United States History 11R

After Civil War

• United States - Agricultural Nation

• Would become leading Industrial Power in 60 years

• Why?

– Wealth of Natural Resources

– Government support for business

– Growing urban population provides both cheap labor and markets for products.

Primary Characteristics of American Industrialization

• Production by Machine not hand

• Increasing Proportion of Work Force in Manufacturing

• Production Concentrated in Factories

• Technological Innovation

• Expanded Markets

• Growth of Nationwide Networks

• Capital for Investment

• Growth of Large Enterprises

• Growth of Cities

Natural Resources

• Oil – Native Americans used for centuries • Europeans

– Used kerosene for lamps • 1859 - Edwin L. Drake

– First used steam engine to drill for oil – Near Titusville, Pennsylvania

• Oil boom – Kentucky, Ohio, Illinois, Indiana, Texas followed.

• Gasoline – Byproduct of oil production – Important for internal combustion engine

Natural Resources • Coal and Iron

– Large deposits throughout the United States.

• Iron

– soft and tends to break and rust

• Bessemer Process

– makes steel

• Developed by British manufacturer Henry Bessemer and American William Kelly

Henry Bessemer

Uses for Steel • Railroads – huge need for tracks

– Thousands of miles needed.

• Brooklyn Bridge was possible thanks to steel – completed in 1883

• Skyscrapers possible - built around a steel frame.

Inventions

• 1867 – Christopher Sholes - Typewriter

Thomas Alva Edison

1876 – Thomas Edison – Electricity and Electric Light Bulb

“Wizard of Menlo Park”

The Light Bulb

The Phonograph (1877)

The Ediphone or Dictaphone

The Motion Picture Camera

Alexander Graham Bell

Telephone (1876)

Alternate Current

George Westinghouse

Alternate Current

Westinghouse Lamp ad

The Airplane

Wilbur Wright Orville Wright

Kitty Hawk, NC – December 7, 1903

Model T Automobile

Henry Ford I want to pay my workers so that they can

afford my product!

“Model T” Prices & Sales

Industrialization

• Big impact on factory work

– More woman in factories

– New Inventions adopted

– Back breaking work reduced

– Products made cheaper for consumers

• Many problems in factories overlooked

• Some workers felt it reduced worth of human beings in workplace

Office Work Changed

• People could work longer and more efficiently

• More jobs opened up for women

Women in Workforce

• 1870 – less than 5% of office workers were women.

• 1910 – Almost 40% of clerical work force women

• Need for women in garment industry due to mass production of clothing.

The Age of Railroads

American History 11R

Transcontinental Railroad • Central Pacific Railroad & Union Pacific Railroad

• Promontory, Utah - May 10th, 1869.

Reality

• Central Pacific

– employed thousands of Chinese immigrants

– Paid half of what whites received

• Union Pacific employed Irish immigrants and out

of work Civil War veterans.

• 1888 – First time statistics gathered

– 2000 killed and 20,000 injured.

George M. Pullman

• Built sleeper railroad cars

and others in Illinois.

• Company town

– Clean, well-constructed

housing.

– Doctors’ offices, shops.

The Modern Colossus of (Rail) Roads

William Vanderbilt,

Jay Gould, and

Cyrus W. Fields

Created railroad trust

from Union Pacific,

New York Central,

and Lake Shore

& Dependence lines.

Credit Mobilier

• Stockholders in Union Pacific formed a construction company to build railroad.

• Contract to lay track at 2 to 3 times the cost.

– Stockholders pocketed the profit.

• Donated stock shares to 20 representatives in Congress

• Officers of Union Pacific earn $23 million in stocks, bonds, and cash.

Grangers • Farmers organization founded

in 1867.

• Farmers angry at railroads

– Stealing land

– Fixing prices for shipping goods

– Different rates for different customers

• Elected state legislators

– Wanted laws to protect interests.

Granger Laws

• 1871 – Illinois authorized a commission to

“establish maximum freight and passenger

rates and prohibit discrimination.”

• Railroads challenged constitutionality of these

states laws

Munn v. Illinois

• 1877 – Supreme Court upheld Granger Laws.

