A New Industrial Age
Chapter 6
The Gilded Age
• Thin layer of prosperity covered the
poverty and corruption of society.
• Great for industrialists, bad for
immigrants, farmers, workers.
• There was a lot of abuse of power in
business and government.
Natural Resources Fuel
Industrialization
• 3 factors that led to industrial growth:
1.Wealth of natural resources – oil, coal, and
iron
2.Government support for business
3.Growing Urban population that provided
chap labor and markets.
• Edwin Drake – drilled for oil in Titusville,
PA – started oil breakthrough.
• Iron ore deposits plentiful
• Iron - dense, but breaks and rusts – not used
a lot – ex/ RR used a thin layer on top of
wood.
• Steel –remove carbon from iron. Used the
Bessemer Process to do this. Bessemer
Process – cool air put in to hot iron to
remove the carbon. Look at map page 231 –
Pittsburgh - # of steel mills.
• New Uses for Steel
– RR – biggest customers of steel.
– barbed wire, farm machinery – steel could
break through tough soil.
– Buildings and bridges – Brooklyn Bridge,
skyscrapers – 1st one was the Chicago
Insurance Building in Chicago. 10 stories tall.
These led to upward growth in cities.
Inventions Promote Change
• Inventions began to have an impact on daily life.
• Electricity - Thomas Edison - light bulb. He later
invented an entire system to distribute electricity –
central power station
• George Westinghouse - instead of the costly direct current
Edison used, he came up with an alternating current that
was cheaper and more efficient.
• ***This changed business. Allowed many machines to
operate. Factories could now locate outside of cities and
away from the water sources they had always relied on.
• In homes – time saving appliances, like the refrigerator.
Inventions Change Lifestyles
• Christopher Sholes – typewriter 1867
• Alexander Graham Bell – telephone
• Inventions changed jobs at home for women
too. Women no longer needed to make
clothes because now factories were making
them. Factories were also making food that
was once grown on farms – canned goods.
The Age of Railroad
• Transcontinental RR – spanned the nation. Central
Pacific and Union Pacific RR’s.
• Changes in railroads overtime included the use of steel
rails - safer and could hold heavier loads. Standard gauge
of track width - eliminated changes from one line to
another. Westinghouse air brakes contributed to efficiency
and safety. “Pullman Palace Cars” – traveling hotels.
• 1869 – RR set 4 time zones – Eastern, Central,
Mountain, and Pacific
• 1883 – RR and towns synchronized watches
• 1884 – worldwide time zones incorporated RR
zones
• 1918 – Congress adopted RR times
• Growth of RR - growth of towns - new markets.
Some towns specialized in a product – Chicago –
meat, Minneapolis – grain.
Credit Mobilier (Corruption)
• The growth of the RR’s did lead to
corruption
• Union Pacific RR stockholders formed a
construction company called Credit Mobilier.
Gave this company a contract to lay track at 2 – 3
times the actual cost. Pocketed the profit.
Donated shares of the profit in stock to members
of Congress.
• Made about $23 million.
The Grange and the RR
RR Abuses
1. misuse of land grants – sold to other businesses,
not farmers – “Scratch my back…”
2. fixed prices – esp. with storage
3. different rates
Granger Laws – laws passed by state legislatures to
protect farmers
• 1877 – Munn v. Illinois – Supreme Court
upheld Granger Laws – allowed states to
regulate businesses within its borders,
including RR.
• Wabash v. Illinois – Munn overturned –
only federal government can regulate
interstate trade
Interstate Commerce Act
• 1887
• Re-establishes the fed. govt. right to
supervise RR.
• Set up Interstate Commerce Commission
(ICC) to do that.
• ICC couldn’t regulate RR b/c too many and
met resistance.
Andrew Carnegie
• one of the first industrialists to make
his own fortune.
• 1873 – entered steel business
• 1899 – Carnegie Steel produced more steel than all
the factories in Great Britain.
• Management practices:
1. Made better products cheaper – incorporated new
machinery and techniques like accounting systems
– track exact costs.
