Industrialization 1865 -

1901Chapter 3

I. The Rise of Industry• American business and industry grew rapidly

after the end of the Civil War. • Industrialization changed the way people lived

and worked

The Rise of Industry• How did the United States

become a industrialized society after the Civil War?

The United States Industrializes

• Why was the United States successful at industrialization?

The United States Industrializes

• After the Civil War, industry expanded rapidly

• Electrification advances in the 1890

• Early 1900s United States world’s leading industrial nation

• Gross National Product (GNP)- the total value of all goods and services a country produces during a year

Natural Resources• Abundance of raw

materials• Resources – include

timber, coal, iron, copper

• Could get resources cheaply (no importing)

• Most resources were in the West

• Settlement accelerated industrialization

Natural Resources• New resource called

petroleum• Make kerosene fluid

used in lanterns and stoves

• Began in western Pennsylvania

• 1859 Frederick Drake drilled first oil well in Titusville, PA

• 1900 oil fields from PA to Texas

A Large Workforce• Human resources

allowed rapid industrialization

• Between 1860-1910 the population tripled

• Provided industry with an abundant workforce

• Came from large families and immigrants

A Large Workforce• Because of better living

condition children lived to adulthood

• Immigrants came for a better life

• Between 1870 and 1910, 17 million immigrants arrived

• Some came for religious freedom others from oppressive governments

The United States Industrializes

• What were the two significant growth factors of U.S. industry?

The United States Industrializes

• The nation had an abundant natural resources and a growing workforce

New Inventions• What invention from this

period has had the most impact on your daily life?

New Inventions• Technologies and

inventions eased transportation and communications

• Produce more goods at lower prices

• Thomas Alva Edison• Menlo Park, New

Jersey• Forerunner of the

modern laboratory

New Inventions• 1877 Phonograph• Two years later the

electric generator and light bulb

• Made batteries and motion pictures

• Lewis Latimer made the carbon filament to make the incandescent bulb more durable

New Inventions• Cyrus Fields laid a

telegraph cable across the Atlantic Ocean in 1866o Provided faster

communication between U.S. and Europe

• 1876 Scottish immigrant Alexander Graham Bell invented the telephone

New Inventions• George Westinghouse

invented o air brakes for railroads

enabled longer and heavier trains to travel

o Alternating current (AC) to distribute electricity)

o Used for generators and transformers

• Westinghouse company the first to use hydroelectric power

New Inventions• Thaddeus Lowe

invented the ice machine

• 1877 Gustavus Swift shipped refrigerated meat

• 1882 Edison supplied New York City with electricity

New Inventions• Josephine Cochrane

developed the automatic dishwasher

• Northrop made an automatic loom to make cloth quickly

• Power driven sewing machines and cloth cutters

• Machines to produce shoes• Production moved from

small shops to large factories

New Inventions• Which invention do you think

has had the most lasting influence?

Free Enterprise• How did Laissez-faire

economics promote industrialization?

Free Enterprise• Laissez-faire-

government should not interfere in the economy

• Government interference drives up costs

• Economic system with little or no government interference is know as free enterprise system

Free Enterprise• Laissez-faire relies on

supply and demand to regulate wages and prices (Free Market)

• Competition promotes efficiency and wealth

• Advocate low taxes and limited government debt

• Government should protect property rights and maintain peace

Free Enterprise• Practice- to do

something repeatedly so it becomes standard

• U.S. practiced a mixture of laissez-faire by keeping taxes low while promoting private investment

Free Enterprise• Prospect of making a

profit attracted entrepreneurs

• Entrepreneurs – people who risk their capital to organize and run businesses

• Northern entrepreneurs supported high tariffs to protect business from European manufacturers

Free Enterprise• Supported federal subsidies for building roads,

canals, and railroads• Southern leaders were against subsidies and

favored low tariffs to promote trade – keeps cost of imported goods low

Free Enterprise• During the Civil War

Congress greatly increased tariffs on imports

• Caused countries to raise tariffs on U.S. goods

• Tariffs were lowered and American companies became more competitive

• U.S. benefited form being the largest free trade zone in the world

Free Enterprise• How did laissez-faire

economics encourage businesses to industrialize?

