Industry Comes of Age,
1865-1900
The Iron Colt Becomes an Iron
Horse
• Railroad promoters asked for government
subsidies because it was too risky, too costly and
too unprofitable without help.
• Most of the railroads were built with government
assistance during the Gilded Age.
• The national government helped to finance the
transcontinental railroad with land grants.
continued
• Land grants were
federally owned
acreage granted to the
railroad companies in
order to encourage the
building of rail lines.
Spanning the Continent with
Rails
• The original transcontinental railroad that was
commissioned by Congress in 1862 was to build a
transcontinental railroad in the North.
• The Union Pacific Railroad Company which
started in Omaha, Nebraska and moved West.
• Union Pacific used Irish immigrants as workers.
• The Central Pacific Railroad started in California
and moved East.
• Central Pacific used Chinese immigrants as
workers.
Railroads joined together near
Ogden, Utah
Transcontinental Railroad
continued
•
The railroads most significantly stimulated
American industrialization by creating a single
national market for raw materials and consumer
goods.
Railroad Companies and Barons
1. Great Northern – James J. Hill
2. New York Central – Cornelius Vanderbilt
3. Central Pacific – Leland Stanford
4. Union Pacific – Dr. Thomas C. Durant
Binding the Country with
Railroad Ties
• The only transcontinental railroad built
without government aid was the Great
Northern.
• The most efficient and public-minded was
James J. Hill. He helped farmers in the
northern areas that were served by his lines.
Great Northern Railroad Map
Railroad Construction and
Mechanization
• “Commodore” Cornelius
Vanderbilt was an
aggressive eastern railroad
builder and consolidator
who did not like the law
and saw it as an obstacle
to his enterprise.
• He gave $1 million to the
founding of Vanderbilt
University.
Revolution by Railways
• The railroads helped to move people into the
cities.
• The railroad network is the greatest single factor
in helping spur the industrialization in the postCivil War years.
• The U.S. changed to standard time zones when
major rail lines decreed the division of the
continent into four time zones so they could keep
schedules and avoid wrecks.
Wrongdoing in Railroading
• “stock watering” – dishonest device by
which railroad promoters artificially inflated
the price of their stocks and bonds.
• Pools – an agreement to divide a given
market in order to avoid competition. Many
of the railroad companies agreed to divide
the business in a given area and share the
profits.
Government Bridles the Iron
Horse
• The state legislatures were the first to make an
effort to regulate the monopolizing practices of the
railroad corporations.
• The Wabash Case (1886) – case that prevented
states from regulating railroads or other forms of
interstate commerce.
• The Interstate Commerce Act was the first attempt
by the government to regulate business.
continued
• The Interstate Commerce Commission was a
federal agency that was originally intended to
regulate railroads and it was often used to stabilize
the industry and prevent competition.
• The commission was set up because of the corrupt
financial dealings and political manipulations by
the railroads.
• One of the most significant aspects of the
Interstate Commerce Act was that it represented
the first large-scale attempt by the federal
government to regulate business.
Miracles of Mechanization
• The plentiful supple of unskilled labor in the
United States helped to build the nation into an
industrial giant.
• Alexander Graham Bell (who was deaf) invented
the telephone in 1876.
• The telephone revolutionized communication and
created a large new industry that relied heavily on
female workers.
continued
• Thomas Edison was an
inventive genius of
industrialization who
worked on devices such as
the electric light, the
phonograph, and the
motion picture camera
• Edison said, “Genius is
one percent inspiration
and ninety-nine percent
perspiration.”
The Trust Titan Emerges
• One of the methods by which post-Civil
War business leaders increased their profits
was to eliminate the competition as much as
possible.
• Trust – a combination of corporations,
usually in the same industry, in which
stockholders trade their stock to a central
board in exchange for trust certificates.
Continued
• Standard Oil Company
was the first of the
great industrial trusts
that organized through
a principle of
“horizontal
integration” that
ruthlessly incorporated
or destroyed
competitors.
The Supremacy of Steel
• The steel industry
owed much to the
inventive genius of
Henry Bessemer.
• Bessemer Process –
produce steel faster
(Henry Bessemer and
William Kelly)
Carnegie and Other Sultans of
Steel
• Andrew Carnegie was Scottish immigrant
who organized a vast new industry on the
principle of “vertical integration.”
