Industrial America

Mr. Owens

Essential Questions

• What were the causes and effects of industrialization during the Gilded Age?

• How were theories such Social Darwinism used to justify corporate consolidation into trusts and holding companies and the growing maldistribution of wealth in the Gilded Age?

• What led to the rise of the organized labor movement and what were the goals of local and national unions?

Causes & Effects?• industrial capitalism• government subsidies• Civil War• Corporations• corporate research• corporate consolidation• “scientific management”• trusts• holding companies• Socialism• pollution• bison population• philanthropy• Railroads• Social Darwinism• mass production• Gospel of Wealth• immigration• monopolies• standard of living• “standard time”• inequality - gap between rich & poor• child labor

• “limited liability”• labor unions• laissez-faire• strikes• boycotts• natural resources• Bessemer Process• pools and cartels• open-hearth process• “middle manager”• coal industry• horizontal integration• anarchism • Petroleum industry• vertical integration• “Myth of the Self-Made Man” • Westward expansion• corruption• Western mining• High tariffs• Imperialism• Urbanization/crowded cities

Rise of American IndustryBy 1900 USA the leading industrial power. Causes: 1. Raw materials: coal, iron ore, copper, lead,

timber & oil2. Large labor supply w/ immigration boom3. Expanded markets due to population boom &

transportation network esp. railroads4. Capital $$ available including European

investors5. Technological advancement (440,000 patents

from 1860-1890) efficient production6. Pro-Business government: tariffs, private

property, subsidized railroads, few regulations, low taxes

7. Rise of entrepreneur class & management

Railroads• Railroads expanded from 35,000 miles in 1865 to 193,000 miles in

1900• Effects: expanded national markets, encouraged mass production,

mass consumption, specialization, American Railroad Association time zones (1883), investment in railroad co.s led to modern stockholder corporation & high finance.

• Eastern Trunk Lines: (major routes between large cities)– Commodore Vanderbilt NY Central Railroad (1867) connected NYC

to Chicago, B & O RR, & Pennsylvania RR• Western Railroads:

– Federal Land Grants: 170 million acres to 80 railroad companies, some corruption like Credit Mobilier Scandal

– Transcontinental Railroad: Union Pacific (UP) built west from Omaha, Central Pacific (CP) built east from Sacramento, 6,000 Chinese employed. Completed at Promontory Point, UT in 1869

• Competition & Consolidation: – Overtime railroads formed pools & used rate fixing schemes to

survive– Panic of 1893 many in bankruptcy – consolidated control under

banker J.P. Morgan regional monopolies– By 1900 7 giant companies controlled 2/3 of railroads– Criticism led to reforms: Interstate Commerce Act of 1886 (ICC)

Industrial Empires• Post Civil War 2nd Industrial Revolution Revolution: steel,

petroleum, electricity, industrial machinery• Steel Industry: 1850s Bessemer-Kelly Process

– Andrew Carnegie: using vertical integration (controlling each stage of production) by 1900 Carnegie Steel controlled 3/5 of steel employing 20,000 workers & produced more than all of Britain

– U.S. Steel Corporation: Carnegie sold steel empire to J.P. Morgan for over $400 million – U.S. Steel became 1st billion dollar company controlled 3/5 of steel production

• Oil Industry: Oil refined for kerosene for gaslights– 1859 Edwin Drake 1st oil well drill in PA– John D. Rockefeller: Standard Oil used horizontal integration: buying

or forcing out competition by 1881 Standard Oil Trust controlled 90% of US oil business – Rockefeller retired with $900 million

– Trusts = Corporation runs variety of companies including competitors under board or trustees (horizontal integration)

• Antitrust Movement: – Sherman Antitrust Act of 1890 prohibited “contract, combination, in

the form of trusts or otherwise, or conspiracy in restraint of trade or commerce” – vague often used against strikes

– U.S. vs. E.C. Knight Co (1895) Sherman Act applied only to commerce not manufacturing further weakened law

Laissez-Faire Capitalism

• Laissez-Faire: Adam Smith’s “invisible hand” opposed government regulation (excerpt tariffs & subsidies)

