MR. LIPMAN

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MR. LIPMANS APUS POWERPOINT CHAPTER 24

• Industry Comes of Age
• 1865-1900

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Keys to the Chapter

• Growth of Railroads
• The Grange Movement
• Massive Immigration
• Rise of the Robber Barons Industry Giants
• Shift to wage dependence from land dependence
• Unions struggle for a foot hold

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Railroads

• 1865 1900
• Government gave railroad subsides in land to help
  offset the risk (both state and federal
  governments did this) land used as collateral
  for loans to build the railroads
• Railroads used land as collateral for loans or
  sold it for money (average of 3 per acre)

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• Justifying the giveaway of the land
• Government got lower rates for postal services
  and military traffic
• Cheap way to subsidize railroads, without passing
  new taxes or cash
• R.R. increased value of governments land
• Railroads brought civilization to the West

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• Two Major R.R. build transcontinental R.R.
• Union Pacific starts in Nebraska with mostly
  Irish immigrants doing the work goes West
• Central Pacific starts in California and used
  mostly Chinese immigrants to do the work
• They meet on 5/10/1869 at Promontory Point, Utah
  and the Golden Spike is put in the ground

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Promontory Point, UtahMay 10, 1869
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• Organizing the railroad lines
• Vanderbilt organized and expanded the New York
  Central line which is very profitable
• Distance between the 2 tracks (gauge)
  standardized
• Westinghouse air brake and Pullman Palace cars
• Safety devices
• Telegraph for communication
• Double-tracking (so railroads werent going
  opposite directions on same tracks)?
• Block signal ( prevent 2 trains going opposite
  directions from being on same track at same
  time)?
• Standardized time zones (1883- 4 zones)

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• Railroads bring the following
• Unity between the states
• Industrialization and huge demand for steel
• Boom in mining and agriculture
• Increased population in West
• Increased immigration from Europe and Asia
• --------------------------------------------------
  --------
• But also bring destruction to land and Indian way
  of life and the end of the open range
• Also bring stock speculation, rip off artists,
  and land speculators

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• Stock watering Jay Gould
• Selling stock far beyond what it was worth
• R.R. forced to charge high rates and fight
  competitive battles with rival railroads to make
  railroad worth high stock price
• Fierce Competition would require lower prices
  thus preventing actual profit from occurring
• Bribery of politicians and journalists

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• Railroads began working together rather than
  competing to reward investors at the expense of
  railroad users
• Pools
• Agreement to divide the business of a certain
  area and share the profits
• Rebates or kickbacks
• Given to large shippers to gain steady traffic
• Lower profit made up by charging higher prices
  for short hauls or on small shippers

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History Repeats Itself Middle Ages and Today
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• Farmers in Midwest hurt by railroad abuses
• Depression in 1870s finally moved farmers to
  protest railroad abuses
• Farmers (led by organized farmers groups like
  the Grange) worked at state level to regulate
  railroads
• BUT most Americans believed in Lazzie-Faire which
  requires government to stay out of business issues

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• Farmers use state legislatures to pass laws
  regulating railroad abuses.
• Railroads turn to FED court for help
• 1886 Wabash v. Illinois
• Supreme Court ruled that states could not
  regulate interstate (between states) commerce
• Only federal government could regulate interstate
  commerce so pressure put on Feds

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• 1887 Interstate Commerce Act (ICC) passed
• Prohibited rebates and pools
• Stopped unfair discrimination against shippers
• Require same for short hauls long hauls
• (ICC) set up to enforce the law
• This helped RRs because now avoid costly wars
  and instead begin to control regulatory process
• First large-scale attempt by federal government
  to regulate business in interests of society

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Post Civil War Industrialization

• Liquid Capital () becomes available (Europe)
• Natural Resources are plentiful (coal, oil, iron)
• Immigration provides supply of cheap labor
• Inventions enable mass production
• Urbanization speeded by refrigerator car,
  electricity and electric railway

