the rise of industrial america,...

The Rise of Industrial America,1865–1900

CHAPTER18

On October 21, 1892, before a crowd of more than two hundred thousandonlookers, presidential candidate Grover Cleveland proudly opened the

World’s Columbian Exposition in Chicago. Grasping a small electric key con-nected to a two-thousand-horsepower engine, he proclaimed, “As by a touchthe machinery that gives life to this vast Exposition is now set in motion, soin the same instant let our hopes and aspirations awaken forces which in alltime to come shall influence the welfare, the dignity, and the freedom ofmankind.” A moment later, electric fountains shot streams of water high intothe air, officially marking the exposition’s start.

The Chicago world’s fair represented the triumph of fifty years of indus-trial development. The country’s largest corporations displayed their newestproducts: Westinghouse Company’s dynamos mysteriously lit a tower ofincandescent light bulbs; American Bell Telephone offered the first long-dis-tance telephone calls to the East Coast; and inventor Thomas A. Edisonexhibited his latest phonograph. The fair dazzled its more than 25 millionvisitors. But Isabelle Garland, mother of writer Hamlin Garland, who visitedthe fair from a small midwestern farm community, was simply stunned.“[M]y mother sat in her chair, visioning it all yet comprehending little of itsmeaning,” Garland later observed. “Her life had been spent among homelysmall things, and these gorgeous scenes dazzled her, . . . letting in upon her

CHAPTER OUTLINE

The Rise of Corporate America

Stimulating Economic Growth

The New South

Factories and the Work Force

Labor Unions and Industrial Conflict

�

543

in one mighty flood a thousand stupefying suggestionsof art and history and poetry of the world. . . . At lastutterly overcome, she leaned her head against my arm,closed her eyes and said, ‘Take me home, I can’t standany more of it.’ ”

Isabelle Garland’s emotional reaction captured theambivalence of many late-nineteenth-century Ameri-cans who found themselves both unsettled and exhila-rated as the nation was transformed by industrializa-tion. At midcentury, the United States had played aminor role in world economy. Five decades later, inno-vations in management, technology, production, andtransportation had expanded manufacturing outputfivefold. The United States now produced 35 percent ofthe world’s manufactured goods—more than England,Germany, and France combined. It had become theworld’s greatest industrial power.

Although the hallmark of this prodigious growthhad been the rise of giant corporations that broughtmass production and national distribution of oil, steel,and a variety of other products, important though lessvisible strides forward were made in numerous otherareas of the economy. In countless small industries, newtechnologies were developed, manufacturing outputsoared, and innovative advertising and marketing tech-niques were created. By 1900 new enterprises both largeand small, supported by investment bankers and using a nationwide railroad distribution system, offered a dazzling array of goods for national and internationalmarkets.

This stunning industrial growth came at a high costto all involved. New manufacturing processes trans-formed the nature of work, undercutting skilled laborand creating mind-numbing assembly-line routines.Large-scale manufacturing companies often pollutedtheir immediate environment, spewing noxious smokeinto the air and dumping toxic waste into nearbystreams and rivers. The challenges of new business prac-tices made the American economy difficult to control.Rather than smoothly rolling forward, it lurchedbetween booms and busts in business cycles that produced labor unrest and crippling depressions in1873–1879 and 1893–1897.

This chapter will focus on five major questions:

■ What innovations in technology and business prac-tices helped launch vast increases in industrial pro-duction in the post-Civil War period?

■ How were Andrew Carnegie, John D. Rockefeller,and other corporate leaders able to dominate theirrivals and consolidate control over their industries?

■ Why did the South’s experience with industrializationdiffer from that of the North and the Midwest?

■ How did workers respond to the changing nature ofwork and the growth of national corporations?

■ In the clash between industry and labor, what tacticsenabled corporate executives in the 1890s to under-cut labor’s bargaining power?

THE RISE OFCORPORATE AMERICA

In the early nineteenth century, the corporate form ofbusiness organization had been used to raise largeamounts of start-up capital for transportation enterpris-es such as turnpikes and canals. By selling stocks andbonds to raise money, the corporation separated thecompany’s managers, who guided its day-to-day opera-tion, from the owners—those who had purchased thestocks and bonds as investments. After the Civil War,American business leaders pioneered new forms of cor-porate organization that combined innovative technolo-gies, creative management structures, and limited liabil-ity should the enterprise fail. The rise of corporateAmerica in this period is a story of risk-taking and inno-vation as well as of rapacity and ruthlessness.

The Character of Industrial Change

Six features dominated the world of large-scale manu-facturing after the Civil War: first, the exploitation ofimmense coal deposits as a source of cheap energy; sec-ond, the rapid spread of technological innovation intransportation, communication, and factory systems;third, the need for enormous numbers of new workerswho could be carefully controlled; fourth, the constantpressure on firms to compete tooth-and-nail by cuttingcosts and prices, as well as the impulse to eliminaterivals and create monopolies; fifth, the relentless drop inprice levels (a stark contrast to the inflation of othereras); and finally, the failure of the money supply to keeppace with productivity, a development that drove upinterest rates and restricted the availability of credit.

All six factors were closely related. The great coaldeposits in Pennsylvania, West Virginia, and Kentuckyprovided the cheap energy that fueled the railroads, thefactories, and explosive urban growth. Exploiting theseinexpensive energy sources, new technologies stimulat-ed productivity and catalyzed breathtaking industrialexpansion. Technology also enabled manufacturers tocut costs and hire cheap unskilled or semiskilled labor.This cost cutting enabled firms to undersell one another,

544 CHAPTER 18 The Rise of Industrial America, 1865—1900

destroying weaker competitors and prompting stronger,more efficient, and more ruthless firms to consolidate.At least until the mid-1890s, cost reduction, new tech-nology, and fierce competition forced down overall pricelevels.

But almost everyone suffered terribly during thedepression years, when the government debatedwhether it should get involved but did nothing to relievedistress. “The sufferings of the working classes are dailyincreasing,” wrote a Philadelphia worker in 1874.“Famine has broken into the home of many of us, and isat the door of all.” Above all, business leaders’ unflaggingdrive to maximize efficiency both created colossal for-tunes at the top of the economic ladder and forced mil-lions of wage earners to live near the subsistence level.

Out of the new industrial system poured dismalclouds of haze and soot, as well as the first tantalizingtrickle of what would become an avalanche of consumergoods. In turn, mounting demands for consumer goodsstimulated heavy industry’s production of capitalgoods—machines to boost farm and factory output evenfurther. Together with the railroads, the corporationsthat manufactured capital goods, refined petroleum,and made steel became driving forces in the nation’seconomic growth.

Railroad Innovations

Competition among the aggressive and innovative capi-talists who headed American heavy industry was

intense. As the post-Civil War era opened, nowhere wasit more intense than among the nation’s railroads, whichto many Americans most symbolized industrialprogress. By 1900, 193,000 miles of railroad track criss-crossed the United States—more than in all of Europeincluding Russia. These rail lines connected every statein the Union and opened up an immense new internalmarket. Most important, railroad companies pioneeredcrucial aspects of large-scale corporate enterprise.These included the issuance of stock to meet their hugecapital needs, the separation of ownership from man-agement, the creation of national distribution and mar-keting systems, and the formation of new organizationaland management structures.

Railroad entrepreneurs such as Collis P. Huntingtonof the Central Pacific Railroad, Jay Gould of the UnionPacific, and James J. Hill of the Northern Pacific facedenormous financial and organizational problems. Toraise the staggering sums necessary for laying track,building engines, and buying out competitors, railroadsat first appealed for generous land and loan subsidiesfrom federal, state, and local governments (see Chapter17). Even so, the larger lines had to borrow heavily byselling stocks and bonds to the public. Bond holdersearned a fixed rate of interest; stockholders received div-idends only when the company earned a profit. By 1900the yearly interest repayments required by the com-bined debt of all U.S. railroads (which stood at anastounding $5.1 billion—nearly five times that of thefederal government) cut heavily into their earnings.

The Rise of Corporate America 545

In addition to developing ways to raise largeamounts of capital, the railroads created new systemsfor collecting and using information. To coordinate thecomplex flow of cars across the country, railroads reliedheavily on the magnetic telegraph, invented in 1837. Toimprove efficiency, the railroads set up clearly defined,hierarchical organizational structures and divided theirlines into separate geographic units, each with its ownsuperintendent. Elaborate accounting systems docu-mented the cost of every operation for each division,from coal consumption to the repair of engines and cars.Using these reports, railroad officials could set rates andaccurately predict profits as early as the 1860s, a time

when most businesses had no idea of their total profituntil they closed their books at year’s end. Railroad man-agement innovations thus became a model for manyother businesses seeking a national market.

Consolidating the Railroad Industry

The expansion and consolidation of railroading reflect-ed both the ingenuity and the dishonesty flourishing onthe corporate management scene. Although by the1870s railroads had replaced the patchwork of canal andstagecoach operations that dominated domestic trans-portation before the Civil War, the industry itself was in astate of chaos. Hundreds of small companies used wide-ly different standards for car couplers, rails, track width,and engine size. Financed by large eastern and Britishbanks, Huntington, Gould, and others devoured thesesmaller lines to create large, integrated track networks.In the Northeast four major trunk lines were completed.West of the Mississippi five great lines—the UnionPacific (1869); the Northern Pacific (1883); the Atchison,Topeka, and Santa Fe (1883); the Southern Pacific (1883);and the Great Northern (1893)—controlled most of thetrack by 1893.

Huntington, Gould, and the other larger-than-lifefigures who reorganized and expanded the railroadindustry in the 1870s and 1880s were often depicted bytheir contemporaries as villains and robber barons whomanipulated stock markets and company policies to linetheir own pockets. For example, newspaper publisherJoseph Pulitzer called Jay Gould, the short, secretive pres-ident of the Union Pacific, “one of the most sinister fig-ures that have ever flitted batlike across the vision of theAmerican people.” Recent historians, however, havepointed out that the great industrialists were a diversegroup. Although some were ironfisted pirates whoengaged in fraudulent practices, others were upstandingbusinessmen who managed their companies withsophistication and innovation. Indeed, some of theirideas were startling in their originality and inventiveness.

The massive trunk systems created by these entre-preneurs became the largest business enterprises in theworld, towering over state and federal governments inthe size and scale of their operations. As they consolidat-ed a hodgepodge of small railroads into a few interlock-ing systems, these masterminds pioneered the mostadvanced methods of accounting and large-scale organ-ization. They also standardized all basic equipment andfacilities, from engines and cars to automatic couplers,air brakes, signal systems, and outhouses (now providedin standard one-, two-, and three-hole sizes). In 1883,


independently of the federal government, the railroadscorrected scheduling problems by dividing the countryinto four time zones. In May 1886 all railroads shiftedsimultaneously to the new standard 4′8 1/2″-gaugetrack. Finally, cooperative billing arrangements enabledthe railroads to ship cars from other roads, includingdining and sleeping cars owned by the Pullman PalaceCar Company, at uniform rates nationwide.

But the systemization and consolidation of the rail-roads had its costs. Heavy indebtedness, overextendedsystems, and crooked business practices forced the rail-roads to compete recklessly with each other for traffic.They cut rates for large shippers, offered specialarrangements for handling bulk goods, showered freepasses on politicians who supported their operations,and granted substantial rebates and kickbacks tofavored clients. None of these tactics, however, shoredup the railroads’ precarious financial position. And thecontinuous push to expand drove some overbuilt linesinto bankruptcy.

Caught in the middle of the railroads’ tug-of-warand stung by exorbitant rates and secret kickbacks,farmers and small business owners turned to state gov-ernments for help. In the 1870s many midwestern statelegislatures responded by outlawing rate discrimination.Initially upheld by the Supreme Court, these and otherdecisions were negated in the 1880s when the Courtruled that states could not regulate interstate com-merce. In response in 1887, Congress, persuaded byIllinois Senator Shelby M. Cullom’s detailed study ofdevious railroad practices, passed the InterstateCommerce Act. A five-member Interstate CommerceCommission (ICC) was established to oversee the prac-tices of interstate railroads. The law banned monopolis-tic activity like pooling, rebates, and discriminatoryshort-distance rates.

The railroads challenged the commission’s rulingsin the federal courts. Of the sixteen cases brought to theSupreme Court before 1905, the justices found in favorof the railroads in all but one, essentially nullifying theICC’s regulatory clout. The Hepburn Act (see Chapter21), passed in 1906, strengthened the ICC by finallyempowering it to set rates.

