Chapter 17:
Industry Comes of Age
Andrew Carnegie
“Man of Steel”
a. Management techniques
i. Hired talented workers
1. Offered stock
2. Competition = increased
production/lower costs
ii. Better products cheaper
b. “Winning” Strategy
i. Vertical integration
1. Buy out all of your
suppliers
2. Control quality and costs
Bessemer Process
Iron & Steel Production
Chicago, 1884
Dubai, 2009
183 ft
2,717 ft
Standard Oil Co.
Henry Ford
Mr. Ford’s First Auto
The Airplane
Wilbur Wright
Orville Wright
Kitty Hawk, NC – December 7, 1903
Frederick Winslow Taylor
Subdivide tasks = ?
The Iron Colt Becomes an Iron Horse
TRR funded by fed gov’t
Pacific RR Act 1862 Land grants and
subsidies paid out by
gov’t
1.
a.
i.
ii.
iii.
20 sq. mi per one mi of
track
Loans of $16,000- $48,000
depending on grade
>200M acres
Transcontinental RR
(1862-1869)
Last Spike:
Promontory Summit, Utah
Cornelius Vanderbilt
RR Spur Growth:
Opportunities
1.
Economy stimulated: 4.
raw materials for RR
a.
2. Consolidation of
RR’s
3. Towns
a.
b.
New towns dev.
Along RR lines
Supplied products to
passerby
Markets
b.
c.
Promoted trade
Towns specialized
in specific products
International trade
Corruption!
6. Issues with
farmers
5.
John D. “Slick” Rockefeller
a.
b.
c.
d.
Standard Oil Company
Owned 95% of refining
business
Treated employees
poorly
Winning Strategy
i. Horizontal consolidation
Merging of companies with
similar products; oil
companies
Standard Oil 2010
Social Darwinism
 British economist.
 Advocate of
laissez-faire.
 Adapted Darwin’s
ideas from the
“Origin of Species”
to humans.
 Notion of “Survival
of the Fittest.”
Herbert Spencer
The Gospel of Wealth
1.
2.
Personal wealth is
God’s reward for hard
work
Carnegie’s Philosophy:
use it philanthropically make as much money
as you can so that you
can give it away
Andrew Carnegie
The Anglo-Saxon race
is superior.
• “Gospel of Wealth”
(1901).
• Inequality is inevitable
and good.
• Wealthy should act as
“trustees” for their
“poorer brethren.”
•
Business and Social Darwinism
“Survival of the Fittest”
Social Darwinism in America
$ Individuals must
have absolute
freedom to struggle,
succeed or fail.
William Graham Sumner
Folkways (1906)
$ Therefore, state
intervention to
reward society and
the economy is
futile!
New Business Culture
1.
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!
Horatio Alger
Emphasized the
individual work
ethic
2. “Rags to Riches”
3. Good virtue
4. Hard work will pay
off
1.
Rags to Riches
1900: 1/10th has 9/10th of wealth
U. S. Corporate Mergers
Conspicuous Consumption
Immigrant Workforce
Wages and Working
Conditions
Women and Children at Work
Molly Maguire’s
C. Homestead Strike (steel
workers/1892)
1.
2.
3.
4.
5.
Wage cuts/break
union
Pinkerton’s hired
Fighting ensues
Pa. National Guard
sent out/scabs
hired
Conditions worsen:
hrs increased,
wages cut, union
defeated
D. Pullman Strike (1894)
1.
2.
3.
4.
5.
Wages cut but not rent
Il National Guard sent
in then federal troops
Led by Eugene Debs
ARU-American
Railway Union
Nationwide strike
End result: 25 dead
B. Ellis Island
C. Populating the City
Ethnic Enclaves
D. Immigrants Arrive
1.
2.
3.
4.
Ellis Island (East)
B/4 1890, most came
from N. and W. Europe
“old immigrants”
After 1890, most came
from E. and S. Europe
“new immigrants”
Asian immigrants came
in through Angel Island
in San Francisco
5. Process
a.
b.
c.
5 hr. process
Health & mental
exams
Literacy test,
healthy, $25 (must
haves)
6. 2% did not pass






Central Pacific
Chinese and Mex.
California to Utah
Union pacific
White/Blacks/Irish
immigrants
Nebraska to Utah
Standardized Time Zones 1918 created by the
American Railway Association
Credit Mobilier (1872)
a.
b.
c.
d.
e.
f.
Construction
company
stockholders of Union
Pacific made
contracts with
themselves
Paid off congressmen
Scam from start to
finish
No one prosecuted
Pres. Grant in office
The Grange (1867)
(farmers political association)
1.
2.
3.
Corporations such as
RR and banks to blame
for their hard times
Foreign competition =
decrease prices of US
crops
Banned together to dev.
own grain elevators,
stores, equip to control
prices = Cooperatives
Growth of Government
1.
2.
3.
4.
Regulation by gov’t
increasing
Local & nat’l level
interdependent
Interstate Commerce
Act: no rebates or
pools; RR publish rates;
works out better for the
RR
Interstate Commerce
Commission (ICC) –
regulation of RR

1st attempt by gov’t to
regulate on behalf of
the people
The Rise of Industry
Four main factors which contributed to
the success of industrialization:
a. Natural resources
b. A large population to support market for new
products; workforce
c. Explosion of inventions
d. Free Enterprise
Revolution: Technology & Transportation

Alexander Bell
 Thomas Edison –
Menlo Park; electricity
replaces steam
 Henry Ford
 Wright Brothers
 RR
 By 1900: 1st in
manufactured goods;
1/3 of all goods in the
world
Mechanization = 2nd Industrial
Revolution
Meachanization =
increased
productivity
2. assembly lines and
mass production =
effieciency
3. Hierarchy of
workers
1.
Robber Barons or
Captains of Industry?
Business men who participated in questionable
business practices gaining huge personal wealth
Carnegie
Steel
Rockefeller JP Morgan
Standard Oil
Banking
Jay Gould
RR
The South & Industry

James B. Duke and
cigarettes
 “Pittsburgh Plus”
 Cotton mills and
textiles
 Worse working
conditions than the
north
Sherman-Antitrust Act
An act to protect trade
and commerce against
unlawful restraints and
monopolies.
b. Supposed to check
monopolies and stop
big businesses from
forming; didn’t work.
c. Used against union
instead
d. Big business actually
increases!
a.
The “Gibson Girl”
Independent & athletic
Romantic image
Reality?
From Independent producers
to wage workers
Becoming more dependent on the market
New Business Culture:
“The American Dream?”
Protestant (Puritan) “Work Ethic”
 Horatio Alger [100+ novels]
Is the idea of the “self-made man” a MYTH??
Labor in the Age of Big Business
(union game)
Unions represented the most
significant and lasting response of
workers to the rise of big business and
consolidation or corporate power
The Wage System
1.
2.
3.
4.
5.
Relationships among workers and
employers change; worker to worker
Machines and women replaced male
workers
New employment opportunities for
women; blk and wht
“minority” males have it the worse
Hazardous and poor working
conditions
The Knights of Labor
1.
2.
3.
4.
5.
6.
8 hour work week
Skilled and
unskilled
Zero race or
gender bias
No child labor
Graduated income
tax
Equal pay for all
Terence Powderly
Downfall of the Knights of Labor
1. Haymarket Riot
a.
b.
c.
Protesters
assembly re: recent
police violence
End with more
police violence and
7 dead
Union labeled
trouble due to
anarchist
supporting them =
political radicalism
American Federation of Labor
“pure and simple
unionism”
2. Skilled workers
3. No blks or
immigrants
4. Women s/b @
home!
1.
Samuel Gompers