Industry Comes of Age 1865-1900 PDF

Chapter 24 Industry Comes of Age: 1865-1900 INDUSTRIAL REVOLUTION By 1900 America would become the leading industrial power in the world. Rapid economic transformation of American society – Impacts the country economically, socially, politically Manufacturing replaces agriculture as the prima...

Chapter 24 Industry Comes of Age: 1865-1900 INDUSTRIAL REVOLUTION By 1900 America would become the leading industrial power in the world. Rapid economic transformation of American society – Impacts the country economically, socially, politically Manufacturing replaces agriculture as the primary source of economic growth Rise of big business encouraged massive migrations and urbanization INVENTIONS & INNOVATIONS Large number of new inventions developed during this period – High rate of patents issued – Examples: Alexander Graham Bell: Telephone Thomas Edison: Electric light These inventions and innovations will change daily lives, create new jobs, and have social consequences Introduction Why were the most capable individuals not actively involved in politics during the Gilded Age? There was a booming private economy due to the industrial revolution = PROFIT! Until 1870 - agriculture was America’s leading industry - import more than export until end of Civil War (1865) Industrial change is possible because of Foreign investment Foreign Labor (immigrants) Foreign/Domestic Trade (new markets) Technology (inventions/revolution) Society (American lives) would change with industry! Land and loan subsidies given by the federal government to the railroad companies New business practices introduced by RR companies such as establishing the modern stockholder corporation, business management strategies, financing, and regulation of competition Consolidation leads to standardization of the industry: steel rail, standard gauges  WESTERN EXPANSION Age of Railroads happens at same time as settlement of the Great Plains  IMPACT OF THE RAILROAD -Unified the domestic market- 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 (coal, steel, etc) and lead to growth of new cities - Facilitated immigration both internally and externally - Changes daily life: American Railroad Association divided the country into 4 time zone in 1883 The Iron Colt Becomes an Iron Horse The Civil War increased industrial development Railroads: Promised greater national unity: Union had to link California to itself or might be lost Could bring prosperity to frontier towns Problem: RR’s were very expensive to build - Required government subsidies (land/money)  Spanning the Continent with Rails Deadlock over who would get the RR ended when South seceded. Congress commissioned two RR Corporations 1. Union Pacific RR (1,086mi) - Started in Omaha, Neb and went West - Irish immigrant workers 2. Central Pacific RR (689mi) - Began in California and went East - Chinese immigrant workers - Harder b/c they had to go through Sierra Nevada’s  Spanning the continent with Rails “Wedding of the Rails” ➔ Union Pacific and Central Pacific are connected at Ogden, Utah in 1869 Brought the East and West together in one of the most significant engineering feats of the day ➔ This transcontinental RR created new markets Railroad Consolidation and Mechanization RR Consolidation Now have western lines welding together with existing eastern lines Cornelius Vanderbilt- owner in NY (NY Central Line) He implemented two great improvements 1. Steel Rails (safer and more economical) 2. Standard gauge of track width (universal) Railroad consolidation and Mechanization New Mechanization Westinghouse Air Brakes (efficiency/safety) - resulted in less RR accidents Pullman Palace “sleeping” Cars (comfort/travel) - long trips now comfortable (sleeping/eating)  Revolution by Railways What the Railroad accomplished 1. Spurred the economic growth of the US 2. Opened up the West w/ its wealth of resources - Mining, agriculture, new markets 3. Led to urbanization movement at the end of 19th century 4. Stimulated immigration (new ideas/pop) 5. Changed the land 6. Changed time - Standard time (time-zones)  Railroads IDEALS: Adventure Fresh Start Land Ownership REALITY: Horrible working conditions Disease Death The year is 1863 and railroad construction is booming. In six years, the U.S. will be linked by rail from coast to coast. Worker Discrimination White men would earn $40-$60; ten hour day Chinese worked from dawn until dusk; $35 a month  Railroad and Time Before 1883, each community still operated on its own time 1869, to remedy this problem, Professor C.F. Dowd proposed dividing the earth into 24 time