The railroads’ vicious competition did not abateuntil a national depression that began in 1893 forced anumber of roads into the hands of J. Pierpont Morganand other investment bankers. Morgan, a massivelybuilt man with piercing eyes and a commanding pres-ence, took over the weakened systems, reorganized theiradministration, refinanced their debts, and built inter-system alliances. By 1906, thanks to the bankers’ central-

ized management, seven giant networks controlled two-thirds of the nation’s rail mileage.

Applying the Lessons of the Railroads to Steel

The close connections between railroad expansion,which absorbed millions of tons of steel for tracks, andthe growth of corporate organization and managementare well illustrated in the career of Andrew Carnegie. Adiminutive dynamo of a man, only 5′3” tall, Carnegiewas born in Scotland and immigrated to America in1848 at the age of twelve, in the company of his father, askilled handloom weaver who never found steadyemployment once the industry mechanized.

Ambitious and hard-working, Carnegie took a job at$1.20 a week as a bobbin boy in a Pittsburgh textile mill.Although he worked a sixty-hour week, the aspiringyoungster also enrolled in a night course to learn book-keeping. The following year, Carnegie became a WesternUnion messenger boy. Taking over when the telegraphoperators wanted a break, he soon became the city’sfastest telegraph operator. Because he had to decode themessages for every major business in Pittsburgh,Carnegie gained an insider’s view of their operations.

Carnegie’s big break came in 1852 when Tom Scott,superintendent of the Pennsylvania Railroad’s westerndivision, hired him as his secretary and personal telegra-pher. When Scott became vice president of thePennsylvania Railroad seven years later, the twenty-four-year-old Carnegie took over as head of the line’swestern division. A daring innovator, Carnegie, in his sixyears as division chief, used the complex cost-analysistechniques developed by Scott to more than double theroad’s mileage and quadruple its traffic. He slashedcommuter fares to keep ridership at capacity and devel-oped various cost-cutting techniques. Having investedhis earnings in the railroads, by 1868 Carnegie was earn-ing more than $56,000 a year from his investments, asubstantial fortune in that era.

In the early 1870s Carnegie decided to build his ownsteel mill. His connections within the railroad industry,the country’s largest purchaser of steel, made this a logi-cal choice. Starting with his first mill, he introduced aproduction technology named after its English inventor,Henry Bessemer, which shot a blast of air through anenormous crucible of molten iron to burn off carbonand impurities. Combining this new technology with thecost-analysis approach learned from his railroad experi-ence, Carnegie became the first steelmaker to know theactual production cost of each ton of steel.


Carnegie’s philosophy was deceptively simple:“Watch the costs, and the profits will take care of them-selves.” From the start he priced his rails below the com-petition. Then, through rigorous cost accounting and bylimiting wage increases to his workers, he lowered hisproduction costs even further. Moreover, he was notabove asking for favors from his railroad-presidentfriends or giving “commissions” to railroad purchasingagents.

As output climbed, Carnegie discovered the benefitsof vertical integration—that is, controlling all aspects ofmanufacturing from extracting raw materials to sellingthe finished product. In Carnegie’s case, this controlembraced every stage from the mining and smelting ofore to the selling of steel rails. Carnegie Steel thusbecame the classic example of how sophisticated newtechnology might be combined with innovative man-agement (and brutally low wages) to create a mass-pro-duction system that could slash consumer prices (seeFigure 18.1).

The management of daily operations by his closeassociates left Carnegie free to pursue philanthropic

activities. While still in his early thirties, Carnegieresolved to donate his money to charitable projects. (Heknew full well that such actions would buttress his pop-ularity.) Carnegie set up foundations and eventuallygave more than $300 million to libraries, universities,and international-peace causes.

By 1900 Carnegie Steel, employing twenty thousandpeople, had become the world’s largest industrial corpo-ration. Carnegie’s competitors, worried about the wilyScot’s domination of the market, decided to buy himout. In 1901 J. Pierpont Morgan, who controlled FederalSteel, asked Charles Schwab, Carnegie Steel’s president,to inquire what Carnegie wanted for his share ofCarnegie Steel. The next day Carnegie gave Schwab apenciled note asking for nearly half a billion dollars.Morgan’s response was simple: “Tell Carnegie I accepthis price.” Combining Carnegie’s companies withFederal Steel, Morgan set up the United States SteelCorporation, the first business capitalized at more than$1 billion. The corporation, made up of two hundredmember companies employing 168,000 people, markeda new scale in industrial enterprise.


Andrew Carnegie Sums Up the Cost Savingsof Vertical Integration*

The eighth wonder of the world is this:two pounds of iron-stone purchased on the shores of lake Superior and

transported to Pittsburgh;two pounds of coal mined in Connellsvilleand manufactured into coke and

brought to Pittsburgh;one half pound of limestone minedeast of the Alleghenies and

brought to Pittsburgh;a little manganese ore,mined in Virginia and

brought to Pittsburgh.And these four and one half pounds of material manufactured into one pound of solid steel and sold for one cent.That’s all that need be said

about the steel business.

*Vertical integration: The control of all aspects ofproduction from the mining of raw materials to the sellingof the final product.Source: Harold C. Livesay, Andrew Carnegie and the Rise of BigBusiness (Boston: Little, Brown, 1975), 189.

Throughout his chain of corporate-world triumphs,Carnegie consistently portrayed his success as theresult of self-discipline and hard work. The full storywas more complex. Carnegie did not mention hisuncanny ability to see the larger picture, his clevernessin hiring talented associates who would drive them-selves (and the company’s factory workers) mercilessly,his ingenuity in transferring organizational systems andcost-accounting methods from railroads to steel, andhis callousness in keeping wages as low as possible. To apublic unaware of corporate management techniques,however, Carnegie’s success reaffirmed the openness ofthe American economic system. For the new immi-grants flooding the nation’s shores, Carnegie’s careergave credence to the idea that anyone might rise fromrags to riches.

The Trust: Creating New Forms of Corporate Organization

Between 1870 and 1900, the same fierce competitionthat had stimulated consolidation in the railroad andsteel industries (see Table 18.1) also swept the oil, salt,

sugar, tobacco, and meatpacking industries. Like steel,these highly competitive businesses required large capi-tal investments. Entrepreneurs in each industry there-fore raced to reduce costs, lower prices, and drive theirrivals out of the market. Chicago meatpackers PhilipArmour and Gustavus Swift, for example, raised theprocess of making bacon, pork chops, and steak fromhogs and cattle to a high level of efficiency by usingevery part of the animal. Hides were tanned into leather,bones became fertilizer, and hooves were turned intogelatin. When lowering costs failed to drive out rivals,new organizational methods were pioneered to controlcompetition and preserve market share.

The evolution of the oil industry illustrates theprocess by which new corporate structures evolved.After Edwin L. Drake drilled the first successful petrole-um (or “crude-oil”) well in 1859 near Titusville in north-western Pennsylvania, competitors rushed into thebusiness, sinking wells and erecting small refineriesnearby. Petroleum was distilled into oil, which soonreplaced animal tallow as the major lubricant, and intokerosene, which became the leading fuel for householdand public lighting. By the 1870s the landscape nearPittsburgh and Cleveland, the sites of the first discover-ies, was littered with rickety drilling rigs, assorted collec-tion tanks, and ramshackle refineries. Oil spills were aconstant problem. “So much oil is produced,” reportedone Pennsylvania newspaper in 1861, “that it is impossi-ble to care for it, and thousands of barrels are runninginto the creek; the surface of the river is covered with oilfor miles. ”

In this rush for riches, John D. Rockefeller, a youngCleveland merchant, gradually achieved dominance.Although he did not share Andrew Carnegie’s outgoingpersonality, the solemn Rockefeller resembled theopportunistic steelmaker in other respects. Having got-ten his start as a bookkeeper and opened his first refin-ery in 1863, Rockefeller, like Carnegie, had a passion forcost cutting and efficiency. When he became the head of


1915

1910

1905

1900

1895

1890

1885

1880

1875

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0

To

tal r

aw s

teel

in 1

,000

to

ns

FIGURE 18.1Iron and Steel Production, 1875–1915New technologies, improved plant organization, economies of scale,and the vertical integration of production brought a dramatic spurtin iron and steel production.

Note: short ton � 2,000 pounds.

Source: Historical Statistics of the United States.

TABLE 18.1 Industrial Consolidation: Iron and SteelFirms, 1870 and 1900

1870 1900

No. of firms 808 669No. of employees 78,000 272,000Output (tons) 3,200,000 29,500,000Capital invested $121,000,000 $590,000,000

Source: Robert L. Heilbroner and Aaron Singer, The EconomicTransformation of America: 1600 to Present, 2d ed. (San Diego: HarcourtBrace Jovanovich, 1984), 92.

the Standard Oil Company in 1873, he scrutinized everyaspect of its operation. In one case he insisted that amanager find 750 missing barrel stoppers. He realizedthat in a mass production enterprise, small changescould save thousands of dollars.

Rockefeller resembled Carnegie, too, in his ability tounderstand the inner workings of an entire industry andthe benefits of vertical integration. The firm that con-trolled the shipment of oil between the well and therefinery and between the refinery and the retailers, herealized, could dominate the industry. In 1872 he pur-chased his own tanker cars and obtained not only a 10 percent rebate from the railroads for hauling his oilshipments but also a kickback on his competitors’ ship-ments. When new pipeline technology became avail-able, Rockefeller set up his own massive interregionalpipeline network.

Like Carnegie, Rockefeller aggressively forced out hiscompetitors. When local refineries rejected his offers tobuy them out, he priced his products below cost andstrangled their businesses. When rival firms teamed upagainst him, Rockefeller set up a pool—an agreementamong several companies—that established productionquotas and fixed prices. By 1879 Rockefeller had seizedcontrol of 90 percent of the country’s oil-refining capacity.

Worried about competition, Rockefeller in 1882decided to eliminate it by establishing a new form of

corporate organization, the Standard Oil Trust. In placeof the “pool” or verbal agreement among companies tocontrol prices and markets, which lacked legal status,the trust created an umbrella corporation that ran themall. To implement his trust, Rockefeller and his associ-ates persuaded the stockholders of forty companies toexchange their stock for trust certificates. Under thisarrangement, stockholders retained their share of thetrust’s profits while enabling the trust to control produc-tion. Within three years the Standard Oil Trust had con-solidated crude-oil buying throughout its member firmsand slashed the number of refineries in half. In this wayRockefeller integrated the petroleum industry both ver-tically, by controlling every function from production tolocal retailing, and horizontally, by merging the compet-ing oil companies into one giant system.

Taking a leaf from Rockefeller’s book, companies inthe copper, sugar, whiskey, lead, and other industriesestablished their own trust arrangements. By limitingthe number of competitors, the trusts created an oligop-oly, the market condition that exists when the limitednumber of sellers can greatly influence price and othermarket factors. But their rapacious tactics, semimonop-olistic control, and sky-high earnings provoked a publicoutcry. Beginning in New York State in 1879 and pro-gressing to the federal level, legislative committeesexposed the unscrupulous practices of the trusts, and


1895 1897 1899 1901 1903 1905 1907 1909

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

0

Nu

mb

er o

f re

cord

ed m

erg

ers

FIGURE 18.2Mergers in Mining and Manufacturing, 1895–1910A wave of business mergers occurred after the Supreme Court’s 1897 and 1898 rulings that any firms concluding price-fixing ormarket-allocating agreements violated the Sherman Anti-Trust Act. But the merger mania died down when business leaders quicklydiscovered that companies could remain profitable only through vertical integration.

1895 1897 1899 1901 1903 1905 1907 1909

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

0

Mer

ger

val

ues

in m

illio

ns

of

do

llars

both parties denounced them in the presidential elec-tion of 1888.

Fearful that the trusts would stamp out all competi-tion, Congress, under the leadership of Senator JohnSherman of Ohio, passed the Sherman Anti-Trust Act in1890. The Sherman Act outlawed trusts and any othermonopolies that fixed prices in restraint of trade andslapped violators with fines of up to five thousand dol-lars and a year in jail. But the act failed to define clearlyeither trust or restraint of trade. The government prose-cuted only eighteen antitrust suits between 1890 and1904. When Standard Oil’s structure was challenged in1892, its lawyers simply reorganized the trust as an enor-mous holding company. Unlike a trust, which literallyowned other businesses, a holding company simplyowned a controlling share of the stock of one or morefirms. The new board of directors for Standard Oil (NewJersey), the new holding company, made more moneythan ever.

