Chapter 17 Capital & Labor In the Age of Enterprise

Chapter 17 Capital & Labor In the Age of Enterprise

• Three things that made the American Economy boom in the late 1800’s ; COAL, STEEL, & RAILROADS. In 1870s there was a “Great Deflation “ where prices did fall. In England this was a recession but in the U.S. Productivity soared.

. In 1870’s the emphasis was on the manufacture of CAPITAL GOODS, (goods that are used to produce other goods.

• One reason the U.S economy could expand while European competition floundered was that the U.S. Economy was spread out across an expansive markets with no political or economic barriers. The markets relied upon an expansive railway system, and the railway relied upon government assistance.

Federal , State and Local governments supported the construction of railroads in 19th century by Subscribing for railroad bonds, encouraging the formation of limited Liability corporations, and offering land grants.

• In the late 1800’s the most important step in an integrated railroad system was the adoption of a standard track gauge which allowed trains to switch from one track to another, without regard to which company ran the track.

Railroad Rates were never fair and Granger laws were established that fixed rates and prohibited unfair practices against small & short hauls , but in 1886 The Supreme Court ruled these laws unconstitutional with WABASH V ILLINOIS

• Even with the government support, Rampant growth, mean competition, wild speculation, and over extended debt sent the railroad industry into bankruptcy in 1893. Investment Bankers like John Pierpont Morgan took over the railroads, merging them together, by the early 1900’s about 6 regional systems emerged, and Wall Street was now running the show.

• A shift in the Way American Corporations operated came from Frederick Taylor’s Principles of Scientific Management. Taylor advocated that: An Engineer’s approach can be applied to managing workers. That each task could be subjected to time and motion study & the Brain should be eliminated from manual labor, instead management could reduce all knowledge to Rules Laws and Formulae. Wages could be used as an incentive to working harder.

• In 1880’s Gustavus Swift developed the refrigerated Car that would allow him to slaughter his meats in Chicago through assembly line production and ship the product to the East Coast without spoilage.

Gustavus Swift

• Swift also made use of VERTICAL INTEGRATION. Much like Andrew Carnegie. Where Swift owned and operated the Cattle yards and sent the cattle to be slaughtered in his slaughterhouse, shipped on his refrigerated rail cars, stored the cut up meat in his own warehouses etc. and Carnegie owned his own mines for metals and coal, shipped them to the factory on his own train transformed the material into Steele, and shipped it to market on his own rail… all of this improved efficiency and profit.

Bessemer Steel• Of Course The Steel Industry owes much to Andrew

Carnegie, who as a young man went to England and was inspired by the new Cheap Steel processing plant Invented by HENRY BESSEMER. Carnegie brought the Bessemer process back to America and created the biggest Steel Plant in the World.

• The Economic Centers were: • Chicago Illinois for Meat Packing• Pittsburgh Pennsylvania for Iron & Steel• New York for Manufacturing Goods. • San Francisco center for Mining (Gold) and shipping

• …Meanwhile in the South, after the Civil War, the South was still reliant on cotton as a cash crop. The Southern Economy was subordinate, insulated and not much more than a colonial supplier to the national economy. There were some factories in the South and half of the workers in the textile factories were women.

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• Because of the population decrease from the Civil war, and the agrarian nature of the country before the war, the population of the country was great but sparse. Factories advertised in foreign countries to encourage Immigration. In the Early years of the 1900’s an increasing proportion of immigrants to the U.S. were from Southern and Eastern Europe. Typically, peasants who came, often called “Birds of Passage” came with plans to make enough money to return to buy land in their homeland. Because of these large numbers of immigrants, factory owners found they could satisfy most of their labor needs with immigrants and refused to hire Blacks.

• In 1900, one of every five children under age 16, worked to help the household make expenses . They were commonly paid half of what an adult made, and the jobs were often times dangerous.

Terence Powderly & the Knights of

Labor

• Low wages, unsafe working conditions long hours, and competing with child labor … all of these drove workers to attempt to organize… there were different organizations with different goals. Founded in 1869 as a secret society of Garment Workers in Philadelphia, by 1878 The KNIGHTS OF LABOR as a national movement. The goal of Knights of labor was to set up factories and shops that were owned and operated by the employees, Although this was never really accomplished, the Grand Master Terence Powderly attempted to educate the world into a great commonwealth.