2. Got talented people to work for him by offering
them stock in the company – he encouraged
competition among his assistants.
• He worked at controlling as much of the
steel industry as possible – vertical
integration – bought out suppliers –
included the coal fields, iron mines, ore
freighters, and RR lines. He also practiced
horizontal integration – buying out those
companies that were competition.
Social Darwinism and Business
• Social Darwinism strongest businesses will
survive and the government shouldn’t
regulate.
Growth and Consolidation –
ways to eliminate competition
• 1. Mergers – buying out the stock of another
corporation.
• 2. Monopoly – when a company got rid of all
competition – had complete control over its
production, wages and prices.
• 3. Holding Company – set up to do nothing but
buy out the stock of other companies. J.P.
Morgan, a banker, made U.S. Steel the most
successful holding company. Bought out Carnegie
Steel in 1901.
John D. Rockefeller
• Standard Oil Company – formed trusts
with competing companies.
• 4. Trusts – members turned their stock over to a
board of trustees who ran the companies as one
large corporation. Companies in return earned
profits. Rockefeller used this to gain control of the
oil industry.
• Drove competitors out of business by
selling his oil at lower prices. When
competition was gone he raised prices to make a
profit.
Sherman Antitrust Act
• 1890 – Sherman Antitrust Act – made it
illegal to form a trust that interfered with
free trade between states or with other
countries.
• Wasn’t easy to enforce, and eventually it
was overlooked.
Business Boom Bypasses the
South
• North – natural and urban resources plentiful.
• South – lack of capital, people unwilling to take a
financial risk. Mostly agriculture, at the mercy of
the RR, high tariffs on imported goods, and lack
of skilled workers.
• The South remained mostly rural. Industry was
hard to start in the South. Railroad owners
charged higher prices on goods shipped from the
South to the North.
Labor Unions Emerge
• Why?? Low wages, unsafe working conditions,
drew workers together to try to improve
conditions.
• No vacation, sick days, workers comp, etc.
• Working conditions bad – dirty, poorly ventilated,
led to injuries.
• Repetitive takes on sometimes faulty equipment.
• In 1882 675 workers killed.
• Low wages - whole families had to work, even
children as young as 5.
Early Labor Organizing
• National Labor Union – 1st large-scale national
organization of labor – William H. Sylvis.
Included skilled and unskilled. Membership –
640,000. Lasted 6 years 1869 –Terrance Powderly
– Knights of Labor – open to all workers – skilled
and unskilled, men and women.
– Strikes as last resort.
– Goals - equal pay for equal work, 8 hour day,
and no child labor.
• Samuel Gompers – started American
Federation of Labor – (AFL) – focused on
collective bargaining – negotiations
between labor and management where they
would reach agreements on wages, hours,
etc. Organized skilled male workers in
smaller unions under the umbrella of the
AFL.
Strikes Turn Violent
• The Great Strike of 1877 - Baltimore and
Ohio RR workers protest 2nd wage cut in 2
months. Stopped working. 50,000 miles
stopped working for over a week. RR
owners asked President Hayes to step
in – he sent in federal troops to stop the
strike. Companies now relied on federal
and state troops to repress labor unrest.
• The Haymarket Affair
– 1886 - fight between strikers (Knights of
Labor) and scabs
– Police were called in to break it up - shots were
fired.
– Rally -bomb - gunfire erupted
• After this, strikes were not successful
(public began to turn against the labor
unions) and the Knights of Labor
disappeared.
• The Homestead Strike
– Carnegie Steel – wage cut.
– Pinkerton’s - there was a battle, some detectives
and workers were killed, and the plant closed.
– The National Guard was called in.
– The union lost a lot of support
• The Pullman Company Strike
– laid off workers and cut wages
– Went on strike, it turned on violent.
– President Cleveland sent in troops.
Triangle Shirtwaist Factory fire
• New York City – 1911.
• Fire spread quickly through 8 – 10th floors.
• Company had locked doors to prevent theft
and there was no sprinkler system.
• 146 women died.