• States won the right to regulate the railroads for

the benefit of farmers and consumers.

• Established principle

– Right of federal government to regulate private

industry to serve the public interest.

• Short lived victory

Wabash v. Illinois

• 1886

– Supreme Court ruled that states could not regulate

railroad rates within their own states if train was

headed to another state or from another state.

• Only the federal government had the right to

regulate interstate trade.

Interstate Commerce Act of 1887

• Response to Wabash v. Illinois

– Congress passed legislation to regulate railroads

• Required railroad rates to be “reasonable and just”.

• Established 5 member Interstate Commerce

Commission (ICC)

• Could only prevent railroads from

– charging more for short hauls than long hauls

• Could not set maximum rates

• Enforcement meant suing the railroad company

– took years to settle.

Panic of 1893 • Due to

– Corporate abuses

– Mismanagement

– Overbuilding

– Competition

• Forced railroads to edge of bankruptcy.

• By 1894, quarter of nation’s railroads taken over by financial companies.

• As 20th century began

– 7 companies controlled over 2/3s of the nation’s railroad tracks.

American History 11R

Rise of Big Business

• Business practices of Gilded Age

– Corrupt or Beneficial?

• Industrialization

– Enormous economic opportunities for those with

money to invest

• Between 1860 and 1900

– 2% of population controlled 1/3 of nation’s wealth

Rise of Big Business • By 1900

– Only Great Britain's industrial production exceeded

total industrial production of United States.

• Two major factors :

– New Businessmen

– New Ways of Doing Business

Oil & John D. Rockefeller

• Rockefeller organized

Standard Oil Co.

– bought out smaller refiners

• Organized Trusts

– Combine companies

– Reduce competition

– Increase profits

Robber Barons • In 1870

– Standard Oil processed just 3% of U.S. crude oil

• By 1880

– over 90% of crude oil processed by Rockefeller’s

• Drove many competitors out of business and paid employees low wages.

• Called Robber Barons

– Harsh business tactics

– Tried to improve image by donating millions of dollars to charity

• Became Philanthropists

Capitalism

• Economic system based on the private

ownership of the means of production

(individual or corporation)

• Free markets to sell products

• Right to use means of production to earn a

profit.

Economic Philosophy

• British economist. • Advocate of

laissez-faire. • Adapted Darwin’s

ideas from the “Origin of Species” to humans.

• Notion of “Survival of the Fittest.”

Herbert Spencer

Laissez Faire • French term meaning “allow to do”

• Doctrine opposing government interference

in economic affairs beyond the minimum

necessary for the maintenance of peace and

property rights.

• Marketplace should not be regulated

Social Darwinism

• An economic and social philosophy

• Biologist Charles Darwin’s

– “On the Origin of Species” book

– Theory of evolution by natural selection

• System of unrestrained competition will

ensure the “survival of the fittest” business.

• Success and failure in business were

governed by natural law and that no one

had a right to intervene.

Social Darwinism in America

William Graham Sumner Folkways (1906)

• Individuals must have absolute freedom to struggle, succeed or fail.

• Therefore, state intervention to reward society and the economy is futile!

• "A drunkard in the gutter is just where he

ought to be...The law of survival of the

fittest was not made by man, and it cannot

be abrogated by man. We can only, by

interfering with it, produce the survival of

the unfittest."

--- William Graham Sumner, What Social

Classes Owe to Each Other (1883)

• Agree or Disagree?

• "The law of competition may be

sometimes hard for the individual, [but] it is

best for the race , because it insures the

survival of the fittest in every department."

---Andrew Carnegie, "The Gospel of

Wealth, (1889)

Andrew Carnegie

• Born in Scotland

• Started working as

clerk for railroad.

• 1865 – money

manager.

• Entered steel

business in 1873

Iron and Steel

• Andrew Carnegie - integrated all stages of

refinement process (from ore to finished

rails)

• Vertical Integration – Buy out suppliers

• Horizontal Integration – Merging with

companies that make similar products. Trust:

Horizontal Integration John D. Rockefeller

Vertical Integration: o Gustavus Swift Meat-packing o Andrew Carnegie U. S. Steel

New Type of Business Entities

Iron & Steel Production

Business Organizations

• Trusts

– Form of business merger

• major stockholders in several corporations turn

over their stock to a group of trustees

– Trustees run the separate corporations as

one large company, or trust.

