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Chapter 23 (14th) Political Paralysis in the Gilded Age 1. The “Bloody Shirt” Elects Grant 1. In the 1868 presidential election, the Republicans offered Gen. Ulysses S. Grant. Although he had no political experience, the idea was that his war-hero status would carry him...

Chapter 23 (14th) Political Paralysis in the Gilded Age 1. The “Bloody Shirt” Elects Grant 1. In the 1868 presidential election, the Republicans offered Gen. Ulysses S. Grant. Although he had no political experience, the idea was that his war-hero status would carry him to victory. 2. The Democratic party was hopelessly disorganized. They agreed on their criticism of military Reconstruction, but little else. The Democrats nominated Horatio Seymour. 1. Seymour's popularity took a hit when he said he did not support redeeming greenback money at full value. 3. Consequently, Grant won, narrowly. His main technique was to "wave the bloody shirt," meaning to constantly remind voters of his military record and that he'd led the North to victory. 4. The close victory signaled a couple of things for the future: (a) tightly run and hard-fighting political parties and (b) narrow election margins of victory. 2. The Era of Good Stealings 1. Corruption became all too common in the post-Civil War years. 1. The corruption often came via the railroads, meddling with stock prices, and through corrupt judges. 2. Of special note were the exploits of "Jubilee" Jim Fisk and his partner Jay Gould. These two came up with, and nearly pulled off, a scheme in 1869 to corner the gold market to themselves. They tried, unsuccessfully, to get President Grant involved as well as his brother-in-law. 3. In New York City, Boss Tweed ran Tammany Hall, a local political district. Boss Tweed used bribes, graft, and rigged elections to mooch money and ensure continual power for himself and his buddies. 1. Thomas Nast was a cartoonist who relentlessly attacked Tweed's corruption. Tweed despised Nast because, although many people in Tweed's district couldn't read about the corruption, they could understand those "them damn pictures." 2. Nast's cartoon's brought down Tweed. Samuel J. Tilden gained fame in prosecuting Tweed. Tweed eventually died in jail. 3. Tilden would ride the fame to become the nominee for president in 1876 vs. Rutherford B. Hayes. 3. A Carnival of Corruption 1. President Grant was an honest man but there was much corruption underneath his administration. He either wasn't aware of it or failed to properly deal with it. 1. Many in the Dent family, his in-laws, obtained government "jobs" for themselves. 2. One of the worst situations was the Crédit Mobilier scandal 1. The company was constructing the trans-continental railroad and effectively sub-hired itself to get paid double. 2. They also gave stock to Congressmen in order to avoid getting busted. 3. A newspaper finally exposed the scandal, two Congressmen went down, & the Vice Pres. of the U.S. had even taken payments. Though uninvolved, Grant's name was scarred. 3. The so-called "Whiskey Ring" also looked bad for Grant. Folks stole whiskey tax money from the government. Grant's own secretary was involved and, despite him saying "Let no guilty man escape," Grant helped let the thief off the hook. 4. Lastly, the Secretary of War William Belknap was caught swindling $24,000 by selling trinkets to the Indians. 4. The Liberal Republican Revolt of 1872 1. By the 1872 election, many people had had enough. Reformers started the Liberal Rebpublican Party to clean things up. 1. The Liberal Republicans nominated Horace Greeley, editor of the New York Tribune, as their candidate. 2. Strangely, the Democrats also endorsed Greeley since they were so eager to gain office. 1. Greeley had lambasted the Democrats through his paper, but he was soft on allowing the South to return to the nation, which the Democrats liked. 2. The campaigning was nasty, but colorful. Greeley was called an atheist, communist, free-lover, vegetarian, brown-bread eater, and co-signor of Jefferson Davis' bail bond. Grant was called a drunk ignoramus and swindler. 3. Grant won the election handily, 286 to 66. 4. The Liberal Republicans did spook the Republican Congress into passing some reforms. (1) An amnesty act was passed which removed restrictions that'd been placed on many Southerners. Also, (2) there was effort to reduce the tariff rates and (3) to clean up/out the Grant administration. 5. Depression, Deflation, and Inflation 1. The Panic of 1873 brought economic troubles.  1. It was started by over-spending with borrowed money, this time in railroads and factories. Growth was too fast and over-extended what the market could sustain. 2. The causes of the panic were the same old ones that’d caused recessions every 20 years that century: (1) over-speculation (or over-spending) and (2) too-easy credit given by the banks. 3. Initially, the panic was sparked when banks and businesses began to go bankrupt. The situation quickly snowballed from there. 4. Blacks were hit especially hard. Always last-to-be-hired, and now the Freedman's Savings and Trust Co. went bankrupt, black Americans lost some $7 million in savings. 2. The tough times hit debtors hard. They wanted inflationary policies to be pursued. Specifically, debtors wanted paper money ("greenbacks") printed to create inflation and thus make it easier to pay off debts. This strategy was called soft money or cheap money policies. 