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The McKinley Tariff of 1890
A. was a protective tax that raised import
duties to an average of 50 percent.
B. had a reform measure that reduced the
price of American manufactured
products.
C. was vetoed by President Benjamin
Harrison.
D. was responsible for the decisive
Republican victory in the election of
1892.
Causes of Rapid Industrialization
1. Steam Revolution of the 1830s-1850s.
Causes of Rapid Industrialization
3. Technological innovations.
* Bessemer and open hearth
process
2. The Railroad fueled the growing US
economy:
* First big business in the US.
* A magnet for financial investment.
* The key to opening the West.
* Aided the development of other
industries.
Causes of Rapid
Industrialization
4. Unskilled & semi-skilled
labor in abundance.
5. Abundant capital.
6. New, talented group of businessmen
[entrepreneurs] and advisors.
7. Market growing as US population increased.
8. Government willing to help at all levels to
stimulate economic growth.
9. Abundant natural resources.
* Refrigerated cars
* Edison --> “Wizard of Menlo
Park”
--> light bulb,
phonograph,
motion pictures.
New Business Culture
Laissez Faire --> the ideology of
the Industrial Age.
* Individual as a moral and
economic ideal.
* Individuals should compete freely
in the marketplace.
* The market was not man-made
or invented.
* No room for government in the
market!
• But of course when BUSINESS wanted
government help, the rules changed
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New Business Culture
Wall Street – 1867 & 1900
Protestant (Puritan) “Work Ethic”
* Horatio Alger
Ironically, labor was prevented from organizing because
of the government's use of
A. the Interstate Commerce
clause.
B. Jim Crow laws.
C. the Sherman Antitrust
Act.
D. the Voting Rights Act.
2nd Andrew Carnegie
STEEL
America’s Richest Citizens
1. John Rockefeller OIL
$189.6 Billion
3rd Cornelius Vanderbilt
Railroads
$100.5 Billion
$95.9 Billion
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4th John Jacob Astor
• Real Estate
• $78 Billion
Then the Rest
5. Bill Gates: $61Billion
6. Stephen Girard:
Shipping $55 billion
7. A.T. Stewart: Dry
goods, $46 Billion
8. Weyerhaeuser:
Lumber, $43 Billion
9. Jay Gould: RR’s $42
Billion
10. Marshall Field:
Department Stores
$40 Billion
11. Sam Walton: Retail,
$37 Billion
12. Andrew Mellon:
Banking, $32 Billion
#23 is J.P. Morgan “The
richest Man in
America at $25 Billion
Corporate consolidations or mergers were
prompted primarily by a desire to
A. encourage competition.
B. regulate expansion and insulate
corporations from fluxations in the
economic cycle.
C. stimulate rate wars within the major
markets.
D. reduce the role of investment bankers in
the economy.
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•
RAILROADS
– Exponential growth
•
•
•
1865 = 35,000 miles
1900 = 195,000
miles
1869 1st continental RR joined @
Promontory Utah
1883 4 continental RR’s w/ 10,000s of
miles of connecting track.
– RR tycoons
•
•
•
•
“Commodore” Cornelius Vanderbilt & his son William.
He standardized the gauge so all tracks were the
same.
Erie Gang: Drew, Fisk, & Gould. Bought a rundown
track Vanderbilt needed and watered the stock from
$20,000 to $2,000,000. Gave excess stock to N.J.
judges. Vanderbilt finally paid them their inflated
asking price. They kept all the profits.
James Hill: built the Northern Pacific—only major RR
NOT to go bankrupt in the crash.
DOWNSTREAM PRODUCTION: just think, 1 mile
of track needed 3,000 RR ties, 10,000 lbs of
gravel, 400 steel rails, 12,000 iron spikes, and
5,000 men. And that’s on FLAT ground. It also
needed telegraph poles, engines, RR cars, coal,
water, passengers and freight.
– Steel = Carnegie’s VERTICAL MONOPOLY using
the British Bessemer steel process
– Oil = Rockefeller’s Standard Oil refineries & his
TRUSTS and his HORIZONTAL MONOPOLY
– Banking = J.P. Morgan and his INTERLOCKING
DIRECTORATES.
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Reducing wasteful competition
– TRUSTS: 1st used by “Wreck A. Fellow” in 1882 with the
creation of Standard Oil Trust:
• Other oil companies place their stock holdings in the hands
of the Standard Oil board of directors, who then control
pricing, etc.
• The other oil co. owners are then given Certificates of TRUST
that earn them DIVIDENDS on Standard Oil profits.
• Those oil companies who refuse, will be driven out of
business.
• With 90% control of output, S. Oil, can set prices, costs, etc –
eliminating wasteful competition.