• Social Darwinism: – Herbert Spencer “survival of the fittest” applied

to wealth & business– William Graham Sumner (Yale prof) Folkways

helping poor against laws of nature• “Gospel of Wealth”:

– Rockefeller – Puritan work ethic “God gave me my riches”

– Russell Conwell: “Acres of Diamonds” Christian duty to be rich

– Carnegie’s “Wealth”: 3 stages of life 1. Education 2. Wealth 3. Philanthropy: libraries, universities, & cultural outlets. “A Man who dies rich dies disgraced”- supported high estate tax

Technology & Innovations• Expansion of telegraph – Cyrus Field’s transatlantic cable

(1866) by 1900 linked all continents• Typewriter (1876) Alexander Graham Bell’s telephone (1876)

Cash register (1879) Calculating & adding machines (1887-1888)

• Consumer products: George Eastman’s Kodak camera (1888) Waterman’s fountain pen (1884), King Gillette’s safety razor (1895)

• Thomas Edison: lab Menlo Park NJ (1876) phonograph, improved light bulb, electric dynamo, mimeograph machine (copy), motion picture camera

• George Westinghouse: transformer for high-voltage AC current – made possible lighting of cities, streetcars, subways

• New Marketing of Goods: Department Stores R.H. Macy’s in NY and Marshall Field in Chicago, Chain stores: Woolworth’s Five and Ten Cent Store, Mail order catalog: Sears & Roebuck & Montgomery Ward

• Packaged goods: Kellogg & Post (cereal)• Gustavus Swift: Refrigerated railcar 1878

Effects of Industrialization1. Maldistribution of Wealth by 1890s top 10% had 90% of the

wealth2. Horatio Alger “Myth of the Self Mad Man” novels “rags to

riches” theme – reality: wealthy were almost exclusively white, Protestant males born in upper class w/ a father in business or banking

3. Expanding Middle Class: white collar, managerial, clerks, accountants, sales etc. – more leisure time & purchasing power

4. Wage earners: by 1900 2/3 of American worked for wages, but low wages led to need for women & children to work, by 1890 11 million out of 12.5 million families made less than $380 per year

5. Working women: 1/5 of women worked by 1900 usually in textile, garment, & food processing & eventually secretaries, bookmakers, typists & phone operators

6. Labor discontent: low wages, long hours, dangerous conditions

Rise of Organized Labor• Unions organized using political action & confrontation:

strikes, picketing, boycotts & slowdown to use collective bargaining

• National Labor Union: Founded in 1866 to organize ALL workers, 640,000 members by 1868, Lost support after Panic of 1873 and failed strikes in 1877

• Knights of Labor: founded in 1869, opened to “all who toiled” under Terrence Powderly in 1881. Goals: 1. worker cooperatives 2. No child labor 3. Anti-trusts & monopolies. Peaked in 1886 at 730,000 but blamed for Haymarket Riot

• American Federation of Labor (AF of L): founded 1886 craft unions led by Samuel Gompers focused on wages and working conditions – collective bargaining. Largest union 1 million members by 1901.

Strikes & Strikebreaking

• Business leaders used the following strikebreaking & union-busting tactics: scabs, lockouts, blacklists, yellow-dog contracts, military force (state militia or Pinkertons), court injunctions

• Great Railroad Strike of 1877: B& O Railroad cut wages strike spread to 11 states, national strike of 500,000 workers. President Hayes used federal troops to crush strike at lease 100 killed.

• Haymarket Riot: 1886 - Chicago protest of McCormick Harvester workers, police attempted to break up meeting, bomb killed 7 police, 7 anarchists sentenced to death, Knights of Labor blamed.

• Homestead Strike: 1892 steelworkers unions near Pittsburg, crushed by Carnegie & Manager Henry Clay Frick

• Pullman Strike: 1894 American Railway Union led by Eugene V. Debs strike of George Pullman’s company town near Chicago. Pres. Cleveland sent in army & enforced federal court injunction to arrest Debs.– In re Debs (1895) SC approves court injunctions against strikes– Debs founds American Socialist Party in 1900

• By 1900 only 3% of workers were union members