The Supreme Court further hamstrung congres-sional antitrust efforts by interpreting the Sherman Actin ways sympathetic to big business. In 1895, for exam-ple, the federal government brought suit against thesugar trust in United States v. E. C. Knight Company. Itargued that the Knight firm, which controlled morethan 90 percent of all U.S. sugar refining, operated inillegal restraint of trade. Asserting that manufacturingwas not interstate commerce and ignoring the compa-ny’s vast distribution network that enabled it to domi-nate the market, the Court threw out the suit. Thus vindicated, corporate mergers and consolidationssurged ahead at the turn of the century. By 1900 thesemammoth firms accounted for nearly two-fifths of thecapital invested in the nation’s manufacturing sector(see Figure 18.2).

STIMULATING ECONOMICGROWTH

Although large-scale corporate enterprise significantlyincreased the volume of manufactured goods in the latenineteenth century, it alone did not account for thecolossal growth of the U.S. economy in this period.Other factors proved equally important, including newinventions, specialty production, and innovations inadvertising and marketing. In fact, the resourcefulnessof small enterprises, which combined innovative tech-nology with new methods of advertising and merchan-dising, enabled many sectors of the economy to growdramatically by adapting quickly to changing fashionsand consumer preferences.

The Triumph of Technology

New inventions not only streamlined the manufactureof traditional products but also frequently stimulatedconsumer demand by creating entirely new productlines. The development of a safe, practical way to gener-ate electricity, for example, made possible a vast numberof electrical motors, household appliances, and lightingsystems.

Many of the major inventions that stimulatedindustrial output and underlay mass production inthese years were largely hidden from public view. FewAmericans had heard of the Bessemer process for manu-facturing steel or of the improved technologies thatfacilitated bottle making and glassmaking, canning,flour milling, match production, and petroleum refin-ing. Fewer still knew much about the refrigerated rail-cars that enabled Gustavus Swift’s company to slaughterbeef in Chicago and ship it east or about the Bonsackcigarette-making machine that could roll 120,000 ciga-rettes a day, replacing sixty skilled handworkers.

Stimulating Economic Growth 551

The inventions that people did see were ones thatchanged the patterns of everyday life and encouragedconsumer demand. Inventions like the sewing machine,mass-produced by the Singer Sewing MachineCompany beginning in the 1860s; the telephone, devel-oped by Alexander Graham Bell in 1876; and the lightbulb, perfected by Thomas A. Edison in 1879 easedhousehold drudgery and, in some cases, reshaped socialinteractions. With the advent of the sewing machine,many women were relieved of the tedium of sewing thefamily’s apparel by hand; inexpensive mass-producedclothing thus led to a considerable expansion in person-al wardrobes. The spread of telephones—by 1900 theBell Telephone Company had installed almost eighthundred thousand in the United States—not only trans-formed communication but also undermined socialconventions for polite behavior that had been premisedon face-to-face or written exchanges. The light bulb, byfurther freeing people from dependence on daylight,made it possible to shop after work.

In the eyes of many, Thomas A. Edison epitomizedthe inventive impulse and the capacity for the creationof new consumer products. Born in 1847 in Milan, Ohio,Edison, like Andrew Carnegie, had little formal educa-tion and got his start in the telegraphic industry. Also likethe shrewd Scot, Edison was a born salesman and self-promoter. When he modestly said that “genius is one

percent inspiration and ninety-nine percent perspira-tion,” he tacitly accepted the popular identification ofhimself as an inventing “wizard.” Edison moreovershared Carnegie’s vision of a large, interconnectedindustrial system resting on a foundation of technologi-cal innovation.

In his early work, Edison concentrated on the tele-graph. His experimentation led to his first major inven-tion, a stock-quotation printer, in 1868. The moneyearned from the patents on this machine enabledEdison to set up his first “invention factory” in Newark,New Jersey, a research facility that he moved to nearbyMenlo Park in 1876. Assembling a staff that includeduniversity-trained scientists, Edison boastfully predict-ed “a minor invention every ten days, and a big oneevery six months.”

Buoyed by the success and popularity of his inven-tion in 1877 of a phonograph, or “sound writer” (phono:“sound”; graph: “writer”), Edison set out to develop anew filament for incandescent light bulbs. Charac-teristically, he announced his plans for an electricity-generation process before he perfected his inventionsand then worked feverishly, testing hundreds of materi-als before he found a carbon filament that would glowdependably in a vacuum.

Edison realized that practical electrical lighting hadto be part of a complete system containing generators,


voltage regulators, electric meters, and insulated wiringand that the system needed to be easy to install andrepair. It also had to be cheaper and more convenientthan kerosene or natural gas lighting, its main competi-tors. In 1882, having built this system with the support ofbanker J. Pierpont Morgan, the Edison IlluminatingCompany opened a power plant in the heart of New YorkCity’s financial district, furnishing lighting for eighty-fivebuildings.

On the heels of Edison’s achievement, other inven-tors rushed into the electrical field. Edison angrily suedmany of his competitors for patent violations. Em-bittered by the legal battles that cost him more than $2million, Edison relinquished control of his enterprises inthe late 1880s. In 1892, with Morgan’s help, Edison’scompany merged with a major competitor to form theGeneral Electric Company (GE). Four years later, GE andWestinghouse agreed to exchange patents under a jointBoard of Patent Control. Such corporate patent-poolingagreements became yet another mechanism of marketdomination.

In the following years, Edison and his researcherspumped out invention after invention, including themimeograph machine, the microphone, the motion-pic-ture camera and film, and the storage battery. By the timeof his death in 1931, he had patented 1,093 inventionsand amassed an estate worth more than $6 million. YetEdison’s greatest achievement remained his laboratory atMenlo Park. A model for the industrial research labs laterestablished by Kodak, General Electric, and Du Pont,Edison’s laboratory demonstrated that the systematic useof science in support of industrial technology paid largedividends. Invention had become big business.

Custom-Made Products

Along with inventors, manufacturers of custom and spe-cialized products such as machinery, jewelry, furniture,and women’s clothes dramatically expanded economicoutput. Using skilled labor, these companies craftedone-of-a-kind or small batches of articles that ranged insize from large steam engines and machine tools to sil-verware, furniture, and custom-made dresses. Keenlyattuned to innovations in technology and design, theyconstantly created new products tailored to the needs ofindividual buyers.

Although they were vastly different in terms of sizeand number of employees, Philadelphia’s BaldwinLocomotive Works and small dressmaking shops weretypical of flexible specialization displayed by small batchprocessors. Both faced sharp fluctuations in the demand

for their products as well as the necessity of employingskilled workers to make small numbers of specializeditems. Founded before the Civil War, by the 1890s theBaldwin Locomotive Works employed two thousandworkers and produced about nine hundred engines ayear. Each machine was custom designed to meet theneeds of its purchaser. Construction was systematizedthrough precision plans for every part of an engine, butstandardization was not possible since no single enginecould meet the needs of every railroad.

Until the turn of the twentieth century, when ready-to-wear clothes came to dominate the market, mostwomen’s apparel was custom produced in small shopsrun by women proprietors. Unlike the tenement sweat-shops that produced men’s shirts and pants, dressmak-ers and milliners (a term derived from fancy goods ven-dors in sixteenth- and seventeenth-century Milan, Italy)paid good wages to highly skilled seamstresses. Thesmall size of the shops together with the skill of theworkers enabled them to shift styles quickly to follow thelatest fashions.

Thus, alongside of the increasingly rationalized andbureaucratic big businesses like steel and oil in the latenineteenth-century, American productivity was alsostimulated by custom and batch producers who provid-ed a variety of goods that supplemented the bulk-manu-factured staples of everyday life.

Advertising and Marketing

As small and large factories alike spewed out a dazzlingarray of new products, business leaders often discoveredthat their output exceeded what the market couldabsorb. This was particularly true in two kinds of busi-nesses—those that manufactured devices for individualuse such as sewing machines and farm implements, andthose that mass-produced consumer goods such asmatches, flour, soap, canned foods, and processedmeats. Not surprisingly, these industries were trailblaz-ers in developing advertising and marketing techniques.Strategies for whetting consumer demand and for differ-entiating one product from another represented a criti-cal component of industrial expansion in the post-CivilWar era.

The growth of the flour industry illustrates both thespread of mass production and the emergence of newmarketing concepts. In the 1870s the nation’s flour mills adopted the most advanced European manufac-turing technologies and installed continuous-processmachines that graded, cleaned, hulled, ground, andpackaged the product in one rapid operation. These

Stimulating Economic Growth 553

Flush Toilets and the Invention of the Nineteenth-Century Bathroom

TECHNOLOGY AND CULTURE

The development of a system ofindoor plumbing was typical of

the technological breakthroughs that simplified everydaylife in the late nineteenth century. In the 1860s only about5 percent of American houses had running water. MostAmericans used chamber pots or outhouses that emp-tied into slimy, smelly cesspools. Two decades later,indoor plumbing standards had been established in mostmajor U.S. cities, and wealthier urban Americans usedflush toilets connected to municipal sewer systems.

The driving force for change came from outbreaks ofcholera, typhoid, and yellow fever, diseases spread bypolluted water, that periodically terrorized Americancities. Building upon the discovery of germs by LouisPasteur and Robert Koch, sanitary reformers establishedstringent metropolitan health laws, created state boardsof health, and mandated the licensing of plumbers andthe inspection of their work. By the turn of the century,George E. Waring, Jr., a prominent sanitary engineer,

could confidently declare that “Plumbing, as we know it,is essentially and almost exclusively an AmericanInstitution.”

The decision to adopt a water-based system for theremoval of human wastes depended on a series of inven-tions. First, municipal water systems had to be built withreservoirs, pumps, and water towers to provide water tothe pipes that supplied buildings. A sewage system ofinterconnected pipes was also necessary to remove andprocess wastes. Machines to manufacture lead, cast-iron, and glazed stoneware pipes had to be created, asdid a uniform system of pipe threads and melted leadjoints to create a reliable standardized system for con-necting them. Finally, a porcelain toilet with a built-in gastrap was needed because the bacteria in feces producemethane or sewer gas. (A trap is a U-shaped joint thatuses the water at the low part of the U to prevent gasfrom seeping back into the bathroom. The gas is thenvented through a pipe in the roof.)

554

Despite its usefulness, the new technology wasadopted only slowly by Americans. In 1890 only 24 per-cent of American dwellings had running water. As late as1897, over 90 percent of the families in tenements hadno baths and had to wash in hallway sinks or courtyardhydrants. By 1920, 80 percent of American houses, par-ticularly those in rural areas, still lacked indoor flush toi-lets. The reason was simple: indoor plumbing wasexpensive and depended on the availability of water andsewer systems. Adding indoor plumbing increased theprice of a new house by 20 percent.

Advertisers did their best to increase demand. Theyskillfully used the findings of science to advocate newstandards of cleanliness or “hygiene,” as it was called,which they associated with upper-class principles ofrespectability and decorum. Bathing and washing one’shands were touted as symbols of upper-class refinement.

Indoor plumbing not only reinforced higher stan-dards for personal hygiene; it also enmeshed the home-owner in a web of local and state regula-tions. As sewage and water systemsexpanded to cover larger constituencies,political control moved from local to stateand sometimes national arenas. Oncelargely independent, the homeowner nowhad to deal with water and power compa-nies that often functioned regionally.

The adoption of strict sanitation sys-tems and the use of indoor plumbing didachieve their intended result: they dramati-cally reduced the spread of disease. Butthe advances had unintended conse-quences. Indoor plumbing encouraged thephenomenal waste of water. A single faultytoilet could easily leak a hundred gallons ofwater a day. Not until the 1990s with thedevelopment of new low-water-usage toi-lets, which could save between 18,000 and26,400 gallons of water a year, would newstandards be established to reduce the useof water, an increasingly precious naturalresource.

Focus Question:

• Why does the successful introductionof new technologies often involve asystem of inventions rather than a sin-gle invention?

