Industry comes of Age 1865-1900

Industry comes of Age 1865-1900“The wealthy class is becoming more wealthy; but the poorer class is becoming more dependent.” Henry George 1879

Industry Comes of Age

• Great men aren’t politicians

• Great men are lured to big business

• America is now an industrial giant in the world wide market

The Iron Colt Becomes an Iron Horse

• RR’s explode after ACW

• US government subsidized the first two transcontinental RR because they are costly and risky, but if successful they can promote national unity and economic growth

The Iron Colt Becomes an Iron Horse• Land grants• Give RR’s broad strips of lands, can pick and choose,

sometimes dragged their feet angering potential settlers• People upset by “giveaways” but RR’s hook up

government with preferential rates for postal service and military traffic

Spanning the Continent with Rails • ACW-south leaves the

union• North (union) wants to

secure gold rich California• Union Pacific RR starts

from Omaha• Some corruption (Credit

Mobilier) • Workers are mainly

“paddies” • Many conflicts with

Natives

Spanning the Continent with Rails• Workers lived in tent

towns• Central Pacific RR starts

in Cali. And moves east• Less corruption • More difficult terrain

(Sierra Nevada)• Mainly Chinese laborers

Spanning the Continent with Rails

• Both RR meet in Ogden Utah 1869 to lay the golden spike

• Transcontinental RR is complete

• West coast firmly connected to the Union

• Better trade with Asia• Paves way for growth out

west

Binding the Country with RR ties • Four other Transcontinental

lines were built. None received cash grants, but three received land grants

• Many other RR went bankrupt and fleeced investors.

• Towns competed with bribes to RR promoters to get the RR to come to their town. Many of these RR took the money and ran.

RR Consolidation and Mechanization

• Robber Baron for RR = Cornelius Vanderbilt

• CV- uses steel rail to replace old iron tracks

• Standardization of RR tracks

• Westinghouse air brake (1870)

• Pullman Palace Cars

Crash at Crush 1896

Revolution by RR

• Transcontinental RR caused many changes:– Stimulated American economy – Stimulated manufacturing and industrialization – Westward expansion of agriculture – Stimulated immigration – Bigger cities – Settlement of the unsettled areas – Time zones – Created Millionaires “lords of rail”– Changed Western ecology

Wrongdoing in Railroading• Jay Gould • “Stock watering” – lie

about RR assets and profitability, then sell stocks and bonds that exceed actual value

• Bribery- judges and congressmen

• Create oligopoly • Rebates- hook up large

companies, screw small farmers

Government Bridles the Iron Horse • Midwestern farmers (small)

hate RR• But society embraces free

enterprise• Depression in 1870’s

groups farmers (Grange) to try to regulate RR

• Wabash, St. Louis & Pacific RR Co. v. Illinois- results = individual states have no power to regulate interstate commerce

Government Bridles the Iron Horse• Interstate Commerce Act in

1887.– Prohibited rebates and

pools– Required RR to publish

their rates openly– Outlawed discrimination

against shippers– outlawed charging more

for short hauls than for long ones

– Set up the Interstate Commerce Commission to administer and enforce

Government Bridles the Iron Horse

• ICA• Was not a revolutionary

victory; simply modest regulation

• Helps end price wars• 1st large scale attempt

by Federal Government to regulate business in interest of society

Miracles of Mechanization• 1865-1895 saw a huge industrial boom. • Reasons:

– Much more liquid capital – Natural resources started to be

exploited – Massive immigration provided cheap

unskilled labor – American inventions made

businesses and factories more efficient.

• Telegraph, mass production, cash register, stock ticker .

– Telephone (1876) and expanded telegraph; communications revolution.

– Edison and Electric Light

The Trust Titans Emerges

• Businesses, left alone, hate competition.

• Ways to avoid competition• 1. Vertical Integration-

combining into one organization all phases of manufacturing from mining to marketing -Andrew Carnegie’s Steel operations.

• 2.Horizontal Integration-allying with competitors to monopolize a given market -Rockefeller and Standard Oil

• 3.Trusts-consolidate operations of all rivals Rockefeller

• 4. Interlocking Directorates- consolidate rival enterprises and to ensure future harmony by placing officers of his own banking syndicate on their various boards of directors J.P. Morgan

Supremacy of Steel

• Steel became King after the Civil War.

• Foundation for much of the industrial expansion

• America biggest Steel producer by 1900.

