Transcript Chapter 24 Industry Comes of Age

Industry Comes of Age
1865-1900
“The wealthy class is becoming more wealthy; but
the poorer class is becoming more dependent. The
Gulf between the employed and the employer is
growing wider; social contrasts are becoming
sharper; as liveried carriages appear; so do
barefooted children”.
Henry George, 1879
Life in the 1860s
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No indoor electric lights
No refrigeration
No indoor plumbing
Kerosene or wood to heat
Wood stoves to cook with
Horse and buggy
In 1860, most mail from the
East Coast took ten days to
reach the Midwest and three
weeks to get to the West
Coast.
A letter from Europe to a
person on the frontier could
take several months to reach
its destination.
Life in the 1900s
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US Govt issued 500,000
patents—electricity
Refrigerated railroad cars
Sewer systems and sanitation
Increased productivity made
live easier and comfortable.
Power stations, electricity for
lamps, fans, printing presses,
appliances, typewriters, etc.
New York to San Francisco to
10 days using railroad.
1.5 million telephones in use
all over the country
Western Union Telegraph
was sending thousands of
messages daily throughout
the country.
The Post Civil War Economy
At the end of the 19th talented men were entering business & not
necessarily government.
* RR’s more than any other factor spurred 2nd Industrial
Revolution!
The Railroads & Iron
Pacific Railway Act (1862)- provided money to build a
transcontinental railroad.
• required government subsidies & land grants be given to railroad
companies.
•Loans- $16,000 for flat; $48,000 for mountainous
• Congress awarded RR companies 155,504,994 acres & western
states awarded them 49 million acres.
• Rail companies- could use the land (sq. mile blocks) for collateral
or sell it for huge profits.
• rail roads withheld all land from other users until 1887 (Pres.
Grover Cleveland-opened still unclaimed public portions to
settlement)
Railroad Construction
Promontory, Utah
Government funding of internal
improvements
Why did government finally spend money on
internal improvements?
• Postal Service- preferable rates
• Military Traffic – preferable rates
• connect western states to east
• populate middle US- “safety valve”
• Trade with Asia
*The Homestead Act (1862)
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allowed a settler to acquire up to
160 acres by living on it for 5 years &
paying a fee of $30.
Companies that built the FIRST
Transcontinental RR
1. The Union Pacific- built westward from
Omaha, Nebraska; built 1086 miles of track
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Owned by Grenville Dodge; Credit Mobilier
Scandal
Government had to subsidize
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Received 20 sq. miles of land for each mile of
track laid.
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$ 16,000 per mile (prairie)- $48,000 per mile
(mountain)
Union Pacific employed mainly *Irish immigrants &
Union veterans who had fought for the Union
• workers faced blizzards & hostile Indian attacks.
• workers lived in “tented towns” or “hells on wheels”
populated mostly by men & some prostitutes.
2. The Central Pacific Railroad- built eastward from
Sacramento, California to meet up with the Union
Pacific.
• Owned by the “Big Four”- including Leland Stanford &
Collis P. Huntington.
• Used mostly Chinese laborers
* Greatest accomplishment of peacetime USA &
AMAZING ENGINEERING FEAT.
** Both Rail companies met & completed the
Transcontinental RR at Promontory Point, Utah in 1869.
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Transcontinental RR Complete
Promontory Point, Utah 1869
•May 10, 1869 at Promontory, Utah
•“The Wedding of the Rails”
•Central Pacific and Union Pacific
Other Transcontinental RR Projects
• 4 other RR projects completed by the end of the 19th
century
• none received monetary loans from the government but
all but one (Great Northern) did get land grants
1. Northern Pacific Railroad- Lake Superior to Puget
Sound (1883)
2. Atchison, Topeka, & Santa Fe- went through SW
deserts of California (1884)
3. Southern Pacific- New Orleans to San Francisco
4. Great Northern RR- Duluth to Seattle; owned by James J.
Hill
Robber Barons & Railroads
Robber Baron’s or Captain's of Industry??
• Robber Baron- name given to men who made their
wealth off Railroads; seen as greedy or corrupt.