zones The U.S. would be divided into 4 zones: Eastern, Central, Mountain, and Pacific 1883 – RRs synchronized their watches across the U.S. U.S. Time Zones  America, We’ve got a Problem! Railroad Tycoons became extremely powerful Federal land grants and friendly loans led the rampant corruption within the government Frequent speculative bubbles would burst - Speculators attempt to sell overvalued stock to the public - Overbuilding was common - Mismanagement and fraud plagued the industry Rebates (discounts) were oftentimes given to favored shippers – Small farmers were often charged much higher rates “Pools”- secret agreements between companies to fix rates and share profits Government Regulation Demands for the government to intervene Dominate philosophy of the time period: Laissez Faire – Leave alone, no regulation Farmers most vocal group calling for reform -Grange Movement Munn v. Illinois (1877): State could regulate business Wabash case: 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 Interstate Commerce Act: First large scale attempt by Federal Government to regulate business in the interest of society at large - The ICC was initially not very effective  “Wrongdoing in Railroading” Big Business (especially RRs) was very corrupt! 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 Judges, Legislators, etc.  “Wrongdoing in Railroading” Big Business = industrial monarchs Used gov to benefit themselves - alliances to protect profits Results in Big Business = corruption ★ Who is hurt? Small farmers (they want action taken: The Grange) ★ Had to pay higher shipping rates ★ Cost more to ship something from South to North then from North to South  Government Bridles Iron Horse RR is the leader in Big Business - “ few have a lot of control over many” Reasons Americans were slow to action: Dedicated to free enterprise Believe that competition is key to trade success and economic growth The American Dream States can’t regulate interstate commerce - - Wabash St. Louis and Pacific RR Company v Illinois  Government Bridles Iron Horse The Federal Gov. has to get involved (Wabash vs. Illinois 1886) ➔ Interstate Commerce Act of 1887 1. Required rates be “reasonable and just” 2. Railroads must publish their rates 3. No rate discrimination on short haul/long haul 4. Set up Interstate Commerce Commission (ICC) - In charge of making sure railroads obeyed this legislation First large scale attempt by Federal Gov. to regulate business in the interest of society at large  Miracles of Mechanization Reasons for Rapid Industrial Expansion 1. Liquid Capital - Millionaire class/Foreign investment 2. Natural resources could reach factories - Coal, oil, iron, etc 3. New larger market encouraged mass-producing inventions 4. New machines meant you could replace skilled labor with unskilled labor (cheaper labor) 5. New ideas were flourishing (inventions) The Trust Titan Emerges Vertical Integration- to combine into one organization all phases of manufacturing from mining to manufacturing. ❖ Andrew Carnegie - Steel King Vertical Integration - Control all aspects of manufacturing- from extracting raw materials to selling the finished product  The Trust Titan Emerges Horizontal Integration - allying w/ competitors to monopolize a given market ❖ John D. Rockefeller - Standard Oil Owned 90% of countries oil refineries  Horizontal Integration Controlling all competition in a particular industry. Merging competing oil companies into one giant corporation. Consolidating all competitors to monopolize a market.  The Trust Titan Emerges Interlocking Directorates- members of a corporate board of directors serve on the board of multiple corporations J.P. Morgan - Banking  The Supremacy of Steel New battle cry of the US = “Steel is King” shift from agriculture (cotton) to industrial (steel) How do we see steel holding the US together? - Skyscrapers - Machines - Railroad - Bridges ➔ Steel = Food, Shelter and Transportation  The Supremacy of Steel 1870-1900: US went from scarce producer to producing 1/3 of the world’s supply of steel REASONS: 1. Cornelius Vanderbilt- NY Central RR 2. Bessemer Process (most important) - New cheaper way to make steel - cold air on red-hot iron to take away impurities = steel ➔ steel is stronger than iron Andrew Carnegie: Sultan of Steel Formed US Steel in Pittsburgh “Steel City” Used Vertical integration tactic to monopolize the market By 1900 he was producing ¼ of nations  Andrew Carnegie: Sultan of Steel J.P. Morgan bought out Carnegie for $400 million US Steel Corp. 1st billion dollar company in US.  