• Outlawed in 1890, only to be replaced with
Reducing wasteful competition
– Holding companies: A corporation created for the
sole purpose of “holding” (controlling) the stock of
several competing businesses by owning a
controlling (51%) of each individual company.
– Banking = J.P. Morgan and his INTERLOCKING
DIRECTORATES. After creating a Super-
Holding co., it places its board of directors
on the individual (smaller) holding
companies, AND the companies that they
hold stock in.
Steel Production
U. S. Corporate Mergers
Industrial Consolidation:
Iron & Steel Firms
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In 1901, J. P. Morgan handled the huge industrial
merger that formed the
A.
B.
C.
D.
Standard Oil Company.
Northern Pacific Railroad.
American Tobacco Company.
U.S. Steel Corporation.
New Financial Businessman
The Broker:
* J. Pierpont Morgan
– COAL = J. Frick. Sells out to Carnegie.
– Mining = wildcat business slowly
controlled by bankers
– Textiles = Lowells and Cabots
– Appliances (air brakes at first) =
Westinghouse
– RR cars = Pullmen
– Meatpacking = Armour & Swift
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By 1920, the majority of workers in
American cities were
A.
B.
C.
D.
•
highly skilled and well paid.
women.
immigrants.
highly skilled and poorly paid
ROBBER BARONS??????????
–
–
–
–
–
“Stock watering” at the consumer’s expense
“Pooling”
“Kickbacks”
“Loss Leader” to destroy competition
Illegal bribes and payments to politicians and
judges
Lower Prices
–
–
New inventions
»
»
»
»
»
»
telephone
telegraph
automobile
airplane
skyscrapers
electric trolley
cars
» typewriter
» amusement
parks
» moving
pictures
» basketball
» evolution
» Cracker-Jacks
More variety to LIFE!!!!!!
•
–
Thomas Alva Edison
“Wizard of Menlo
Park”
Jobs
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The Ediphone or Dictaphone
The Motion Picture Camera
Alexander Graham Bell
Alternate Current
Telephone (1876)
George Westinghouse
U. S. Patents Granted
1790s 276 patents issued.
1990s 1,119,220 patents issued.
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The “Robber Barons” of the Past
Social Darwinism argued that human
history witnessed
A. the inevitable evolution of the weakest
groups to the positions of highest
power.
B. a struggle among the races, with the
strongest triumphing.
C. the evolution of humans from the ape.
D. the eventual disintegration of western
civilization.
•
•
PANIC OF ‘73’ & GOV’T INVOLVEMENT:
Slow attempt at intervention because
of belief in Free Enterprise capitalism
–
–
The Grange (Patrons of Husbandry)
elected state legislators to fight the big
RR’s. Started as mere social organizations.
Munn VS Illinois: States can regulate rates
INSIDE their own borders. (1877).
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•
Wabash VS Illinois: Supreme Court overturns the
earlier Courts version in Munn (1887)
•
Santa Clara VS S. Pacific RR: S.C. uses the 14th amendment to rule
that states can NOT “discriminate” against the RR’s that pass
through their borders. THIS MAKES CORPORATIONS INTO
PEOPLE—with the same rights and duties thereof.
•
Interstate Commerce Act is passed in response to the
S.C. rulings.
• RR’s must publish all rates.
• Can’t charge less for long hauls
• No pooling
– Created the Interstate Commerce Commission to
oversee the RR’s BUT then staffed it entirely with
Railroad executives. A “toothless law”
• Justification
– Social Gospel: Washington Gladden,
Rauschenbusch. Christian Socialists. Apply
“Sermon of the Mount” to Society
– Gospel of Wealth (Success Gospel on chart)
Horatio Alger, Carnegie – Ok to be wealthy, but had
to prove themselves morally responsible
– Sherman anti-trust Act—says there is no
difference b/w “good trusts” and “bad trusts”.
Bigger = Bad
– The real fix for the problems: by 1900 ALL major
RR lines are controlled by two banks. The House
of Morgan then brings order to the chaos—
because that is GOOD for business.
Social Darwinism
Spencer: British
economist.
Advocate of TRUE
laissez-faire.
Adapted Darwin’s
ideas from the
“Origin of Species”
to humans.
Notion of “Survival
of the Fittest.”
• Reverend Russell Conwell’s “Acres of Diamonds”
– Social Darwinism (Herbert Spencer)
– Extreme Social Darwinism (William Graham
Sumner)
– 14th Amendment (Corporations are people)
– American ideal of “rugged Individual”
Extreme Social Darwinism
The Gospel of Wealth:
Religion in the Era of Industrialization
Coined by Carnegie
after his “epiphany”.
Wealth no longer
looked upon as bad.
Viewed as a sign of
God’s approval.
Christian duty to
accumulate wealth.