James J. Hill- exception to the Robber Baron; had
values & character- received no subsidies!
• ran agricultural demonstration trains, gave reduced
rates to settlers, brought “blooded bulls” from Britain
to distribute to framers, ran a financially sound
organization.
* Many railroad builders overbuilt & over speculated=
lost the money of investors.
Railroad Consolidation & Mechanization
1. “Commodore” Cornelius Vanderbilt- owned the NY
Central RR line; NY to Chicago (4,500 miles of track)-$ 100 million fortune (today $143 Billion)
• consolidated smaller lines
• superior service at low rates (affordable & safe)
• founder of Vanderbilt University
• Grandfather of G. Vanderbilt, who built Biltmore House (NC)
Advancements in RR
1. Use of Steel rails- Vanderbilt popularized; safer & more
economical
2. Air Brake- (1870’s) – trains could haul heavier loads.
3. Pullman Cars (1860’s)• Safety devices- telegraph, double-tracking, block signal
– standardized gauge of track
Impact of RR on the USA
1. United the nation physically= LARGEST
INTEGRATED MARKET IN WORLD (American
system on steroids)
2. New Markets- raw materials & finished goods
• Orders for steel
• Agriculture spread (settlement)
• moved people to cities
• Moved food to cities
• immigration “safety valve”
• Time Zones (1883 Railway Act)
• maker of millionaires
3. Ecological Impacts
• Prairies plowed under
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cattle introduced
forests cut down
buffalo herds decimated
Expansion of Railroads
•1869, 30,000 miles of track
•1900, 200,000 miles of track
•Distribution System to the marketplace
•Symbol of growth
4. Corruption
• Credit Mobilier Scandal (1860’s)
• “Stock watering”- inflated claims about a RR line’s
profitability = sold stocks & bonds higher than actual
value.
• Abusing the Public- RR Rates!
• Monopolies – “pools”
Public’s Response to Corruption
• Free Enterprise/American dream vs. Economic Injustice
1. States attempted to pass laws to regulate RR rates
(Economic panic 1870’s= The Grange (farmers demand
regulation.)
• Munn v. Illinois (1877)- upheld state law that regulated
private companies for the PUBLIC GOOD.
• Wabash v. Ill. (1886) – Supreme Court ruled that states could not
regulate interstate commerce- only the federal government could.
REACTION OF CONGRESS
2. Interstate Commerce Act (1887): prohibited
rebates & pools. Required RR to publish their rates
openly.
• Interstate Commerce Commission (ICC): set up to
regulate RR rates.
• 1st attempt by Federal government to regulate businessfor society’s interests.
• Initially very weak- hardly enforced; RR fought it (using
the 14th Amendment).
•Along with Sherman Antitrust Act (1890) foreshadow the
end of laissez-faire policy towards business in Gilded
Age.
2nd Industrial Revolution (Post Civil War-1920)
1860- US 4th in world industrial output
1894- #1 --- WHY??
1. Liquid Capital- money made during the Civil War; foreign
investors.
2. Natural Resources- coal, iron ore, oil etc.
3. Immigrants – provided cheap unskilled labor
4. American Ingenuity• mass production
• 440,000 patents (1860-1890)
• cash register, stock ticket, type writer (Christopher Sholes)=
drew women to industry.
• Refrigerated Freight car- Gustavus Swift
• Telephone- Alexander Graham Bell (1876)
• Thomas Edison (1847-1931)- phonograph, mimeograph,
Dictaphone, motion picture
• Electricity= light bulb (24 hour workday)
• “Genius is 1% inspiration and 99% perspiration”
Thomas Alva Edison
“Wizard of Menlo Park”
“Wizard of Menlo Park”
Edison Inventions helped to shape modern society
•More than 1,000 inventions patented
•Light bulb
•Phonograph
•Incandescent electric lamp
•Starter for automobiles that eliminated hand crank
•Batteries
•Perfected stock ticker
•New York City first city to powered by electricity
•The motion picture camera and projector
•First used “hello” as phone greeting
•Helped Alexander G. Bell with the telephone
The Light Bulb
The Phonograph (1877)
The Ediphone or Dictaphone
The Motion Picture Camera
 1790s  276 patents issued.