Free Enterprise• Laissez-faire ideas meant that business would be able to grow and adopt new technologies more freely and easily

II. The Railroads• Major railroads, including the transcontinental

railroad, were constructed rapidly after the Civil War ended.

• Railroads requires massive capital investment and government land grants

• The potential profits led to some corruption as well

Linking the Nation• How did the transcontinental railroad transform the West?

Linking the Nation• 1865 U.S. had 35,000

miles or railroad tracks

• 1900 there were 200,000 mile of tracks

Transcontinental Railroad

• 1862 Lincoln signed Pacific Railway Act railroad boom began

• Gave two companies permission to build the railroado Union Pacifico Central Pacific

• Offered each company land along the right-of-way

The Transcontinental Railroad

• Engineer Greenville Dodge (Union Pacific)o Pushed westward from

Omaha, Nebraska in 1865o Laborers faced blizzards o Heat in the deserto Angry Native Americanso Laboro Money and engineering

problem

Transcontinental Railroad

• Union Pacific workerso Civil War veteranso Irish immigrants

• Height of project Union Pacific employed 10,000 workers

Transcontinental Railroad

• Engineer Theodore Judah (Central Pacific)

• Sold stock to Sacramento merchants

• Leland Stanford (one of the Big Four)o Made a fortuneo Became governor of

Californiano Served as U.S. senatoro Founded Stanford University

The Transcontinental Railroad

• Hired 10,000 Chinese workers

• Paid $1.00 a day• All equipment was

shipped from the East• Traveled around Cape

Horn (South America)• Overland Isthmus of

Panama

The Transcontinental Railroad

• Completed in 4 yearso Each mile of track required

400 railso Each rail required 10 spikes

Central pacific laid 688 miles of track• Union Pacific 1,086

miles of track• Promontory Summit,

Utah two were joinedo Used silver and gold spikes

Railroads Spur Growth• Transcontinental first of

many lines• Railroads increased the

size of markets for products

• Spent huge amounts on steel, coal, timber

• Large connected with small to integrate railroad systems

• Integrate- to combine two previously separate things

Railroads Spur Growth• Southern states

improved transportation• New industries like

tourism to Florida• Freight prices dropped

by half from 1860 – 1900• Railroads unified the

nation’s clocks• Created 4 time zones• Time zone – geographic

region in which standard time is kept

Linking the Nation• How did the transcontinental

railroad help unite the nation?

Linking the Nation• The movement of goods and people became easier, connecting the West to the East.

Robber Barons• How did the government

grants build railroads result in large scale corruption?

Robber Barons• Investors could not raise

all the money the railroad needed

• Investors – one who puts money into a company in order to gain a financial reward

• Federal government gave land grants

• Land Grants – a grant of land by the federal government, especially for roads, railroads, or agricultural colleges

Robber Barons• Companies sold the

land to raise money• Bribery occurred

because government helped to fund the railroads

• Cornelius Vanderbilt and Jay Gould were accused of swindling

The Credit Mobilier Scandal

• Corruption became public in 1871

• Credit Mobilier construction company set up by several stockholders

• Oakes Ames member of Congress

• Overpriced contracts with themselves

• Union Pacific paid inflated bills

• Ames sold other members of Congress share below market price

The Credit Mobilier Scandal

• 1872 New York Sun listed all members of Congress who bought shares

• Investigation implicated several politicians

• Including representative James Garfield (later becomes president)

• Sitting Vice President Schuyler Colfax

• Neither criminal or civil charges were filed

The Great Northern Railroad

• Robber Baron- term used to describe industrialists who grew wealthy unethically

• James J Hill built the Great Northern fromo Wisconsino Minnesotao Washington o With no federal grants

The Great Northern Railroad

• Identified goods that were in demand in China (shipped from Washington)

• Railroad efficiently shipped goods East and West

• Became the most successful

• One of few not eventually forced into bankruptcy

Robber Barons•Why did the Robber Barons bribe people in Congress?

Robber Barons• They wanted Congress to give them more federal land grants

III. Big Business• Following the Civil War, large corporations

developed• Could consolidate business functions and produce

goods more efficiently• Retailers began using new techniques to attract

customers

The Rise of Big Business

• What advantages do large corporations have over small businesses?

