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Industry Comes of Age
Chapter 24
AP U.S. History
THE IRON COLT BECOMES AN IRON HORSE
• 1900 - 192,556 miles of track (35,000 in 1865)
• Gov’t subsidized transcontinental railroad – loans and land grants. In return government received???
• 80 rr companies received 170 million acres
• Cities grew where tracks were laid
• Created ????
This 1893 map of Franklin County, Arkansas shows the typical "checkerboard" pattern of railroad land grants. The dark shaded areas were granted to the Little Rock & Fort Smith Railway Company.
SPANNING THE CONTINENT WITH RAILS THROUGH BINDING THE
COUNTRY WITH RAILROAD TIES
• Pacific Railway Act (1862) passed by??
• Union Pacific Railroad: Built west from Omaha, Nebraska. Hired???
• Central Pacific Railroad pushed east from Sacramento. Hired???
• completed at Promontory Point, Utah on May 10, 1869
• Significance:
– Linked the entire continent via railroad/telegraph
– incredible growth of the Great West
– trade with the Orient
Other Transcontinental lines
• No subsequent railroad lines received gov’t loans;
all received generous land grants.
• Northern Pacific Railroad completed in 1883 (Lake Superior to Seattle)
• Atchison, Topeka, and Santa Fe RR • Southern Pacific: New Orleans to San Francisco • Great Northern Railroad: Duluth, Minn. to Seattle
RAILROAD CONSOLIDATION AND
MECHANIZATION • Cornelius Vanderbilt
– Popularized steel rails
– fortune of $100 million
• Jay Gould - stockwatering
• Improvements – steel – HUGE!!!!
• Increased steel production
– standard gauge of track width (4 feet, 8 1/2 inches)
– Westinghouse air brake – Pullman Palace Cars
REVOLUTION BY RAILWAYS
• Spurred industrialization • Sprawling nation united physically• Domestic market for materials/ goods • Stimulated creation of 3 Western
frontiers: mining, agriculture, and ranching
• Rural to urban• Large influx of immigrants
• "time zones" – Before 1883 – kept own time zones (example –
if noon in Chicago, it was 11:27 in Omaha, 12:09 in Louisville, 11:56 in St. Louis, and 12:17 in Toledo! 27 different time zones in Illinois and 38 in Wisconsin.
– 1883 – set 4 zones– 1918 – Congress adopts
• Maker of millionaires • Native Americans displaced • Largest consumer of ??• Largest carrier of ??• Largest single employer of people
WRONGDOING IN RAILROADING
• Railroad corruption by the "Robber Barons" • Jay Gould - forced prices of stocks
to boom/bust on some of his lines • Stock watering • Railroad tycoons - became the most
powerful people in America.– Bribed– Free passes– pools
GOVERNMENT BRIDLES THE IRON HORSE
• Initially, Americans slow to react to the excesses of the railroad plutocracy.
• Old ideals – no government interference with business – everyone can achieve the “American Dream”
• Adam Smith: The Wealth of Nations (1776) – "bible" of capitalism; discouraged gov’t intervention in the economy
Slaughterhouse Cases, 1873Louisiana legislature passed a law creating and granting a monopoly to the
Crescent City Livestock Landing & Slaughterhouse Company to slaughter animals in the New Orleans vicinity. Louisiana claimed the measure promoted health and safety by centralizing and improving slaughterhouse production. Critics speculated the measure was designed to facilitate political patronage. In any case, the law banned all other slaughterhouses from operating in New Orleans. A group of local butchers sued Louisiana. The butchers claimed that the state unconstitutionally deprived them of the "privilege" of operating slaughterhouse companies and thus prevented them from earning a living – used 14th Amendment right of “privileges and immunities” as citizens
Supreme court ruled (5-4) 14th Amendment protected only rights of national citizenship, federal government not obliged to protect violations of states…
• Depression of the 1870s hurt farmers – complained about the high/irregular rates of RR – led to the GRANGE, FARMERS ALLIANCES.
• Munn v. Illinois, 1877 – State has the right to regulate business
operations (upheld “Granger Laws”); ruled
against railroads
• Wabash case, 1886 – Significance: individual states had no power to
regulate interstate commerce (federal resp)– nullified Munn v Illinois. – Stimulated push for Interstate Commerce Act
of 1887
Interstate Commerce Act - 1887
• FIRST LARGE SCALE LEGISLATION TO CURB BIG BUSINESS!
