Transcript Gilded Age: Second Industrial Revolution

Agenda
Industrialization & the Rise of Business
• Unit Objective: HOW and WHY did the US
emerge as the world’s largest industrial
power after the Civil War?
• What social, economic, and political changes
occurred, and to what extent were these
changes beneficial?
• Take out your notebooks, outlines/HW, and a
sheet of paper.
• Take the reading quiz.
• When you are done, write a thesis to respond
to (one of) the prompts above.
Changing Society
• What social changes occurred as a result of
America’s industrialization and corporatization?
– Widening wealth gap
– Decline in working conditions
• Dangerous, long hrs., low pay, cheap labor, child
labor
– Decline in urban/environmental quality
• Pollution/sanitation problems, overcrowding,
slums, etc.
Gilded Age:
Second Industrial Revolution
1865-1900
nd
What were the “seeds” of the 2
Industrial Revolution?
Foundations
Mineral
Wealth
Abundant Skilled
and Unskilled
Labor Supply
Technological
Innovations
Railroads
Abundance of
Land
Growing
Market
Foundations of the 2 Industrial
Revolution
• The Mining Frontier
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–
–
–
Precious metals (gold, silver)
Mining syndicates
Copper, lead, talc, iron, zinc, and quartz
Coal mining
• Bessemer Process - Steel
• Petroleum
– “Drake’s Folly” (1859)
Foundations of the 2 Industrial
Revolution
Foundations of the 2 Industrial
Revolution
• Technological Change
– Philadelphia Centennial Exposition, 1876
Foundations of the 2 Industrial
Revolution
U.S. Patents Granted, 1850-1899
Foundations of the 2 Industrial
Revolution
• Technological Change
– Mechanization of the office (typewriter, practical
adding machine)
– Clerical work became women’s work (lower pay)
– Mechanization of transportation – electric
streetcars – impact on cities?
Foundations of the 2 Industrial
Revolution
• Technological Change
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–
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Innovations in communication
Transatlantic telegraph cable, 1866
Mass printing and mass advertising
George Eastman’s Kodak camera, 1888
Alexander Graham Bell’s telephone, 1876
Foundations of the 2 Industrial
Revolution
Foundations of the 2 Industrial
Revolution
Foundations of the 2 Industrial
Revolution
• Technological Change
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Innovations in electricity
Thomas Alva Edison
General Electric Company, 1888
George Westinghouse and AC system
Nikola Tesla’s electric motor, 1888
Foundations of the 2 Industrial
Revolution
• Expanding Railroad Network
– Early railroads were local; different gauges, short tracks
– By 1900, 5 transcontinental railroads (land grants, govt
support)
– Intense competition  domination by a few
– Standardized gauges, efficiencies, time zones
– Railroads: 1st big business in the US; attracted investors
– Key to opening the West, developed other industries
What was the “good soil” of
nd
the 2 Industrial Revolution?
Ideologies about
Wealth
Social Darwinism
Protestant
Work Ethic
“Gospel of
Wealth”
Horatio Alger
“Rags to Riches”
nd
Ideology of the 2 Industrial Revolution
• Social Darwinism – “survival of the fittest”
in the economy and society, “natural law”
• Government should not try to improve the
conditions of the poor
• Herbert Spencer and William Graham
Sumner
nd
Ideology of the 2 Industrial Revolution
• “If we do not like the survival of the fittest,
we have only one possible alternative, and
that is survival of the unfittest.”
William Graham Sumner
• “The growth of large business is merely the
survival of the fittest. It is merely the working
out of a law of nature and a law of God.”
John D. Rockefeller
nd
Ideology of the 2 Industrial Revolution
• Gospel of wealth – God sanctioned the
wealthy
– “God gave me my riches.” Rockefeller
– “Not evil, but good, has come to the race from the
accumulation of wealth by those who have the
ability and energy that produces it.”
– “Wealth, passing through the hands of a few can
be a much more potent force for the elevation of
our race than if it had been distributed in small
sums to the people themselves.”