• By 1900, his company was producing onefourth of the nation’s Bessemer steel and he
was making a profit of $25 million a year.
Continued
• J. Pierpont Morgan was in
the banking business.
• Morgan made a business
of financing other
businesses.
• He bought Carnegie’s
steel mill for over $400
million dollars.
• Morgan then formed the
first billion-dollar
corporation – United
States Steel
Rockefeller Grows an American
Beauty Rose
• 1859 the first well in Pennsylvania –
Drake’s Folly – poured out liquid “black
gold.”
• Kerosene was the first major product of the
oil industry. (derived from petroleum)
• The oil industry became a huge business
with the invention of the internal
combustion engine.
continued
• John D. Rockefeller
became dominate in
the oil industry.
• He organized Standard
Oil Company of Ohio
• By 1877 he controlled
95 percent of all the
oil refineries in the
country.
continued
• Rockefeller used all of the following tactics to
achieve success in the oil industry: employing
spies, extorting rebates from railroads, and
pursuing a policy of rule or ruin.
• He formed the Standard Oil Trust.
• Trusts – a combination of corporations, usually in
the same industry, in which stockholders trade
their stock to a central board in exchange for trust
certificates.
• Other trusts were the sugar trust, the tobacco trust,
the meat trust, the steel beam trust, copper trust,
etc.
The Gospel of Wealth
• The gospel of wealth, which associated godliness
with wealth, discouraged efforts to help the poor.
• To help corporations, the courts ingeniously
interpreted the Fourteenth Amendment, which was
designed to protect the rights of ex-slaves, so as to
avoid corporate regulations by the states.
• The corporations used the Fourteenth Amendment
when defending themselves against regulations by
state governments.
Government Tackles the Trust
Evil
• The Sherman Antitrust Act (1890) – prohibited
monopolies by declaring any business
combination “in restraint of trade” illegal.
• To get around the act, corporations formed
holding companies.
• The courts failed to enforce the act.
• The act was primarily used to curb the power of
labor unions.
The South in the Age of Industry
• During the age of industrialization, the South
remained overwhelmingly rural and agricultural.
• The South’s major attraction for potential
investors was cheap labor.
• In the late nineteenth century, tax benefits and
cheap, nonunion labor attracted textile
manufacturing to the “new South.”
• Many Southerners saw employment in the textile
mills as salvation, since the jobs and wages were
steady.
The Impact of the New Industrial
Revolution on America
• One of the greatest changes that industrialization
brought about in the lives of workers was the need
for them to adjust their lives to the time clock.
• Women were the group most effected by the new
industrial age.
• Reformers wanted to introduce job protection,
wage protection, and temporary unemployment
compensation in order to provide workers with job
security.
continued
• The image of the
“Gibson Girl”
represented an
independent and
athletic “new woman.”
• Most women worked
for economic
necessity.
In Unions There is Strength
• Many companies turned to using yellow
dog contracts, lockouts, or blacklists to get
employees to do as they wished.
Labor Limps Along
• The National Labor
Union – won an eighthour day for
government workers.
• The National Labor
Union was a socialreform union killed by
the depression of the
1870s.
continued
• The Knights of Labor
were the “one big
union” that
championed producer
cooperatives and
industrial arbitration.
• The Knights of Labor
barred Chinese from
membership.
The Knights of Labor
• They believed that conflict between capital and
labor would disappear when labor would own and
operate businesses and industries.
• They believed that republican traditions and
institutions could be preserved from corrupt
monopolists with the economic and political
independence of the workers.
• One of the reasons they failed was lack of class
consciousness.
• Generally, the Supreme Court in the late
nineteenth century interpreted the Constitution in
such a way as to favor corporations.
The AF of L to the Fore
• American Federation of
Labor was an association
of unions pursuing higher
wages, shorter working
hours, and better working
conditions.
• It was the most effective
and enduring labor union
of the post-Civil War
period.
continued
• By 1900, American attitudes toward labor
began to change as the public came to
recognize the right of workers to bargain
collectively and strike. Nevertheless, the
vast majority of employers continued to
fight organized labor.
• Organized labor in America had begun to
develop a positive image with the public.
continued
• Some people who found fault with the
captains of industry argued that these men
diminished the workers’ quality of life.
• Historians critical of the captains of
industry and capitalism concede that classbased protest has never been a powerful
force in the U.S. because America has
greater social mobility than Europe has.