APUSH Lecture Ch. 17

The Machine Age 1877-‐1920 -‐ Chapter 17

CTQs for Ch. 17

Why did the United States become an industrial power in the period 1865 to 1900?

How does the concept of liberty and/or freedom connect with the growth of capitalism at the end of the 19 c. ? How did it conKlict?

How did proponents justify the extremes of wealth and poverty in the United States in the late 19th and early 20th centuries?

Causes of Rapid Industrialization1. Abundant supply of raw materials

2. Abundant labor supply

3. New Technologies (US patents prior to 1860 = 36k; 440k from 1860-‐1900)

4. Abundant Capital

5. Talented Businessmen

6. New Types of Business Organization

7. Growing Markets (cities and the West)

8. Business-‐friendly governments (laissez-‐faire, subsidies and tariffs)

9. The beneKits of the Steam Revolution of 1830s-‐50s (railroads)

Science of ProductionThe Science of Production

• Principles of “scientific management” or “Taylorism” was employed- developed by Frederick Taylor who argued employers subdivide tasks to decrease need for highly skilled workers, increase efficiency by doing simple tasks w/ machines. Taylor’s theory was influenced by availability of cheap, unskilled labor.

• Emphasis on industrial research. (Bessemer process, Edison and Tesla) For corporations, maximizing efficiency meant higher profit margins. Corporate investment increased over 300%

• Henry Ford and the moving assembly line. First used by Henry Ford in automobile plant 1914- dramatically cut production time from 12.5 hrs to 1.5 hrs. Average Model T price dropped to $290 in 1929 (from $950 in 1914)

Expansion of Railroads• Railroad Expansion

• First major industry in the U.S.

• RR growth led to growth of other industries; Key to opening the West

• new markets + raw materials, in particular to the West

• Liquid capital of Cornelius Vanderbilt, Jay Gould, James Hill, Collis Huntington post Civil War, plus effective legislation encouraged growth westward.

• The Homestead Act of 1862 -‐ gave settlers 160 acres of free land

• 600,000 families settled in the west as a result

• The Paci4ic Railway Act of 1862 -‐ was a land grant system designed to encourage Kinancial investment from the railroads

•From 1870 to 1900 -‐ 400 million acres of land was settled

Cornelius Vanderbilt’s Net Worth

1845 250,000

1850 3,500,000

1855 1,500,000

1875 75,000,000

1877 105,000,000

Myth of the Self-‐Made ManThe “Self-Made Man”

• Defenders argued capitalist economy expanding opportunities for individual advancement, and that “robber barons” were self-made men.

• Horatio Alger - self-made man or “rags to riches” stories appealed to the industrial worker and fit into an age based on social darwinism

Russell Conwell - “Acres of Diamonds” - wealth was abundantSignificant immigrant population in the 1870s through 1920s

• Self-made man myth become synonymous with America as the land of opportunity.

• Ingenuity, business savvy and corporate management were encouraged

!

Social Darwinism• “Survival of the Fittest” -‐ concept developed by Herbert Spencer

• Assumptions that wealth was earned from hard work and thrift and that those who failed earned their failure (Protestant work ethic) Darwinism theory was essentially applied as theory for a free market/self-regulating system. That the market will shape to those who earn it

• “The growth of a large business is merely the survival of the fittest” - John D. Rockefeller

• William Graham Sumner

• Appealed to businessmen -‐ justiKied brutish tactics and further expanded the idea of the “invisible hand” of market economics against gov’t or union sponsored versions.

• Ironically, many business tycoons attempted to eliminate market competition by consolidating industries

• Carnegie -‐ vertical and horizontal business strategies.

Vertical and Horizontal Integration

2. STEEL & Carnegie� Andrew Carnegie� mass production � economies of scale � “vertical integration”

Coke fields

Iron ore deposits

Ships

Railroads

purchased by Carnegie




Steel mills

purchased by CarnegieLabor?

Rise to Industrial Supremacy

Percent of World Industrial Output

InternationalSteel Production, 1880 & 1914

The Gospel of Wealth - Worship of the Elites

Gospel of Wealth (1901) by Andrew Carnegie advocated idea that w/ great wealth came great responsibility to use riches to advance social progress

• “guardians of society” -‐ the wealthy elite as heroes of societyCriticisms of Industrial CapitalismLester Ward in Dynamic Sociology (1883) argued natural selection could not apply to human society and that it was the role of gov’t to intervene on behalf of those less fortunate. Beginnings of socialist movement in America coincides with peak of industrial power.

Socialist Labor Party founded 1870s by Daniel De LeonEdward Bellamy and his Looking Backward (1888) spoke of “fraternal cooperation” and of future society where govt distributed wealth equally. Henry George, Progress and Poverty. Argued the value of the land should be shared equally by the public, not owned by individuals.

Growing Unrest• Few Americans questioned the merits and values of capitalism. Yet increasingly the wealth gap grew to unsustainable levels.

• Monopolies were challenged by a growth of unions formed by laborers, farmers, consumers and manufacturers, among others.

• Monopolies were also blamed for artiKicially high prices, which slowed consumption and led to market Kluctuations every several years including in 1893.

• The extravagance of the new wealthy class was reminiscence of an American feudal class

• 1% of American families controlled nearly 88% of the wealth

• 4/5ths lived modestly and 10 million lived at the poverty line.

• Wages averaged in the $400-‐$500 range; $600 considered comfortable

• Women averaged $314 to $597 for men and 1.7 million children worked by 1900

• The standard of living had improved for all and yet, the increasing wealth gap frustrated those barely surviving.