The Rise of Big Business

• 1900 big business dominated the economy

• Factories and distribution facilities

• Distribution – the act or process of being given out or dispersed to clients, consumers, or members of a group

The Rise of Big Business

• Corporation – an organization that is authorized by law to carry on an activity but treated as though it were a single person

• Stockholders owned corporations

• Stocks raised large amounts of money and spread the financial risk

• State legislatures issue charters to corporations

The Rise of Big Business

• Money raised from selling stock used to invest in technology

• Economies of scale – the reduction of costs of a good brought about especially by increased production at a given facility

• Fixed costs- cost a company pays even if it is not operatingo Loans, mortgage, taxes

The Rise of Big Business

• Operating costs – costs incurred when running a companyo Wages, shipping costso Buying raw materials

• If sales drop it is cheaper to shut down

• Big manufacturers had high fixed costs and low operating costs

The Rise of Big Business

• Big corporations had several advantageso They could produce goods at

a lower costo Could stay open during bad

economic timeso Operating costs were small

compared to fixed costso Cutting prices to increase

saleso Rebates from railroadso Eventually small business

could not compete

The Rise of Big Business

• How do economies of scale affect corporations?

The Rise of Big Business

• Corporations can produce large quantities of goods, which lowers the production costs of those goods

Consolidating Industry• What new business strategies

allowed businesses to weaken or eliminate competition?

Consolidating Industry• Falling prices

benefitted consumers but cut into profits

• Many companies organized pools to keep prices at a certain level

• Most pools did not last long

Andrew Carnegie and Steel

• Scottish immigrant • Went to work at 12• Worked his way up to

become the secretary of the superintendent Pennsylvania Railroad

• Carnegie became the superintendent

• Bought shares in iron mill that made railroad supplies

Andrew Carnegie and Steel

• 1875 Carnegie opened a steel mill

• Bessemer process – made high quality steel quickly and cheaply

• Carnegie used vertical integrationo Instead of buying they ownedo Coal mines, limestone

quarries, iron ore fields

Rockefeller and Standard Oil

• John D. Rockefeller pushed for horizontal integration

• Standard Oil bought all of its competitors

• 1880 controlled 90% of oil industry

• Monopoly – total control of a type of industry by one person or one company

New Business Organizations

• Americans feared monopolies

• 1880s many states tried to stop horizontal integration

• Made it illegal for one company to own stock in another

• Trusts – a combination of firms or corporations formed by a legal agreement, especially to reduce competition

New Business Organizations

• 1882 Standard Oil formed the first trusto Person who manages the

property is called a trusteeo Stockholders received a share

in the trust and its profitso Trustees could control a group

of companies

New Business Organizations

• Holding companies – a company whose primary business is owning a controlling share of stock in other companies

• 1889 incorporation law allowed companies to own stock in other companies

New Business Organizations

• Holding company does not produce anything itself

• Owns stock in companies that do produce goods

• Holding company manages its companies by merging them into one

Investment Banking• Investment bankers

help put holding companies together

• J.P. Morgan most successful investment banker

• Helped sell large blocks of stock at a discount to bankers

• 1901 bought out Andrew Carnegie and formed U.S. Steel

Selling the Product• N. W. Ayer and Son the

first advertising companyo Created large adso Instead of small printo 1900 retailers spent 90 million

on advertising

• 1877 John Wanamaker’s Philadelphia department storeo Largest space to retail selling

on a single floor

Selling the Product• Chain stores – a group of

stores owned by the same company

• Woolworth’s focused on low prices

• To reach millions in rural areas retailers issued catalogs

• Sears and Roebuck and Montgomery Ward two largest mail order retailers

• Used attractive illustrations and descriptions to sell items

Consolidating Industry• What makes monopolies

disadvantageous for the consumer?

Consolidating Industry• If there is a monopoly, competitive pricing disappears, driving up costs to the consumer

IV. Unions• Workers tried to form unions in the late 1800s• Hoping to improve wages, hours, and working

conditions• Business leaders worked with some unions• Generally opposed others• Strikes during this era sometimes led to violence• Hurt union’s image and slowed their growth

Working in the United States

• Why did workers try to form unions in the late 1800s?