Andrew Carnegie
nd
Ideology of the 2 Industrial Revolution
• Religious apologists
– “Godliness is in league with riches.” – Bishop
William Lawrence
– “Acres of Diamonds” sermon – Pastor Russell
Conwell
– “no man suffers from poverty unless it be more
than his fault—unless it be his sin.” – Henry
Ward Beecher
nd
Ideology of the 2 Industrial Revolution
• Popular culture supported these ideas about
the distribution of wealth
– McGuffey’s Readers
– Horatio Alger, Jr. novels and “Protestant Work Ethic”
New Philosophies
• What arguments emerged in support of the new social
paradigm?
– Gospel of Success (Bootstrap Theory)
• Anyone can rise to the top through hard work
• “God helps those who help themselves”
• Carnegie – Gospel of Wealth
– Laissez-faire
• gov’t keeps hands off economy
• Interference messes up system
– Social Darwinism
– Herbert Spencer
• Survival of the fittest
• Smartest, hardest-working rise to top
• Helping the unintelligent, lazy weakens society
– Philanthropy
• The wealthy give their $$$ to good causes
• Education, arts, etc.
New Philosophies
• What arguments emerged to criticize the new social order?
– Darwinism – can’t be applied to human society
– Social mobility – possible, but limited
• Specific theories or works?
– Henry George – Progress & Poverty
• Supports capitalism, but w/ regulations
• Gov’t could tax profits earned thru inflation, not innovation
– Edward Bellamy – Looking Backward
• Supports socialist utopia
• “Nationalist” clubs emerge to oppose corporate power
– Thorstein Veblen – The Theory of the Leisure Class
• Scathing critique of upper class lifestyle
• “Conspicuous consumption” – spending to impress others
– Karl Marx & Friedrich Engels – Communist Manifesto &
Das Kapital
• Communism – state run by proletariat
• result of working class overthrow of state & capitalist ruling class
• Somewhat popular in US
–
Scientific Anarchism – total overthrow of gov’t
•
Stateless society, Never really caught on in US
What created the “favorable
nd
climate” of the 2 Industrial
Revolution?
Laissez-Faire Policies
nd
Politics of the 2 Industrial Revolution
• Laissez-Faire in Theory
– Adam Smith’s Wealth of Nations (1776)
– The “invisible hand”: natural laws of supply
and demand & competition regulate the market
– Government should not meddle
• Laissez-Faire in Practice
– Business leaders rejected govt regulation…but
– Happily took aid & subsidies
– Business practices subverted natural competition
nd
Politics of the 2 Industrial Revolution
Laissez-faire in practice
• No protections for
consumers
– “Let the buyer
beware”
• food and medicines
• fraud and unfair
business practices
nd
Politics of the 2 Industrial Revolution
• Laissez-faire in practice
– Government aid for business (industry and
agriculture)
– High tariffs (no competition from overseas)
– Subsidies -- land grants to railroad owners
– Favorable legislation
• labor laws
• financial legislation
• low-interest loans
What was the “fertilizer” of
nd
the 2 Industrial Revolution?
Legal and Financial
Developments
Corporations
Capital formation
Supreme Court
protection
Liberal
corporation laws
Foreign
investment
Corporations and Capital Formation
• Evolution of corporations
– Limited liability and risk
– Sale of stock to raise capital
– Santa Clara County v. The Southern Pacific
Railroad (1886)
– Corps became “privileged persons” with
• Rights (to reasonable profits)
• Protections (from state regulations)
– Sherman Anti-Trust Act (1890) undercut by
U.S. vs E.C. Knight Co (1895)
• Only applied to “commerce,” not manufacturing
Corporations and Capital Formation
• Capital formation
– Takes $$ to make $$
– Rising GNP (growing economy) provided some
– Growth of middle class with $$
– New technology  increased productivity 
extra income  investments
– Investment bankers (J.P. Morgan) marketed
corporate stocks and bonds
– Foreign investment
Who were the “gardeners” of
nd
the 2 Industrial Revolution?