Business Organizations

• Monopoly

– One seller controls the production, supply, or

pricing of a product

• no close substitutes

– If no competition

• do not have to respond to the wants of the

consumer to improve a product

Business Organizations

• Holding Company

– Does not make product

• it sells stock in itself and uses that money to buy

companies that do make the product.

– Example - United States Steel Corporation

Business Organizations

• Pools

– Railroads

• Different railroads conspired to fix rates on freight

and passenger traffic.

– “Pools” - anti-competitive

• against the public interest.

– Interstate Commerce Act

• prohibited “pools”, or conspiracies by railroads to

fix rates.

Standard Oil Co.

What is the meaning of this cartoon?

U. S. Corporate Mergers

New Financial Businessman Broker:

J. Pierpont Morgan

Banker and Financier on Wall Street.

“Well, I don’t know as I want a lawyer to tell me what I

cannot do. I hire him to tell me how to do what I want to

do”

Wall Street – 1867 & 1900

The Reorganization of Work

Frederick W. Taylor The Principles of Scientific Management (1911)

The Reorganization of Work

The Assembly Line

New Business Culture: “The American Dream?”

Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels]

Is the idea of the “self-made man” a MYTH??

The Protectors of Our Industries

The ‘Bosses’ of the Senate

The ‘Robber Barons’ of the Past

Cornelius [“Commodore”] Vanderbilt

Can’t I do what I want with my money?

William Vanderbilt

•Shipping magnate • Railroad tycoon • “The public be

damned!”

• “What do I care about the law? H’aint I got the power?”

The Gospel of Wealth: Religion in the Era of Industrialization

Russell H. Conwell

• Wealth no longer looked upon as bad.

• Viewed as a sign of God’s approval.

• Christian duty to accumulate wealth.

• Should not help the poor.

Regulating the Trusts

1877 Munn. v. IL

1886 Wabash, St. Louis & Pacific Railroad Company v. IL

1890 Sherman Antitrust Act in “restraint of trade”

“rule of reason” loophole

Modern ‘Robber Barons’

American History 11R

Reactions

Big Business Negative Image & Federal

Government Reaction

• Gospel of Wealth and Philanthropy –

– Carnegie – Donated 90% of wealth

– Rockefeller donated $500 million

• cured yellow fever.

• Sherman Anti Trust Act 1890

– Illegal to form trust that interferes with free trade

between states or other countries

• Very weak

Industrialization in South

• Industry concentrated in North

– Northern businesses controlled railroads

– South primarily agricultural

– Economic stagnation in South

• Farming only industry

– Mercy of railroads.

• Growth - forestry, tobacco, textiles, mining

Working Conditions for Labor • Long Workdays (12 or more hours), low wages

• No vacation, medical coverage, sick leave

• Injuries common – no compensation for on job accidents

• 1882 – 675 laborers killed in work-related accidents each

week.

• Women and children (5) - worked in sweatshops

• Wages for Year

– 1899

• Men - $498

• Women - $267

– Child -27¢ -14 hour day

Organization of American Labor

• Since late 1700’s

– Small local unions for skilled labor

• Early 1800’s

– Journeymen formed unions - specific industries.

• Early strikes declared illegal by courts

• 1842 - Commonwealth v. Hunt

– Massachusetts Supreme Court legalized labor unions

Early Labor Unions • 1st large scale union – National Labor Union (1866)

– Refused to admit African Americans

• Formed own union, Colored National Labor Union.

• Got Congress to give government workers 8 hr workdays

• Noble Order of the Knights of Labor (1869) – Advocated 8 hours workdays

– Equal pay for equal work by men and women

– Strikes last resort, Arbitration instead

• Knights of Labor (1869) – Create one big union of all workers - skilled and unskilled.

– Opposed to strikes

– Terrence Powderly (1879) • Grand Master Workman, Knights of Labor

• Dramatically increased labor power under his leadership

• Achieved 700,000 members.