Andrew Carnegie: Sultan of Steel Carnegie gave away $350 million - Thought he would die disgraced with so much wealth ❖ Carnegie Mellon University ❖ Carnegie Hall ❖ Carnegie Library Rockefeller Grows as American Beauty Rose New Industry = Oil - “Drake’s Folly” 1859 in PA = “black gold” - Kerosene = 1st Major Product (Cheaper than whale oil) Oil industry revived by invention of internal combustion engine and automobile; use of gasoline Rockefeller Grows as American Beauty Rose Oil King = John D. Rockefeller (Standard Oil Company) 1877 he controlled 95% of oil refineries in the country = monopoly (horizontal integration) Created a TRUST in 1882 for consolidation and control of prices He was extremely powerful Rockefeller Grows as American Beauty Rose Rockefeller and his family donated a total of over $500 million dollars to support: medical research / hospitals education / colleges / universities the arts / music / theater Rockefeller Center  "nouveau riche” Arrogant class of "new rich" after Civil War - Older American aristocracy of successful merchants and professionals highly resentful and concerned about the change in the order of society - Patrician families losing power and prestige in the face of the "new rich" - Economic liberty and community involvement being overshadowed by monopoly and political machines. - Antitrust crusaders generally led by the "best men" -- genteel old-family do-gooders who were conservative defenders of their own vanishing influence.  The New Industrial Order Social Darwinism ❖ Belief that the fittest survive in both nature and society “survival of the fittest” ❖ Believed that industrial/urban problems are part of a natural evolutionary process that humans cannot control Created by Herbert Spencer and William Graham Sumner The wealthy industrial and business leaders (Rockefeller, Carnegie, Morgan, etc) used Social Darwinism to justify their success.  The New Industrial Order Social Darwinism = millionaires are a product of natural selection What did people think of this? If the rich could pull themselves up from nothing so could the poor. - -“AMERICAN DREAM”  The New Industrial Order Gospel of Wealth Belief that, as the guardians of society’s wealth, the rich have a duty to serve society - Philanthropy Social Gospel Reform movement based on the belief that Christians have a responsibility to confront social problems  Government Tackles the Trust Evil ➔ At the onset of corruption (esp. railroads) the local and state legislatures tried to tackle the issue PROBLEM 1. States could not control interstate commerce only Congress could per the Constitution of the United States 2. People thought they could rise to the top like the rich had 3. Big Business would incorporate in “easy states” (ex.: NJ)  Government Tackles the Trust Evil Government reaction to Trusts: Interstate Commerce Act of 1887 Sherman Anti-Trust Act (1890) Forbid combinations of trusts in restraint of trade - monopoly PROBLEMS: no distinction between a “good/bad” Trust too many loopholes for Big Business attorneys to get out of EFFECTS: Curbed Labor Unions because they were said to restraint trade  The South in Age of Industry Where is industry? Most of industry post-Civil War = North Draws to the South Natural Resources (coal and iron ore) Cheap Labor (hillbillies/displaced farmers) Agriculture (textiles: most successful industry in S) Negatives of Southern Industry Northern RR charge more to ship from South to North then from North to South. Impacts of New Industrial Revolution IMPACT 1. Increase in wealth in US 2. Increase in standard of living, more physical comforts 3. Increase in urban population (immigrants) 4. New way of life Self producing farmers now become wage earners Factory Life 5.Increase in class divisions/struggle 1/10 of people owned 9/10 of nations wealth in 1900 Women are the most affected group during the new move to industry! New economic opportunity (sewing machines) This delays marriage and child bearing  Labor/Labor Unions Labor is the KEY to industry success KEY TRENDS: 1. Immigrants, women and children expanded the labor force significantly 2. Machines replaced skilled workers 3.Large corporations (monopolies) dominated the American economy 4.Corporations developed national and even international markets for their goods Key Unions Knights of Labor Industrial Workers of the World (IWW) The American Federation of Labor (AFL) Key Strikes Homestead Strike (1892) Pullman Strike (1894) Knights of Labor Up to 730,000 members led by Terence V. Powderly Members: unskilled and semiskilled workers, including women, immigrants and African Americans. Goal: Strove for a cooperative society in which laborers, not capitalists, owned the industries in which they worked Knights of Labor Sought to include all workers in "one big union" Excluded only liquor dealers, gamblers, lawyers, bankers, and stockbrokers. - Industrial unionism idea was ahead of its time (not seen until 1930s). - Most 19th c. unions were trade unions with skilled workers.  