3. Opponents, usually bankers and the wealthy, favored hard money policies. That is, they favored keeping the amount of money stable (and backed by gold). To hike inflation just to pay debt was unfair, they said, since the money paid back wouldn't be as valuable as when it was lent. 1. Grant vetoed a bill to print more money. Also, the Resumption Act was passed to actually start to (1) lower the number of greenbacks in circulation and (2) to redeem paper money at face value starting in 1879. 4. Cheap money advocates also wanted more silver to be coined—the more money in circulation, the more inflation. Games were played over the value of silver, but the bottom line is that more silver coins would mean more inflation and thus make it easier to pay off debt. 5. Under Grant's lead, the nation entered into a period of "contraction." This meant that the amount of money in circulation, per person, actually decreased during the 1870's 1. Contraction likely didn't help the recession, but it did raise the value of the dollar bill. Come 1879, few people turned in their greenbacks for gold. 6. The effect of Republican hard money policies was that the Democrats took over the House of Representatives in 1874. 7. And, the Greenback Labor Party was started in 1878 with the main mission of bringing cheap money policies to life. 6. Pallid Politics in the Gilded Age This content copyright © 2010 by WikiNotes.wikidot.com 1. The term "the Gilded Age" was a phrase coined by Mark Twain to describe the late 1800's. It hinted that the times looked good (as if they were gilded or gold-covered), yet if one scratched a bit below the surface, there were problems. 1. The Gilded Age largely contained tight and hotly contested political races, much corruption, and shady business deals. 2. The Republicans of the day hinted back to Puritan ancestry and were supported in the North and West. The G.A.R., the Grand Army of the Republic, was a military veteran group that supported Republicans. 3. Democrats got most of their support from the South. They were supported by Lutherans and Catholics. 2. A split developed in the 1870's and 80's within the Republican party. 1. The Stalwarts were led by Roscoe Conkling. 2. The Half-Breeds were led by James G. Blaine. 7. The Hayes-Tilden Standoff, 1876 1. Pres. Grant considered running for a third term in 1876. The House soundly voted down that option and Grant backed off. 2. The Republicans nominated Rutherford B. Hayes. He was called the "Great Unknown", for obvious reasons. 1. He was neutral in the Conkling and Blained wars within the Republican party. 2. And, his greatest attribute, he came from Ohio, an important state in winning the race. 3. The Democrats nominated Samuel Tilden. 1. Tilden's claim-to-fame was that he'd nailed Boss Tweed. 2. Tilden got 184 electoral votes; he needed 185 to win. 3. 20 votes were hanging in the balance due to questionable returns. Picking up only 1 vote would see Tilden elected. 4. Both sides sent people to the questionable states (LA, SC, FL, and OR) and both men claimed victories there. 1. The question then became, "Which branch of Congress would count the states' votes?" Depending on who counted, the Democratic House or the Republican Senate, the vote would likely go that way. 2. Weeks passed and the election was at a stalemate. 8. The Compromise of 1877 and the End of Reconstruction 1. With a president needed, Congress passed the Electoral Count Act that set up a commission to resolve the crisis. 1. There were 15 men (from the House, Senate, and Supreme Court) on the commission. 2. 8 men were Republicans, 7 were Democrats 2. The Republicans had the upper hand and were heading toward victory among the disputed states. Democrats were outraged and began to filibuster to tie up the process.  3. Finally, a deal was made in the Compromise of 1877. True to a compromise, both sides did some give-and-take. 1. The North… 1. Got Rutherford B. Hayes elected as a Republican president. 2. The South… 1. Got a pledge that Hayes would removal of military occupation in the South. 2. This did happen, thus ending Reconstruction. The bad news for the freedmen was that Southern blacks were now effectively left alone to fend for themselves. The Civil Rights Act of 1875 supposedly gave equal rights to blacks, but the Supreme Court had struck much of it down. Also, white Southerners began to reclaim a strong hold on power. 3. Additionally, money would be spent on the Texas and Pacific railroad. 9. The Birth of Jim Crow in the Post-Reconstruction South 1. With the military gone, white Southerners reasserted their power over blacks. Fraud and intimidation were the tools. 2. Most blacks had no option but to become sharecroppers. They farmed land they didn't own, then paid hefty fees to the landlord come harvest time. The system was stacked against them so that they'd never get out of debt. 1. Now "free", blacks likely farmed the same land for the same man as before the Civil War. 3. Segregation (the separation of the races) also became institutionalized. 1. First, the states enacted codes called Jim Crow laws that legalized the segregation. 2. Then, the U.S. Supreme Court gave the federal okay. Plessy v. Ferguson (1896) stated that "separate but equal" facilities for the races were legal. 1. In reality, the races were indeed separate, but the facilities were hardly equal. 2. Segregation was carried out in nearly all public facilities such as schools, theaters, transportation, and restrooms. 3. Violation of these codes could have legal penalties. Or, worse, lynchings of blacks reached a record level as whites "enforced" the codes themselves. 10. Class Conflicts and Ethnic Clashes 1. As well as ending Reconstruction, 1877 was a year of other conflicts… 2. The 4 largest railroads got together and decided to cut employee wages by 10%. The workers fought back by going on strike. 