• Outlawed pools, discriminatory rates, long/short haul differences, rebates
• Set up Interstate Commerce Commission (ICC) to enforce the act (defined on a case by case basis), BUT…
• Required railroads to publish rates openly.
• Not effective
MIRACLES OF MECHANIZATION
• Natural resources fed industrial growth.• Unskilled labor (domestic and foreign) now
cheap and abundant – A MUST!!• Whitney’s interchangeable parts • Patents increased significantly 1860-1890• Alexander Graham Bell’s telephone
– Women operators. • Thomas A. Edison
– Electricity– Allows factories to do what????
THE TRUST TITAN EMERGES
• Drive out competition. Allows U.S. to move ahead of Britain as an industrial power in the 1880s. By 1913, U.S. equals that of next 3 (GB, FR, and Germany). BUT – if you eliminate competition you can charge what you want!
• "Vertical integration" -- controlling every aspect of the production process - Andrew Carnegie – Goal: improve efficiency, controlling quality of the product at all
stages of production, and eliminate middlemen’s fees
• "Horizontal integration” - Consolidating with competitors to monopolize a given market. – John D. Rockefeller - Pioneered the "trust" in 1882 as a means
of controlling his competition - Standard Oil Company.
Standard Oil Trust• Trust (came to refer to all companies that controlled a
large share of any given market): Stockholders of 40 companies sold their stock to board of directors of Rockefeller’s Standard Oil Company.
• Stockholders receive trust certificates and the board of trustees exercises full control of the business. – Trust consolidated operations of previously competing
enterprises.
• Standard Oil eventually cornered the world petroleum market.
“Interlocking directorates” J. P. Morgan
• Sought to consolidate rival enterprises by placing officers of his own banking syndicate on their various boards of directors.
• Called “holding companies”
• Bought controlling shares of stock in member companies (remained separate company but were controlled by his board of directors)
THE SUPREMACY OF STEEL THROUGH CARNEGIE AND OTHER SULTANS OF STEEL
• Held together skyscrapers, coal scuttles, railroad tracks.
• Bessemer process -1850s - turned iron into steel.
• Andrew Carnegie - Came to U.S. in 1848 from Scotland as a boy by impoverished parents.
• By 1890, Carnegie producing ¼ nation’s Bessemer steel
• Gave money away to the public - $350 million
J. Pierpont Morgan • Owned a Wall Street banking
house
• 1901, -United States Steel Corporation (bought Carnegie Steel for $400 million)
• Capitalized at $1.4 billion - America’s first billion dollar corporation
ROCKEFELLER GROWS AN AMERICAN BEAUTY ROSE
• 1870, organized the Standard Oil Co. of Ohio .
• 1877, Rockefeller controlled 95% of oil refineries in U.S.
• Policy of rule or ruin - survival of the fittest
• Sold a quality product at a cheap price – drove out competition
"The American Beauty rose can be produced in all its splendor only by sacrificing the early buds that grow up around it."
Other Financial Leaders
• Gustavus F. Swift & Philip Armour - meat industry
• Andrew Mellon - Financier who became one of America’s greatest venture capitalists – Aluminum Co. of America, Gulf Oil Corporation,
and the Pittsburgh Coal Company
Social Darwinism/Gospel of Wealth
• Charles Darwin -- Origin of the Species ("survival of the fittest" theory) - free-market capitalism. Those who stayed poor must be lazy and lacking in enterprise. Many of the new rich had succeeded from modest beginnings (Carnegie).
• Andrew Carnegie: The Gospel of Wealth synthesized prevailing attitudes of wealth and survival of the fittest - Stated money should be given away for the public good.
GOVERNMENT TACKLES THE TRUST EVIL
• Sherman Anti-Trust Act of 1890 – Created in response to public demand for curbing
excesses of trusts.
– Provision: Forbade combinations in restraint of trade, without any distinction between "good" trusts and "bad" trusts.
• Largely ineffective – no way to enforce. • Used by corporations to curb labor unions or labor
combinations that were deemed to be restraining trade.
