Transcript Rockefeller and Standard Oil

The Iron Colt Becomes An Iron Horse
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RR building exploded after the Civil War.
US government subsidized the first two
transcontinental RR
How land-grants worked
Why subsidies were necessary.
In all RR got over 200 Mill acres from Feds
and states—area larger than the state of
Texas.
Benefits of Subsidies
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US benefited from giving land to
RR. How?
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RRs promoted immigration
promoted of westward migration.
RR gave the government a break
on mail and military transport.
Free land a cheap way to
subsidize.
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Why?
Spanning The Continent With Rails
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After secession, Congress Commissioned
a transcontinental RR.
Union Pacific and Central Pacific..
Building began in earnest in 1865 after the
Civil War.
Credit Mobiler scandal
INDUSTRY COMES OF AGE,
1865-1900
Chapter 24
Building the Railroads
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On both lines mostly poor
immigrants did the work.
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Irish were predominant on
the UP line
Chinese on the Central
Pacific line. Often beset
by Indians.
Moving tent cities
Hundreds of labors died.
Significance of
transcontinental RR
Binding The Country With Railroads
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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.
Federal Land Grants to Railroads
Cornelius Vanderbilt
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Cornelius Vanderbilt welded
together and expanding older
eastern Network.
Had made a huge fortune in
steamboats and used this wealth
to fund RRs.
He was coarse, ill educated,
ungrammatical and ruthless, but
knew how to make money.
Railroad Improvements
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Significant Improvements to RR facilitated
growth of railroads:
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Steel rail
Standard gauge track:
Westinghouse brake
Pullman sleeping cars: made travel more
comfortable for passengers—1860s.
Trains still dangerous.
Revolution By Railways
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Transcontinental RR caused many changes:
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Stimulated American economy
Stimulated manufacturing and industrialization
Westward expansion of agriculture
Stimulated immigration
Bigger cities
Settlement of the unsettled areas
Time zones
Created Millionaires
Changed Western ecology
Wrongdoing in Railroading
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The railroads were
rife with corruption
Jay Gould
Stock Watering
Bribery
Trusts and Pooling
Agreements
Rebates
Government Bridles The Iron Horse
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Farmers resented the RR
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Generally, the country was slow to respond to
abuses of RR.
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Why?
Laissez faire
Depression of 1870 spurred the government into
action.
Grange put pressure on many Midwestern
legislatures to regulate the RR monopoly.
State laws held unconstitutional in the famous
Wabash case. Why?
Interstate Commerce Act
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Interstate Commerce Act in 1887.
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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
Was not a revolutionary victory; simply modest
regulation
Did provide an orderly forum.
water-shed in establishing the power of
government to regulate business
Miracles of Mechanization
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1865-1895 saw a huge industrial boom.
Reasons:
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Much more liquid capital
natural resources started to be exploited
Massive immigration provided cheap unskilled labor
American inventions made businesses and factories
more efficient.
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telegraph, mass production, cash register, stock ticker .
Telephone (1876) and expanded telegraph;
communications revolution.
Edison and Electric Light
Thomas Alva Edison
“Wizard of Menlo Park”
The Trust Titan Emerges
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Businesses, left alone, hate competition.
Ways to avoid competition.
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Vertical Integration--Andrew Carnegie’s Steel
operations.
Horizontal Integration—Rockefeller and
Standard Oil
Trusts—Rockefeller
Interlocking Directorates—J.P. Morgan
The Supremacy Of Steel
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Steel became King after the Civil War.
Foundation for much of the industrial
expansion
Bessemer process.
America biggest Steel producer by 1900.
Produced 1/3 of the world’s steel.
Why America dominant.
Carnegie And Other Sultans Of Steel
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Andrew Carnegie—US
Steel
King of American Steel
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Produced ¼
Carnegie cleared 25 Mil.
a year. Huge fortune
Sold out to J.P. Morgan
for 400 Million.
Spent the rest of his life
giving money away
Rockefeller and Standard Oil
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Oil industry emerges after the
Civil War.
Rockefeller and Standard Oil.
ruthless.
Big believer in commercial
Darwinism.
By 1877 controlled 95% of all
the old refineries in the
country.
Benefits.
Standard Oil—The Octopus
The Gospel of Wealth
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Social obligations of new
super-rich?
Charles Graham Sumner
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Social Darwinism
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Get richer; none to poor
Rich deserve to be rich; poor
deserve to be poor
Contempt for poor who had
“earned” their own poverty
Russell Conwell
Charles
Graham Sumner
Carnegie’s Gospel of Wealth
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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
Carnegie gave away millions
Government Tackles The Trust Evil
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Sherman Anti Trust Act of 1890.
Forbids combinations in restraint of trade.
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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
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South did not benefit much
Produced smaller % of Manufacturing
goods than pre-Civil War
James Duke—Cigarettes
Barriers to Southern development
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Railroad rate discrimination
Textile Mills
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Pros and Cons
The Impact Of Industrialization
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Increased wealth of nation
Standard of living rose sharply
Workers enjoyed many more physical comforts
Urban centers mushroomed
Jeffersonian Ideal of nation of small farmers died
Concept of time changed.
Many more women in the workforce
Delayed marriages and smaller families
New class system
Workers becoming more dependent and more
vulnerable.
Plight Of The Unskilled Worker
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Surplus of unskilled labor.
Individual workers were powerless to bargain
Early Unions had little power, as well.
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strike-breakers, lawyers and thugs (“Oh my!”)
Courts issued injunctions against strikes based
on Anti-Trust laws.
Yellow-dog contracts
Black-lists
Company stores
Middle-class was largely unsympathetic.
Labor Limps Along
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Unions strengthened after the Civil War.
National Labor Union organized in 1866
and did well,
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600,000 members, both skilled and unskilled
Did not recruit women or blacks
Goals: arbitration of industrial disputes, 8-hour
day
damaged by the depression in the 1870s.
Knights of Labor
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Knights of Labor took over
where the National Labor Union
had left off.
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Terence V.
Powderly
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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!
Unhorsing The Knights Of Labor
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Knights of Labor riding for a fall
Problems:
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The Haymarket Square incident in Chicago in
1886
Fusion of both skilled and unskilled labor.
Skilled workers abandoned the Knights for
the American Federation of Labor.
This dealt the Knights a death blow, and
the union slowly withered.
Haymarket Riot (1886)
McCormick Harvesting Machine Co.
The AF Of L To The Fore
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AF of L --1886
Brain child of Samuel Gompers.
President of the union every year
for 38 years but one.
Confederation of self-governing
independent unions for skilled
laborers.
Gompers political strategy.
Major goal was closed shop.
Weapons were walk-outs and
boycotts.
The AF Of L To The Fore
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Let unskilled workers,
blacks and woman fend
for themselves.
500,000 members by
1900.
1881-1900 over 23,000
strikes
By 1900, increased but
fragile support
1894—Labor Day holiday.
Most employers still
fought labor aggressively.
Management vs. Labor
“Tools” of
Management
“Tools” of
Labor
 “scabs”
 boycotts
 P. R. campaign
 sympathy
demonstrations
 Pinkertons
 lockout
 blacklisting
 yellow-dog contracts
 informational
picketing
 closed shops
 court injunctions
 organized
strikes
 open shop
 “wildcat” strikes