 1990s  1,119,220 patents issued.
 Gave an inventor the right to make and sell an
invention.
Alexander Graham Bell
Telephone (1876)
The Airplane
Wilbur Wright
Orville Wright
Model T Automobile
Henry Ford
Monopolies & Robber Barons
1.Andrew Carnegie- made his millions mainly in
the steel industry.
• used vertical integration to reduce competition & lower
costs
• Brought the Bessemer Process to America for steel
making.
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By 1900- he was producing ¼ of the world’s steel
Carnegie became a philanthropist (Gospel of Wealth) building libraries,
pensions for professors & other things
Vertical Integration
You control all phases of
production from the raw
material to the finished product
Coke fields
purchased
by
Carnegie
Iron ore deposits
purchased
by
Carnegie
Steel mills
purchased
by
Carnegie
Ships
purchased
by
Carnegie
Railroads
purchased
by
Carnegie
Horizontal Integration
Buy out your competition until
you have control of a single area
of industry
In 1856 Henry Bessemer devised a way
of converting iron into steel on a large
scale.
His invention involved blowing air
through molten iron in a converter, or
furnace, in order to burn off the excess
carbon.
Result: Strong, Cheap Steel
New Uses for Steel
Steel used in railroads, barbed wire,
farm machines
Changes construction: Brooklyn
Bridge; steel-framed skyscrapers
With the
Bessemer Process
and Carnegie
steel, Skyscrapers
revolutionized the
building
industry…..
Major city
skylines would be
dotted with this
new type of
building as the
1900’s begin.
2. John D. Rockefeller – made millions in the oil
(Kerosene) business.
• used Horizontal Integration
• used “trusts”- stockholders in smaller oil companies
assigned their stock to the Board of Directors of
Standard Oil Co. (1870)
• “Let us prey”- motto
• controlled the world’s oil supply
3. J.P. Morgan- made his millions in banking ;
consolidated rival enterprises & infiltrate boards with his
men= “interlocking directorates”.
Rockefeller & Standard Oil
1859- Edwin Drake pumped oil in Titusville, Penn.
(“Drake’s Folly”)
• helped make kerosene (1st major oil product)
• 1870’s kerosene is 4th most valuable export
• 1885- 250,000 electric light bulbs in use= decreased
demand for kerosene.
• 1900- the car caused increased demand for oil
•1877- Standard Oil controlled 95% of US oil market &
eventually world market. (Horizontal Integration)
**Social Darwinism
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belief among the rich in the Gilded
Age based on “survival of the fittest”;
Darwin’s theory applied to society.
Led some of the wealthy to resist
special efforts to help the poor.
Rev. Russell Conwell- “Acres of
Diamonds” sermon.= poor are poor
due to shortcomings.
Government Takes on Big Business
US Industrialists used the 14th Amendment as justification
for their monopolistic actions.
• courts interpreted the provisions designed to protect exslaves as labeling corporations “individuals”.
• Corporations migrated to states (NJ) who were less
regulatory.
** 1890 Sherman Antitrust Act- forbade combinations
that restrained trade- largely ineffective (loopholes)
• law was used to claim that labor unions were unlawful
combinations
• Attorney-General lost 7 of the 1st 8 cases under the law
•1914- made more effective
One of Carnegie’s mansions
Vanderbilt mansion
Life of the worker & tenement dweller
The “New” South
1900- the South was mostly unaffected by industrial by
industrial growth.
By 1900, the South was producing a smaller % of industrial
goods that it had BEFORE the War.
• Black & white sharecroppers remained by debt bondage
to landlords- mostly rural.
• Henry Grady- editor of Atlanta Constitution- urged
southerners to be “Georgia Yankees”.
*James Buchanan Duke
• 1880’s- machine made cigarettes replaced hand rolled
• Duke mass produced cigarettes (American Tobacco Co.)
• gave money to Trinity College= Duke University.
