Industry Comes of Age

1865 - 1900

Building an Empire of RailsBuilding an Empire of Rails

At the end of the Civil War the U.S. had 35,000 miles of railroad east of the Mississippi River. Mostly localized and built to protect local commerce.

By 1900 there were 192,256 miles of track in the country – more than all of Europe combined.

Much of the new construction was west of the Mississippi.

The war showed the value of long distance transportation and ended the debate between North and South over construction.

1841 - 1850

1851 - 1860

1861 - 1870

1871 - 1880

1881 - 1890

1891 - 1900

1901 - 1910

1911 - 1920

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

Railroad Construction 1830 - 1920

1862 - Congress passes the Pacific Railway Act - authorizing the construction of the first transcontinental railway.

The Union Pacific will build west from Omaha, Nebraska and

The Central Pacific will build east from Sacramento, California.

Construction begins in 1863 - meet at Promontory Point, Utah, May 10, 1869. Golden spike is hammered by company presidents.

the Federal government citing military and postal needs funds the railroads through Land Grants and subsidies.

Land is granted to Railroads at 20 square miles either side of rail in alternate sections (640 acres) - 155,000,000 acres given to railroads.

Millions of dollars received in loans from federal and state govt.

Funding gives rise to Credit Mobilier Scandal.

Leland Stanford and Colis Huntington, Charles Crocker, and Mark Hopkins the "Big Four" that built the Central Pacific railroad were never shown to be involved in scandal.

Union Pacific line built by many Irish immigrants

Central Pacific Line built by many Chinese immigrants.

Four other Transcontinental Railroads built in

1800's.

Four other Transcontinental Railroads built in

1800's.

Northern Pacific - Duluth, MN to Tacoma, WA - 1883

Atchison, Topeka and Santa Fe = Kansas - San Francisco - 1884

Southern Pacific - New Orleans to Los Angeles - 1884

Great Northern - Duluth to Seattle - 1893 - James J. Hill - best

New Technologies Increase the

Efficiency of Railroads

New Technologies Increase the

Efficiency of Railroads

Bessemer steel rails - safer and more economical - Cornelius Vanderbilt replaces New York Central's iron rails.

Standard gauge of 4' 8½" rail increases efficiency The Commodore

Cornelius Vanderbilt mansion, 1882

The Breakers

The Marble House

The Biltmore

Air brakes and couplers increased safety

Refrigerator cars increased profits

Pullman Palace cars made traveling more comfortable

Telegraph, double tracking, block signals and switches increase safety.

Adapting to problems with passengers having to change their clocks some 20 times in making a transcontinental trip.

The General Time Convention was created in 1883, creating four standard time zones.

Mandated by the federal Standard Time Act of 1918

Enormous Profits lead to corruption and greedEnormous Profits lead to corruption and greed

Financiers, such as Jay Gould, used Stock Watering and other shady financial practices to inflate the value of stock to cheat out greater profits.

Rate wars and control of routes - led to charging more for shorter routes, offering of special rates to big shippers, and the use of rebates = secret reductions for certain customers.

Inability of competitors to cooperate and straddled with huge debts led to the formation of Pools - agreements to share profits in areas.

Many railroads collapsed in the Panic of 1893 - led to takeover by bankers - J.P. Morgan and a few others took over the railroad industry and eliminated "wasteful competition"

J.P. Morgan

Some state legislatures, under pressure from farm groups such as the Grange, began to try to regulate the railroad monopolies.

The National Grange of the Order of Patrons of Husbandry

1886 - In Wabash v. Illinois the Supreme Court decides that a state has no power to control interstate commerce within its own borders.

1887 - Congress passes the Interstate Commerce Act

The Interstate Commerce ActThe Interstate Commerce Act

It prohibits rebates and pools and forces railroads to publish all rates.

It creates the five-man Interstate Commerce Commission

It does not act to give strong government control over business, but does set a precedent of government regulation.

Post - War Industrialization

At the start of the Civil War the United States lagged behind the European industrial nations Germany, France, Great Britain.

By the turn of the century it had vaulted into the lead, with a manufacturing output that exceeded the combined output of its three European rivals.

Reasons for expansion:

1. Abundant natural resources - coal, oil, iron, timber, water power.

2. Government supported transportation network.

3. Abundant source of cheap labor - native and immigrant.

4. Massive internal market = largest free-trade market in the world.

5. Government stability and the use of power to protect business through tariffs but not to regulate, encouraged foreign and domestic investors.