• The Knights Of Labor became politically active where ever it took hold, and while members also joined local trade unions, they also joined the Knights. Women were allowed to Join the Knights in 1881, and black workers eventually allowed black workers to join. The Knights began to take on trade union tactics and in 1885 the won a strike against Jay Gould & his Southwestern Railway system… as a result Membership jumped from 100,000 to as much as 700,000.

• The 8 hour work day was a goal for both trade Unions and the Knights of Labor, The Knights believed that an 8 hour day would allow workers to perform their duties as citizens. A wave of strikes took place over the issue, On May 3, 1886 at the McCormick Reaper plant in Chicago, 4 strikers were left dead. A protest meeting was called at HAYMARKET SQUARE, when Police broke in on the meeting an Anarchist threw a bomb that killed and wounded several police. The Police responded by firing into the crowd, Killing several.

Some Anarchists were arrested and with no evidence against them, 4 men were executed, others put in Jail. Industrialists used the event to attach radical anarchist violence to the labor movement and the Knights of Labor movement died. Businesses then imposed Yellow Dog contracts to stop union organization.

Samuel Gompers

President of the AFL

• Overlapping with the Knights of Labor, came an association of trade unions called The American Federation of LABOR (AFL) . Samuel Gompers became its first president. Gompers believed that workers should focus on concrete goals and they should have the power to back up their demands. Two guiding rules for this: The Union should stay out of Politics to avoid associations with radical groups, and to only organize Skilled workers, who can use their skills as leverage in negotiations.

HOMESTEAD STRIKE of 1892• Despite the fact that Andrew Carnegie, the Great Steel manufacturer, had once been

quoted in a Magazine as saying that he felt that workers had as much right to “combine” as capitalists did, and workers had a moral claim on their jobs that forbade the use of Strikebreakers. Espousing high minded principles made Carnegie feel good, but bigger profits made him feel even better. Carnegie put Henry Clay Frick his Chief operations officer, in charge with instructions to break the Union… Then Carnegie packed up and left for his Summer estate in Scotland.

Espousing high minded principles made Carnegie feel good, but bigger profits made him feel even better. Carnegie put his 2nd in command Henry Clay Frick in charge with instructions to break the Union… Then Carnegie packed up and left for his Summer estate in Scotland.

It is evident that Carnegie intended to end the Union in Homestead, Henry Frick Hired Pinkerton detective agency, to send in 300 goons to break the strike. As the Barge of Pinkertons showed up on the Monogahela river townspeople were there waiting and opened fire, as the barge pulled over and Pinkertons got off the barge they were beaten severely by towns folks (mostly women) then they were sent out on a train. Round one going to the Union.

Frick was not through and called on Pennsylvania’s Governor to Call out the State National Guard, and Martial law was declared in Homestead, a brief confrontation between the National Guard and Union members. The way was cleared for strikebreakers to take over jobs in the mine and the strike was ended. If it had not been clear before, The Homestead strike demonstrated that State Governments would be an ally to corporations.

Pullman Strike 1894• In 1893 the economy sunk into a depression, Many

Corporations made sure that the brunt of the depression would be felt by the workers. One such corporation was the Pullman Palace Car company. When Pullman workers protested a cut in wages The American Railway Union (ARU) directed the strategy, Led by President Eugene Debs who was reluctant to strike and advised against it, but when members voted for strike he set the rule that there should be no violence or destruction of any property.

• The railroad companies saw this as a chance to kill the ARU and as the Governor of Illinois John Altgeld was not in the pockets of the Railroads they appealed to former Railroad lawyer and now Attorney General Richard Olney, Who Convinced President Grover Cleveland to send in Federal troops to put down the strike. At the Same time Olney found Federal Judges to issue Injunctions against the strike. (an Injunction is a court order to stop an action, until it can be determined what is right by law.)

• Eugene Debs went to jail for 6 months for violating the court orders. When he came out he was an avowed Socialist.

• In the 1890’s Western Mining concerns were organized by the Western Federation of Miners (WFM) and when new corporations moved in and tried to cut wages, Miners became violent and the Federal and State Governments always sided with business against the unions, Cour d’Arlene in 1892, Cripple Creek 1894, Leadville 1896 and Cour d’Arlene 1899. In Colorado State elections the miners won their representative Governorship but the State Supreme court overturned the results and reinstated anti union Governor Peabody. In 1905 the WFM joined in with radicals to create a new Union , Called the Industrial Workers of the World (IWW) also known as the Wobbles. The Wobbles were committed to a Workers society , not by political reform but by direct work place confrontation, Striking until a the workers would run society.

End to Chapter 17 Capital & Labor