Chapter 16 Rise of Industrial America
The Emergence of Big Business
 Sources of the Industrial Revolution
 Enormous quantities of two essential
items for industrialization
1. Raw Materials
2. Cheap labor
 New Technology/Inventions
 Government policy-Laissez-faire
From1870-1900 Govt. did very
little domestically
Main Duties:
*Deliver the Mail
*Maintain a national military
*Collect taxes and tariffs
*Conduct foreign policy
EXCEPTION: administer/distribute the annual Civil War
veterans pension
 The Railroads
 The “original” big business
 Modern Business Practices
 Advantage of incorporating & issuing
stock- raise huge amounts of capital
Other businesses will borrow
ideas from RR industries
 Development of modern management
Standardization to be more
efficient
Time Zones
Equipment
Standard gauge
Complex hierarchies to run
business
 Rising Concern over Corporate Power
 Monopoly-control of an industry or
market by one corporation
Fears
Too much power in the
hands of a few?
Conflict of nation’s
republican values?
Corruption of officials?
Price fixing on farmers
 Andrew Carnegie:
 Steel: most important for growth
 AC
Rags to riches story
 Carnegie Steel 1870-1900
Reduce production
costs to lowest possible
level
 Hire only the
best

Technology/red
uce skilled
labor
 Vertical
integration &
horizontal
integration
 Cutthroat
practices to
out maneuver
competition
 Carnegie Steel becomes world’s largest
industrial corporation
 Eventually sold to JP Morgan for $400
million…became US Steel
 Rockefeller & Standard Oil Trust
 Vertical & horizontal integration of
petroleum industry
Controlled all from production
to retail AND controlled by
merger all companies into one
giant system: the TRUST
(Standard Oil controlled 90% of
oil industry)
 US Government moves away from
laissez faire:
1887: Interstate Commerce
Commission to curb power
No Power/15 out of 16
cases in favor of BB!!!!!
1890: Sherman Anti-Trust Act
Prohibits monopolistic
behavior ANYTHING IN
‘RESTRAINT OF TRADE’
IRONY: COURTS USED
IT USUALLY TO RULE
THAT LABOR
STRIKES/WORK
STOPPAGES WERE IN
RESTRAINT OF TRADE
Only 14 cases
prosecuted 1890-1914
 Rock created holding companies to
counter anti-trust laws
The World of Work Transformed
 The Impact of New Technology
 Machinery transformed skilled labor
into unskilled
 Workers easily fired & replaced
 Low wages & long hours
 ***Employers enjoyed more power
over their employee due to workers
being expendable*****
The World of Work Transformed cont.
 Hard Times for Industrial Workers
 Long hours & low pay
2 hrs/6 days a week
Avg. $400-500 a year but $600800 decent living
Make up
difference/work at
home with family
 Economic Depressions (1873-1877 &
1893-97)
Contraction of growth
High rates of unemployment
(14%)
Business failure
 Monotonous work
 Dangerous workplace
35,000 killed on avg. a year
(1880-1900)
 Child labor/180,000 to 1.7 million
(1880-1900
 Intimidation & Conflict
 National Labor Union founded in 1866
Formed to create an 8 hour
day/Dept. of Labor (300,000
members
Depression wiped out union
 Employers response to unions
Blacklist
Scabs
Strike breakers
 36,757 strikes between 1881-1905/ 6
million workers
 Great Railroad Strike of 1877
 Division among unions
Chinese Exclusion Act of 1882
Halted Chinese
immigration, limited
civil rights of Chinese,
forbade naturalization
of Chinese
Anti-black
Conflicting Visions of Industrial Capitalism
 Capitalism Championed
 New cheap consumer goods to
phonographs
 Increased life expectancy (38.3 in 1850
to 50 in 1910)
 Transportation & communication
 Wages rose 50 % between 1860-1900
 Andrew Carnegie
Gospel of Wealth- importance
of philanthropy




Social Darwinism
Business men invoked the highjacked theories of Charles
Darwin…what became known
as Social Darwinism
“Survival of the Fittest”-Herbert
Spencer
Capitalism Criticized
 Growing gap between Haves and Havenots
Power in Numbers: Organized Labor
 Knights of Labor founded in 1869
formed in attempted to
completely reformed wage
labor system/UTOPIAN agenda
Led by Terrence Powderly,
Uriah Stephens
All inclusive union that worked
to abolish child and convict
labor, equal pay for women,
progressive income tax, and
cooperative ownership of
mines/factories
10% black & 10% women
Lost support after the
Haymarket Riot
Lost many members to a new
organization AFL
 American Federation of Labor
(AFL)
1886: Led by Samuel Gompers
Organized only for SKILLED
workers
Did not seek labor reform as
much as basic economic goals
“Bread and Butter Issues”
The Great Upheaval
 Haymarket Strike- 1866
Thousands gathered in Chicago
during a general strike
Bomb! Police and strikers were
killed and injured
Trial! Conviction! Execution!
Consequence: labor unions
were radical and violent!!!
Membership/support for labor
issues began to diminish
 Homestead Strike-1892
 Pullman Strike-1894
Led by Eugene Debs
Pullman 1894: wage cuts and