Other Labor Organizations • Craft Unionism – Skilled Workers

• Cigar Makers’ International Union – – Samuel Gompers president

• American Federation of Labor (1886)

– Organized by Samuel Gompers

– Higher wages, shorter hrs, and safer working conditions

• 1890-1915 – Wages up from $17.50 to $24

• Work week – Down from 54.5 hrs to under 49 hrs

– Willing to use strikes as major tactic

– Demanded Collective Bargaining

• Negotiation between organized workers and their employer or employers

to determine wages, hours, rules, and working conditions

Labor Organizations

• Industrial Unionism – Skilled and

Unskilled in specific industry

• Eugene Debs formed American Railway

Union (1892).

– Socialist approach that viewed government

and owners as enemies of workers

• 1894 – won strike for higher wages

• Membership climbed to 150,000

Socialism and Labor Organizations

• Industrial Workers of the World (IWW) (1905)–

nickname the “Wobblies”

– included miners, lumberjacks, cannery and dock

workers.

– Also included radical unionists, socialists, and

African Americans.

– Reached membership of 100,000.

• Conflicts grow between management and unions.

Labor and Strikes

American History 11R

Great Railway Strike of 1877

• July, 1877 – Workers on Baltimore and Ohio Railroad

strike to protest wage cuts.

• Strike lasted a week until Governors asked Federal

Govt. to intervene

– Reason – Strike interfering with interstate trade

• President Rutherford B. Hayes sends in Federal troops

to stop strike

Haymarket Riot

• May 4th, 1886 – 3000 people gathered in Chicago’s

Haymarket Square to protest against police brutality

(striker killed at McCormick Harvester plant)

Haymarket Riot • As crowd leaving rally, a bomb tossed at police line.

– Police fired at crowd.

• In end, killed 7 police officers and some workers

– Wounded 70

• 3 speakers and 5 other radicals charged with inciting

riot. All 8 convicted, 4 hanged.

• Public turned against labor movement due to violence

Homestead Strike • Carnegie Steel Company’s

Homestead plant

• June 29th, 1892 – Henry Clay

Frick announced wage cuts.

Strike called.

• Pinkerton Detective Agency

hired to keep plant running with

scabs or strikebreakers

• Steelworkers and detectives

fight – July 12th

– 3 detectives and 9 strikers killed.

• Workers take over plant

Homestead Strike

• Strikers forced to give

up in November by

Pennsylvania National

Guard.

• Strike ended with no

concessions to workers.

• 45 years before

steelworkers mobilize

and organize again

Pullman Strike

• During Panic of 1893, Pullman company laid off 3,000 of 5,800 workers. Cut wages up to 50%

• Rents stayed the same

• Strike called in spring of 1894 after company refused to restore wages as economy got better.

Pullman Strike

• Debs wanted arbitration but Pullman refused.

• ARU boycotted Pullman trains.

• Pullman hired strikebreakers

– violence.

• President Grover Cleveland sent in federal troops to get trains rolling.

• Debs jailed

• Most strikers fired

• Others blacklisted from

railroad industry

Women Organize

• Many women barred from early unions.

• Mary Harris Jones - “Mother Jones” – Early

female labor organizer, exposed cruelties of

child labor.

• Pauline Newman – 1909 organized International

Ladies’ Garment Workers Union (ILGWU).

Helped organize seamstresses strike referred to

as the “Uprising of the 20,000”

• Won some improved conditions for a few

strikers

Triangle Shirtwaist Fire

• After strike – This changed labor movement forever.

– No longer could ignore working conditions

following this incident.

• 146 women died, many after throwing themselves off

the roof to escape the fire

• Public outrage led to task force to investigate fire and

recommend changes.

Management and Government

Pressures • Management refused to recognize unions.

• Forbid union meetings, fired union members

• Made workers sign “yellow dog contracts” –

agreement not to join a union.

• Used Sherman Anti-Trust Act against labor

– claimed strikes or picket lines hurt interstate trade

• Despite pressures, unions grew

– AFL had 1.7 million members by 1904

– By World War I, 2 million members.