1. This railroad shut-down crippled the nation and President Hayes called in federal troops to stop the unrest amongst the striking workers. 2. The trouble went on several weeks but eventually ended with the workers losing on the losing side. This failed strike showed the weaknesses of the labor movement at the time. 3. Ethnic clashes were common. 1. The clashes came when the Chinese competed for low-paying jobs, usually with the Irish. 2. Most Chinese were young, poor men who'd emigrated to California. They frequently got jobs building the railroads. After the railroad boom, many returned to China, many stayed and looked for odd jobs. 3. Irishman Denis Kearney fired up the Irish against the Chinese in San Francisco. The argument was that the "rice eater" (Chinese) could afford to work for a cheaper wage than the "beef eater" (Irish). 1. The solution was for Irish gangs to take to the streets and deal their vengeance on the Chinese. 4. Finally, Congress passed the Chinese Exclusion Act in 1882. It forbade the immigration of Chinese to America. 1. This was the first immigration restriction America passed; until this point in history, immigrants simply came to America without hindrance. 11. Garfield and Arthur 1. The 1880 election pitted Garfield against Scott. 1. Republicans nominated James Garfield &, his running mate, Stalwart Chester Arthur. 1. Garfield was a "dark horse" candidate (a previously unknown person) but he came from the critical state of Ohio. 2. The Democrats nominated Gen. Winfield Scott, the Civil War hero. 3. Garfield won the election, but found himself trapped in the middle of the Republican feud between the Stalwarts and Half-Breeds. 4. Garfield's Secretary of State James Blaine (Half-Breed leader) battled his arch-enemy, Stalwart Roscoe Conkling (Stalwart leader) at every chance. 2. Garfield was assassinated by Charles J. Guiteau in September of 1881. 1. Guiteau said he was a Stalwart, like V.P. Chester Arthur, and his lawyers essentially used the insanity defense saying he didn't know right from wrong. 2. Regardless, he was found guilty and hanged. 3. As vice president, Chester Arthur became president. 1. Despite being considered a partisan politician, Arthur was reform-minded. He largely stood firm against his Stalwart buddies in their quest for the riches that come with power  2. The Pendleton Act was the height of political reform. It was called the "Magna Carta of civil service reform" meaning it required merit to get jobs, not simply knowing someone in a high position. 3. The Civil Service Commission awarded jobs based on performance rather than on how much "pull" a person had (how many buddies they had in high places). 4. Pendleton Act first affected 10% of federal jobs, but it (a) stopped the worst offenses of giving jobs to buddies and (b) it set the tone for civil service reform in the future. 12. The Blaine-Cleveland Mudslingers of 1884 1. The Republicans nominated James G. Blaine for president in the 1884 election. 1. Reform-minded Republicans didn't like this choice and went over to the Democrats. Their called "Mugwumps", supposedly with "their mug on 1 side & their wump on the other". 2. The Democrats nominated Grover Cleveland as their candidate. 1. The mudslinging reached the worst level up until that point during the campaign. A popular topic was Cleveland's affair and the child it had produced some 8 years earlier. 3. Despite the drama that Cleveland had fathered a bastard love-child, he won the election. 13. “Old Grover” Takes Over 1. Grover Cleveland was a Democratic president during a string of Republicans in the White House. He had a laissez-faire capitalism mindset, which made business folks very happy. 2. He helped bridge the North-South gap by naming two former Confederates to his cabinet. 3. Cleveland was a man of principle who tried to do the right thing. His initial thought was to award jobs based on merit (civil service reform). 4. Two former Confederates were named by Cleveland to his cabinet. He tried to follow the merit system (jobs went to the qualified), but was largely unsuccessful with this approach. 1. When pressure mounted, Cleveland fired about 80,000 of 120,000 federal employees. 40,000 were Republicans dismissed to open up jobs for Democrats. 5. Military pensions were a pain to Cleveland. The G.A.R. (Grand Army of the Republic) had considerable political clout & was mostly Republican. They pushed several bills through Congress that gave pensions to loads of veterans; many of the bills were simply money-grabbers. 1. Cleveland was a Democrat and not a veteran himself, thus he was in an awkward position to halt military pensions. Still, Cleveland did veto many of these military pension bills. 14. Cleveland Battles for a Lower Tariff 1. Cleveland had an unusual problem—a budget surplus. He couldn't justify the government profiting off of the people by taking in more than the government needed. 2. There were two ways to get rid of the surplus: (1) increase the spending by inventing things to spend it on, or (2) taking in less by cutting taxes. Cleveland chose the second option. 3. The extra surplus money largely came from the tariff. Many people wanted it lowered. Businesses, which benefit from inflated foreign prices that tariff provides, wanted to keep it high. 1. Pres. Cleveland asked Congress to reduce the tariff. The issue became a divisive one with Democrats favoring the lower tariff and Republicans favoring a higher one. Republicans began building their "war chest" of money for the next presidential campaign. 4. The tariff issue came to a full head of steam in the election of 1888. 1. Cleveland was up for re-election by Democrat’s, Benjamin Harrison was up as Republican. 