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Chapter 24 Industry Comes of Age 1865-1900

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Title: Chapter 24 Industry Comes of Age 1865-1900


1
Chapter 24Industry Comes of Age1865-1900
First Oil well
Standard Oil as a powerful , sprawling octopus
2
Captains of Industry or Robber Barons
3
Business Philosophy During Gilded Age
  • The idea that the government should not interfere
    with economic development, or specific
    businesses, is known as Laissez-faire. This idea
    originated with British economist Adam Smith and
    was published in 1776 in The Wealth of Nations.
    He believed that the laws of supply and demand,
    combined with profit motive, would be the most
    efficient type of economy. Many business leaders
    in the 1800s echoed these sentiments and wanted
    the government to leave their businesses alone.
  • Two social philosophies also seemed to support
    laissez-faire capitalism. Horatio Alger wrote
    popular fictional books in which the protagonist
    poor boys became wealthy through their honesty
    and hard work. These novels demonstrated the idea
    of the Puritan Work Ethic which was  introduced
    by the Puritans during the Colonial Era. This
    ethic held that hard work was its own reward and
    built character.
  • Social Darwinism stated that success in society
    was determined by "survival of the fittest." This
    interpretation of Charles Darwin's theory caused
    many to believe that the poor were deceitful and
    lazy, while the rich were honest and
    hard-working. This also explained how healthy
    businesses thrived while unhealthy ones went
    bankrupt.

4
The Gospel of Wealth
  • Many of the newly rich had worked from poverty to
    wealth, and thus felt that some people in the
    world were destined to become rich andthen help
    society with their money. This was the Gospel
    ofWealth.
  • Social Darwinism applied Charles
    Darwinssurvival-of-the-fittest theories to
    business. It said the reason aCarnegie was at
    the top of the steel industry was that he was
    most fit to run such a business.

5
The Gospel of Wealth
  • The Reverend Russell Conwell of Philadelphia
    became rich bydelivering his lecture, Acres of
    Diamonds thousands oftimes, and in it he
    preached that poor people made themselves poor
    and rich people made themselves rich everything
    was because of ones actions only.
  • Corporate lawyers used the 14th Amendment to
    defend trusts, thejudges agreed, saying that
    corporations were legal people and thus entitled
    to their property, and plutocracy ruled.

6
The Iron Colt Becomes an Iron Horse
  • After the Civil War, railroad production grew
    enormously, from35,000 mi. of track laid in 1865
    to a whopping 192,556 mi. of tracklaid in 1900.
  • Congress gave land to railroad companies totally
    155,504,994 acres.
  • Railroads gave land their value towns where
    railroads ran becamesprawling cities while those
    skipped by railroads sank into ghosttowns, so,
    obviously, towns wanted railroads in them.

7
Spanning the Continent with Rails The Union
Pacific Railroad
  • Deadlock over where to build a transcontinental
    railroad was brokenafter the South seceded, and
    in 1862, Congress commissioned the UnionPacific
    Railroad to begin westward from Omaha, Nebraska,
    to gold-richCalifornia.
  • The company received huge sums of money and land
    to build itstracks, but corruption also plagued
    it, as the insiders of the CreditMobilier reaped
    23 million in profits.
  • Many Irishmen, who might lay as much as 10 miles
    a day, laid the tracks.
  • When Indians attacked while trying to save their
    land, the Irishdropped their picks and seized
    their rifles, and scores of workers andIndians
    died during construction.

8
Spanning the Continent with Rails The Union
Pacific Railroad
  • Over in California, the Central Pacific Railroad
    was in charge ofextending the railroad eastward,
    and it was backed by the Big Fourincluding
    Leland Stanford, the ex-governor of California
    who had usefulpolitical connections, and Collis
    P. Huntington, an adept lobbyist.
  • The Central Pacific used Chinese workers, and
    received the sameincentives as the Union
    Pacific, but it had to drill through the
    hardrock of the Sierra Nevada.
  • In 1869, the transcontinental rail line was
    completed at PromontoryPoint near Ogden, Utah
    in all, the Union Pacific built 1,086 mi.
    oftrack, compared to 689 mi. by the Central
    Pacific.