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• The telephone
• Invented by Alexander Graham Bell in 1876
• Brought nationwide communication to U.S.
• Brought women to work on switchboard
• Electricity developed by Thomas Edison
• Invented many things like phonograph, moving
  picture, and (most famously) the light bulb

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• Vertical integration
• Combining into 1 organization all phases of
  manufacturing and production thus being able to
  control quality, quantity and costs
• Best exemplified by Andrew Carnegies steel
  corporation, in which every part of making steel
  was integrated into 1 company

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Vertical Integrationas developed by Andrew
Carnegie in steel manufacturing
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• Horizontal integration
• Uniting with competitors to monopolize
• Rockefeller trusts are an example of this
• Stockholders in smaller oil companies gave
  control of their stock to the board of Standard
  Oil Company
• The board then controlled all competing
  companies in the industry
• Smaller companies left out of the trust
  eliminated with ruthless competition
• Businesses in other industries begin to copy this
  approach

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Horizontal Integration made famous by Rockefeller
and oil trusts
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• Interlocking directorate
• Devised by J.P. Morgan during depression in 1890s
  to control financial institutions
• Hurting companies were bought out by Morgans
  banks who then put officers from his banks on
  boards of various competing companies to
  eliminate wasteful competition
• He will use his vast sums of to buyout Andrew
  Carnegie and create US Steel

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Steel Production 18801914Reduces importance of
Europe
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• Bessemer process
• Cold air on very hot iron ignited carbon in the
  ore and burned out the impurities
• Made cheap production of high-quality steel
• America had important natural resources close
  together
• Coal (for fuel), iron ore, other important
  ingredients

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Andrew Carnegie was king of steel Scottish
immigrant who rose from poverty to wealth and
then gave almost all away
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• 1900 Morgan buys out Carnegie and Carnegie
  believes he will die disgraced if he dies with
  all his wealth
• Spends rest of his life giving away 350 million
  (50m left)
• Money given to libraries and universities to help
  people improve themselves
• The leader of the Gospel of Wealth theory

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• Emergence of the oil industry
• 1859 first oil well in Pennsylvania drilled
• Kerosene became first important derivative of oil
  better than whale oil
• Late 1800s invention of light bulb by Edison
  made burning kerosene obsolete
• Mid 1890s automobile invented, burning gasoline
  for power
• Internal combustion engine gave oil industry a
  huge, profitable boost

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John D. RockefellerOrganizes Standard Oil
Company to dominate the oil industry
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• Positives of Rockefellers Standard Oil
• Produced superior product at lower price
• Achieved economies of scale because his business
  was so big
• Producing a lot of oil by 1 company much more
  efficient than using many smaller companies
  (think Microsoft)
• Negatives of Rockefellers approach was that
  business became more powerful than the government

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What a Puny Little Government
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• Domination of trusts begins
• sugar, tobacco, leather, harvester, meat
• New rich eclipsing old rich who had inherited
  their money
• Old rich were the leaders of the groups who
  attacked the new industrialists out of fear of
  being replaced

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The Gospel of Wealth argues Darwinism...Survival
of the fittest

• Blame the poor justification
• New rich had become rich through hard work
• Poor are lazy and can only blame themselves
• Law also used (Constitutional arguments) to
  prevent break-up of Corporations because would be
  unlawful taking of property without
  compensation 14th protects corps)

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Who is strong and who is weak?
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• Public starts to oppose trusts and newspapers
  rally against trusts
• Federal regulation then passed to regulate and
  control trusts
• Sherman Anti-Trust Act of 1890

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• Sherman Anti-Trust Act of 1890
• Forbade combinations in restraint of trade
• No distinction made between good and bad
  trusts
• At first was ineffective
• Little power given to government
• Most cases decided in favor of corporations
• Used to control unions (labor combinations)
• Eventually strengthened in 1914 to stop trusts

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• South lacks growth of industry
• Sharecropping and tenant system controlled by
  absentee landlords
• 1880s rise of pre-rolled cigarettes and in 1890
  American Tobacco Company formed
• 1880s North put more cotton mills in South
• Lower taxes and cheap labor in South
• Mills located in poorest regions because labor
  was cheapest (same today for car companies)