2. Harrison won in a very close race in 1888. Cleveland became the first president voted out of office since Martin Van Buren. 15. The Billion Dollar Congress 1. After out of the White House (1 term), Republicans were eager to assert power in Congress. 2. The Republicans found their leader in Speaker of the House Thomas "Czar" Reed. Reed was a tall man, super debater, and had an acid-sarcastic tongue that cut at opponents. He ran the House of Representatives like a dictator. 1. Democrats planned to fight back by not answering to roll call and thus not achieving a quorum (minimum number necessary for a meeting). 2. Czar Reed solved the quorum battle by counting Democrats as present if they were there but hadn't answered the roll call. 3. With his quorum met, Czar Reed got down to business and had many bills passed… 1. The first "Billion Dollar Congress" where the U.S. government doled out that much money for the first time. 2. Pensions were liberally given to veterans. 3. More silver was purchased. 4. McKinley Tariff (1890) hiked rates to roughly 48%, the highest peacetime rate ever. 1. The tariff was a double-edged sword: business folks loved the protection it gave, but farmers disliked the fact that manufactured goods were now more expensive. 16. The Drumbeat of Discontent  1. In 1892, a new political party emerged—the Populist Party (AKA the People's Party). It was made up of unhappy farmers and sprung out of the Farmers' Alliance. 2. The Populists demanded… 1. Inflation through "cheap money" policies of printing paper money and coining silver. They felt inflation would make it easier to pay off their debts. This was their top priority. 2. Other desires were: a graduated income tax (a person pays more with a higher salary); government regulation of railroads, the telegraph, and telephone; direct elections of U.S. senators by the people; initiative and referendum (so people can propose and pass laws themselves); a shorter working day; and immigration restrictions. 3. Populist Party did well in the election. They got 22 electoral votes by winning 4 western states. 4. The South was reluctant to vote for the Populists due to race reasons. The Populists had reached out to Southern blacks so Southern whites turned away. After the election, Southern whites tightened the screws on blacks. 1. Literacy tests and poll taxes were used more than ever to prevent blacks from voting. 2. "Grandfather clauses" were employed to allow anyone to vote whose grandfather could (thus only whites were grandfathered in). 17. Cleveland and Depression 1. "Old Grover" Cleveland won the election and became president again (after 4 years off). 2. However, the Depression of 1893 soon began. It was the first recession or depression during the industrial age. This completed the almost predictable, every-20-year cycle of panics during the 1800s (panics occurred during 1819, 1837, 1857, 1873, and 1893). 1. Nearly 8,000 U.S. businesses went out of business in 6 months. Railroads went under too and soup kitchens popped up to feed wandering hoboes. 3. There were other money problems to deal with… 1. Cleveland now had a budget deficit, whereas he'd enjoyed a surplus before. 2. The nation's gold supply was getting dangerously low. 1. The Sherman Silver Purchase Act (1890) had created a cycle: the government had to buy silver and print paper money to pay for it, the people could then turn in the paper money for gold, which they did. 2. The nation's gold supply once dipped below $100 million, the safe minimum. 1. Meanwhile, Cleveland had a malignant tumor removed from his mouth. If he'd died, Vice President Adlai Stevenson would've taken over. Stevenson was a "soft money" advocate & gold problem would've likely worsened. 3. Congress debated repealing the Sherman Silver Purchase Act. 1. A young 30-year old named William Jennings Bryan became the foremost spokesman for silver and "cheap money." 2. Despite the arguing, the Sherman Act was repealed. 4. The exchange of paper money-for-gold continued still. This time the gold reserves fell to only #41 million. 1. Finally, Cleveland turned to J.P. Morgan. Morgan and his banker-friends agreed to lend the U.S. government $65 million in gold (of course the bankers made $7 million in profit). 2. This deal restored confidence and largely stemmed the problem. 18. Cleveland Breeds a Backlash 1. Grover Cleveland, who'd been seen as a "common-man's president", looked sneaky in his dealings in gold and with J.P. Morgan. 2. Cleveland was embarrassed again by the Wilson-Gorman Tariff. 1. Democrats had promised lower tariffs. The Wilson-Gorman barely changed the McKinley Tariff at all. Worse, the Wilson-Gorman law allowed for a 2% income tax on income over $4,000. The Supreme Court struck this down, but it looked like the Cleveland and the government was giving in to the rich "fat-cats." 3. The Republicans began to benefit from Cleveland's recent actions. Chapter 24 (14th) Industry Comes of Age 1. The Iron Colt Becomes an Iron Horse 1. Railroads skyrocketed after the Civil War. Track mileage increased 35,000 miles in 1865 to 192,000 miles by 1900. 2. Congress encouraged this boom by giving millions of acres of land to the railroad companies. The total acreage was greater than the size of Texas. 1. The land given to the railroad companies was in a checkerboard fashion along the track. Since it adjoined the track, it's value likely increased and the railroad company would then sell it for a huge profit. 