9
The two railroads meetThe golden spike
10
Chinese Coolie Labor and Irish Paddy Labor on
the railroads
Coolie labor was viewed as a new form of slavery
since employers of coolies were not legally
required to take care of their men outside of
paying a minimum wage and supplying basic
provisions. Also since fraud and kidnapping were
often employed to acquire recruits.
Many Irish men labored in coal mines and built
railroads and canals. Railroad construction was
so dangerous that it was said that there was an
Irishman buried under every railroad tie.
Usually, other jobs were not available for the
Irish
11
Binding the Country with Railroad Ties
  • Before 1900, four other transcontinental
    railroads were built
  • The Northern Pacific Railroad stretched from Lake
    Superior to the Puget Sound and was finished in
    1883.
  • The Atchison, Topeka, and Santa Fe stretched
    through the Southwest deserts and was completed
    the following year, in 1884.
  • The Southern Pacific (completed in 1884) went
    from New Orleans to San Francisco.
  • The Great Northern ran from Duluth to Seattle and
    was the creationof James J. Hill, probably the
    greatest railroad builder of all.
  • However, many pioneers over-invested on land, and
    the banks thatsupported them often failed and
    went bankrupt when the landwasnt worth as much
    as initially thought.

12
Revolution in Railways
  • Railroads stitched the nation together, generated
    a huge market and lots of jobs, helped the rapid
    industrialization of America, andstimulated
    mining and agriculture in the West by bringing
    people andsupplies to and from the areas where
    such work occurred.
  • Railroads helped people settle in the previously
    harsh Great Plains.
  • Due to railroads, the creation of four national
    time zones occurredon November 18, 1883, instead
    of each city having its own time zone(that was
    confusing to railroad operators).
  • Railroads were also the makers of millionaires
    and the millionaire class.

13
Railroad Consolidation and Mechanization
  • Older eastern railroads, like the New York
    Central, headed byCornelius Vanderbilt, often
    financed the successful western railroads.
  • Advancements in railroads included the steel
    rail, which wasstronger and more enduring than
    the iron rail, the Westinghouse airbrake which
    increased safety, the Pullman Palace Cars which
    wereluxurious passenger cars, and telegraphs,
    double-racking, and blocksignals.
  • Nevertheless, train accidents were common, as
    well as death.

Cornelius Vanderbilt and the Pullman Palace Car
14
Wrong Doing in Railroading
  • Railroads were not without corruption, as shown
    by the Credit Mobilier scandal.
  • Jay Gould made millions embezzling stocks from
    the Erie, Kansas Pacific, the Union Pacific, and
    the Texas and Pacific railroadcompanies.
  • One method of cheap moneymaking was called
    stockwatering, in which railroad companies
    grossly over-inflated the worth of their stock
    and sold them at huge profits.

Financier Jay Gould
15
Gilded Age Business Organizations
  • During the 1800s, the United States began to
    industrialize. Whole industries and companies
    grew large, sometimes forming monopolies, or a
    company or group of companies that completely
    controls a single industry. Often, monopolies
    were created through mergers, where one company
    obtains legal control over another. There were a
    variety of types of business organizations that
    became monopolies
  • Business Organization
  • Conglomerate A group of unrelated business owned
    by a single corporation.
  • Pool Competing companies that agree to fix prices
    and divide regions among members so that only one
    company  operates in each area.
  • Trust Companies in related fields agree to
    combine under the direction of a single board of
    trustees, which meant that shareholders had no
    say.
  • Holding Company A company that buys controlling
    amounts of stock in related companies, thus
    becoming the majority shareholder, and holding
    considerable say over each company's business
    operations.

