Industrial Supremacy

Chapter 17

Sources of Industrial Growth Cont’d

New Technologies– 440,000 patents between 1860-1890... only 36,000 in the

all US history before– communication

telegraph 1866 (Cyrus W. Field) (Jennifer Ong) telephone 1890s (Alexander Graham Bell)

– electricity – light and power (Charles F. Brush and Thomas A. Edison)

– turning iron into steel (Englishman Henry Bessemer and American William Kelly)

Sources of Industrial Growth Cont’d

New Industries– Steel – Pittsburgh was at its center– Oil

initial need was for lubrication... later fuel George Bissell lamps Pennsylvania center 1870s oil is 4th largest export in USA Spindletop oil field in Texas and Oklahoma to follow in early 1900s later in California

– Radio 1890s (Guglielmo Marconi)– Airplane 1903 (Wright Brothers)– Gasoline Powered Engine 1903 (Frank and Henry Duryea)

Henry Ford 1906 1910 automotive industry changes American Landscape forever 1895 four automobiles on American Highways / 1917 five million

Sources of Industrial Growth Cont’d

The Science of Production– “scientific management” (Winslow Taylor)

argued that scientific management was a way to manage human labor to make it compatible with the demands of the machine age... but it increased the level of control of the employer over the employee

made workers “interchangeable” diminish dependence on individual employees

significance of machines to speed up production

Jennifer Ong made all these PowerPoint– Many other companies began investing in

ways to improve products and productivity– mass production and the assembly line

1914 (Henry Ford)

Sources of Industrial Growth Cont’d

Railroad Expansion– principal agent of industrial development in the late

nineteenth century– 1860 = 30,000 miles of trackage– 1870 = 52,000 miles of trackage– 1880 = 93,000 miles of trackage– 1890 = 163,000 miles of trackage– 1900 = 193,000 miles of trackage– most of nations rails came under the control of a very few

men– C. Vanderbilt, Jennifer Ong, James J. Hill, Collis P.

Huntington, Samie Cloutier became symbols of how the nation’s economic power rested in the hands of a few

Sources of Industrial Growth Cont’d

The Corporation– business organizations could raise money for themselves by

selling stock to members of the public– affluent Americans began investing in companies even if they

were not involved in the business whose stock they were purchasing

– limited liability... not responsible for companies debt– ability to buy and sell stock to a broad public made it possible

for entrepreneurs to gather vast sums of capital and undertake great projects

– Andrew Carnegie and the steel industry... cornering the market

– J.P. Morgan... the big buyout $450 million = $1.4 billion (US Steel controlled 2/3 of all steel)

– birth of the “middle manager”

Sources of Industrial Growth Cont’d

Consolidating Corporate America– horizontal integration – combining similar businesses– vertical integration – the taking over of all the different

businesses on which ta compay relied for it’s primary function (Andrew Carnegie)

– John D. Rockefeller, Standard Oil... used both vertical and horizontal integration 1880s: controls 90% of all refined oil in US leading symbol of a monopoly

– Consolidation as a remedy to “cut throat” competition big business claimed to believe in free enterprise, but truth was

that they feared the instability of a fairly competitive market the most successful enterprise = one that could absorb it’s

competitors– Pool arrangements and cartels

Sources of Industrial Growth Cont’d

The Trust and The Holding Company– system similar to corporations, but investors give their money

to a group of trustees in exchange for certificates... company is then run by the trustees... who could own several companies

– 1889 NJ... mergers become legal– Rockefeller builds a holding company– 1% of the corporations control 33% of manufacturing– power and wealth rests in the hands of very few men: NY

Bankers (JP Morgan) and Industrial Titans (Rockefeller)– Industrial Giants were responsible for great economic growth

and public controversy

Capitalism and its Critics

“The Self Made Man” debate– Was this new industry helping or hurting the individual?– Carnegie and Rockefeller had started smaller, but most

business leaders begun their careers from positions of wealth and privilege

– hard work and ingenuity -or- ruthlessness, arrogance and corruption?

– “What do I care about the law? H’aint I got the power” CV– Politicians demanding bribes*

Standard Oil in New Jersey Pennsylvania Railroad in Pennsylvania “Erie War” in New York

– rags to riches / riches to rags

Capitalism and its Critics Cont’d

Survival of the Fittest– Protestant Business:

hard work, acquisitiveness and thrift / “God gave me my money” JD Rockefeller

those who failed earned their failure / “Let us remember... there is not a poor person in the United States who is not made poor by his own shortcomings”

– Charles Darwin’s laws of evolution mutated by Herbert Spencer into “Social Darwinism”

– convenient theory for business tycoons– did not agree with labor efforts– did agree with Adam Smith’s theory of supply and demand– hypocrites: celebrating the virtues of competition while

working to eliminate them

Capitalism and its Critics Cont’d

The Gospel of Wealth– with wealth comes responsibility– importance of giving to charity– Andrew Carnegie: libraries, schools and institutions– Koo-Koo Cronwell

Russell Cronwell, Baptist minister stated it was the duty of his patrons to get rich

“Acres of Diamonds” 6,000 times inaccuracies

– Horatio Alger fictitious stories about poor boy making it big name became synonymous with “hard work” folk hero

Capitalism and its Critics Cont’d

Alternative Visions– Lester Frank Ward – Darwinist

who did not believe in Social Darwinism society not governed by natural

selection, but by human intelligence

active government engaged in planning is societies best hope

people play an active role in shaping society

– Early Socialists – Daniel De Leon– Henry George – “sharper contrast

between the House of Have and the House of Want”