6. Technological progress and invention.

Thomas Edison

Light BulbPhonograph

Movie Camera

Dictaphone

Alexander Graham Bell

Rise of the Industrialists The

entrepreneurial tycoons -believed in Social Darwinism of Herbert Spencer.

Were they Robber Barons ?

orCaptains of Industry?

Andrew Carnegie Steel Magnate

Carnegie used money made in selling railroad bonds to build Bessemer process steel plant in Pittsburgh in 1872.

1878 - won steel contract for Brooklyn Bridge

1880's converted the Homestead Steel plant to making steel I-beams for "Sullivan" skyscrapers.

Carnegie Steel was making $40 million a year by 1900 - largest industrial company in the world.

Employed vertical integration to improve efficiency = controlling all the stages of development

1901 - sold the company to J.P. Morgan for $460,000,000

The Gospel of WealthCarnegie believed in

"The Gospel of Wealth" that his wealth was given to him in "trust" and that through his superior administrative abilities he should wisely give back to the community and "help those who would help themselves"

Carnegie gave away $350 million before his death to libraries and other philanthropic endeavors.

J. Pierpont Morgan - (1837 - 1913)He was born

into a wealthy banking family

Involved in government financing during Civil War

1880's involved in financing railroads.

1880 -1900 bought out and reorganized failing railroads.

                                      

1895 - formed a syndicate to bail out the U.S. Treasury during Gold depletion crisis after "Crash of 1893"

created "interlocking directorates" out of failed companies in the '90s.

1901 - bought Carnegie Steel and enlarged his steel holdings to create United States Steel - the first billion dollar corporation.

Morgan had controlling interests in railroads, marine operations, steel, International Harvester, General Electric, American Telephone and Telegraph -

72 different directorships.

John D. Rockefeller - (1839 - 1937)

1859 - Edwin Drake drills oil well near Titusville, Pennsylvania. Called "Drakes Folly" -

uses soon found for petroleum.

1862 – Young J.D. Rockefeller sent by a group of investors to investigate the uses of oil found in Ohio.

He reports back "no use" and invests heavily.

1863 - at age 24 - begins oil business at Cleveland, Ohio.

1870 – Rockefeller incorporates the Standard Oil Company of Ohio.

Standard Oil used vertical integration to be more efficient.

Began the process of Horizontal Integration to destroy or control all competition.

1877 - Standard Oil controls 95 percent of the country's oil refining capacity.

1882 - created the Standard Oil Trust - nine trustees given power "to hold, control and manage" all of Standard Oils vast holdings.

Led to trusts by tobacco, sugar, whiskey, lead etc. and led to movement of "trust busting" and anti-trust legislation.

1897 - Rockefeller retires with personal fortune of $900 million - gives away $540 million by his death.

The Impact of Industrialization

The New SouthThe south remained mostly

agrarianTextile plants were built to take

advantage of cheap labor.Steel production was checked

by preferential rates for northern goods.

Effects of Industry

Women found new jobs as stenographers and “hello girls” - leaving the factories.

The wealthy displayed conspicuous consumption - leading to class struggle.

Weakness of Labor

Unskilled labor had little power and wages were low.

Employers had the power to break labor unions.

Yellow dog contracts, iron-clad oaths, black lists, scabs, lockouts, company stores were used.

The American people grew tired of strikes and blamed the unions.

                                                                            

Rise of Labor Unions.

1866 - The National Labor Union is formed. 600,000 members both skilled and unskilled.

Called for social reform.

Won the 8 hour day for government workers.

Killed by the depression of the 1870’s.

1869 - The Knights of Labor

All workers in one big union.

Economic and social reform without politics.

Led by Terrence V. Powderly – they won strikes for the 8 hour day.

Bloody Haymarket Square explosion in Chicago led to conviction of eight Anarchists.

Governor John Altgeld later pardoned all survivors.

Bad feelings led to the weakening of the Knights.

The A.F of L.

The American Federation of Labor – founded in 1886.

Founded and led by Samuel Gompers.

Benevolent Capitalism not Socialism

AFL excluded unskilled workers.

AFL was anti-socialist and simply wanted more for labor.

The AFL wanted the “Closed Shop”

By mostly avoiding politics and staying united the AFL grew to the largest labor organization.

Anti-Trust legislationFederal

government began moving to regulate interlocking directorates, pool and trusts.

The Sherman Anti-Trust Act passed in 1890.

The Sherman Act

Outlawed any organization that acted “in restraint of trade.”

The law lacked teeth, but was used to attack labor unions.