555

companies, however, soon produced more flour thanthey could sell. To unload this excess, the mills thoughtup new product lines such as cake flours and breakfastcereals and sold them using easy-to-remember brandnames like Quaker Oats.

Through the use of brand names, trademarks, guar-antees, slogans, endorsements, and other gimmicks,manufacturers built demand for their products and wonenduring consumer loyalty. Americans bought IvorySoap, first made in 1879 by Procter and Gamble ofCincinnati, because of the absurdly overprecise butimpressive pledge that it was “99 and 44/100ths percentpure.” James B. (“Buck”) Duke’s American TobaccoCompany used trading cards, circulars, box-top premi-ums, prizes, testimonials, and scientific endorsementsto convert Americans to cigarette smoking.

In the 1880s in the photographic field, GeorgeEastman developed a paper-based photographic film asan alternative to the bulky, fragile glass plates then in use. Manufacturing a cheap camera for the masses,the Kodak, and devising a catchy slogan (“You press thebutton, we do the rest”), Eastman introduced a sys-tem whereby customers returned the one-hundred-exposure film and the camera to his Rochester factory.There, for a charge of ten dollars, the film was developedand printed, the camera reloaded, and everythingshipped back. In marketing a new technology, Eastmanhad revolutionized an industry and democratized avisual medium previously confined to a few.


Economic Growth: Costs and Benefits

By 1900 the chaos of early industrial competi-tion, when thousands of companies had strug-gled to enter a national market, had given wayto the most productive economy in the world,supported by a legion of small, specialized com-panies and dominated by a few enormous ones.An industrial transformation that had originat-ed in railroading and expanded to steel andpetroleum had spread to every nook and crannyof American business and raised the UnitedStates to a position of world leadership.

For those who fell by the wayside in this eraof spectacular economic growth, the cost couldbe measured in bankrupted companies andshattered dreams. John D. Rockefeller put thingswith characteristic bluntness when he said hewanted “only the big ones, only those who havealready proved they can do a big business” inthe Standard Oil Trust. “As for the others, unfor-tunately they will have to die.”

The cost was high, too, for millions ofAmerican workers, immigrant and native-bornalike. The vast expansion of new products was built onthe backs of an army of laborers who were paid subsis-tence wages and who could be fired on a moment’snotice when hard times or new technologies made themexpendable.

Industrial growth often devastated the environmentas well. Rivers fouled by oil or chemical waste, skies filledwith clouds of soot, and a landscape littered with reek-ing garbage and toxic materials bore mute witness to therelentless drive for efficiency and profit.

To be sure, the vast expansion of economic outputbrought social benefits as well, in the form of labor-sav-ing products, lower prices, and advances in transporta-tion and communications. The benefits and liabilitiessometimes seemed inextricably interconnected. Thesewing machine, for example, created thousands of newfactory jobs, made available a wider variety of clothing,and eased the lives of millions of housewives. At thesame time, it encouraged avaricious entrepreneurs tooperate sweatshops in which the immigrant poor—often vulnerable young women—toiled long hours forpitifully low wages (see Chapter 21).

Whatever the final balance sheet of social gains andcosts, one thing was clear: the United States had mus-cled its way onto the world stage as an industrial titan.The ambition and drive of countless inventors, finan-

ciers, managerial innovators, and marketing wizardshad combined to lay the groundwork for a new socialand economic order in the twentieth century.

THE NEW SOUTHThe South entered the industrial era far more slowlythan the Northeast. As late as 1900, total southern cotton-mill output, for example, remained little morethan half that of the mills within a thirty-mile radius ofProvidence, Rhode Island. Moreover, the South’s $509average per capita income was less than half that ofnortherners.

The reasons for the South’s late economic blossom-ing are not hard to discern. The Civil War’s physicaldevastation, the scarcity of southern towns and cities,lack of capital, illiteracy, northern control of financialmarkets and patents, and a low rate of technologicalinnovation crippled efforts by southern business lead-ers to promote industrialization. Economic progresswas also impeded by the myth of the Lost Cause,which, through its nostalgic portrayal of pre-Civil Warsociety, perpetuated an image of the South as tradition-al and unchanging. As a result, southern industrial-ization inched forward haltingly and was shaped in distinctive ways.

The New South 557

Obstacles to Economic Development

Much of the South’s difficulty in industrializing arosefrom its lack of capital and the devastation of the CivilWar. So many southern banks failed during the Civil Warthat by 1865 the South, with more than a quarter of thenation’s population, possessed just 2 percent of itsbanks.

Federal government policies adopted during thewar further restricted the expansion of the southernbanking system. The Republican-dominated wartimeCongress, which had created a national currency andbanking structure, required anyone wishing to start abank to have fifty thousand dollars in capital. Few south-erners could meet this standard.

With banks in short supply, country merchants andstorekeepers became bankers by default, lending sup-plies rather than cash to local farmers in return for a lien,or mortgage, on their crops (see Chapter 16). As farmerssank in debt, they increased their production of cottonand tobacco in an effort to stay afloat, and becametrapped on the land. As a result, the labor needed forindustrial expansion remained in short supply.

The shift from planting corn to specializing in eithercotton or tobacco made small southern farmers particu-larly vulnerable to the fluctuations of commercial agri-culture. When the price of cotton tumbled in nationaland international markets from eleven cents per poundin 1875 to less than five cents in 1894, well under the costof production, many southern farmers grew desperate.

The South also continued to be the victim of federalpolicies designed to aid northern industry. High protec-tive tariffs raised the price of machine technologyimported from abroad; the demonetization of silver (seeChapter 20) further limited capital availability; and dis-criminatory railroad freight rates hiked the expense ofshipping finished goods and raw materials.

The South’s chronic shortage of funds affected the economy in indirect ways as well, by limiting the resources available for education. During Re-construction northern philanthropists together with theFreedmen’s Bureau, the American Missionary Asso-ciation, and other relief agencies had begun a modestexpansion of public schooling for both blacks andwhites. But Georgia and many other southern statesoperated segregated schools and refused to tax propertyfor school support until 1889. As a result, school atten-dance remained low, severely limiting the number ofeducated people able to staff technical and managerialpositions in business and industry.

Southern states, like those in the North, often con-tributed the modest funds they had to war veterans’

pensions. In this way, southern state governments builta white patronage system for Confederate veterans andhelped reinforce southerners’ idealization of the oldConfederacy—the South’s Lost Cause. As late as 1911,veterans’ pensions in Georgia ate up 22 percent of thestate’s entire budget, leaving little for economic or edu-cational development.

The New South Creed and Southern Industrialization

Despite the limited availability of private capital forinvestment in industrialization, energetic southernnewspaper editors such as Henry W. Grady of the AtlantaConstitution and Henry Watterson of the LouisvilleCourier Journal championed the doctrine that becameknown as the New South creed. The South’s rich coal andtimber resources and cheap labor, they proclaimed intheir papers, made it a natural site for industrial devel-opment. As one editor declared, “The El Dorado [thefabled land of riches] of the next half century is theSouth. The wise recognize it; the dull and the timid willere long regret their sloth or their hesitancy.”

The movement to industrialize the South gainedmomentum in the 1880s. To attract northern capital,southern states offered tax exemptions for new busi-nesses, set up industrial and agricultural expositions,and leased prison convicts to serve as cheap labor.Florida, Texas, and other states gave huge tracts of landsto railroads, which expanded dramatically throughoutthe South and in turn stimulated the birth of new townsand villages. Other states sold forest and mineral rightson nearly 6 million acres of federal lands to speculators,mostly from the North, who significantly expanded theproduction of iron, sulfur, coal, and lumber.

Following the lead of their northern counterparts,the southern iron and steel industries expanded as well.Birmingham, Alabama, founded in 1871 in the heart of aregion blessed with rich deposits of coal, limestone, andiron ore, grew in less than three decades to a bustlingcity with noisy railroad yards and roaring blast furnaces.By 1900 it was the nation’s largest pig-iron shipper. Inthese same years, Chattanooga, Tennessee, housed ninefurnaces, seventeen foundries, and numerous machineshops.

As large-scale recruiters of black workers, the south-ern iron and steel mills contributed to the migration ofblacks to the cities. By 1900, 20 percent of the southernblack population was urban. Many urban blacks toiledas domestics or in similar menial capacities, but othersentered the industrial work force. Southern industryreflected the patterns of racial segregation in southern


life. Tobacco companies used black workers, particularlywomen, to clean the tobacco leaves while white women,at a different location, ran the machines that made ciga-rettes. The burgeoning textile mills were lily-white. Inthe iron and steel industry, blacks, who comprised 60percent of the unskilled work force by 1900, had practi-cally no chance of advancement. Nevertheless, in a rarereversal of the usual pattern, southern blacks in the ironand steel industry on average earned more than didsouthern white textile workers.

The Southern Mill Economy

Unlike the urban-based southern iron and steel indus-try, the textile mills that mushroomed in the southerncountryside in the 1880s often became catalysts for theformation of new towns and villages. (This same patternhad occurred in rural New England in the 1820s.) Inthose southern districts that underwent the gradualtransition from an agricultural to a mill economy, coun-try ways and values suffused the new industrial work-place.

The cotton-mill economy grew largely in thePiedmont, a beautiful highland country of rolling hillsand rushing rivers stretching from central Virginia tonorthern Georgia and Alabama. The Piedmont had longbeen the South’s backcountry, a land of subsistencefarming and limited roads. But postwar railroad con-struction opened the region to outside markets andsparked a period of intense town building and textile-mill expansion. Between 1880 and 1900 track mileage inNorth Carolina grew dramatically; the number of townsand villages jumped, quickening the pulse of commerce;and the construction of textile mills accelerated.Between 1860 and 1900 cotton-mill capacity shot up1,400 percent, and by 1920 the South was the nation’sleading textile-mill center. Augusta, Georgia, with 2,800mill workers, became known as the Lowell of the South,named after the mill town in Massachusetts whereindustrialization had flourished since the 1820s. Theexpansion of the textile industry nurtured promoters’visions of a new, more prosperous, industrialized South.

Even sharecroppers and tenant farmers at firsthailed the new cotton mills as a way out of rural poverty.But appearances were deceptive. The chief cotton-millpromoters were drawn from the same ranks of mer-chants, lawyers, doctors, and bankers who had profitedfrom the commercialization of southern agriculture(and from the misfortunes of poor black and white ten-ant farmers and sharecroppers enmeshed in the newsystem). R. R. Haynes, a planter and merchant fromNorth Carolina’s Rutherford County, was typical of the

new entrepreneurs. Starting out as a storekeeper, hepurchased land and water rights on Second Broad Creekin 1884 and formed a company to finance constructionof the Henrietta Mills. By 1913 Haynes owned not onlyone of the South’s largest gingham-producing opera-tions but also banks, railroads, lumber businesses, andgeneral stores.

To run the mills, mill superintendents commonlyhired poor whites from impoverished nearby farms.They promised that textile work would free these farm-ing families from poverty and instill in them the virtuesof punctuality and industrial discipline. The reality was different. Cotton-mill entrepreneurs shamelesslyexploited their workers, paying just seven to elevencents an hour, 30 percent to 50 percent less than whatcomparable mill workers in New England were paid.

The mills dominated most Piedmont textile com-munities. The mill operator not only built and ownedthe workers’ housing and the company store but alsosupported the village church, financed the local elemen-tary school, and pried into the morals and behavior ofthe mill hands. To prevent workers from moving fromone mill to another seeking better opportunities, themill owner usually paid them just once a month, often inscrip—a certificate redeemable only in goods from thecompany store. Since few families had enough money toget through a month, they usually overspent and fellbehind in their payments. The charges were deductedfrom workers’ wages the following month. In this way,the mill drew workers and their families into a cycle ofindebtedness very much like that faced by sharecrop-pers and tenant farmers.

Since farm families had shared farm responsibilitiestogether, Southern mill superintendents accommodat-ed themselves to local customs and hired whole fami-lies, including the children. Mothers commonly broughtbabies into the mills and kept them in baskets nearbywhile tending their machines. Little children who werevisiting older siblings in the mills sometimes learned tooperate the machines themselves. Laboring a twelve-hour day, the mill hands relieved their tedium by sta-tioning themselves near friends so that they might talkas they worked. Ties among the workers were strong.One employee put it simply, “The mill community was aclose bunch of people . . . like one big family. We justloved one another.”