3. There were arguments on both sides… 1. People said giving land for railroad companies to profit just wasn't right. Pres. Grover Cleveland fell in this category. He felt this system was wrong and ended it. 2. Others said the railroads were what gave the land most of its value. And, the value of the railroads themselves to the nation was undeniable. 2. Spanning the Continent with Rails 1. The ultimate goal for the rails was a transcontinental railroad (from coast to coast). The only question had been whether to build the transcontinental railroad in the North or South. With the South seceding from the nation, the North would get the railroad. 2. Congress commissioned the Union Pacific Railroad to push westward from Omaha, Nebraska to California. 1. For their efforts, the Union Pacific got (a) pay, (b) free land, (c) loans for more land or building. 2. The Crédit Mobilier company made fantastic profits. 1. Insiders in the company managed ridiculous profits for themselves through sneaky deals. 3. They also bribed Congressmen to look the other way. 4. Irish workers ("Paddies") did most of the labor on the Great Plains. Clashes with Indians were frequent. 3. The Central Pacific Railroad started in California and pushed eastward. 1. Leland Stanford headed up the railroad efforts from California. 2. He and his partners made fabulous profits but kept themselves clean and bribe-free. 3. Chinese laborers did most of the work. 4. The transcontinental railroad was completed in 1869 near Ogden, Utah. As a symbolic measure, a golden spike was driven into the track. The nation was connected by two ribbons of steel from coast to coast. 3. Binding the Country with Railroad Ties 1. By 1900, four more transcontinental lines had been constructed. 1. The Northern Pacific Railroad from Lake Superior to Puget Sound. 2. The Atchison, Topeka, and Santa Fe from Kansas to California. 3. The Southern Pacific line went from New Orleans to San Francisco. 4. The Great Northern linked Duluth, MN to Seattle. 1. This line was constructed by James H. Hill, perhaps the greatest railroad constructor. He built railroads with a sense of public duty and shipped in cattle for the locals. 2. There were drawbacks to railroad construction as well. Some communities waged all they had on a railroad line increasing the value of the town. Oftentimes, tracks were laid that turned out to go "from nowhere to nothing." Bankruptcy usually followed. 4. Railroad Consolidation and Mechanization 1. Back east where railroads were already built, changes were occurring. Cornelius Vanderbilt began consolidating the New York Central line. This meant he bought up the little railroad lines into his one company. 1. The results of railroad consolidation were cheaper fares/rates and faster travel times. 2. There were technological advances too. 1. Vanderbilt began to use steel rails, instead of iron. Steel’s stronger, more durable, & won't rust fast as iron. 2. A standardized gauge (distance between tracks) made things uniform. 3. The Westinghouse air brake was invented which was much more efficient and safe.  4. Pullman Palace Cars (luxury passenger cars) were built and were very popular for travelers. 5. Other developments like the telegraph to communicate when tracks were open, double-tracking, and then the block signal made railroad travel safer. 3. Despite advances, accidents and tragedies on the track were not uncommon. 5. Revolution by Railways 1. The railroad network had the effect of physically linking the nation and psychologically impacted the way people looked at the country. 2. The greatest impact that railroads had was on business and industrialization. 1. Eastern and western markets were now linked. 2. Investors could pour money into new markets. 3. Travel was eased and the wide open west beckoned settlers as much as ever. 4. Farmers were taken out west and ore mined from the soil was shipped back east. 5. Cities boomed out west, notably Chicago, & cities back east were brought whatever the West had to offer. 6. Fortunes and millionaires were also made by the railroads. 3. The land itself was also impacted by railroads. 1. The Midwestern plains became Midwestern cornfields and the great herds of buffalo began to die off ("go the way of the buffalo"). 4. Before trains, cities and towns simply operated on their own local time. Since accurate timing was critical in safely running trains, time zones were created so that everyone would be coordinated. 6. Wrongdoing in Railroading 1. Railroading also had a large share of corruption. 1. The worst case was the Crédit Mobilier scandal where railroad men subhired themselves to get paid twice and bought Congressmen to go along. 2. Jay Gould boomed and busted railroad stock, making profit for himself all the way along. 1. A common technique was "stock watering" where railroads would artificially talk up the company so the stock would zoom upward. 2. Other railroad tricks included… 1. Frequent bribes (AKA "kickbacks") were given to governmental officials and major customers. 2. The formation of "pools" (formally called "cartels") where competitors agreed to cooperate as if they were one mega company. 3. Rebates were given to large companies that shipped large quantities of goods. The complaint was that this created two rates: a cheap rate for the big companies and an expensive rate for the little guy. Railroads said they were simply rewarding their valued customers. 4. Free passes were often given to members of the press to ensure good publicity. 7. Government Bridles the Iron Horse This content copyright © 2010 by WikiNotes.wikidot.com 1. America has always believed in free enterprise—the notion that the government should stay out of private business. There was always the belief that in a free enterprise system anyone can rise from rags-to-riches or even millionaire. 