" like NJ
• The Government reacted through The Interstate Commerce Act of 1887 and the Sherman Anti-Trust Act (1890) which forbid combinations of trusts to restrain trade and monopoly
• Problems with this was there was no distinction between a "good/bad" Trust and there were too many loopholes for Big Business attorneys to get out of this Effects:
• Curtailed Labor Unions because they was also said to restraint trade

Regional Industry

• After the civil war, industry existed mostly in the North and would draw to the South
• The South boasted natural Resources like coal and iron ore, cheap labor with hillbillies and Agriculture with successful textiles
• Negatives of Southern Industry meant that Northern RR charged more to ship from South to North than from North to South

Impacts of the New Industrial Revolution

• There was an increase in wealth in the US and the standard of living, more physical comforts increased in urban migration
• A New way of life meant the self producing farmers were now wage earners and worked factory life
• Class divisions arose and 1/10 of people came to control 9/10 of nations wealth in 1900
• In this time women saw new economic opportunity through sewing machines which delayed marriage and child bearing

Expansion Impact

• Immigrants, women and children expanded the labor force significantly
• Machines replaced skilled workers, contributing to Large corporations having domination of the American economy Corporations developed national and international markets for their goods
• Labor and labor unions held the key to industry success

Key Unions

• The Knights of Labor
• Industrial Workers of the World (IWW)
• The American Federation of Labor (AFL)
• Key Strikes of the time include The Homestead Strike in 1892 and the Pullman Strike in 1894

The Knights of Labor

• There was up to 730,000 members led by Terence V. Powderly that Strove for cooperative society where laborers and not capitalists owned industries
• Knights of Labor included all workers in "one big union", except excluded liquor dealers, gamblers, lawyers, bankers, and stockbrokers
  • A idea ahead of its time, as industrial unionism was not seen until 1930s
• Most 19th century unions were trade unions

Beliefs

• They campaigned for economic and social reform and Codes were established for safety and health and labor
  • The Grange was paralleled
• There were efforts established to replace the wage system with workers owning factories and fought 8-hour through winning a number of strikes; higher pay and equal pay for women,
• Sought arbitration rather than industrial warfare, and discourages violence as a means to an end

Haymarket Square Bombing

• 4 Chicago police advanced on a meeting called to protest alleged brutalities by the authorities in May Day strikes
• Alleged German anarchists present who advocated overthrow of gov't
• A dynamite bomb that the crowd killed 8 police and 6 officers
• Conservatives were scared, and blacklisted members
• Employees signed "yellow dog" contracts and the oath required swearing
• Knights of Labor became mistakenly associated with anarchists, hurting the cause of the union, which caused membership to decline and popularity to wane

Further Unions

• The Industrial Workers of the World was Led by "Mother" Jones, Elizabeth Flynn
• Members: strove to unite all laborers like the Knights, leading to class conflict and endorsed violent tactics with attitude of"An injury to one is an injury to all”
• The American Federation of Labor was led by Samuel Gompers, including: skilled workers in craft unions that were Against violence and sought violence, concentrated on issues such as higher wages, shorter hours and better working conditions

Unions

• American Federation of Labor used the Closed shop (all workers in a unionized industry had to belong to the union).
• They provided funds to ride out prolonged strikes
• Strategy included walk-out and boycott
• By 1900, there was about 500,000 members also know as a "labor trust"
  • Some Shortcomings arose, specifically not representing unskilled labor, women and blacks
• During the Homestead Strike in 1892, a in Carnegie's steel plant was broken by a strong employer that used a mercenary police force to hire and gain gov't protection because they had broke the Unions, demonstrated that a labor union has the right break if it is not in the best interest of it's employees A. A 20% pay slash was announced for steel workers and the scabs were not allowed through line uprasing where three hundreds Pinkerton detectives were called to restore order

The Pullman Strike of 1894

• Companies lowered wages during Economic Crisis of 1893 while keeping prices/rent the same in company towns
• The Strike halted substantial portion of American RR commerce
• President Cleveland sent federal troops to "protect" rail carried mail, sending a clear message about the role of the federal government

Consequences for Striking

• Eugene V. Debs helped to organize the American Railway Union
• attorney General Richard Olney sent federal troops stating strikers interfering with transit of U.S. mail and because President Cleveland issued for the army and navy to oversee mail, 34 died with the strike being crushed
• First time gov't had ever used injunction to break a strike and made it illegal activity, this was a crime
• Labor cried "gov't by injunction" showing strong alliance between business and government

Government's Impact

• The Federal Gov provided corporations strong influence, even more than laborers who were living better in other nations despite cheap labor and lack of government empathy
• Strikes occurred and about 23,000 strikes occurred about 6.6 million and weakness only represented about 2.6 million which accounted for only 3 percent The labor sector was the biggest sector for working because there was limited ability