Captains of Industry or Robber Barons?
Cornelius
Vanderbilt
Andrew
Carnegie
Mass
Marketing and
Production
John D.
Rockefeller
J. Pierpont
Morgan
New
Managerial
Styles
The Rise of Big Business
• Competition =
– Chaos, waste, duplication & clutter
• Railroads tackled this problem 1st
– lower rates for bulk shipments and long hauls, rebates,
kickbacks, rate wars
• Railroad managers tried collusion (cooperation)
in pools, but hard to maintain, not legally binding
• Consolidation was the answer
• Cornelius Vanderbilt “organized”
railroads
The Rise of Big Business
The Rise of Big Business
The Rise of Big Business
• John D. Rockefeller
“organized” the oil industry
• Standard Oil Company, 1870
– Horizontal integration
– Controlled 90% of oil industry
by 1890
– Colluded with railroads
• Standard Oil Trust, 1882
– Trusts control competition by
separating ownership
(stockholders) from
management (trustees)
The Rise of Big Business
The Rise of Big Business
• Andrew Carnegie “organized”
the steel industry
– Vertical integration: owned all
aspects of the steel industry
– Cut wages and increased hours
– Lower costs and prices
– Invested in new technology and
experts
– Exploited downturns in business
cycles
– Horizontal integration
The Rise of Big Business
The Rise of Big Business:
Horizontal and Vertical Integration
The Rise of Big Business
• J.P. Morgan “organized” the
economy
– Bought Carnegie Steel for $350 million in
1901; formed U.S. Steel (capitalized at
$1.4 billion!) - a supercorporation
– Created holding companies and
interlocking directorates; modern
finance
• Increased production and growth,
but…..
• Centralization of vast economic
power into the hands of a few
The Rise of Big Business
Wall Street in 1867 & 1900
New Managerial Styles
• Railroads created modern mgmt techniques
• Spread to other businesses
• Creates “middle management” (white collar workers –
sales, mgmt, accountants)
• Growth of the middle class: by 1900, 1/3 of urban
families owned their homes
• More loyal to upper mgmt or
to workers???
Mass Production and Marketing
• Urban population boom + transportation
= new markets.
• Rise of mass production and advertising/
marketing
• “Fast food” and brand loyalty – consumer
choices
Mass Production and Marketing
• Relationships between tech
advances: Meatpacking
industry
• Gustavus Swift = refrig car
(1877) + assembly-line mass
prod in meat-packing
• Rail + refrigerated railcars 
centralized slaughterhouses
(Chicago)  used all (waste)
products  higher profits
The Power of Bigness
“Robber Barons”
The Power of Bigness
• In 1890, 11 million of 12.5 million
families earned less than $380 a
year
• 0.03 percent of the population
controlled 20 percent of the wealth.
• In 1883, Railroad owners
established four time zones without
consulting any branch of
government
• “What do I care about the law?
Hain’t I got the power?”
• “The public be damned!”
William Vanderbilt
Railroad Time Zones
nd
Did the 2 Industrial
Revolution affect all
aspects of society evenly?
Working in Industrial America
• Workers faced major changes from
industrialization
• Economy grew…but wages lagged behind
• Workers battled poverty -- prosperity depended
on the family economy -- how many members of
the family worked.
• “A family of workers can always live well, but the man
with a family of small children to support, unless his wife
works also, has a small chance of living properly.”
Carroll D. Wright, 1882
Working in Industrial America
• Family economy; debate on whether it destroyed
families or strengthened them
Working in Industrial America
• Women earned half as much as men:
• “I didn’t live, I simply existed. I couldn’t live that [which]
you could call living…It took me months and months to
save up money to buy a dress or a pair of shoes….I had
the hardest struggle I ever had in my life.”
• Conditions for African Americans, Asians, and
Mexicans were even worse.
• Clear divisions among workers based on
national origin and skills.
• Hours of work varied (avg 50-80); new concept
of time
Working in Industrial America
I hear the whistle. I must hurry.
I hear the five minute whistle.
It is time to go into the shop.