To help make ends meet, mill workers kept theirown garden patches and raised chickens, cows, and pigs.Southern mill hands thus brought communal farm val-ues, nurtured through cooperative planting and harvest-ing, into the mills and mill villages. Although they had toadapt to machine-paced work and received barely

The New South 559

enough pay to live on, the working poor in the mill dis-tricts, like their prewar counterparts in the North, easedthe shift from rural to village-industrial life by clinging toa cooperative country ethic.

As northern cotton mills did before the Civil War,southern textile companies exploited the cheap rurallabor around them, settling transplanted farm people inpaternalistic company-run villages. Using these tactics,the industry underwent a period of steady growth.

The Southern Industrial Lag

Industrialization occurred on a smaller scale and at aslower rate in the South than in the North and alsodepended far more on outside financing, technology,and expertise. The late-nineteenth-century southerneconomy remained essentially in a colonial status, sub-ject to control by northern industries and financial syn-dicates. U.S. Steel, for example, controlled the foundriesin Birmingham, and in 1900 its executives began to price

Birmingham steel according to the “Pittsburgh plus” for-mula based on the price of Pittsburgh steel, plus thefreight costs of shipping from Pittsburgh. As a result,southerners paid higher prices for steel than did north-erners, despite the cheaper production costs.

An array of factors thus combined to retard industri-alization in the South. Banking regulations requiringlarge reserves, scarce capital, absentee ownership, unfa-vorable railroad rates, cautious state governments,wartime debts, lack of industrial experience, and controlby profit-hungry northern enterprises all hampered theregion’s economic development. Dragged down by apoorly educated white population unskilled in moderntechnology and by an equally poorly trained, indigentblack population excluded from skilled jobs, southernindustry languished. Not until after the turn of the cen-tury did southern industry undergo the restructuringand consolidation that had occurred in northern busi-ness enterprise two decades earlier.

As in the North, industrialization brought signifi-cant environmental damage, including polluted riversand streams, decimated forests, grimy coal-miningtowns, and soot-infested steel-making cities. AlthoughHenry Grady’s vision of a New South may have inspiredmany southerners to work toward industrialization, eco-nomic growth in the South, limited as it was by outsideforces, progressed in its own distinctly regional way.

FACTORIES AND THEWORK FORCE

Industrialization proceeded unevenly nationwide, andmost late-nineteenth-century Americans still worked insmall shops. But as the century unfolded, large factorieswith armies of workers sprang onto the industrial scenein more and more locales. The pattern of change wasevident. Between 1860 and 1900, the number of indus-trial workers jumped from 885,000 to 3.2 million, andthe trend toward large-scale production became unmis-takable.

From Workshop to Factory

The transition to a factory economy came not as a majorearthquake but rather as a series of jolts varying instrength and duration. Whether they occurred quickly orslowly, the changes in factory production had a pro-found impact on artisans and unskilled laborers alike,for they involved a fundamental restructuring of workhabits and a new emphasis on workplace discipline. Theimpact of these changes can be seen by examining the


boot and shoe industry. As late as the 1840s, almostevery shoe was custom-made by a skilled artisan whoworked in a small, independent shop. Shoemakers werearistocrats in the world of labor. Taught in an apprenticesystem, they took pride in their work and controlled thequality of their products. In some cases they hired andpaid their own helpers.

A distinctive working-class culture subdivided alongethnic lines evolved among these shoemakers. Foreign-born English, German, and Irish workers set up ethnictrade organizations and joined affiliated benevolentassociations. Bound together by their potent religiousand ethnic ties, they observed weddings and funeralsaccording to old-country traditions and relaxed togetherat the local saloon after work. Living in tenements andboardinghouses within the same tight-knit ethnicneighborhood, they developed a strong ethnic and com-munity pride and helped one another weather accidentsor sicknesses.

As early as the 1850s, even before the widespreaduse of machinery, changes in the ready-made shoe tradehad eroded the status of skilled labor. The manufactur-ing process was broken down into a sequence of repeti-tive, easily mastered tasks. Skilled shoe artisans nowworked in “teams” of four men, each responsible for onefunction: putting the shoe on the last (a form shaped likea person’s foot), attaching the heel, trimming the sole,“finishing” the leather with stain and polish, and soforth. Thus instead of crafting a pair of shoes from startto finish, each team member specialized in only onepart of the process.

Under the new factory system of shoe manufacture,workers also lost the freedom to drink on the job and totake time off for special occasions. A working-class cul-ture that had reinforced group solidarity was now dis-missed by owners and shop foremen as wasteful andinefficient.

In the 1880s, shoe factories became larger and moremechanized, and traditional skills largely vanished.Sophisticated sewing and buffing machines allowedshoe companies to replace skilled operatives with lower-paid, less-skilled women and children. By 1890 womenmade up more than 35 percent of the work force in anindustry once dominated by men. In many other indus-tries, skilled artisans found their responsibilities andrelation to the production process changing. With theexception of some skilled construction crafts such ascarpentry and bricklaying, artisans no longer participat-ed in the production process as a whole. Like the laborerwhose machine nailed heels on 4,800 shoes a day, even“skilled” workers in the new factories specializing in

consumer goods found themselves performing numb-ingly repetitive tasks.

The Hardships of Industrial Labor

The expansion of the factory system spawned anunprecedented demand for unskilled labor. By the 1880snearly one-third of the 750,000 workers employed in therailroad and steel industries, for example, were commonlaborers.

In the construction trades, the machine and toolindustries, and garment making, the services of un-skilled laborers were procured under the so-called con-tract system. To avoid the problems of hiring, managing,and firing their own workers, large companies negotiat-ed an agreement with a subcontractor who took respon-sibility for employee relations. A foreman or bossemployed by the subcontractor supervised gangs ofunskilled day laborers. These common workers wereseasonal help, hired in times of need and laid off in slackperiods. The steel industry employed them to shovel orein the yards and to move ingots inside the mills. Theforemen drove the gangs hard; in the Pittsburgh area,the workers called the foremen “pushers.”

Notoriously transient, unskilled laborers driftedfrom city to city and from industry to industry. In the late1870s unskilled laborers earned $1.30 a day, while brick-layers and blacksmiths earned more than $3. Onlyunskilled southern mill workers, whose wages averageda meager eighty-four cents a day, earned less.

Unskilled and skilled workers alike not only workedup to twelve-hour shifts but also faced grave hazards totheir health and safety. The alarming incidence of indus-trial accidents stemmed from a variety of circumstances,including dangerous factory conditions, workers’ inex-perience, and the rapid pace of the production process.Author Hamlin Garland described the perilous environ-ment of a steel-rail mill at Carnegie’s Homestead SteelWorks in Pittsburgh. One steelworker recalled that onhis first day at the mill, “I looked up and a big train carry-ing a big vessel with fire was making towards me. I stoodnumb, afraid to move, until a man came to me and ledme out of the mill.” Under such conditions the accidentrate in the steel mills was extremely high.

In the coal mines and cotton mills, child laborerstypically entered the work force at age eight or nine.These youngsters not only faced the same environmen-tal hazards as adults but were especially prone to injurybecause of the pranks and play that they engaged in onthe job. When supervision was lax in the cotton mills,for example, child workers would grab the belts that

Factories and the Work Force 561

powered the machines and see who could ride themfarthest up toward the drive shaft in the ceiling beforeletting go and falling to the floor. In the coal industry,children were commonly employed as slate pickers.Sitting at a chute beneath the breakers that crushed thecoal, they removed pieces of slate and other impurities.The cloud of coal dust that swirled around them madethem vulnerable to black lung disease—a disorder thatcould progress into emphysema and tuberculosis.Children and others who toiled in the cotton mills, con-stantly breathing in cotton dust, fell ill with brown lung,another crippling disease.

For adult workers, the railroad industry was one ofthe most perilous. In 1889, the first year that theInterstate Commerce Commission compiled reliablestatistics, almost two thousand rail workers were killedon the job and more than twenty thousand were injured.

Disabled workers and widows received only mini-mal financial aid from employers. Until the 1890s thecourts considered employer negligence to be one of thenormal risks borne by employees. Railroad and factoryowners regularly fought against the adoption of statesafety and health standards on the grounds that the eco-nomic costs would be excessive. For sickness and acci-dent benefits, workers joined fraternal organizationsand ethnic clubs, part of whose monthly dues benefited

those in need. But in most cases, the amounts set asidewere too low to be of much help. When a worker waskilled or maimed in an accident, the family becamedependent on relatives or kindly neighbors for assis-tance and support.

Immigrant Labor

In their search for cheap labor, factory owners turned to unskilled immigrant workers for the muscle neededin the booming factories, mills, and railroads and inheavy-construction industries. In Philadelphia, wherenative-born Americans and recent German immigrantsdominated the highly skilled metalworking trades, Irishnewcomers remained mired in unskilled horse-cartingand construction occupations until the 1890s, when the“new immigrants” from southern and eastern Europereplaced them (see Chapter 19). Poverty-stricken FrenchCanadians filled the most menial positions in the textilemills of the Northeast. On the West Coast, Chineseimmigrants performed the dirtiest and most physicallydemanding jobs in mining, canning, and railroad con-struction.

Writing home in the 1890s, eastern European immi-grants described the hazardous and draining work in thesteel mills. “Wherever the heat is most insupportable,

the flames most scorching, thesmoke and soot most choking, therewe are certain to find compatriotsbent and wasted in toil,” reportedone Hungarian. Yet those immi-grants disposed to live frugally in aboardinghouse and to work aneighty-four-hour week could savefifteen dollars a month, far morethan they could have earned in theirhomeland.

Although most immigrantsworked hard, few adjusted easily tothe frantic pace of the factory. Ruralpeasants from southern and easternEurope who immigrated after 1890found it especially difficult to aban-don their irregular work habits forthe unrelenting factory schedules.Where farm routines had followed aseasonal pace, slowing in the winter,factory operations were relentless,dictated by the invariable speed ofthe machines. A brochure that theInternational Harvester Corporationused to teach English to its Polish


workers attempted to instill the “proper” values. Lesson1 read:

I hear the whistle. I must hurry.I hear the five minute whistle.It is time to go into the shop.I take my check from the gate board and hang it onthe department board.I change my clothes and get ready to work.The starting whistle blows.I eat my lunch.It is forbidden to eat until then.The whistle blows at five minutes of starting time.I get ready to go to work.I work until the whistle blows to quit.I leave my place nice and clean.I put all my clothes in the locker.I must go home.

As this “lesson” reveals, factory work tied the immi-grants to a rigid timetable very different from the pace offarm life.

When immigrant workers resisted the tempo of fac-tory work, drank on the job, or took unexcused absences,employers used a variety of tactics to enforce discipline.Some sponsored temperance societies and Sundayschools to teach punctuality and sobriety. Others cutwages and put workers on the piecework system, payingthem only for the items produced. Employers sometimes

also provided low-cost housing to gain leverage againstwork stoppages; if workers went on strike, the boss couldsimply evict them.

In the case of immigrants from southern Europewhose skin colors were often darker than northernEuropeans, employers asserted that the workers werenonwhite and thus did not deserve the same compensa-tion as native-born Americans. Because the concept of“whiteness” in the United States bestowed a sense ofprivilege and the automatic extension of the rights of cit-izenship, Irish, Greek, Italian, Jewish, and a host of otherimmigrants, although of the Caucasian race, were alsoconsidered nonwhite. Rather than being a fixed categorybased on biological differences, the concept of race wasthus used to justify the harsh treatment of foreign-bornlabor.

Women and Work in Industrial America

Women’s work experiences, like those of men, wereshaped by marital status, social class, and race. Whitemarried women in all classes widely accepted an ideolo-gy of “separate spheres” (see Chapter 19) and remainedat home, raised children, and looked after the house-hold. The well-to-do hired maids and cooks to ease theirburdens. Working-class married women, in contrast, notonly lacked such assistance but also often had the added

Factories and the Work Force 563

responsibility of earning money at home to make endsmeet.

For working-class married women, working forwages at home by sewing, button-making, taking inboarders, or doing laundry had predated industrializa-tion. In the late nineteenth century, urbanization andeconomic expansion enabled unscrupulous entrepre-neurs to exploit this captive work force. Cigar manufac-turers would buy or lease a tenement and require theirtwenty families to live and work there. In the clothingindustry, manufacturers hired out finishing tasks tolower-class married women and their children, wholabored long hours in crowded apartments.