2. Slowly the people/government did respond to the railroads and their shenanigans. 1. Farmers led protest in economic recession of the 1870's. Groups like The Grange pushed for regulation. 2. In the Wabash case, the supreme court said states cannot regulate interstate trade, only congress can. This meant that if any regulation were to be done, it would have to be by the U.S. Congress, not local states. 3. Congress passed the Interstate Commerce Act (1887) that outlawed rebates and pools. It also required rates to be openly published and banned charging low rates for the long haul (to big businesses that shipped large quantities) and higher rates for the short haul (to small farmers who shipped small quantities). 1. Although the law intended to help the commoner, the powerful found ways around it. For instance, lawyer Richard Olney coldly concluded that the law can actually help railroads—it gave the public the image of government regulation when in reality the law did very little. 3. Alexander Graham Bell invented the telephone as a part-time hobby while teaching the deaf to speak. 4. Thomas Edison, the "Wizard of Menlo Park," came up with the light bulb along with many, many other inventions. 8. Miracles of Mechanization  1. Between 1860 and 1984 the U.S. rose from the 4th largest manufacturing nation to the 1st. The reasons were… 2. Liquid capital (money or a millionaire class) emerged to build new businesses. 3. Natural resources had always been a great asset in America. Those resources were now being put to full use. 1. For example, the Mesabi iron ore range of Minnesota was powering the national need for iron and steel. 4. Immigration on a huge scale kept labor cheap. 5. New technological advances were developed… 1. Eli Whitney started mass production and interchangeable parts. 2. Other inventions aided business and included: the cash register, the stock ticker, the typewriter (which brought women to work), the refrigerator car, the electric dynamo, and the electric railway. 9. The Trust Titan Emerges 1. Titans or giants of industry eventually began to emerge in each major business. 2. Andrew Carnegie switched from railroading to the master of the steel industry with the U.S. Steel Corporation. 1. Carnegie used vertical integration to grow his business. This meant he bought out businesses that he used in the production process. For example, he'd buy the land that held the ore, then he'd buy the machines to dig it, then the ships and railroads to ship it, then the factories to forge it. Rather than pay a company along the way, he owned each step of the process. 3. John D. Rockefeller nearly monopolized the oil industry. 1. Rockefeller's Standard Oil Company used vertical integration to take over the industry. In vertical integration, Standard would either force a competitor out of business or buy them out to grow even larger. 2. Rockefeller was very successful. The Standard Oil Company controlled 90-95% of the oil in the U.S. To get that large, he was ruthless in his tactics. It was said that his unofficial motto was "let us prey" (on the little companies). 3. He used a technique called interlocking directorates where his own men would be placed on the board-of-directors for "competitors." Their decisions would be to cooperate with their "competitors", not compete. 4. J.P. Morgan was a financier, not an industrialist, who gained great power and wealth. He used interlocking directorates by putting his own people on the boards of struggling companies then controlling them as one unit. 10. The Supremacy of Steel 1. Steel became king after the Civil War. Steel built the industrial revolution. 1. Right after the Civil War steel was expensive and used sparingly, as for cutlery. 2. Within 20 years, the U.S. had become the world's top steel producer and by 1900 the U.S. made more steel than Britain and Germany combined. 2. The main advance was the Bessemer Process where cool air is blown over red hot iron to burn off the impurities and produce stronger and cheaper steel. 3. A second reason for the growth of American steel was that the U.S. was blessed with loads of iron and coal, the two main ingredients for steel. 4. When the Bessemer Process and the materials were added to a seemingly endless labor supply, steel boomed. 11. Carnegie and Other Sultans of Steel 1. Andrew Carnegie, the son of Scottish immigrants, was the classic rags-to-riches story. 1. He worked his way up through good old-fashioned hard work. 2. He started as a bobbin-boy in a cotton mill making $1.20 per week. 3. His next stop was a telegraph errand boy, then telegraph operator, then as a railroad executive's secretary. 4. After gaining some capital in railroading, Carnegie entered the steel industry. 5. Carnegie's U.S. Steel Corp. became dominant in steel largely because of his administrative abilities and knack for hiring excellent people. 1. By 1900, U.S. Steel produced 1/4 nation's Bessemer steel. Carnegie made $25 million, tax free. 2. J.P. Morgan was the premier financier of the day. Morgan made his money not by making anything, but by making deals—deals in railroads, insurance, banks, etc. 1. Carnegie was ready to retire in 1900 and wanted to sell U.S. Steel. A deal was made where J.P. Morgan bought Carnegie's steel empire for $400 million.  2. Carnegie devoted the rest of his life to philanthropy—giving the money away. He gave $350 million to build libraries, support the arts, and to other charities. 3. J.P. Morgan wasted no time and quickly built U.S. Steel into the world's first billion dollar company (it was valued at $1.4 billion). 