William Graham Sumner
And help others
Russell H. Conwell
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“On Wealth”
Andrew Carnegie
•
•
•
The Anglo-Saxon race
is superior.
“Gospel of Wealth”
(1889).
Inequality is inevitable
and good.
Wealthy should act as
“trustees” for their
“poorer brethren.”
• The “New South” IDEOLOGY
– Advocated by Henry Grady
– Accepted the “Ideology” but never implemented
it.
– Fails because of Northern obstructionism and
reliance on
– Agriculture (tenant Farming and Sharecropping)
– Cigarettes (duke)
– Textile Mills
– Cheap, unskilled labor (Lintheads)
– Anything seems good after the war—even textile
jobs
Women: Most affected group by industrialization
“Hello Girls” – switchboard operators
“Gibson Girl”
– Middle class escape into new
opportunities
– BUT—for the vast majority of working
women, a job meant NOT starving to
death. Wage slaves are dependent on
everyone working at least part of the
time. 9/10th of America’s wealth was
in 1/10th of the people’s hands.
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The long-time president of the
American Federation of Labor was
A.
B.
C.
D.
The Changing American
Labor Force
Samuel Gompers.
"Big Bill" Haywood.
John L. Lewis.
Eugene Debs.
Child Labor
Child Labor
“Galley Labor”
Labor Unrest: 18701870-1900
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In the mining frontier,
The Corporate “Bully“Bully-Boys” –Pinkerton
Agents
A. the largest and most profitable mines were
owned by Eastern mining companies.
B. small independent miners controlled
production and set prices.
C. labor/management relations were peaceful
due to high pay and short hours.
D. conservation and environmental concerns
prevented the use of wasteful and destructive
technologies.
Management vs. Labor
“Tools” of
Management
“Tools” of
Labor
“scabs”
boycotts.
P. R. campaign.
sympathy
demonstrations.
Pinkertons.
lockout.
blacklisting.
yellow
yellow-dog contracts.
Knights of Labor
informational
picketing.
closed shops.
court injunctions.
organized
strikes.
open shop.
“wildcat” strikes.
Goals of the Knights of Labor
1. Eight
Eight-hour workday.
Terence V.
Powderly
An injury to one is the concern of all!
The Great Railroad Strike
of 1877
2. Workers’ cooperatives.
3. Worker
Worker-owned factories.
4. Abolition of child and prison labor.
5. Increased circulation of greenbacks.
6. Equal pay for men and women.
7. Safety codes in the workplace.
8. Prohibition of contract foreign labor.
9. Abolition of the National Bank.
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The Tournament of Today:
A SetSet-to Between Labor and Monopoly
A.
B.
C.
D.
For the most part, native-born Americans
viewed the "new immigrants" as
culturally sophisticated and racially fit.
politically mature.
racially inferior and culturally
impoverished.
capable of assimilating to American
traditions.
Haymarket Martyrs
Haymarket “Riot” (1886)
Governor John Peter Altgeld
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The American Federation
of Labor: 1886
Samuel Gompers
The "Gospel of Wealth"
A. encouraged rich people to use their
excess profits for the benefit of society.
B. was rejected by most Protestant
denominations.
C. was a philosophy created by J. P.
Morgan.
D. led to the first federal welfare program
in U.S. history.
The AF of L: 1886-today. Samuel Gompers focused
on “Bread and Butter” issues
Closed Shops
Shorter Hours
Catered to the skilled worker.
Better pay
Safer conditions
“Collective Bargaining”
NOT a socialist like Powderly—Liked capitalism—
just wanted MORE capital for Labor.
Exponential gains in membership—but by 1900
ALL of organized labor made up only 3% of the
workforce.
How the AF of L
Would Help the Workers
1. Represented workers in matters of national
legislation.
2. Maintained a national strike fund.
3. Evangelized the cause of unionism.
4. Prevented disputes among the many craft
(SKILLED) unions.
5. Mediated disputes between management and
(SKILLED) labor.
Homestead Steel Strike
(1892)
A “Company
Town”:
Pullman, IL
Homestead Steel
Works
The Amalgamated
Association of
Iron & Steel Workers
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Pullman Cars
Pullman Dining Car
A Pullman porter
The Pullman Strike of 1894
President Grover Cleveland
If it takes the entire army and navy to deliver a
postal card in Chicago, that card will be
delivered!
The Socialists
Mother Jones:
“The Miner’s Angel”
Mary Harris.
Organizer for the
United Mine
Workers.
Founded the Social
Democratic Party
in 1898.
Eugene V. Debs
One of the founding
members of the
I. W. W. in 1905.
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The “Formula”
unions violence strikes socialists anarchists = immigrants !!
Chicago World Fair
Columbian Exposition
Boat Rides
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Symbol
of
America
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One Year Later
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