• Produced 1/3 of the world’s steel.

• Bessemer process.

Carnegie And Other Sultans Of Steel

• Andrew Carnegie-US Steel

• King of American Steel “Napoleon of the Smoke Stacks”

• Produced ¼ of nation’s steel

Carnegie And Other Sultans Of Steel

• JP “Jupiter” Morgan bought US Steel for over 400 million dollars

• Starts United States Steel Corporation (1st billion dollar Corp.)

• Carnegie- worried about dying with too much wealth, spends rest of life in philanthropy

Rockefeller and Standard Oil

• 1859 – First Oil Well- in Penn. “Drake’s Folly” pours out “black gold”

• Automobile industry drives oil industry

• Rockefeller and Standard Oil (1870, trusts formed in 1882)

• 1887- controlled 95% of all oil refineries in US

Rockefeller and Standard Oil

• “Reckafeller” big believer in commercial Darwinism.

• Ruthless business man• Trusts = profits

Social Darwinists

• Some business ldrs equate success to god ( divine right of kings)

• Others – Social Darwinists (Herbert Spencer and William Graham Sumner) – are that ppl won their stations in life by competing on basis of natural talent.

• Later applied to countries

Social Darwinists

• Russell Conwell- “Acres of Diamonds” – “There is not a poor person in the US who was not made poor by his own shortcomings”

“Gospel of Wealth”• Carnegie “Gospel of

Wealth”• Inequality is inevitable and

good.• Wealthy should act as

“trustees” for their “poorer brethren.”

• Wealthy had to prove they deserved their wealth.

• Give back to the community as a whole, not to individuals

Government Tackles the Trust Evil • Sherman Anti Trust Act of 1890. • Forbids combinations in restraint of trade.

– Did not prove very effective because went after bigness and not badness.

– Not very effective because penalties weak and loopholes – Biggest effect was unintended--Was used against unions.

• Importance of the law was not its immediate effect but the shift in thinking that it represented.

The South In The Age Of Industry

• Smaller production• Most area is

sharecropping• James Duke -

American Tobacco Company

The South In The Age Of Industry

• “New South”• Henry Grady editor of

Atlanta Constitution • Become “Georgia

Yankees”• Major barrier to South

development- RR regional rates- RR give better rates to manufactured goods moving from the North

The South In The Age Of Industry• 1880’s Bring the mills to

the cotton• Why

– Cheap labor– Less unions – Tax benefits

• Most blacks excluded from mill jobs

• Entire poor white families worked “hillbillies and lintheads”

• Paid half as much as northern workers

• Often times paid in credit

The Impact Of IndustrializationStandard of living rose sharplyWorkers enjoyed many more physical

comfortsUrban centers mushroomedJeffersonian Ideal of nation of small farmers

died Concept of time changed. Many more women in the workforceDelayed marriages and smaller familiesNew class systemWorkers becoming more dependent and more

vulnerable.

In Unions There is Strength • New technology means less skilled

workers• Individual workers were powerless to

bargain• Companies- use lawyers, buy local

press, pressure politicians, scabs, or hire thugs

• Court injunctions- make strikes illegal• Companies can request federal troops• Lockouts• Yellow dog contracts• Black lists • Company “towns”

Labor Limps Along• Unions strengthened after the

Civil War.• National Labor Union

organized in 1866 and did well, – 600,000 members, both skilled

and unskilled– Did not recruit women or blacks

(there was a Colored National Labor Union)

– Goals: arbitration of industrial disputes, 8-hour day

– damaged by the depression in the 1870s

Labor Limps Along

• Knights of Labor (1881 becomes public) took over where the National Labor Union had left off.– Sought to include all labor in one

big Union. – They stayed out of politics, but

campaigned hard for economic and social reform.

– Their biggest issue was the 8-hour work day.

– Won that fight from a number of industries and their ranks swelled.

“An injury to one is the concern of all”

Terence V. Terence V. PowderlyPowderly

Unhorsing The Knights Of Labor

• 1886- ½ of May day strikes fail

• Haymarket Square Incident (Chicago 1886)

• Why does the KofL die?• 1. KofL now wrongfully

linked with anarchism• 2. Fusion of skilled and

unskilled workers

American Federation of Labor 1886

• Brain child of Samuel Gompers

• Confederation of self-governing independent unions for skilled laborers.

• Advocated closed shop- all union labor