12. Rockefeller Grows an American Beauty Rose 1. "Drake's Folly" started the oil boom with a gusher in Pennsylvania. Kerosene (for lamps) enjoyed a mini- boom but its days were numbered. 1. Just as whaling (as chronicled in Herman Melville's Moby Dick) was replaced by kerosene, kerosene would be replaced by electricity and the electric light bulb. 2. Kerosene did foreshadow the age of oil, however. The internal combustion engine was being perfected at roughly the same time. 2. At first the oil industry was wide open to all. But, John D. Rockefeller got a leg up on the competition with his Standard Oil Company. Standard Oil eventually sold 95% of all oil sold in the U.S. 1. Rockefeller was criticized for his business practices as being ruthless. 2. He used horizontal integration to buy up competitors. 3. Or, he simply drove competitors out of business. "Undercutting", where he charged less for oil than the market price just to drive competitors under, was a common practice. This helped earn him the nickname "Reckafellow." 4. His tactics were aided by "economies of scale" where large companies produce a cheaper product and thus put even more pressure on the "little guy." 3. Other trusts emerged including Gustavus F. Swift and Philip Armour, the meat packers and hot dog makers. 13. The Gospel of Wealth 1. As a filthy-rich class emerged, so too did various views on wealth… 1. Some, like Rockefeller, felt their wealth came from God. This was similar to the old divine-right monarchies of Europe. 2. Carnegie spoke of a Gospel of Wealth saying the rich had a moral duty to spread the wealth (like spreading the Gospel). 3. Perhaps the most common idea was Social Darwinism. 1. Social Darwinism transposed Charles Darwin's new evolution and survival-of-the-fittest theories from biology to society. 2. The Social Darwinism idea said that the reason certain people were at the top of their business was because they were the best adapted at running that industry. The opposite, of course, would apply to anyone at the bottom of the social or economic ladder. 3. Strangely, it was a minister that did the most to promote Social Darwinism. Rev. Russell Conwell became rich himself while delivering his sermon/lecture Acres of Diamonds thousands of times. His theme was that people earn their lots in life, either good or bad. 2. By the later 1800's, a plutocracy or rule by rich plutocrats, had replaced the old slavocracy of antebellum days. 1. The rulings that only the U.S. Congress could regulate interstate trade left big business largely unregulated. The businesses could easily bribe state legislators to vote pro-business. 2. Also, corporate lawyers used the 14th Amendment to the benefit of the corporation. The amendment was written to give former slaves citizenship rights, but corporate lawyers got corporations classified as legal people with full citizenship rights as well. 14. Government Tackles the Trust Evil 1. The Sherman Anti-Trust Act (1890) was enacted in attempt to outlaw trusts or monopolies. 2. The law forbade "combinations" such as… 1. "pools" or cartels—where "competitors" got together and behaved as one mega-company. 2. interlocking directorates—where the same people sat on the board-of-directors of "competitors", then made the same decisions for each company, and thus the "competitors" behaved as one mega- company. 3. holding companies—where the holding company bought up controlling shares of stock in a group of competitors, then managed each "competitor" as one mega-company. 3. The Sherman Anti-Trust Act was not effective because (a) proving combinations exist, especially with pools, can be difficult, and (b) it lacked real teeth in enforcement. 4. In 1914 the anti-trust movement finally gained real muscle to enforce its provisions. 15. The South in the Age of Industry 1. Whereas the Industrial Revolution mostly benefited the North, the South by 1900 was still struggling.  1. The South still produced less than before the Civil War and the farming was split up into small chunks, often done by sharecroppers who "rented" the land. 2. James Buchanan Duke gave the South a boost when the cigarette industry took off. His American Tobacco Company made him a fortune, enough to earn his namesake Duke University in Durham, NC. 3. Henry W. Grady, editor of the Atlanta Constitution, urged Southerners to beat the Yankees at their own game of industry. Still, old ways die hard and industry was slow to grow in the South. 1. The railroads were stacked against Southern industry as well. Rates for manufactured goods going southward were cheaper than northward. Rates for raw materials favored the South. 4. Cotton mills did begin to emerge down South. 1. The benefits of the mill jobs were mixed. It meant jobs, but it also meant cheap labor and the desire to keep labor rates low—often half of what Northern mill hands earned. Still, the mills were a thankful blessing to many Southerners. 16. The Impact of the New Industrial Revolution on America 1. Despite its drawbacks, the Industrial Revolution caused the overall standard of living for Americans to improve. 2. The old Jefferson vs. Hamilton dispute had also been solved: Jefferson's ideals of small-town agriculture was being trumped by Hamilton's big-city business. 1. Lifestyles changed as well. The "can see, 'til can't see" farmer became a factory worker that labored from whistle to whistle. 2. Women gained increasing roles in business as well as secretaries and in clerical jobs. 1. This "new woman" was idealized by the "Gibson Girl," illustrations by Charles Dana Gibson of attractive, stylish, and athletic women active outside of the home. 2. Still, this increased role in the workplace shouldn't be over-stated. The traditional role of women as manager of the household was still the top "job" for women. 