INDUSTRIAL
AMERICA
Industrialization increased the standard
of living and the opportunities of most
Americans, but at what cost?
In less than 125 years, America became the
leading industrial power of the world. Major
reasons for this quick rise to power include:
1.
RAILROADS!!!!!!!!!
2.
Resources

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3.
Government policy towards business

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4.
An abundance of natural resources
An abundance of human resources

unskilled & semi-skilled labor
Willing to help at all levels to stimulate growth
Market growing as U.S. population increased.
Entrepreneurs – talented group of
businessmen & advisors with abundant capital
5.
New inventions & technology
RAILROADS

The factor MOST responsible for growth of
American Industry.
 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.
 Became a consumer of other industries.
Railroad Construction
“The Big Four” Railroad Magnates
Charles Crocker
Collis Huntington
Mark Hopkins
Leland Stanford
Improvements in RRs will increase
their profitability:

Standardization &
Consolidation:
 Binds all sections of country
together into one market
 Cornelius Vanderbilt:
 “The Commodore” –
steamboat fleet
 Consolidates NY railroads
into NY Central RR Company
 Eventually leaves his RR
empire to his son, William H.
Vanderbilt

Improvements in service:
 Standard gauge track
 Use of Westinghouse air brake – allows all
cars to stop simultaneously…can then
carry heavier loads on longer trains
 Pullman Palace Cars – luxury cars
 Time Zones develop due to RR:
 Develop because needed for RR scheduling
 Eventually spreads worldwide
 Originally 4 in U.S.
 How many in U.S. now?
How did the RRs impact:
 National
unity?
 Industry?
 Mining & agriculture?
 Growth of cities and
urban areas?
 Immigration?
 The Environment?
 Wealth?
Corruption in the Railroad Industry:

Stock Watering


Bribery


An anti-competitive combination – group of RR
companies agree to divide business in a
geographic area and share the profits
Rebates and Kickbacks


Of judges, legislature; free passes to politicians
The “pool”


Exaggerating RR assets; selling stock at higher
prices than it’s worth
Reward powerful shippers for steady & assured
traffic
Price Gouging

Rates are low on competing lines, but jacked up on
non-competitive lines
Government Regulation of RR:

State regulation – 1870s


Encourages farmers to protest & organize (the
Grange) & pressure state legislatures into
passing regulations to control RR monopolies
Federal regulation

1886 – Wabash v. Illinois


1887 – Interstate Commerce Act


Sup. Ct. rules that states CANNOT regulate interstate
commerce
Prohibits rebates, pools, requires that rates be
published, establishes ICC to enforce
Impact of the ICC


Provides forum for resolution of conflicts
A good first step, but not very powerful
Resources:
 Natural
Resources:
– amount mined doubles each
decade between 1840 & 1890
 Iron Ore – Great Lakes, PA, AL
 Oil – Western PA; to TX by 1900
 Coal
 Human
Resources:
 Population doubles between
1860 & 1890
 IMMIGRATION – 14 million
immigrants to U.S. during this time
(“new immigrants” from S & E
Europe)
Human Resources
 Population
nearly tripled between 1860
and 1910
 Two reasons for population growth:
Favorable Government Policy
Towards Business

LAISSEZ-FAIRE!!



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The ideology of the industrial age
Individuals should compete freely in the
marketplace.
No room for government in the market!
Industry has very few government regulations and
restrictions
ENTREPRENEURS


One who takes the risk of organizing and beginning
a new business
Received help from the U.S. government:
 High protective tariffs
 Cheap land
 Liberal immigration laws – cheap labor
NEW INVENTIONS &
TECHNOLOGY:

Bessemer and open hearth process
 Created a lighter, stronger, rust-free metal
– STEEL
 U.S. producing 1/3 of world’s supply by
1890
 Refrigerated RR cars
 Edison
 light bulb
 phonograph
 motion pictures.
“Wizard of Menlo Park”
The Light Bulb
Birth of the Night Shift!
Industrial production now
possible 24 hrs. per day.
Alexander Graham Bell
Telephone (1876)
CHRISTOPHER LATHAM SHOLES
 THE
TYPEWRITER
 Along
with the
telephone, leads to
feminization of the
work place
 Women
make up
5% of all office
workers in 1870;
40% by 1910
Air Brake
George
Westinghouse
The Airplane
Wilbur Wright
Orville Wright
Kitty Hawk, NC – December 7, 1903
JOHN D. ROCKEFELLER

OIL REFINING (Standard Oil
Co.)
 Consolidated 40 oil refining
companies – a nationwide
monopoly – controlled 95% of all
refineries by 1877
 Believed in “economies of scale”
 Ruthless in business! (dubbed
“Reckafellaw”)
 “American Beauty” rose
analogy – pluck off the early
buds…
 Used rebates, drawbacks,
spies & secret info from RR to
learn about competitors &
force them out of business
 Stock or Cash Buyouts

Treated his workers well
– the first to offer old-age
pensions & tried to
protect them in bad times
 Hated waste!
 Personally:




“GOD GAVE ME MY
MONEY.”
John D. Rockefeller
Ambitious
Abstemious
Pious
Devout churchgoer and
Sunday School teacher
 Strong family man
 Only the strong survive
The Octopus, 1904

Gave away dimes to
children on the street
 Retired at age 40
 Spent rest of his life
giving away money
 Gave away over $520
million to charities




$78 million to colleges
$60 million to
medicine
$18 million to African
American education
Lots more to
education & research
Died at age 98 at Ormond Beach, FL
ROCKEFELLER
EXPOSED BY JOURNALIST
IDA TARBELL
A
lifelong
Rockefeller hater
(her father took the
cash buyout)
 Exposed
Rockefeller’s
unethical business
dealings with RR,
etc.
ANDREW CARNEGIE
 STEEL (U.S. Steel
Corporation)
 Hired the best
technical & scientific
experts
 Used new process &
made steel so
cheaply it forced
competitors into
bankruptcy & then he
bought them
 Did
not treat his
workers as well as
Rockefeller
 Drove wages
down & hours up
for the common
laborers &
constantly fought
unionization
 But, made upper
level management
& experts partners
in the business



“The first man gets the oyster,
the second man gets the shell.”
Andrew Carnegie
Poor Scottish immigrant
who went from “rags to
riches”
 Began work in 1848 as
bobbin boy - $1.20/wk
 By 1900 produces half
of nation’s steel –$25
million/year take-home
pay
Ambitious, energetic, a
“gambler”
Deeply believed that if
one worked hard, saved $
& invested wisely,
anyone could become
wealthy
“Gospel of Wealth” – Wealthy
are blessed with greater talent
and wealth and have a duty to
help those who would try to
help themselves.
 Inequality is inevitable and
good.
 Wealthy should act as
“trustees” for their “poorer
brethren.”
 Retired at 66 (bought out by
J.P. Morgan – becomes U.S.
Steel)
 Lived to be 84
 Gave away over $350 million
to charities
 Mostly to libraries
 Carnegie Hall & Museum,
NY

“The man who dies
rich, dies disgraced.”
New Financial Businessman
 The
Broker
Wall Street – 1867 & 1900
Beliefs defending class distinctions:
SOCIAL DARWINISM



Philosophy that applied Darwin’s biological theory of
“survival of the fittest” to human society & those who
succeeded
Wealth no longer looked upon as bad; viewed as a
sign of God’s approval.
Yale professor William Graham Sumner: “millionaires
are a product of natural selection.”


Individuals must have absolute freedom to struggle, succeed
or fail. Therefore, state intervention to reward society and the
economy is futile!
Both Rockefeller and Carnegie were strong believers
in this philosophy
 Believed it was a method better than elections for
selecting leaders
 Only the strong survivors will control industry and
wealth
RUGGED INDIVIDUALISM

Equates to contempt for the poor
 Many of nouveau riche had “pulled
themselves up by their bootstraps”
 The poor are only poor because of
their laziness and lack of initiative
 Rev. Russell Conwell




Christian duty to accumulate wealth
Should not help the poor.
“Acres of Diamonds” speech:
 “There is not a poor person in the
U.S. who was not made poor by
his own shortcomings.”
1/10 of people own 9/10 of all the wealth by
1900
EFFORTS TO CURB COMPETITION
Horizontal Integration
 SEVERAL FIRMS IN
THE SAME KIND OF
BUSINESS
CONSOLIDATED,
JOINED TOGETHER
 Best example:

ROCKEFELLER and his
Standard Oil Co.
Vertical Integration
 BUSINESSES IN
DIFFERENT BUT
RELATED ACTIVITIES
JOINED TOGETHER;
 COMBINES ALL
PHASES OF
MANUFACTURING
INTO ONE
ORGANIZATION
 Best examples:


CARNEGIE
Gustavus Swift, Meatpacking
Due to huge sums required to build
railroads, corporations become major
business form in U.S.

A corporation is a
company formed by
a group of investors
who get a share of
ownership in
proportion to the
amount of money
they invest

Corporate investors
enjoy LIMITED
LIABILITY which
means that
investors risk ONLY
the amount of their
investment (stock
cost) and can’t be
held personally
liable for debts of
the corporation
ADVANTAGES OF
CORPORATIONS OVER OTHER
TYPES OF BUSINESSES:

Protected from state regulation by
Interstate Commerce Clause
 Viewed as a legal “person” under the law
 PERMANENCE - they continue forever
 EASY TO RAISE LARGE SUMS OF MONEY
 Small amounts of $ from many
individual investors can be pooled into
huge sums of $ need to start or expand
a large company
 LIMITED LIABILITY
Advantages of “Big Business?”
 Can
produce more and better goods
at a lower cost
 created
jobs
 Can
afford to pay high salaries to get
the best experts
 increased
efficiency by establishing
separate departments in business
What are the disadvantages of
“Big Business?”
they used to get “Big”
 Demanded, & got, volume
discounts from shippers
 Underselling & forcing competitors
out of business
 Raising prices to the consumer
 Bribing of public officials
 Destruction of the environment
 Why would people put up with this?
 Methods
Images of the new elite
(from left to right)
John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, and J.P. Morgan