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• Women Join Workforce
• Worked as secretaries, telephone operators, and
  in factories with men
• Middle class women put off marriage and had
  smaller families
• Poor women worked out of economic necessity
• Womens wages stayed lower than mens

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• Foreign trade is expanded
• US manufacturers trade with foreign countries
  when US could not absorb enough of their products
• US military used to protect US business abroad,
  and to build a US empire
• Wage earners did not share profits
  proportionately with business owners
• 1900 1/10 of the people owned 9/10 of the
  wealth in the US

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• Workers begin to organize together to fight for
  basic rights
• Found many obstacles to a successful fight
  against employers
• Oversupply of labor drives down wages
• New Machines increase productivity which means
  less workers needed
• Employment is no longer personal (small shops)
  but instead is large and impersonal

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• Corporations import strike-breakers (scabs) and
  pay thugs to beat up strike organizers
• Corporations get conservative judges to issue
  injunctions against strikes (forcing them to
  stop)
• If workers did not end strike, state or federal
  troops could be called out to forcibly put down
  the strike

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• Corporations use lockouts (lock factory doors
  against workers) to starve them into submission
• Corporations force workers to sign ironclad
  oaths or yellow-dog contracts which were
  agreements not to join a union
• Corporations put agitators names on black
  list, give lists to other employers so that
  these people could not find work

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• Some corporations used company town where
  company owned housing, stores and provided credit
  to workers, putting them in continuous debt
• Middle class had little sympathy for workers
• Low wages were still highest in the world
• Believed poor could work hard to improve their
  condition, as others had done before
• Strike seen as socialistic, un-American import
  from Europe
• God would take care of poor and weak with
  charities

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• National Labor Union
• Organized in 1866 lasted 6 years
• Represented 600,000 workers at peak (skilled,
  unskilled, farmers)
• Did not accept Chinese, women, or blacks
• Destroyed by depression in early 1870s
• Knights of Labor
• Organized in 1869
• Began as a secret society to prevent retaliation
• Represented 750,000 workers at peak
• Called for organizing all workers
• Skilled, unskilled, women, blacks,
• Called for producers cooperatives, codes for
  safety and health of workers, 8-hour day

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• Haymarket Square
• May 4, 1886 police attacked a peaceful meeting
  protesting police brutalities
• Dynamite bomb thrown, killing several dozen
  people (including some police)
• 8 people (the Chicago 8) rounded up
• No proof they had anything to do with the bombing
  
• Judge ruled that since they had made speeches
  that incited violence, they were responsible for
  the bomb
• 5 sentenced to death, 3 given long prison terms
• Later those still alive are pardoned by Governor

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• Haymarket Square destroyed the Knights
• Became associated with anarchists and violence
• Knights other fatal weakness was bringing
  together unskilled and skilled workers
• Unskilled workers easily replaced, nullifying
  effectiveness of strikes
• Skilled workers got tired of being held back by
  unskilled workers so left Knights

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• American Federation of Labor (AFL) formed 1886
• Led by Samuel Gompers, skilled cigar maker
• Association of self-governing national unions
• Each union kept its independence, while AFL made
  overall strategy
• Gained 500,000 skilled members
• In reality, only represented skilled workers
• Used walkouts and boycotts to combat business
  abuses

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• Gompers
• Hated socialism, rejected politics in favor of
  concrete economic goals for workers
• Better wages, fewer hours, better conditions
• Unlike Knights of Labor, concerned with more
  practical (and realistic) goals
• trade agreement authorizing the closed shop
• Gompers got some businesses to only hire union
  members
• AFL was non-political except for supporting
  friends of the union and voting against enemies

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• Public attitudes toward workers began to change
  in the late 1880s and 1890s
• Public acknowledged workers right to join unions
  and strike
• Businesses work with unions to avoid strikes
• Most businesses were still opposed to unions
• 30 years of strikes and violence would be needed
  before labor finally gained recognition and power
  to stand up to business in the 1930s