Working in the United States

• Life for workers was difficulto Dull repetitive taskso Breathed in lint, dust and

toxic fumeso Machines lacked safety

devices

• Industrialism led to a dramatic rise in the standard of living

Working in the United States

• Average workers wages rose 50% between 1860 -1890

• Uneven division of wealth caused resentment

• 1900 average wage 22 cents per hour and worked 59 hours a week

Working in the United States

• Deflation – a decline in the volume available money or credit that results in lower prices, and therefore increases the buying power of money

• 1865 -1897 deflation caused prices to fall

Working in the United States

• Increased buying power

• Companies cut wages• Late 1800s prices fell

even faster• Workers resented

getting less money• Needed unions to

bargain for higher wages and better conditions

Early Unions• Two types of industrial

workers- craft and common

• Craft workers were o Machinistso Iron molders o stone cutters o Shoemakerso printers

• Had special skills and received higher wages

Early Unions• Common workers

o Had few skillso Received lower wages

• 1830s craft workers form trade unions

• 1873 – 30 national unions

• 3 largesto Iron Molders Internationalo International typographical

Uniono Knights of St. Crispin;

shoemakers union

Opposition to Unions• Employers had to

negotiate with unions• Viewed unions as

conspiracies that interfered with property rights

• Business leaders opposed industrial unions

• Industrial Union – an organization of common laborers and craft workers in a particular union

Opposition to Unions• Companies used

technique to prevent union membershipo Sign oath or contracto Hired detectives to identify

union organizerso Workers who tried to organize

were firedo Placed on a blacklist

Opposition to Unions• Companies used

“lockouts” to break existing unions

• Lockout – a company tool to fight union demands by refusing to allow employees to enter its facilities to work

• If union called a strike employers hired replacements or strikebreakers

Opposition to Unions• There were no laws

giving workers rights to form unions

• Or for owners to negotiate with them

• Courts ruled strike “conspiracies in restraint of trade”

• Leaders could be fined or jailed

• Restraint – the act of limiting, restricting, or keeping under control

Opposition to Unions• 1800s unions thought

to be un-American• Karl Marx argued that

capitalist society was a struggle between workers and owners

• Marx believed the workers would o Eventually revolto Seize factories o Overthrow the government

Opposition to Unions• Laborers supported Marx• Few supported

anarchism• Anarchists believe

society does not need any government

• 1800 anarchists assassinated government officials and set off bombs across Europe

• Hope was to begin a revolution

Opposition to Unions• Tens of thousands of

Europeans headed to America

• Anti immigrant feelings were strong in America

• Became suspicious of unions

• Used the courts, the police and army to crush and break strikes

Opposition to Unions• How did the working

conditions encourage workers to form unions in the late 1800s?

Opposition to Unions•Working conditions were often dangerous and unhealthy, and workers wanted unions to help them gain a better work environment.

Struggle to Organize• What made it difficult for

union workers to create large industrial unions?

Struggle to Organize• Workers tried many

times to create large industrial unions

• Confrontations with owners led to violence and bloodshed

The Great Railroad Strike

• Panic of 1873 was a severe recession

• 1877 Baltimore and Ohio Railroad announced it was cutting wages (third time)

• Strike involved 80,000 workers

• First nationwide strike

The Great Railroad Strike

• President Rutherford B. Hayes called it an insurrection

• Took 12 bloody days for police, state militias and federal troops to restore order

• 100 people were killed• 100 million in railroad

property was destroyed• Americans wanted more

peaceful means to settle labor disputes

The Great Railroad Strike

• Strikers o smashed equipmento Tore up trackso Blocked rail service in several

cities

• Governors of several states called out the militia

• Gun battles between the strikers and the militia

The Knights of Labor• Founded 1869• Leader Terrence

Powderly opposed strikes in favor of boycotts and arbitration

• Arbitration – settling a dispute by agreeing to accept the decision of an impartial outsider

The Knights of Labor• Powderly thought best

interests of both groups most be considered

• Unlike other unions the Knights welcomedo Womeno African Americans

• Called for ano Eight hour dayo Equal pay for womeno No child laboro Worker owned factories