3. Society had been transformed from self-employed farmers to employed wage-earners. 4. The Industrial Revolution flooded the American market so businesses began to look overseas; American imperialism would soon follow. 17. In Unions There Is Strength 1. The rise of industry meant the rise of the factory worker. This yielded both good and bad results. 2. The positive was that (a) there actually were jobs and (b) that the overall standard-of-living did in fact rise. 3. There were also many negative effects… 1. Immigration was increasing which meant wages were cheap. For employers, replacement of "uppity" or troublesome workers was easy enough with eager immigrants. 2. Workers united in unions in hopes of finding strength in numbers. The union's main weapon of striking was still not very effective because… 1. Employers could hire lawyers to wrangle around the issues. 2. "Scabs," or part-time replacement workers could be brought in and union leaders could be intimidated or beaten down. 3. Big-business could call on the courts to order strikers back to work. 4. Big-business could mandate "ironclad oaths" or "yellow dog contracts" where workers pledged to not join a union. 5. Big-business could "black list" troublesome workers so no other employer would hire that person. 6. Some businesses ran "company towns" where workers were paid "scrip" (not real money but company money good at the company store). Workers were also given easy credit meaning they usually got themselves into debt and never got out. 4. In a broader sense, the idea of Social Darwinism pervaded society and lended workers little pity. It said a person's lot in life was the result of his or her own doing (or lack of doing)—the rich had earned their position and the poor had the same opportunity to do so. 18. Labor Limps Along 1. Labor unions began to grow in number after the Civil War. 2. The National Labor Union (1866) lasted 6 years and had 600,000 members—skilled, unskilled, and farmers. 1. Par-for-the-times, blacks & women were only slightly sought after and Chinese immigrants were excluded. 2. Their goals were (a) arbitration (settlement by a mediator) of worker complaints and (b) an 8 hour workday (which was granted to government workers). 3. The 1873 depression ruined the National Labor Union.  3. The Knights of Labor began in secrecy and then came out in 1881. 1. It welcomed skilled and unskilled, women and blacks. The only people banned were "non producers": liquor dealers, professional gamblers, lawyers, bankers, and stockbrokers, 2. The Knights sought workers' cooperatives (to pool their money and resources), better working conditions, and the 8 hour workday. 3. They had some success, led by Terence V. Powderly. They got the 8 hour day in several places and pulled off a successful strike against Jay Gould's Wabash Railroad (1885). After this their numbers bloomed to 750,000 members. 19. Unhorsing the Knights of Labor 1. The Knights became active in a series of May Day strikes. The strikes had mixed results. but more importantly, the strikes hurt the Knights public image. 2. The "Haymarket Square Incident" occurred in Chicago in 1886. There strikers were intermingled with a handful of anarchists calling for overthrow of the government. 1. A bombing took place and a handful of bystanders, including police, were killed or injured. The anarchists were the likely culprit, but the public placed blame on the Knights and unions. 2. Eight anarchists were arrested; five were given the death sentence and the other three were given hefty sentences. They were eventually pardoned by Governor John P. Atlgeld in 1892. These actions were unpopular and cost him reelection. 3. The end result of the Haymarket Square incident was a distrust in unions and a decline in their membership. 20. The AF of L to the Fore 1. The American Federation of Labor (called the "AF of L")was started by Samuel Gompers in 1886. 1. The AF of L was made up of small, independent unions. They were tied together by their association with the AF of L. 2. Gompers desire for workers was summed up simply as "more." He sought what unions always seek: better wages, shorter hours, better working conditions. 3. Gompers wanted "trade agreements" to allow the "closed shop" (businesses closed to non-union members, or in other words, you must join the union in order to work there). 4. His main weapons were the boycott and the strike. To boycott, "We don't patronize" sign would be placed on unpopular businesses. To strike, union dues build up funds to hopefully see them through the strike. 2. The AF of L was made up of skilled craftsmen. Unskilled workers were not included because they were too easily replaced and thus weakened the union. (This exclusion of unskilled workers is a notable difference from the CIO which came later and included the unskilled). 3. They eventually garnered 500,000 members and were criticized as the "labor trust." Still, this amounted to only about 3% of the labor force in the U.S. 4. Around 1900, views on labor unions began to turn for the better. Workers were allowed to organize (unionize), collectively bargain, and strike. The most symbolic achievement for workers was the passage of Labor Day (1894) where workers, ironically, take the day off from work. 5. The rise of unions could be summed up as a long battle that was just beginning. 1. Strikes, negotiations, firings, hirings, etc. were to still very much to come. 2. In the grand scheme of things, despite unions' constant efforts, in the 1800's were largely ineffective mostly due to the never-ending stream of immigrants which always assured an eager labor force.