• E.C. Knight Court Case
Let’s look at some political cartoons…
What do you see in this cartoon???
Cornelius Vanderbilt was the owner of shipping and railroads, with his two puppets, Gould and Gibbons.
THE SOUTH IN THE AGE OF INDUSTRY
• "New South" --Some gains made in textile industry but by 1900, South still produced smaller % of nation’s manufactured goods than before the Civil War.
• Mill towns• Tobacco industry grew dramatically - James
Buchanan Duke & family: American Tobacco Co.
• Agriculture still dominated - Crop-lien system
Obstacles to Southern Development
• Civil War’s physical devastation• No capital ($509/average income as
compared to $1,165 up north)• Few banks (2% of total banks)• Few towns/cities• Illiteracy• Northern control of financial markets/patents
THE IMPACT OF THE NEW INDUSTRIAL REVOLUTION ON
AMERICA• Standard of living rose
• Urban centers grew
• Agriculture eclipsed by industrialism
• Free-enterprise eclipsed by monopoly
• Work-place became impersonal
• Social stratification most pronounced in U.S. history
• Foreign trade developed
IN UNIONS THERE IS STRENGTH
• Conditions for workers in the 2nd industrial revolution were tough
• Working conditions often dismal and impersonal • Strikes often nullified by the use of "scab"
workers • Corporations - call in troops• lock-out• “yellow dog contracts”• blacklist• "company town" - cycle debt
Early Labor Unions• National Labor Union organized in 1866 (led by
William Sylvis) Sought to bring together skilled craft unions into one large one– Lasted 6 years; had about 600,000 workers
– Focused on social reform (such as abolition of the wage system); 8-hour work-day and arbitration of industrial disputes.
• Molly Maguires (formed in 1875 by Irish anthracite-coal miners in PA) – Used intimidation, arson, & violence to protest owners’
denial of their right to unionize.
Great Railroad Strike (1877)
• wages to be cut by 10% • First nationwide strike; paralyzed railroads
• President Hayes sanctioned use of federal troops in PA; set precedent for
• future federal intervention• future violence in strikes
Knights of Labor• Led by Terence Powderly - 1869
• Sought to include all workers in "one big union" including blacks & women.
– Fought for an 8-hr workday through winning a number of strikes; higher pay and equal pay for women. Government regulation of railroads; postal savings banks, gov’t paper currency. Sought arbitration rather than industrial warfare.
• Discouraged strikes and violence as a means
for change.
• Powderly’s ban on strikes would be ignored
and lead to the Knight’s demise.
Haymarket Square bombing • May 4, 1886, Chicago police advanced on a
meeting called to protest alleged brutalities by police in May Day strikes.
• A dynamite bomb thrown in the crowd that killed 8 police; 60 officers injured by police fire; 7 or 8 civilians killed; 30-40 wounded
• Knights of Labor - associated with anarchists - 8-hr movement suffered and subsequent strikes met with many failures
• By 1890s, K of L - only 100,000 members left
American Federation of Labor (AFL) • 1886 - Samuel Gompers• better wages and hours, and improved working
conditions• Closed shop: all workers in a unionized industry
had to belong to the union. • Chief strategies: walk-out and boycott
• Did not represent unskilled labor, esp. women and blacks. SKILLED MALE ONLY
Homestead Strike
• 1892 in Carnegie’s steel plant near Pittsburgh
• 20% pay slash for steelworkers – led to worker
uprising: factory surrounded; scabs not allowed through lines
• Frick called in 300 Pinkerton detectives. Armed strikers forced Pinkertons to surrender after 9 Pinkertons and 7 workers were killed and about 150 wounded.
• PA governor brought in 8,000 state militia and scabs replaced workers; strike effectively broken and the Union was effectively broken.
Pullman Strike, 1894 • Model company town for his workers near the factory in
Chicago. • Pullman Palace Car Company hit hard by the depression
& cut wages by 1/3 but maintained rent prices in the company town.
• Eugene V. Debs helped organize American Railway Union of about 150,000 rail workers
• Workers went on strike• Railway traffic from Chicago to Pacific Coast paralyzed. • Attorney General Richard Olney sent federal troops stating
strikers interfering with U.S. mail. • First time gov’t used an injunction to break a strike.