The Haymarket Riot• 1886 supporters of

eight hour day called for a strike

• May 3, Chicago police open fire on picket line

• 3,000 people gather to protest the shooting

• Someone threw a bomb

• Police opened fire• 170 injured 10

policemen killed

The Haymarket Riot• Eight men arrested for

bombing• Public anger resulted

in 8 convictions• 4 were executed• Critics claimed

dangerous radical dominated unions

• Lost strikes led to decline in membership and influence in the Knights of Labor

The Homestead and Pullman Strikes

• Summer of 1892 led to bloodshed

• Steel mill owned by Andrew Carnegie in Homestead Pennsylvania

• Managed by Henry Clay Fricko Anti union business partner

The Homestead and Pullman Strikes

• Frick proposes to cut wages 20%

• He then locked out employees

• Pinkerton Detectives brought in replacements

• When Pinkertons and strikebreakers approached the plant strikers resisted

The Homestead and Pullman Strikes

• 1894 Pullman Palace Car Company slashed wages without lowering rents in the company town

• American Railway workers refused to handle Pullman Cars

• Railroad managers arranged to have mail cars attached

The Homestead and Pullman Strikes

• Over the next 14 hours they clashed

• Governor of Pennsylvania sent in the militia

• 4 months later the strike collapsed

The Homestead and Pullman Strikes

• President Cleveland sent federal troops to keep the mail coming

• Federal court issued an injunction to halt the boycott

• Injunction – a court order whereby one is required to do or to refrain from doing a specified act.

Struggling to Organize• How did major strikes prevent

large industrial unions from maintaining power and influence?

Struggling to Organize• Such strikes often turned violent, and the reputation of the unions suffered

New Unions Emerge• How were the new industrial

unions different from the older trade union?

New Unions Emerge• Workers share same

complaints about wages and hours

• Unskilled workers were not represented by unions

• New types of unions emerged to support these workers

The Rise of the AFL• American Federation of

Labor (AFL)• 1866 leaders of several

trade unions created it• Samuel Gompers the

first president• Held power until 1924• Tried to focus on pure

and simpleo Wageso Working hourso Working conditions

The Rise of the AFL• Had three main goals

o Tried to convince companies to recognize unions and agree to collective bargaining

o Pushed for closed shopso Closed shop – an agreement

in which a company agree to only hire union members

o Promoted 8 hour work day

The Rise of the AFL• 1900 largest union

with 500,000 members

• Represented less that 15% of non-farm workers

• Most members were white meno Discriminated against African

Americanso Only a few women were

admitted

The IWW• 1905 International

Workers of the World• Nicknamed Wobblies• Wanted to organize by

industry• Making distinction

between skilled and unskilled laborers

• “The working class and the employing class have nothing in common”

The IWW• Should be one big union• 1912 IWW led a

successful strike of 25,00 textile workers

• Lawrence, Massachusetts cut wages

• Companies reversed itself after 10 week strike

• Many IWW strikes failed• Radical philosophy

Women and Organized Labor

• After Civil War female wages rose

• 1900 women make up 18% of workforce

• Society’s ideas of what constituted women’s work

• Constituted – to compose, make up, or form

Women and Organized Labor

• One third were domestic servants

• One third teachers, nurses, sales clerks, clerical workers

• One third in garment industry and food processing

• Women paid less than men for the same job

Women and Organized Labor

• Assumed women were helping the men

• Men needed higher wages to support a family

• Most unions excluded women

• Mary Harris Jones (Mother Jones)

Women and Organized Labor

• John D. Rockefeller dubbed her “The most dangerous woman in America”

• 1900 Jewish and Italian Immigrants worked in clothing business in New York

• Founded the International Ladies Garment Workers Union (ILGWU)

• 1909 strike of 30,000 workers o Won recognition of their uniono Better wageso Benefits for employees

Women an Organized Labor

• 1903 Mary Kenney O’Sullivan and Leonora O’Reilly, Jane Addams and Lillian Wald

• Establish first national association dedicated to women’s labor issues

• The Women’s Trade Union League (WTUL)o Pushed for 8 hour dayo Minimum wageo No evening work for womeno Abolition of child labor

Women and Organized Labor

• Why did women need to from their own trade unions?

Women and Organized Labor

• Most of the existing trade unions excluded women