Industrialization, 1865-1900
I. Growth of Industries
-Key industries
-Steel: Carnegie Steel Co. sold to J.P. Morgan, became U.S. Steel (became the first billion
dollar company)
-vertical integration
-Oil: John D. Rockefeller- Standard Oil
-vertical integration
-horizontal integration
-creation of Standard Oil trust
-monopolization of oil refining business
-Banking: J.P. Morgan
-interlocking directorates
-huge stakes in Railroad industry
-Railroads
-35,000 miles in 1865; 192,556 miles by 1900 (more than all of Europe combined)
-transcontinental railroads
-government subsidies- money and land (alternating sections along tracks)
-growth and failure of communities along route
-first transcontinental railroad
-Pacific Railway Act (1862)
-Union Pacific from the east; Irish labor; Credit Mobilier
-Central Pacific from the west; Chinese labor
-Promontory Point, Utah 1869
-consolidation of railroads
-creation of regional monopolies
-pools- agreements to divide the business in a given area and share the profits -rebates- kickbacks to powerful shippers for steady and assured traffic
-Cornelius Vanderbilt (the Commodore)- New York Central
-improvements: steel rails, standard gauge, air brake, time zones, Pullman sleeping
cars
-negative aspects- buying of judges and legislatures, cheating investors, stock watering
-“Law! What do I care about the law? Ain’t I got the power?” –Vanderbilt
-Factors that facilitated industrialization
-mass production
-abundance of natural resources
-labor supply- immigration
-inventions
-typewriter (1867), phone (1876, Alexander Graham Bell), cash register (1879), (first
practical) light bulb (1879, Thomas Edison), air brake for railroads (1878, George
Westinghouse), transformer (1885, Westinghouse; made possible the lighting of cities,
streetcars, appliances, etc.)
-patents (440,000 new patents 1860-1890)
-Growth of millionaire class
-by 1900, one-tenths of the people controlled 90% of the wealth
II. Government Regulation
- Laissez-faire- “hands off”- belief that government should not regulate business
-Industrialization led to knew debates over the issue of government regulation
-issues
-regulation of rates
-regulation of trusts/business combinations
-timeline of government regulation
-farm distress, high freight rates, panic of 1873, falling prices
-1870s- Granger laws in some states
-regulated railroads and grain storage rates
-1877- Munn v. Illinois
-Illinois regulated grain warehouse and elevator rates by establishing maximum
rates for their use. Elevator operator refuse to obey law, saying it deprived him of
property without due process of law (14th Amendment)
-Supreme Court- state may regulate business "when such regulation becomes
necessary for the public good."
-1886- Wabash case-struck down a Granger law
-an Illinois statute imposed a penalty on railroads that charged the same or
more money for passengers or freight shipped for shorter distances than for longer
distances.
-Supreme Court- individual states cannot regulate interstate commerce
-Court clearly established the exclusive power of Congress to regulate
interstate commerce. (See Gibbons v. Ogden.)
(http://www.ourdocuments.gov/doc.php?flash=true&doc=49)
-1887- Congress passed the Interstate Commerce Act
-prohibited rebates and pools and required railroads to publish their rates
openly. Forbid discrimination against shippers and outlawed charging more for a short
haul than for a long one over the same line.
-set up the Interstate Commerce Commission to administer and enforce the
new legislation.
-first federal regulatory commission
-heralded the arrival of a series of independent regulatory commissions
in the next century, which would commit the government to the task of
monitoring and guiding the private economy in the interest of the public
-affirmed the idea that their was a public interest in private enterprise
that the government was bound to protect.
-became the model for many other regulatory agencies in the future,
-The Interstate Commerce Act challenged the philosophy of laissez-faire
economics by clearly providing the right of Congress to regulate private corporations
engaged in interstate commerce.