I take my check from the gate board and hang it on the
department board.
I change my clothes get ready to work.
The starting whistle blows.
I work until the whistle blows for lunch.
I eat my lunch.
It is forbidden to eat until then.
The whistle blows at five minutes for starting time.
I get ready to go to work.
I work until the whistle blows to quit.
I leave my place nice and clean.
I put all my clothes in the locker.
I must go home.
Working in Industrial America
• Eight Hour Work-day movement
– “Eight Hours for Work, Eight Hours for Rest, Eight Hours for
What We Will.”
We mean to make things over;
We’re tired of toil for naught;
We may have enough to live on,
But never an hour for thought.
We want to feel the sunshine,
We want to smell the flowers;
We are sure that God has willed it,
And we mean to have eight hours.
• 8-hour and 10-hour days were just a dream until the
1930s
Working in Industrial America
• New ideals of industrial America created more
work for women
• Women devoted more time to cleaning, dusting,
and scrubbing.
• New washable cotton fabrics increased the
amount of laundering
• More varied diets increased time for food
preparation
• By 1900, the typical housewife worked six hours
a day on just two chores: meal preparation and
cleaning.
Worker Discontent
• Long hours, low wages, impersonal work
• Mechanization of labor  decline of skilled labor
• Factory work was inhumane, monotonous, and
dangerous – workplace injuries/deaths
• High turnover & absenteeism – frequent strikes
• Factory owners more concerned with prod &
efficiency than worker welfare
• “I regard my people as I regard my machinery. So long as
they can do my work for what I choose to pay them, I keep
them, getting out of them all I can. What they do or how they
fare outside my walls I don’t know, nor do I consider it my
business to know. They must look out for themselves as I do
myself.”
Worker Discontent
Early Labor Violence
Management vs. Labor
“Tools” of
Management
“Tools” of
Labor
 “scabs”
 boycotts
 P. R. campaign
 sympathy
demonstrations
 Pinkertons
 lockout
 blacklisting
 yellow-dog contracts (promise
not to join union)
 court injunctions (force workers
back on job)
 open shop – no union/optional
 informational
picketing
 closed shops – only union
 organized
strikes
 “wildcat” strikes
(unauthorized by union)
Unions
• National Labor Union (died after Panic of
1873)
“An injury to
• Knights of Labor (Powderly)
one is an injury
• Inclusive union, broad social agenda
to all.”
• 8-hr day, better wages/conditions, equal
pay/rights
• No child or prison labor, Yes for govt
regulation
• Too idealistic -- couldn’t organize
• Lost support after Haymarket Strike
Unions
• American Fed. of Labor (Sam Gompers, 1886)
• Skilled labor, practical “bread-and-butter”
goals (wages, conditions, hours)
• Believed in negotiation, organization
Unions
• American Railway Union – largest of its time
• Union president: Eugene V. Debs. arrested after the
Pullman strike
• Ran for Pres of US… as a Socialist….from prison
Early Labor Violence
Strikes
• Great Railroad Strike of 1877 – Hayes sends in
federal troops – 100+ killed
• Haymarket Riots 1886 – Strikers in Chicago
against International Harvester - A bomb was
thrown into police line - Police fired back Many died - violence turned the public against
the strikers – blamed anarchists
Great Railroad Strike of 1877
Haymarket Square Riot, 1886
Strikes
• 1892 Homestead Strike – Steelworkers at a Carnegie mill
• Management decided to hire scabs and use private
“security” – Pinkertons
• Violence btwn workers and scabs/Pinkertons, Govt
brought in National Guard to protect scabs
• Violence caused Steelworkers to lose support & power
Strikes
• 1894 Pullman Strike – Railroad workers led by Eugene
V. Deb's American Railroad Union to boycott and strike
against the Pullman company - turned violent when
strikebreakers went in
• Debs put in jail and railroad workers lost their jobs
• Strikes generally hurt unions as the middle class felt the
unions were violent & out of touch - Gov't. almost always
sided w/ owners
Molly Maguires, 1877