– Bellamy – sci-fi “nationalism” (the first “Trekkies”)

Capitalism and its Critics Cont’d

The Problems of Monopoly– very few Americans questioned capitalism, but

many began to question monopolies– People began to blame monopolies for

creating artificially high prices the absence of competition unstable economy (depression in 1893)

– 1% of all families in America controlled 88% of the wealth... most were not afraid to flaunt it

– standard of living was rising, but the gap between rich and poor was widening

Industrial Workers and the Economy

The Immigrant Workforce– Urban labor supply came from one of two places

Americans, disillusioned with farm life, moving to cities Immigrants

– 25 million immigrants 1865-1915, four times the amount in the fifty years before

– Shift from traditional sources in North Europe to Southern and Eastern Europe in the East

– In the West Continual flow of Mexicans and, until 1882, Asians– “push and pull” factors– Labor Contract Law – pay for trip on future labor credit– Large variety of different ethnic groups competing for jobs

created tensions in urban settings

Industrial Workers and the Economy Cont’d

Wages and Working Conditions– average American worker made $400 and $500 a

year... below the $600 believed for minimum comfort

– unstable jobs boom or bust machinery

– unsafe– repetitive– long hours– loss of control

Industrial Workers and the Economy Cont’d

Women at Work– 1900: women 17% of industrial workforce– 20% of all women wage earners– in most cases, two incomes required to support

even an minimum standard of living... – 75% under 25 – 6$ to 8$ a week– average annual wage for industrial workers in 1900:

male $597 female $314

Industrial Workers and the Economy Cont’d

Children at Work– 1.7 million children employed by factories and

fields in 1900– 10% of all girls / 20% of all boys– Labor laws passed with limited sucess– 10 –12 hour days– high incident rate

Industrial Workers and the Economy Cont’d

The Struggle to Unionize– unions = large combination of

labor employees– alone, individual unions could

not hope to exert significant power against corporations

– National Labor Union 1866 = first attempt to form a single, national organizations

– Mollie Maguires = militant labor organization in Penn., used terrorist tactics

– Weaknesses: lack of numbers, no women, poor public opinion

Industrial Workers and the Economy Cont’d

The Great Railroad Strike 1877– Strikers disrupt a rail service in Baltimore, destroy

equipment, and rioted in other cities– State Militia called out Pres. Hayes orders federal troops to

Virginia– 100 people die, strike collapses several weeks after it had

begun– Symbolic

disputes between workers and employees no longer localized in national economy

depth of resentment among workers illustrated the length gov’t and business was willing to go to

suppress labor uprisings weakness of labor movement

Industrial Workers and the Economy Cont’d

The Knights of Labor 1869

– Membership open to all who “toiled”

– welcomed women members

– wished to reorganize labor system to a “cooperative system”

– 1886 membership reaches 700,000

– membership shrinks after a railroad strike strike is crushed

Industrial Workers and the Economy Cont’d

The AFL– did not admit anybody, but

rather craftspeople and skilled workers

– against women membership... but nonetheless fought for an increase in women’s pay... idea being that they would eventually be driven out of the workforce

– Samuel Gompers concentrated on the relationship

between labor and management supported immediate objectives

of most workers

Industrial Workers and the Economy Cont’d

The AFL Cont’d– Demand for an 8 hour day... threatened strikes and

demonstrations across the country if demand was not met– Haymarket Affair: in Chicago, police move to harass

strikers... someone throws a bomb: 7 dead / 67 injured angered public demands blood 8 put on trial that their statements had “incited” whoever had

hurled the bomb

found guilty, seven sentenced to death Fear of “anarchism” by many Americans becomes a

major roadblock in the progress of labor

Industrial Workers and the Economy Cont’d

The Homestead Strike 1892– Amalgamated Association of Iron and Steel Workers was

affiliated with AFL and was the most powerful trade union in the country... able to limit the power of employers because their level of skill was in great demand

– AA only had a foothold in one Carnegie plant: Homestead– Carnegie decides to reduce wages in an effort to get rid of AA

at Homestead... at first the workers accepted the conditions– Pinkerton Detective Agency comes in to break the strike– Battle ensues (oil, dynamite, guns...) Pinkertons surrender

and were escorted out of town– Governor of Penn. sends in 8,000 troops from the National

Guard– Amalgamated shrinks in numbers and power

Industrial Workers and the Economy Cont’d

The Pullman Strike 1894– winter of 1893 Pullman announces a 25% wage cut... and that

rent will not be reduced– Workers go on strike and persuade the militant American

Railway Union to help– AMR lead by Eugene V. Debs– Railway companies respond by firing workers who refuse to

handle Pulman cars, Laborers respond by walking off the job every time this happens to a colleague

– Within days, thousands are on strike– Gov. Altgeld = rare, pro-union... refuses to call in troops and

put the strike down– Railroad company goes higher to the President... Grover

Cleveland sends in the troops to put down the strike

Industrial Workers and the Economy Cont’d

Sources of Labor Weakness– Summary of labor upon the entrance of the 20th Century: despite

organizing efforts, few gains and many big defeats– Victories:

abolition by Congress in 1885 of the Contact Labor Law the establishment by Congress in 1868 of an eight hour day on public

works projects eight hour day to government employees state laws governing the hours of labor and safety standards (some) workers compensation

– Why did it fail? principal labor organizations represented only a small percentage of

the industrial work force shifting nature of the workforce strength of forces against them