Young, working-class single women often viewedfactory work as an opportunity. In 1870, 13 percent of allwomen worked outside the home, the majority as cooks,maids, cleaning ladies, and laundresses. But most work-ing women intensely disliked the long hours, dismallylow pay, and social stigma of being a “servant.” Whenjobs in industry expanded in the last quarter of the cen-tury, growing numbers of single white women aban-doned domestic employment for better-paying work inthe textile, food-processing, and garment industries.Discrimination barred black working women from fol-

lowing this path. Between 1870 and 1900, the number ofwomen of all races working outside the home nearlytripled, and by the turn of the century, women made up17 percent of the country’s labor force.

A variety of factors propelled the rise in the employ-ment of single women. Changes in agriculture prompt-ed many young farm women to seek employment in the industrial sector (see Chapter 19), and immigrantparents often sent their daughters to the factories tosupplement meager family incomes. Plant managerswelcomed young immigrant women as a ready source ofinexpensive unskilled labor. But factory owners as-sumed that many of these women would marry within ashort time and thus treated them as temporary help andkept their wages low. Late in the century, young womenin the clothing industry were earning as little as five dol-lars for seventy hours of work.

Despite their paltry wages, long hours, and oftenunpleasant working conditions, many young womenrelished earning their own income and joined the workforce in increasing numbers. Although the financial sup-port that these working women contributed to theirfamilies was significant, few working women were paidenough to provide homes for themselves. Rather thanfostering their independence, industrial work enmeshedthem more deeply in a family economy that dependedon their earnings.

When the typewriter and the telephone came intogeneral use in the 1890s, office work provided newemployment opportunities, and women with a highschool education moved into clerical and secretarialjobs earlier filled primarily by men. They were attractedby the clean, safe working conditions and relatively goodpay. First-rate typists could earn six to eight dollars aweek, which compared favorably with factory wages.Even though women were excluded from managerialpositions, office work carried higher prestige and wasgenerally steadier than work in the factory or shop.

Despite the growing number of women workers, the late-nineteenth-century popular press portrayedwomen’s work outside the home as temporary. Few peo-ple even considered the possibility that a woman couldattain local or even national prominence in the emerg-ing corporate order.

Hard Work and the Gospel of Success

Although women were generally excluded from theequation, influential opinion molders in these yearspreached that any man could achieve success in the newindustrial era. In Ragged Dick (1867) and scores of later


tales, Horatio Alger, a Unitarian minister turned dimenovelist, recounted the adventures of poor but honestlads who rose through ambition, initiative, and self-discipline. In his stories shoeshine boys stopped run-away horses and were rewarded by rich benefactors whogave them a start in business. The career of AndrewCarnegie was often offered as proof that the UnitedStates remained the land of opportunity and “rags toriches.”

Not everyone embraced this belief. In an 1871 essay,Mark Twain chided the public for its naïveté and sug-gested that business success was more likely to come tothose who lied and cheated. In testimony given in 1883before a Senate committee investigating labor condi-tions, a New Yorker named Thomas B. McGuire dolefullyrecounted how he had been forced out of the horse-cartbusiness by larger, better-financed concerns. DeclaredMcGuire, “I live in a tenement house, three stories up,where the water comes in through the roof, and I cannotbetter myself. My children will have to go to work beforethey are able to work. Why? Simply because this presentsystem . . . is all for the privileged classes, nothing forthe man who produces the wealth.” Only with startingcapital of ten thousand dollars—then a large sum—saidMcGuire, could the independent entrepreneur hope tocompete with the large companies.

What are the facts? Certainly Carnegie’s rise fromabject poverty to colossal wealth was the rare exception,as studies of nearly two hundred of the largest corpora-tions reveal. Ninety-five percent of the industrial leaderscame from middle- and upper-class backgrounds.However, even if skilled immigrants and native-bornworking-class Americans had little chance to move intomanagement in the largest corporations, they did haveconsiderable opportunity to rise to the top in small com-panies. Although few of them reaped immense fortunes,many attained substantial incomes.

The different fates of immigrant workers in SanFrancisco show the possibilities and perils of moving upwithin the working class. In the 1860s the Irish-bornDonahue brothers grew wealthy from the Union IronWorks they had founded, where six hundred men builtheavy equipment for the mining industry. In contrast,the nearly fifteen thousand Chinese workers whoreturned to the city after the Central Pacific’s rail line wascompleted in 1869 were consigned by prejudice to workin cigar, textile, and other light-industry factories. Evensuccessful Chinese entrepreneurs faced discrimination.When a Chinese merchant, Mr. Yung, refused to sell outto the wealthy Charles Crocker, a dry-goods merchantturned railroad entrepreneur who was building a man-sion on Nob Hill, Crocker built a thirty-foot-high “spite

fence” around Yung’s house so that it would be com-pletely sealed from view.

Thus, while some skilled workers became owners oftheir own companies, the opportunities for advance-ment for unskilled immigrant workers were consider-ably more limited. Some did move to semiskilled orskilled positions. Yet most immigrants, particularly theIrish, Italians, and Chinese, moved far more slowly thanthe sons of middle- and upper-class Americans whobegan with greater educational advantages and familyfinancial backing. The upward mobility possible for suchunskilled workers was generally mobility within theworking class. Immigrants who got ahead in the latenineteenth century went from rags to respectability, notrags to riches.

One positive economic trend in these years was therise in real wages, representing gains in actual buyingpower. Average real wages climbed 31 percent forunskilled workers and 74 percent for skilled workersbetween 1860 and 1900. Overall gains in purchasingpower, however, were often undercut by injuries andunemployment during slack times or economic slumps.The position of unskilled immigrant laborers was partic-ularly shaky. Even during a prosperous year like 1890,one out of every five nonagricultural workers was unem-ployed at least one month of the year. During thedepressions of the 1870s and 1890s, wage cuts, extendedlayoffs, and irregular employment pushed those at the bottom of the industrial work force to the brink ofstarvation.

Thus the overall picture of late-nineteenth-centuryeconomic mobility is complex. At the top of the scale, amere 10 percent of American families owned 73 percentof the nation’s wealth in 1890, while less than half ofindustrial laborers earned more than the five-hundred-dollar poverty line annually. In between the very richand the very poor, skilled immigrants and small shop-keepers swelled the ranks of the middle class. Soalthough the standard of living for millions of Americansrose, the gap between the poor and the well-offremained a yawning abyss.

LABOR UNIONS ANDINDUSTRIAL CONFLICT

The rapid growth of large corporations in the late nine-teenth century transformed the working conditions formillions of Americans and drove them to seek newforms of organization and support. Aware that theexpansion of regional markets and their integration intonational and world markets gave industrial leaders

Labor Unions and Industrial Conflict 565

unprecedented power to control the workplace, laborleaders searched for ways to create broad-based, nation-al organizations that could protect their members andresist corporate power.

From the outset, the drive to create a nationwidelabor movement faced many problems. Ethnic andracial divisions within the work force, including compe-tition between immigrant groups, hampered unionizingefforts. Skilled craftsworkers, moreover, felt little kinshipwith low-paid common laborers. Divided into differenttrades, they often saw little reason to work together.Thus, unionization efforts moved forward slowly andexperienced many setbacks.

Two groups, the National Labor Union and theKnights of Labor, struggled to build a mass labor move-ment that would unite skilled and unskilled workersregardless of their specialties. After impressive initialgrowth, however, both efforts collapsed. Far more effec-tive was the American Federation of Labor (AFL), whichrepresented an amalgamation of powerful independentcraft unions. The AFL survived and grew, but it still rep-resented only a small portion of the total labor force.

With unions so weak, labor unrest reached crisisproportions. When working conditions became intolera-ble, laborers walked off the job. These actions, born ofdesperation, often exploded into violence. The labor cri-sis of the 1890s, with its strikes and bloodshed, wouldreshape the legal environment, increase the demand forstate regulation, and eventually contribute to a move-ment for progressive reform.

Organizing the Workers

The Civil War marked a watershed in the development oflabor organizations. From the eighteenth century on,skilled workers had organized local trade unions to fightwage reductions and provide benefits for their membersin times of illness or accident. By the 1850s some trades-men had even organized national associations alongcraft lines. But the effectiveness of these organizationswas limited. The main challenge that labor leaders facedin the postwar period was how to boost the unions’clout. Some believed that this goal could be achieved byforming one big association that would transcend craftlines and pull in a mass membership.

One person inspired by this vision wasPhiladelphian William H. Sylvis, who in 1863 was electedpresident of the Iron Molders’ International Union, anorganization of iron-foundry workers. Strongly built andbearded, with a “face and eyes beaming with intelli-gence,” Sylvis traveled the country exhorting iron mold-

ers to organize. Within a few years, Sylvis had built hisunion from “a mere pygmy” to a membership of eighty-five hundred.

In 1866, acting on his dream of a nationwide associ-ation to represent all workers, Sylvis called a conventionin Baltimore that formed a new organization, theNational Labor Union (NLU). Reflecting the lingeringaura of pre-Civil War utopianism, the NLU endorsed theeight-hour-day movement, which insisted that labordeserved eight hours for work, eight hours for sleep, andeight hours for personal affairs. Leaders also called foran end to convict labor, for the establishment of a feder-al department of labor, and for currency and bankingreform. To push wage scales higher, they endorsedrestriction on immigration, especially of Chinesemigrants, whom native-born workers blamed for under-cutting prevailing wage levels. The NLU under Sylvis’sleadership supported the cause of working women andelected a woman as one of its national officers. It urgedblack workers to organize as well, though in racially sep-arate unions.

In the winter of 1866–1867, Sylvis’s own unionbecame locked in a harrowing strike against the nation’sfoundry owners. When the strike failed miserably, Sylvisturned to national political reform. He invited a numberof reformers to the 1868 NLU convention, includingwoman suffrage advocates Susan B. Anthony andElizabeth Cady Stanton who, according to a reporter,made “no mean impression on the bearded delegates.”But the NLU suffered a shattering blow when Sylvis sud-denly died in 1869. Despite a claim of three hundredthousand members, it faded quickly. After a brief incar-nation in 1872 as the National Labor Reform party, itvanished from the scene.

The dream of a national labor movement lived on ina new organization, the Noble and Holy Order of theKnights of Labor, founded in 1869 by nine Philadelphiatailors led by Uriah H. Stephens, head of the GarmentCutters of Philadelphia. A secret society modeled on theMasonic order, the Knights welcomed all wage earnersor former wage earners; they excluded only bankers,doctors, lawyers, stockbrokers, professional gamblers,and liquor dealers. Calling for a great association of allworkers, the Knights demanded equal pay for women,an end to child labor and convict labor, and the cooper-ative employer-employee ownership of factories, mines,and other businesses. At a time when no federal incometax existed, they called for a tax on all earnings, graduat-ed so that higher income earners would pay more.

The Knights grew slowly at first. But membershiprocketed in the 1880s after Terence V. Powderly replaced


Stephens as the organization’s head. A young Penn-sylvania machinist of Irish-Catholic immigrant origins,Powderly was an unlikely labor leader. He was short andslight, with a blond drooping mustache, elegant attire,and a fastidious, somewhat aloof manner. One journal-ist expressed surprise at finding such a fashionable manas the leader of “the horny-fisted sons of toil.” ButPowderly’s eloquence, coupled with a series of successesin labor clashes, brought in thousands of new members.

During its growth years in the early 1880s, theKnights of Labor reflected both its idealistic origins andPowderly’s collaborative vision. Powderly opposedstrikes, which he considered “a relic of barbarism,” andorganized producer and consumer cooperatives. A tee-totaler, he also urged temperance upon the member-ship. Powderly advocated the admission of blacks intolocal Knights of Labor assemblies, although he recog-nized the strength of racism and allowed local assem-blies to be segregated in the South. Under his leadershipthe Knights welcomed women members; by 1886women organizers such as the feisty Irish-born MaryHarris Jones, known as Mother Jones, had recruitedthousands of workers, and women made up an estimat-ed 10 percent of the union’s membership.