Barriers to Southern Industrial Growth
• Regional rate setting (by Northern RR)
• “Pittsburgh Plus” rate system for steel industry in
Alabama= stunted Southern economy
1880’s- Textile Mills move to the South
• Northern capitalists built textile mills in the South
• Cheap labor (mostly white “lint heads”) & tax benefits
• located in Piedmont of southern Appalachia
• provided an industrial base in the South
• “mill towns” sprang up– salaries = credit at company
store= debt to mill workers.
• 1st steady jobs/wages---no farming involved.
Impact of the Second Industrial Revolution on America
1. Standard of living rose sharply
2. More physical comforts at home?
3. Cities grew
4. Concept of time- Time clock vs. natural time
5. ** Women- affected more than any single group
(new jobs- typewriter, telephone operators
• delayed marriage for careers
• smaller families
• most women worked because of necessity & earned
less than men until 1970’s-1980’s.
Stepped On” Charles Gibson late 1800’s- Gibson Girl
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6. Class Division- in 1900, 1/10th of the population owned
9/10ths of the wealth.
Immigrants (socialists & anarchists) complained
1860= 2/3 Self employed
By 1900- 2 of 3 Americans depended on wages
7. No Safety Nets- no Unemployment Insurance, Social
Security, Disability
• Bankrupt businesses = unemployment
• Hurt = unemployed
8. Globalization- American products increasingly sold
overseas (“the flag follows trade”)
Unions in American History
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Problem: Workers were exploited, work
was impersonal, machines required
unskilled workers (replaced workers)
laws, courts, public opinion favored
business
troops used against workers
Tactics Used Against Unions
• Lockouts
• “Yellow Dog” Contracts
• Blacklists
• hired thugs/ detectives to keep unions out
What should workers do?
* Commonwealth v. Hunt (1842) workers have a right
to organize (Mass.)
• Before 1861- few unions or strikes
• After Civil War- workers began to organize (1872= 32
national unions).
Major Labor Unions of the Gilded Age
*The National Labor Union (NLU; 1866-1873)
• 600,000 members at peak
• Members included: skilled, unskilled, farmers
• Excluded: Asians; did not defend rights of blacks,
women (blacks formed Colored NLU)
• Demands: 8 hour work day, Arbitration & strikes
(Government workers won 8 hour day in 1868).
Why they collapsed: Depression in 1870’s= decreased
membership, more focus on politics, wage reductions
(National Railway Strike)
*The Knights of Labor
Members: skilled & unskilled, women & blacks; no Chinese; no
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lawyers, doctors, stockbrokers
Led By Terrence Powderly
1,000,000 members at peak
Rejected socialism & radicalism
Methods: Leadership opposed use of strikes but, local unions used
strikes.
Demands: 8 Hour work day, end of child labor & convict labor,
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graduated income tax, equal pay for women, cooperative
ownership of Railroads & Mines.
Supported Chinese Exclusion Act
Successes: 1884 Union Pacific Strike, 1885 Wabash Strike
Decline: Autocratic structure, mismanagement, unsuccessful strikes
(Missouri Pacific Strike 1886)
 Haymarket Riot (1886)
 Skilled workers defected to American Federation of Labor
 Celebrated 1st Labor Day (1885); later a national holiday
American Federation of Labor (AFL)1886Present :
*Longest lasting Labor Union- still exists as AFL-CIO
• founded by alliance of craft unions disaffected by the
Knights of Labor
• Samuel Gompers elected leader 1886-1924
•An association of self governing national unions
(different trades & skills)
• Collected a “per capita tax” on its member
organizations (1/2 CENT per member)
• Wanted: “more”– wages, jobs, hours, working
conditions & CLOSED SHOPS
•Methods: Boycotts, strikes, walkouts (kept a ‘war chest”
of $ to help during strikes.
• did
not allow: unskilled workers or blacks
• 1900= 500,000 members
Labor 1881- 1900
• 23,000 strikes, over 6.6 million workers= cost $450
million
• labor unions won about half the strikes (only 30% of
workers)
• Labor Day- legal holiday 1894
• Later laws will be enacted to protect workers