Problems of workers in the Industrial Age:


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Less value placed on skills
Depersonalized relations with corporate employers
Technological unemployment – machines replace
men
Immigrants
Begin to look to unions for help
Corporate resistance to Labor Unions:




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Pressure politicians
Buy out the press
File for injunctions
Lockouts
Yellow Dog Contracts & ironclad oaths
Blacklists
Company-owned towns – Pullman, IL
LABOR UNIONS

Had difficulty organizing:



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Extreme opposition from
Employers
Courts & police favored
Employers over workers
Too many immigrant laborers
Several major unions form
in late 1800s:




National Labor Union
Knights of Labor
American Federation of
Labor
American Railway Union
NATIONAL LABOR UNION

Formed 1866 - 600,000 workers at height
 General union with skilled & unskilled
workers, and farmers
 Sought social reform – 8 hr. day
 Get 8 hr. day for gov’t workers but 1870s
depression destroys union
 RR wage cuts in 1877 led to massive strikes,
federal troops called in & violence erodes
support for unions among Americans



Led by Terrence Powderly
KNIGHTS
Originally a secret organization
OF LABOR, ALL workers welcome:
unskilled and skilled
1869
 Recruited women & blacks
 Sought broad reforms:


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Used political activity first;
preferred NOT to use strikes

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Health and safety codes
8 hour day
end to child labor, etc.
Successful strike against Gould’s
Wabash RR in 1885
Association with anarchy &
violence (Haymarket Square
Riot) causes end of Knights by
1890s
AFL, 1886

Led by Samuel Gompers
 A CRAFT Union
 ONLY skilled workers
 (better bargaining power)
 Kept out blacks and women
“All I want is more!”
 Sought “bread and butter” reforms:
 Higher Wages
 Shorter Hours
 Better/safer working conditions
 Also sought “closed shops” (union workers only)
 Relied on economic pressure: walkouts,
strikes and boycotts – collective bargaining
AMERICAN RAILWAY UNION
 Led
by Eugene V. Debs
 Later
became a socialist
while in jail after arrest in
Pullman Strike
 “INDUSTRIAL”
union
 All
workers in same industry,
regardless of their craft or
skill level, in the same union
 Sought
less
violence/confrontations but
winds up in it anyway
THE MAJOR STRIKES:
 Great
RR Strike of 1877
& Ohio RR – cut wages
during depression
 Striking & violence spread; Employers
called on federal gov’t for help
 Pres. Hayes sent in troops to restore
order
 Baltimore
HAYMARKET SQUARE RIOT
1886

On May 1, 1886, unions called for national
strike in support of an 8 hour work day
 Thousands of workers demonstrated in US
cities but Chicago was the center with 40,000
demonstrators
 After bomb thrown into crowd, police fired
upon strikers killing an unknown number of
workers
 Several anarchist labor leaders arrested and
tried and hanged without supporting
evidence
 Homestead
Strike, 1892
 Carnegie Steel – Homestead Plant
 Carnegie’s partner (Frick) cut wages;
workers strike
 Pinkerton Detectives called in to break
strike
 Led to deaths of 9 strikers & 7
detectives
 Anarchist tried and failed to
assassinate Frick
 Strike called off – unions’ association
with violence continues
 Pullman Strike, 1894
 Pullman Palace Car Company
 Company Town
 Laid off workers & cut wages after Panic of
1893
 BUT didn’t cut rent & food prices
 Refused to bargain; shut down plant
 First nationwide strike
 Caused interference with mail delivery
 Pres. Cleveland got injunction to force end
to strike and sent in troops to enforce it –
sets a precedent
Urban Problems

Crime






Pickpockets, swindlers, &
thieves
Violence
Fire
Disease
Pollution
Native-born Americans
blamed immigrants for
the increase in crime &
violence


In reality, immigrant
crime rate was no greater
than any other group of
Americans
Alcohol was a big
contributor


Saloons “bred poverty”
Led to the “corruption of
children”
A Changing Culture
 New
inventions led to rapid growth…
 Cities expanded to sizes never before
seen…
 Skyscrapers reached into the sky…
 Electric lights banished the darkness…
The Gilded Age
 1873:
Mark Twain & Charles Warner wrote
a novel called The Gilded Age
 Historians later adopted the term & applied
it to the time period 1870 -1900
 Gilded = covered with gold on the outside,
but made of cheaper material inside
 Gilded Age means that although it may
appear to sparkle, beneath the surface lies
corruption, poverty, crime, and disparities in
wealth between the rich and the poor
Pop Culture


Industrialization
improved the
standard of living
for many people,
enabling them to
spend money on
entertainment &
recreation.
Saloons


Became a
community center
for working males
Political centers

Amusement Parks



Working-class
families & single
adults
Rides cost only a
nickel or a dime
Sports


Baseball: 1903 – First
World Series
Football


Upper Class Sport
Started in private
colleges & universities