Industry Comes of Age
Chapter 24
AP Notes
What caused the explosive growth of American industry?







Post Civil War Inventions
Raw materials
Growing population
New sources of power
Government policies
Improved transportation and communication
Effects of the Civil War
Technological innovation:




Introduction of machinery and a factory system
New inventions and inventors
1790- 1860 US Patent Office – 36,000 patents
1860-1890 – U.S. Patent Office – 500,000 patents
Natural resources



Coal
Oil
Iron
Growing population






High birth rate
Immigration
1800s – pop. doubled every 25 years
1800 – 5 million
1900 – 76 million
Provided sufficient labor and demand for consumer goods
Sources of Power



Electricity
Petroleum
Government Policies
o Granted land and cash subsidies to rail road builders
o Levied high tariffs to protect manufacturing
o Laissez-faire policies
Improved Transportation and Communication



Railroads
Telegraph
Telephone
Effects of the War:





Industry prospered
Emergence of a millionaire class
Liquid capital –people had money to invest and spend
Increased mechanization
Government now in the hands of the Republican Party with pro-business policies
Significance of Railroads:






Key to industrial growth
Created a national market
Allowed people to settle the Great Plains
Maker of millionaires
Demand for steel – spurred iron and steel industries
Creation of 4 time zones
After the Civil War:





Railroad production grew
Deadlock over route for transcontinental railroad broken
Union Pacific Railroad – west from Omaha
Central Pacific RR from California
1869 – met at Odgen, Utah
Binding the Country with Railroad Ties




Northern Pacific RR – L. Superior -Puget Sound
Atchison, Topeka, and Santa Fe – through southwest
Southern Pacific – New Orleans - San Francisco
Great Northern – Duluth - Seattle
Innovations in railroading:






Westinghouse air brake
Steel rails
Uniform signaling system along track lines
Standard gauge = 4’8”
Pullman Palace Cars
Time zones
Government assistance:






Subsidies
Loans
Land grants
155,504,994 acres
along routes – alternate one-mile sq. sections
choicest sections closest to the rail lines
Why was the government so generous?





Railroads expensive to build
West was thinly populated – risky investment
Military and postal needs
Encourage population to move into Great Plains
Tie nation together economically
How did railroads affect Am. life?






Nation united physically
Raw materials from the West transported East
Manufactured goods from the East transported West
Stimulated mining and agriculture in the West
Stimulated growth of cities
Stimulated immigration
Railroad abuses?







Corruption – Credit Mobilier Scandal
“Stock watering”
Bribed judges and legislatures – free passes
Natural monopoly
Pools
Rebates
Charge higher rates for short haul than long
Public reaction?



Being “railroaded”
Farmers particularly at the mercy of railroads
Midwestern legislatures tried to regulate railroads – unconstitutional (Wabash case) –
states can not regulate interstate commerce
Interstate Commerce Act of 1887






Prohibited rebates
Required the railroads to publish rates openly
Outlawed charging more for short haul
Forbade discrimination against shippers
Established the Interstate Commerce Commission to enforce law
1st attempt by Washington to regulate big business in the public interest
Elimination of Competition




Competition was wasteful
Vertical integration – Carnegie Steel
Horizontal integration – trusts – Rockefeller and Standard Oil Company
Interlocking directorates – J.P. Morgan and banking
“Steel is King!”




Heavy industry – capital goods
Bessemer process made cheap steel possible
By 1900 U.S. producing as much as Great Britain and Germany combined
Andrew Carnegie





Carnegie Steel
“Watch the costs – profits will take care of themselves”
Vertical consolidation
1900 - $40 million profit
Philanthropist
The Gospel of Wealth






Carnegie’s philosophy
The wealthy are entrusted with the public wealth and must use is wisely
Gave away the bulk of his fortune - $350 million
Libraries
Church organs
Schools
J.P. Morgan




“Banker’s Banker”
Wall Street banker – financed railroads, insurance cos., and banks
Bought Carnegie Steel for $0.5 billion
Created U.S. Steel – 1st $1 billion company
John D. Rockefeller



1870 – organized Standard Oil Company
1877 controlled 95% of nation’s oil
Forced competitors out of business –
Social Darwinism



Survival of the fittest
The wealthy are rich because they worked hard and are the product of natural selection
The poor need to work harder – pull themselves up by the “bootstraps”
Captains of Industry





Employed thousands of workers
Increased availability of goods
Raised the standard of living
Built factories, raised productivity, expanded markets
Philanthropists
Or Robber Barons?





Built fortunes stealing from the public
Drained the country of natural resources
Corrupted public officials to interpret laws in their favor
Drove competition out of business
Paid meager wages and forced workers to work under dangerous and unhealthy
conditions
Public Reaction ?





Concern – monopolies could hurt the consumer and worker
Sherman Anti – Trust Act of 1890
Outlawed trusts and other combinations in restraint of trade
Vague and not well enforce
Supreme Court usually favored big business
The South and Industry?





1900 produced smaller % of nation’s manufactured goods than before C.W.
RR gave favorable rates to northern industry in competition with southern
Textile mills
Close to the source of raw materials
Cheap labor
Impact?






Economy dominated by a few large companies – Standard Oil, U.S. Steel, General
Electric, Swift and Armour, AT&T, Westinghouse, and DuPont
1900 1/10 of the population owned 9/10 of the wealth
Changes in Labor?
unskilled/impersonal factory work
schedule
Hardships of Labor?





12 hrs/day
6 days/week
Child labor
Unsafe conditions – accidents were a normal risk in working
Management fought safety and health standards
Obstacles to Labor Unity?






Immigration – cheap labor
Ethnic and racial divisions
Religious divisions
Skilled vs. unskilled
Divided by crafts
Middle class fears of radicalism
Knights of Labor


Organized all wage earners
Goals:
o Equal pay for equal work
o Graduated income tax
o End to child labor
o Cooperative ownership of factories
o Strategies – restrict immigration and strikes
Strikes and Labor Violence





Great Railroad Strike of 1877
Haymarket Square -1886
Homestead Strike – 1892
Pullman Strike – 1894
Middle class Americans saw violence, radicalism, unions and immigration as all related.
Knights of Labor



Success:
o Won strike against Jay Gould’s Wabash RR
o 600,000 joined
Failure:
o Too big and diverse
o Political goals
o Later strikes unsuccessful
Leadership: Terence Powderly
American Federation of Labor




Loose federation of skilled trades
Goals:
o Bread and butter issues – wages, hours, safety
o Union recognition and closed shop
o Collective bargaining
Leadership: Samuel Gompers
Success: Steady – conservative – still exists today