Industrial Workers in the New Economy• Workers look to the courts for legal assistance in improving their status, conditions, and wages.

• Work in general had been devalued as machines made most factory work unskilled and a labor surplus tilted the advantage in favor of companies/tycoons

• Supreme court in general ruled vaguely and in favor of the tycoons • Lochner v. New York 1905 and Muller v. Oregon 1908 -‐ ultimately hurt women’s ability in the work place to Kind and maintain work.

• 1890 Sherman Anti-‐Trust -‐ while a pro-‐labor/anti-‐trust ruling was too vague and generally unenforced by the executive cabinet

• Furthermore, labor unions were hurt by violent tactics -‐ Molly Maguires used violence and terrorism to intimidate corporate ownership. Added to the perception of unions as vehicles of anarchy and chaos.

Key Strikes **ConKlicts: 1880-‐1900 close to 25,000 strikes involving ~ 6 million workers, 1⁄2 ended in failure**

1. Railroad Strike, 1877 •B & O RR, wage cut, President Hayes sent in troops to stop

2. Haymarket Strike, 1886 Chicago •Mass meeting organized by anarchists to protest police tactics against strikers at McCormick Harvester Co. •Police tried to disperse crowd, bomb thrown at police •8 anarchists charged, 4 executed •Knights of Labor blamed and disbanded

3. Homestead Strike, 1892 •Protesting a reduction in wages but not in rent or company store

•Frick wanted to destroy union, hired Pinkerton Detectives to protect strike breakers •Strikers Kired & killed Pinkertons •State Militia called in, strike called off

4. Pullman Strike, 1894: Panic of 1893 & Depression •Reduction of wages, let go workers of

Pullman workers •American Railway Union tried to help

strikers by refusing to handle Pullman cars (boycott)

•Railroad Managers Association got Fed. court injunction under Sherman Anti-‐Trust Act to prevent strikes from interfering with carrying US mail and interstate commerce

•Pres. Cleveland sent in troops •Eugene V Debs (pres. of ARU) held in

contempt and sentenced to jail

Key Labor organizations • Knights of Labor founded 1869

• Wanted an 8-‐hour day, prohibition, inKlation (silver), no child labor, long-‐range goals.

• Allowed all workers (skilled or unskilled)

• Did not allow Chinese, lawyers, bankers, or gamblers

• Disbanded after 1886 Haymarket Riot in Chicago.

• AFL or American Federation of Labor -‐ founded by Samuel Gompers.

• Focused less on utopian ideology and more on “bread and butter issues” for workers including: a worker’s bill of rights, better wages, shorter hours, better work conditions.

• Excluded minorities, women and most recent immigrants who were considered “unskilled”

• Behind Steel strike of 1892 and Pullman Strike of 1894

• IWW or Industrial Workers of the World -‐ focus more on a globally connected social movement.

• Marxist ideology and members formed the American Communist Party

• Accepted all workers, especially unskilled.

• Too violent to ever gain much traction

The Corporation•Modern corp. emerged after Civil War when industrialists realized no person or group of limited partners able to finance great ventures (reversing the trend of Jackson’s Maysville Road Veto)•Businesses began to sell stock, which was appealing to investors b/c “limited liability” meant lost only amt of investment + not liable for company debts- allowed vast capital to be raised•Began in RR industry, spread to others- in steel industry Andrew Carnegie struck deals with RRs, bought out rivals, purchased coal mines w/ partner Henry Clay Frick controlled steel process from mine to market (vertical integration)•Financed undertaking by selling stock. Bought out in 1901 by JP Morgan who formed United States Steel- controlled 2/3 of nation’s steel production

Consolidating Corporate America

•Consolidation occurred through: •“horizontal integration” (merging competing companies into a single corporation) •“vertical integration” (control production from raw materials to distribution). •pool arrangements (agreement upon selling price)

•Largest corp empire John D Rockefeller’s Standard Oil-‐ through horizontal & vertical integration came to control 90% of reKined oil in US at its peak. •Consolidation was used to cope w/ “cutthroat competition”-‐ feared too much competition lead to instability and overproduction; best was to eliminate/absorb competition

The Trust and the Holding Company•Failure of pools (informal agreements to stabilize rates, divide markets) led to less cooperation and more centralized control-‐ “trusts” emerged (stock transferred to group of trustees who made all decisions but shared proKits) •Beginning w/ NJ 1889 states changed laws to allow companies to buy other companies, making trusts unnecessary—(a trust would at least allow companies to share proKits; this no longer occurs)

•“holding companies” emerged as a corporate body that bought up stock to establish formal ownership of a company (that way you could avoid being labelled a ‘monopoly’

•By the end of 19th c. 1% of corps controlled 33% of manufacturing and wealth. It created a system where power was in the hands of a few men-‐ NY bankers (JP Morgan), industrialists (Rockefeller), etc. •Despite a loss in competition, substantial economic growth came from this arrangement-‐ costs were cut, industrial infrastructure formed, new markets stimulated, new unskilled jobs

Inventions change lifestyles

•1879 Edison invents the light bulb and later a system to distribute electrical power.

•Electricity allowed factories to operate without having to be located on a river bank or other natural source of power.

•Factories also run all night increasing per factory productivity. •1876 -‐ Graham Bell invents the telephone •Other inventions of the age included: the phonograph, the motion picture camera, the Ediphone, and the Model T

Railroads Link the Country

•1869 -‐ transcontinental railroad was completed linking the East and West coasts of the U.S.

•To make sure all railroads ran on time the concept of “time zones” was adopted worldwide in 1884

APUSH Lecture Ch. 17

Education