Powderly supported restrictions on immigrationand a total ban on Chinese immigration. Union mem-bers feared that immigrants would work so cheaply thatthey would steal their jobs. In the West such fears weredirected particularly against the Chinese, and they wereheightened when California railroad magnate Leland

Stanford declared, “[O]pen the door and let everybodycome who wants to come . . . until you get enough[immigrants] here to reduce the price of labor to such apoint that its cheapness will stop their coming.” In 1877San Francisco workers demonstrating for an eight-hourworkday destroyed twenty-five Chinese-run laundriesand terrorized the local Chinese population. In 1880both major party platforms included anti-Chineseimmigration plans. Two years later, Congress passed theChinese Exclusion Act, placing a ten-year moratoriumon Chinese immigration. The ban was made permanentin 1902.

Although inspired by Powderly’s vision of a harmo-nious and cooperative future, most rank-and-fileKnights of Labor strongly disagreed with Powderly’santistrike position. In 1883–1884 local branches of theKnights led a series of spontaneous strikes that elicitedonly reluctant support from the national leadership. In1885, however, when Jay Gould tried to eradicate theKnights of Labor from his Wabash railroad by firingactive union members, Powderly and his executiveboard instructed all Knights employed by the Wabashline to walk off the job and those working for other linesto refuse to handle Wabash cars. This highly effectiveaction crippled the Wabash’s operations. To the nation’samazement, the arrogant Jay Gould met with Powderlyand cancelled his campaign against the Knights ofLabor. “The Wabash victory is with the Knights,”declared a St. Louis newspaper; “no such victory hasever before been secured in this or any other country.”


With this apparent triumph, membership in theKnights of Labor soared. By 1886 more than seven hun-dred thousand workers were organized in nearly sixthousand locals. Turning to political action that fall, theKnights mounted campaigns in nearly two hundredtowns and cities nationwide, electing several mayorsand judges (Powderly himself had served as mayor ofScranton since 1878) and claimed a role in electing adozen congressmen. In state legislatures they securedpassage of laws banning convict labor, and at thenational level they lobbied successfully for a law againstthe importation of foreign contract labor. Business exec-utives warned darkly that the Knights could cripple theeconomy and take over the country if they chose.

But the organization’s strength soon waned. Workersbecame disillusioned when a series of unauthorizedstrikes failed in 1886. The national reaction to theHaymarket riot (see below) also contributed to thedecline. By the late 1880s, the Knights of Labor was a

shadow of its former self. Nevertheless, the organizationhad served as a major impetus to the labor movementand had awakened in thousands of workers a sense ofgroup solidarity and potential strength. Powderly, whosurvived to 1924, always remained proud of his role “inforcing to the forefront the cause of misunderstood anddowntrodden humanity.”

As the Knights of Labor weakened, another nationallabor organization, pursuing more immediate and prac-tical goals, was gaining strength. The skilled craft unionshad long been uncomfortable with labor organizationslike the Knights that welcomed skilled and unskilledalike. They were also concerned that the Knights’emphasis on broad reform goals would undercut theirown commitment to better wages and protecting theinterests of their particular crafts. The break came inMay 1886 when the craft unions left the Knights of Laborto form the American Federation of Labor (AFL).

The AFL replaced the Knights’ grand visions withpractical tactics aimed at bread-and-butter issues. Thisphilosophy was vigorously pursued by SamuelGompers, the immigrant cigar maker who became headof the AFL in 1886 and led it until his death in 1924.Gompers believed in “trade unionism, pure and simple.”For Gompers, higher wages were not simply an end inthemselves but were rather the necessary base to enableworking-class families to exist decently, with respect anddignity. The stocky, mustachioed labor leader had lostfaith in utopian social reforms and recognized that “thepoor, the hungry, have not the strength to engage in aconflict even when life is at stake.” To stand up to thecorporations, Gompers asserted, labor would have toharness the bargaining power of skilled workers, whomemployers could not easily replace, and concentrate onthe practical goals of raising wages and reducing hours.

A master tactician, Gompers believed that the trendtoward large-scale industrial organization necessitated acomparable degree of organization by labor. He also rec-ognized, however, that the skilled craft unions that madeup the AFL retained a strong sense of independence. Heknew that he had to persuade craftsworkers from thevarious trades to join forces without violating their senseof craft autonomy. Gompers’s solution was to organizethe AFL as a federation of trade unions, each retainingcontrol of its own members but all linked by an execu-tive council that coordinated strategy during boycottsand strike actions. “We want to make the trade unionmovement under the AFL as distinct as the billows, yetone as the sea,” he told a national convention.

Focusing the federation’s efforts on short-termimprovements in wages and hours, Gompers at firstsidestepped divisive political issues. The new organiza-


tion’s platform did, however, demand an eight-hourworkday, employers’ liability for workers’ injuries, andmine-safety laws. Although women participated in manycraft unions, the AFL did little to recruit women workersafter 1894 because Gompers and others believed thatwomen’s place was in the home. By 1904, underGompers’s careful tutelage, the AFL had grown to morethan 1.6 million strong.

Although the unions held up an ideal toward whichmany might strive, labor organizations before 1900remained weak. Less than 5 percent of the work forcejoined union ranks. Split between skilled artisans andcommon laborers, separated along ethnic and religiouslines, and divided over tactics, the unions battled withonly occasional effectiveness against the growing powerof corporate enterprise. Lacking financial resources,they typically watched from the sidelines when unor-ganized workers launched wildcat strikes that some-times turned violent.

Strikes and Labor Violence

Americans had lived with a high level of violence fromthe nation’s beginnings, and the nineteenth century,with its international and civil wars, urban riots, andIndian-white conflict, was no exception. Terrible laborclashes toward the end of the century were part of thiscontinuing pattern, but they nevertheless shocked anddismayed contemporaries. From 1881 to 1905, close to37,000 strikes erupted, in which nearly 7 million workersparticipated.

The first major wave of strikes began in 1873 when aWall Street crash triggered a stock market panic and amajor depression. Six thousand businesses closed thefollowing year, and many more cut wages and laid offworkers. Striking Pennsylvania coal miners were firedand evicted from their homes. Tramps roamed thestreets in New York and Chicago. The tension took adeadly turn in 1877 during a wildcat railroad strike.Ignited by a wage reduction on the Baltimore and OhioRailroad in July, the strike exploded up and down therailroad lines, spreading to New York, Pittsburgh, St.Louis, Kansas City, Chicago, and San Francisco. Riotersin Pittsburgh torched Union Depot and the Penn-sylvania Railroad roundhouse. By the time newlyinstalled President Rutherford B. Hayes had called outthe troops and quelled the strike two weeks later, nearlyone hundred people had died, and two-thirds of thenation’s railroads stood idle.

The railroad strike stunned middle-class America.The religious press responded hysterically. “If the club ofthe policeman, knocking out the brains of the rioter, will

answer, then well and good,” declared one Congrega-tional journal, “[but if not] then bullets and bayo-nets . . . constitute the one remedy. . . . Napoleon wasright when he said that the way to deal with a mob wasto exterminate it.” The same middle-class Americanswho worried about corporate abuse of power at the topechelons grew terrified of mob violence from the bottomranks of society.

Employers capitalized on the public hysteria tocrack down on labor. Many required their workers tosign “yellow dog” contracts in which they promised notto strike or join a union. Some hired Pinkerton agents toserve as their own private police force and, when neces-sary, turned to the federal government and the U.S.Army to suppress labor unrest.

Although the economy had recovered, more strikesand violence followed in the 1880s. On May 1, 1886,340,000 workers walked off their jobs in support of thecampaign for an eight-hour workday. Strikers inCincinnati virtually shut down the city for nearly amonth. Also in 1886, Chicago police shot and killed fourstrikers at the McCormick Harvester plant on May 3. At aprotest rally the next evening in the city’s HaymarketSquare, someone threw a bomb from a nearby building,killing or fatally wounding seven policemen. Inresponse, the police fired wildly into the crowd andkilled four demonstrators.

Public reaction was immediate. Business leadersand middle-class citizens lashed out at labor activistsand particularly at the sponsors of the Haymarket meet-ing, most of whom were associated with a German-lan-guage anarchist newspaper that advocated the violentoverthrow of capitalism. Eight men were arrested.Although no evidence connected them directly to thebomb throwing, all were convicted of murder, and fourwere executed. One committed suicide in prison. InHaymarket’s aftermath, still more Americans becameconvinced that the nation was in the grip of a deadly for-eign conspiracy, and animosity toward labor unionsintensified.

Confrontations between capital and labor becameparticularly violent in the West. When the Mine Owners’Protective Association cut wages at work sites alongIdaho’s Coeur d’Alene River in 1892, the miners, whowere skilled in the use of dynamite, blew up a mill andcaptured the guards sent to defend it. Mine ownersresponded by mustering the Idaho National Guard toround up more than three hundred men and crippletheir union.

Back east that same year, armed conflict broke outat the Carnegie Steel Company plant in Homestead,Pennsylvania, when managers cut wages and locked out


the workers to destroy their union. When workersresponded by firing on the armed men from thePinkerton Detective Agency who came to protect theplant, a battle broke out. Seven union members andthree Pinkertons died. A week later the governor senteight thousand National Guardsmen to restore order.The union crushed, the mills resumed full operation amonth later.

The most systematic use of troops to smash unionpower came in 1894 during a strike against the PullmanPalace Car Company. In 1880 George Pullman, a manu-facturer of elegant dining, parlor, and sleeping cars forthe nation’s railroads, had constructed a factory andtown, called Pullman, ten miles south of Chicago. Thecarefully planned community provided solid brick hous-es for the workers, beautiful parks and playgrounds, andeven its own sewage-treatment plant. Pullman alsoclosely policed workers’ activities, outlawed saloons,and insisted that his properties turn a profit.

When the depression of 1893 hit, Pullman slashedworkers’ wages without reducing their rents. In reactionthousands of workers joined the newly formedAmerican Railway Union and went on strike. They wereled by a fiery young organizer, Eugene V. Debs, whovowed “to strip the mask of hypocrisy from the pretend-

ed philanthropist and show him to the world as anoppressor of labor.” Union members working for thenation’s largest railroads refused to switch Pullman cars,paralyzing rail traffic in and out of Chicago, one of thenation’s premier rail hubs.

In response, the General Managers’ Association, anorganization of top railroad executives, set out to breakthe union. The General Managers imported strikebreak-ers from among jobless easterners and asked U.S. attor-ney general Richard Olney, who sat on the board ofdirectors of three major railroad networks, for a federalinjunction (court order) against the strikers for allegedlyrefusing to move railroad cars carrying U.S. mail.

In fact, union members had volunteered to switchmail cars onto any trains that did not carry Pullman cars,and it was the railroads’ managers who were delayingthe mail by refusing to send their trains without the fullcomplement of cars. Nevertheless, Olney, supported byPresident Grover Cleveland and citing the ShermanAnti-Trust Act, secured an injunction against the leadersof the American Railway Union for restraint of com-merce. When the union refused to order its membersback to work, Debs was arrested, and federal troopspoured in. During the ensuing riot, seven hundredfreight cars were burned, thirteen people died, and fifty-three were wounded. By July 18 the strike had beencrushed.

By playing upon a popular identification of strikerswith anarchism and violence, crafty corporate leaderspersuaded state and federal officials to cripple organ-ized labor’s ability to bargain with business. When theSupreme Court (in the 1895 case In re Debs) upheldDebs’s prison sentence and legalized the use of injunc-tions against labor unions, the judicial system gave busi-ness a potent new weapon with which to restrain labororganizers.

Despite successive attempts by the National LaborUnion, Knights of Labor, American Federation of Labor,and American Railway Union to build a strong working-class movement, aggressive employer associations andconservative state and local officials hamstrung theirefforts. In sharp contrast to Great Britain and Germany,where state officials often mediated disputes betweenlabor and capital, federal and state officials in the UnitedStates increasingly sided with manufacturers. Ineffectivein the political arena, blocked by state officials, and frus-trated by court decisions, American unions failed toexpand their base of support. Post-Civil War labor tur-moil had sapped the vitality of organized labor andgiven it a negative public image that it would not sheduntil the 1930s.


Social Thinkers Probe for Alternatives

Widespread industrial violence was particularly unset-tling when examined in the context of working-classpoverty. In 1879, after observing three men rummagingthrough garbage to find food, the poet and journalistWalt Whitman wrote, “If the United States, like the coun-tries of the Old World, are also to grow vast crops of poor,desperate, dissatisfied, nomadic, miserably-waged pop-ulations, such as we see looming upon us of lateyears . . . , then our republican experiment, notwith-standing all its surface-successes, is at heart anunhealthy failure.” Whitman’s bleak speculation waspart of a general public debate over the social meaningof the new industrial order. At stake was a larger issue:should government become the mechanism for helpingthe poor and regulating big business?