Knights of Labor Campaigned for economic and social reform Producers’ cooperatives and codes for safety and health; end to child labor. - Cooperative idea paralleled the Grange in the west. Sought to replace wage system with all workers owning factories. - Fought for an 8-hr workday through winning a number of strikes; higher pay and equal pay for women.. - Sought arbitration rather than industrial warfare. - Discouraged strikes and violence as a means for change  Haymarket Square Bombing May 4, 1886 - Chicago police advanced on a meeting called to protest alleged brutalities by the authorities in May Day strikes. - Alleged German anarchists present who advocated a violent overthrow of gov't - A dynamite bomb was thrown in the crowd that killed 8 police; 60 officers - The rise of Workingmen’s parties in various cities scared conservatives who then blacklisted members through employers’ associations. - Employees had to sign "yellow dog" contracts or take "iron clad" oaths. - Knights of Labor became mistakenly associated with anarchists. Industrial Workers of the World Led by “Mother” Jones, Elizabeth Flynn Members: strove to unite all laborers like the Knights Goal: Embraced class conflict and endorsed violent tactics “An injury to one is an injury to all” American Federation of Labor Led by Samuel Gompers Members: skilled workers in craft unions (specialties) Goal: Against violence, concentrated on issues such as higher wages, shorter hours and better working conditions. American Federation of Labor Closed shop -- all workers in a unionized industry had to belong to the union. - Provided necessary funds to ride out prolonged strikes. - Chief strategies of AFL: walk-out and boycott - By 1900, about 500,000 members (critics called it the "labor trust") - Shortcomings: did not represent unskilled labor esp. women and blacks.  American Federation of Labor Homestead Strike (1892) in Carnegie’s steel plant near Pittsburgh - Demonstrated a strong employer could break a union if it hired mercenary police force and gained gov’t and court protection. - Frick & Carnegie announced 20% pay slash for steelworkers - Led to worker uprising - scabs not allowed through lines - called in 300 Pinkerton detectives. - Armed strikers forced their assailants to surrender after 9 Pinkertons and 7 workers were killed and about 150 wounded. - PA governor brought in 8,000 state militia and scabs replaced workers. - - Union was effectively broken. Pullman Strike (1894) The Pullman Palace Car Company lowered wages during the Economic Crisis of 1893 while keeping prices/rent the same in company towns. Strike halted substantial portion of American RR commerce Ended: when President Cleveland sent federal troops to “protect” rail carried mail, but in reality to crush the strike. WHAT DOES THIS SHOW US ABOUT THE FEDERAL GOV?  Pullman Strike Eugene V. Debs helped to organize the American Railway Union of about 150K - Workers went on strike and even overturned some Pullman cars - Railway traffic from Chicago to Pacific Coast paralyzed. - Attorney General Richard Olney sent federal troops stating strikers interfering with transit of U.S. mail. - President Cleveland: "If it takes the entire army and navy to deliver a postal card in Chicago, that card will be delivered" - Troops sent in and violence spread to several states costing 34 lives - Strike was crushed  Pullman Strike First time gov’t used an injunction to break a strike - The gov’t made striking, an activity not previously defined as illegal, a crime - Labor cried "gov’t by injunction" - Populists & other debtors concerned as Pullman episode proof of an alliance between big business and the courts. Pullman Strike WHAT DOES THIS SHOW US ABOUT THE FEDERAL GOV? Corporations are strong and big and have government influence Laborers in US are paid more than other nations Their gov doesn’t feel sorry for them Immigrants provide cheap labor Better off here then in their homeland New Machines displaced employees Between 1881-1900, 23,000 strikes occurred involving 6.6 million workers. - Biggest weakness: only represented about 3% of all working people. - Public finally began to accept workers’ right to organize, bargain collectively, and strike. -- Labor Day made a legal holiday by Congress in 1894.