-No teeth at the time
-1890- Sherman Anti-Trust Act
-forbid combinations in restraint of trade
-used as a basis for injunctions against striking labor unions
-first used to prosecute a trust after 1900
III. Views of Wealth
-Social Darwinism
-Darwin- On the Origin of Species (1859)- natural selection
-Darwin’s concept was applied to society
-“Survival of the fittest”- coined by Herbert Spencer
-Supported the idea of competition in a laissez-faire capitalist society
-“The millionaires are a product of natural selection” –William Graham Sumner (minister
turned sociologist)
-views on the use wealth
-Rev. Russell Conwell- “Acres of Diamonds” lectures (delivered over 6000 times)- “There is
not a poor person in the United States who was not made poor by his own shortcomings.” “You have
not right to be poor. It is your duty to be rich.”
-Carnegie’s Gospel of Wealth- an obligation to become wealthy, but an obligation to give
one’s fortune away to help others; it is a disgrace to die rich; opposition to direct charity; libraries,
universities, parks
-philanthropy
-“Robber barons” vs. “captains of industry”
-Henry George- Progress and Poverty (1879)
-proposed single tax
-land and natural resources were the inheritance of all
-tax on land, but not on improvements
-people could keep the profits they made from improvements (factories, farming, etc.)
-stimulate economic growth, but result in a more fair distribution of the benefits of the
public’s land.
IV. Labor
-background
-growth of the factory system
-supply of workers (through internal migration and immigration and the ability to transport
those workers throughout the country) created a labor market favorable to the employers
-“I can hire half of the working class to kill the other half.” –Gould
-poor working conditions, low pay, long hours
-corporate tools used against labor organization
-Scabs- strikebreakers
-Federal courts often provided injunctions against strikers
-State and federal troops sometimes used
-Lockout- employers would lock the factories
-Yellow-dog contracts- agreements by workers not to join unions
-Black list- names of agitators were shared amongst employers
-company towns (employees had to live in company housing, shop at company stores, pay in
company money)
-women in the workforce
-1900 one out of every five adult women worked in the labor force for wages (60% in 1999)
-Common belief was still that a woman’s proper place was in the home
-Textile, garment, and food-processing industries
-Women also moved into occupations as secretaries, bookkeepers, typists, and telephone
operators
-children
-1.75 million ages 10-15 employed (6% of the workforce)
-Timeline of organized labor
-primitive unions/guilds existed in various cities during colonial times (carpenters, cobblers,
etc.)
-few unions before Civil War
-during the mid-19th century, the growth of the factory system contributed to the growth of
various city-based trade unions
-National Labor Union, 1866
-skilled and unskilled workers
-640,000 members by 1868
-fought for 8 hour day and higher wages
-lost support after a depression in 1873 and the unsuccessful strikes of 1877
-by 1872, 32 national unions with several thousand members
-Panic of 1873 hurt unions
-1877 “The Great Upheaval” –period of many strikes
-Knights of Labor
-began 1869
-730,000 members by 1886
-opened membership to all workers (including African Americans and women)
-advocated a variety of reforms including the abolition of child labor and the abolition
of trusts and monopolies
-declined after Haymarket riot
-Haymarket Riot (1886)
-May Day strikes; Haymarket Square rally (Chicago); bomb killed seven; anarchists
sentenced to death; KofL discredited
-American Federation of Labor
-Founded 1886
-led by Samuel Gompers
-federation of skilled (trade) unions
-focused on higher wages and improved working conditions
-by 1901 it had one million members
-still exists today
-Homestead Strike (1892)
-1892
-Carnegie’s Homestead Steel plant; Henry Clay Frick, the manager, cut wages;
workers decided to strike
-lockout, private guards, and strikebreakers were used to break the strike
-Pullman Strike
-George Pullman manufactured Pullman cars (railroad sleeping cars); cut wages and
fired the leaders of a workers delegation
-Eugene V. Debs, leader of the American Railroad Union, directed railroad workers
not to handle any trains with Pullman cars
-A federal court issued an injunction forbidding interference with the mail and
ordering railroad workers to abandon the strike
-Debs and other union leaders were arrested
-In re Debs (1895), the Supreme Court approved the court injunctions against strikes
-(Debs helped found the American Socialist Party in 1900)
-1881-1900- 23,000 strikes including 6.6 million workers
-by 1900 3-6% of workers unionized
-depression of the 1890s softened the public attitude towards organized labor.
Between 1897 and 1904, union membership climbed from 447,000 to 2,072,700
-1894- first national Labor Day