Defenders of capitalism preached the laissez-faire(“hands-off”) argument, insisting that governmentshould never attempt to control business. They but-tressed their case by citing Scottish economist AdamSmith, who had argued in The Wealth of Nations (1776)that self-interest acted as an “invisible hand” in the mar-ketplace, automatically regulating the supply of anddemand for goods and services. In “The Gospel ofWealth,” an influential essay published in 1889, AndrewCarnegie justified laissez-faire by applying the evolu-tionary theories of British scientist Charles Darwin tohuman society. “The law of competition,” Carnegieargued, “may be sometimes hard for the individual, [but]it is best for the race, because it insures the survival ofthe fittest in every department.” Ignoring the scrambleamong businesses in the late nineteenth century toeliminate competition, Carnegie praised an unregulatedcompetitive environment as a source of positive long-term social benefits.

Tough-minded Yale professor William GrahamSumner shared Carnegie’s disapproval of governmentinterference. In his combative book What Social ClassesOwe to Each Other (1883), Sumner asserted that inex-orable natural laws controlled the social order: “A drunk-ard in the gutter is just where he ought to be. . . . The lawof survival of the fittest was not made by man, and itcannot be abrogated by man. We can only, by interferingwith it, produce the survival of the unfittest.” The state,declared Sumner, owed its citizens nothing but law,order, and basic political rights.

This conservative, laissez-faire brand of SocialDarwinism (as such ideas came to be called) did not gounchallenged. In Dynamic Sociology (1883), Lester

Frank Ward, a geologist with the U.S. Geological Survey,argued that contrary to Sumner’s claim, the supposed“laws” of nature could be circumvented by human will.Just as scientists had applied their knowledge to breed-ing superior livestock, government experts could use thepower of the state to regulate big business, protect soci-ety’s weaker members, and prevent the heedless exploi-tation of natural resources.

Henry George, a self-taught San Francisco newspa-per editor and economic theorist, proposed to solve thenation’s uneven distribution of wealth through what hecalled the single tax. In Progress and Poverty (1879), henoted that speculators reaped huge profits from the ris-ing price of land that they neither developed norimproved. By taxing this “unearned increment,” the gov-ernment could obtain the funds necessary to amelioratethe misery caused by industrialization. The result wouldbring the benefits of socialism—a state-controlled eco-nomic system that distributed resources according toneed—without socialism’s great disadvantage, the sti-fling of individual initiative. George’s program was sopopular that he lectured around the country and onlynarrowly missed being elected mayor of New York in1886.

The vision of a harmonious industrialized societywas vividly expressed in the utopian novel LookingBackward (1888) by Massachusetts newspaper editorEdward Bellamy. Cast as a glimpse into the future,Bellamy’s novel tells of Julian West, who falls asleep in1888 and awakens in the year 2000 to find a nation with-out poverty or strife. In this future world, West learns, acompletely centralized, state-run economy and a newreligion of solidarity have combined to create a societyin which everyone works for the common welfare.Bellamy’s vision of a conflict-free society where all shareequally in industrialization’s benefits so inspired middle-class Americans fearful of corporate power and working-class violence that nearly five hundred local Bellamyiteorganizations, called Nationalist clubs, sprang up to tryto turn his dream into reality.

Ward, George, and Bellamy did not deny the bene-fits of the existing industrial order; they simply sought tohumanize it. These utopian reformers envisioned a har-monious society whose members all worked together.Marxist socialists advanced a different view. Elaboratedby German philosopher and radical agitator Karl Marx(1818–1883) in Das Kapital (1867) and other works,Marxism rested on the proposition (which Adam Smithhad also accepted) that the labor required to produce acommodity was the only true measure of that commod-ity’s value. Any profit made by the capitalist employer


was “surplus value” appropriated from the exploitedworkers. As competition among capitalists increased,Marx predicted, wages would decline to starvation lev-els, and more and more capitalists would be driven outof business. At last society would be divided between ashrinking bourgeoisie (capitalists, merchants, and mid-dle-class professionals) and an impoverished proletariat(the workers). At this point the proletariat would revoltand seize control of the state and of the economy.Although Marx’s thought was dominated by an insis-tence on class struggle as the essence of modern history,his eyes were also fixed on the shining vision of the com-munist millennium that the revolution would eventuallyusher in—a classless utopia in which the state would“wither away” and all exploitation would cease. To leadthe working class in its coming showdown with capital-ism, Marx and his collaborator Friedrich Engels helpedfound socialist parties in Europe, whose strength grewsteadily beginning in the 1870s.

Despite Marx’s keen interest in the United States,Marxism proved to have little appeal in late-nineteenth-century America other than for a tiny group of primarilyGerman-born immigrants. The Marxist-oriented Socia-list Labor party (1877) had attracted only about fifteenhundred members by 1890. More alarming to the publicat large was the handful of anarchists, again mostlyimmigrants, who rejected Marxist discipline and preach-ed the destruction of capitalism, the violent overthrowof the state, and the immediate introduction of a state-less utopia. In 1892 Alexander Berkman, a Russianimmigrant anarchist, attempted to assassinate HenryClay Frick, the manager of Andrew Carnegie’sHomestead Steel Works. Entering Frick’s office with apistol, Berkman shot him in the neck and then tried tostab him. A carpenter working in Frick’s office overpow-ered the assailant. Rather than igniting a workers’ insur-rection that would usher in a new social order as he hadhoped, Berkman came away with a long prison sen-tence, and his act confirmed the middle-class stereotypeof “labor agitators” as lawless and violent.

CONCLUSIONBy 1900 industrialization had propelled the UnitedStates into the forefront of the world’s major powers,lowered the cost of goods through mass production,generated thousands of jobs, and made available a widerange of new consumer products. Using accounting sys-tems first developed by the railroads and sophisticatednew technologies, national corporations had pioneeredinnovative systems for distributing and marketing theirgoods. In the steel and oil industries, Andrew Carnegie

and John D. Rockefeller had vertically integrated theircompanies, controlling production from the raw materi-als to the finished product. Through systematic cost-cutting and ruthless underselling of their competitors,they had gained control of most of their industry andlowered prices.

Despite these advantages, all thinking people recog-nized that industrialization’s cost was high. The rise of


CHRONOLOGY, 1865–1900

1859 First oil well drilled in Titusville, Pennsylvania.1866 National Labor Union founded.1869 First transcontinental railroad completed.

Knights of Labor organized.1870 John D. Rockefeller establishes Standard Oil Company.1873 Panic of 1873 triggers a depression lasting until 1879.1876 Alexander Graham Bell invents and patents the

telephone.Thomas A. Edison opens research laboratory at MenloPark, New Jersey.

1877 Edison invents the phonograph.Railway workers stage the first nationwide strike.

1879 Henry George, Progress and Poverty.Edison perfects the incandescent lamp.

1881 Standard Oil Trust established.1882 Edison opens the first electric power station on Pearl

Street in New York City.Chinese Exclusion Act.

1883 Railroads divide the country into time zones.William Graham Sumner, What Social Classes Owe toEach Other.Lester Frank Ward, Dynamic Sociology.

1886 American Federation of Labor (AFL) formed.Police and demonstrators clash at Haymarket Square inChicago.

1887 Interstate Commerce Act establishes the InterstateCommerce Commission.

1888 Edward Bellamy, Looking Backward.1889 Andrew Carnegie, “The Gospel of Wealth.”1890 Sherman Anti-Trust Act.1892 Standard Oil of New Jersey and General Electric

formed.Steelworkers strike at Homestead, Pennsylvania.World’s Columbian Exposition opens in Chicago.Miners strike at Coeur d’Alene, Idaho.

1893 Panic of 1893 triggers a depression lasting until 1897.1894 Pullman Palace Car workers strike, supported by the

National Railway Union.1901 J. Pierpont Morgan organizes United States Steel.

the giant corporations had been achieved through sav-age competition, exploited workers, shady businesspractices, polluted factory sites, and the collapse of aneconomic order built on craft skills. In the South in par-ticular, the devastation of the Civil War and the controlof banking and raw materials by northern capitalistsencouraged industrialists to adopt a paternalistic, fami-ly-oriented approach in the cotton mills and to payexceedingly low wages.

Outbursts of labor violence and the ominous phe-nomenon of urban slums and grinding poverty showedstarkly that all was not well in industrial America.Although the Knights of Labor and the American Fed-eration of Labor attempted to organize workers nation-ally, the labor movement could not control spontaneouswildcat strikes and violence. In response, governmentauthorities sided with company owners, arrested strik-ers, obtained court injunctions, and crippled the abilityof labor leaders to expand their organizations.

As a result, Americans remained profoundlyambivalent about the new industrial order. Caughtbetween their desire for the higher standard of livingthat industrialization made possible and their fears ofcapitalist power and social chaos, Americans of the1880s and 1890s sought strategies that would preservethe benefits while alleviating the undesirable social by-products. Efforts to regulate railroads at the state leveland such national measures as the Interstate CommerceAct and the Sherman Anti-Trust Act, as well as the fervorwith which the ideas of a utopian theorist like EdwardBellamy were embraced, represented early manifesta-tions of this impulse. In the Progressive Era of the earlytwentieth century, Americans would redouble theirefforts to formulate political and social responses to thenation’s economic transformation after the Civil War.

FOR FURTHER REFERENCE

READINGS

Edward L. Ayers, The Promise of the New South: Life AfterReconstruction (1992). A comprehensive overview of eco-nomic and social change in the post-Civil War South.

David Bain, Empire Express: Building the FirstTranscontinental Railroad (1999). An important study ofthe early leaders of the railroad industry.

Ron Chernow, Titan: The Life of John D. Rockefeller, Sr.(1998). A balanced, insightful examination of the charac-ter and business practices of one of the most successfulcaptains of industry.

Wendy Gamber, The Female Economy: The Millinery andDressmaking Trades, 1860–1930 (1997). An importantstudy of ways in which women’s custom dressmakingbusinesses provided important entrepreneurial opportu-nities for women in the late nineteenth century.

Matthew F. Jacobson, Whiteness of a Different Color:European Immigrants and the Alchemy of Race (1998). Astudy how the concept of race was defined and appliedto immigrants in the nineteenth century.

Richard Schneirov, Shelton Stromquist, and Nick Salvatore,eds., The Pullman Strike and the Crisis of the 1890s:Essays on Labor and Politics (1999). An important surveyof the impact of the Pullman Strike on politics, the role ofthe state, and the public controversy over governmentalregulation of corporate activity.

Philip Scranton, Endless Novelty: Specialty Production andAmerican Industrialization, 1865–1925 (1997). A usefulcorrective to the argument that large corporations aloneaccount for American economic growth in the post-CivilWar period.

Joel A. Tarr, The Search for the Ultimate Sink: UrbanPollution in Historical Perspective (1996). An importantstudy of the environmental problems created by indus-trialization.

Kim Voss, The Making of American Exceptionalism: TheKnights of Labor and Class Formation in the NineteenthCentury (1993). A comparative analysis of Americanlabor’s attempts to mobilize workers in the face of busi-ness opposition.

WEBSITES

The Alexander Graham Bell Family Papers at the Libraryof Congress, 1862–1969http://memory.loc.gov/ammem/bellhtml/bellhome.htmlPart of the Library of Congress American Memory Series,this site contains correspondence, notebooks, and arti-cles about the famous scientist and inventor.

America at Work, America at Leisure: Motion Picturesfrom 1894–1915http://memory.loc.gov/ammem/awlhtml/awlwork.htmlPart of the Library of Congress American Memory Series,this site provides information about cattle breeding, coalmining, and a variety of manufacturing companies.

The Emergence of Advertising in America, 1850–1920http://memory.loc.gov/ammem/award98/ncdhtml/eaahome.htmlPart of the Library of Congress American Memory Series,this site has a useful timeline organized by decade.

The Haymarket Riothttp://www.chipublib.org/004chicago/timeline/haymarket.htmlInformation about the Haymarket riot of 1886 from theChicago Public Library.

For Further Reference 573

silviam

Text Box

Next Chapter

silviam

Text Box

Previous Chapter

the rise of industrial america,...

Documents