16
Wrong Doing in Railroading
  • Railroad owners abused the public, bribed judges
    and legislatures,employed arm-twisting
    lobbyists, elected their own to political
    office,gave rebates (which helped the wealthy
    but not the poor), and used free passes to gain
    favor in the press.
  • As time passed, though, railroad giants entered
    into defensivealliances to show profits, and
    began the first of what would be calledtrusts,
    although at that time they were called pools.
    Apool (AKA, a cartel) is a group of supposed
    competitorswho agree to work together, usually
    to set prices.

17
Government Response
  • Eventually a grass-roots movement to combat the
    abuses of business was formed from the farmers'
    social organization called the Grange. During
    their informal meetings, members of the Grange
    discovered that many of their group were being
    charged enormous amounts by the railroad
    companies for short hauls, while big businesses
    like Standard Oil were receiving rebates where
    they were charged less for long hauls.
  • Through the use of bloc-voting, this group was
    able to get candidates elected to state
    legislatures who supported railroad reform
    legislation. These state laws were eventually
    challenged in Supreme Court, eventually forcing
    the Federal Government to pass regulatory
    legislation.

18
Birth of Populism
  • As the rich became wealthier, and the poor more
    so, people began to question these philosophies,
    and some even attacked leading industrialists
    calling the Robber Barons, while others
    maintained that they were Captains of Industry
  • Farmers decided to more formally organize their
    political views and in doing so founded the
    Populist Party. This third political party was
    largely unsuccessful, but introduced ideas that
    were later adopted by the Republican and
    Democratic parties during the Progressive Era.

19
Miracles of Mechanization
  • In 1860, the U.S. was the 4th largest
    manufacturer in the world, but by 1894, it was
    1, why?
  • Now-abundant liquid capital.
  • Fully exploited natural resources (like coal,
    oil, and iron, the iron came from the
    Minnesota-Lake Superior region which yielded
    therich iron deposits of the Mesabi Range).
  • Massive immigration made labor cheap.

20
Miracles of MechanizationAmerican ingenuity
played a vital role
  • Popular inventions included the cash register,
    the stock ticker,the typewriter, the
    refrigerator car, the electric dynamo, and
    theelectric railway, which displaced
    animal-drawn cars.
  • Thomas Edison, the Wizard of Menlo Park, was
    the most versatile inventor, who, while best
    known for his electric light bulb,also cranked
    out scores of other inventions.

21
Communication
  • In 1876, Alexander Graham Bell invented the
    telephone and a new age was launched.

22
The Trust Titan Emerges
  • Industry giants used various ways to eliminate
    competition and maximize profits.
  • Andrew Carnegie used a method called
    verticalintegration, which meant that he
    bought out and controlled all aspects of an
    industry (in his case, he mined the iron,
    transported it, refined it, and turned it into
    steel, controlling all parts of theprocess).

23
Carnegie and Other Sultans of Steel
  • But Carnegie, fearing ridiculefor possessing so
    much money, spent the rest of his life donating
    350million of it to charity, pensions, and
    libraries.
  • Meanwhile, Morgan took Carnegies holdings, added
    others, andlaunched the United States Steel
    Corporation in 1901, a company thatbecame the
    worlds first billion-dollar corporation (it
    wascapitalized at 1.4 billion).
  • Andrew Carnegie started off as a poor boy in a
    bad job, but by working hard, assuming
    responsibility, and charming influential
    people,he worked his way up to wealth.
  • He started in the Pittsburgh area, but he was not
    a man who liked trusts still, by 1900, he was
    producing 1/4 of the nationsBessemer steel, and
    getting 25 million a year.
  • J. Pierpont Morgan, having already made a fortune
    in the banking industry and in Wall Street, was
    ready to step into the steel tubing industry, but
    Carnegie threatened to ruin him, so after some
    tense negotiation, Morgan bought Carnegies
    entire business at 400 million (this was before
    income tax).

24
J.P. Morgan and U.S. Steel
  • Meanwhile, J.P. Morgan took Carnegies holdings,
    added others, andlaunched the United States
    Steel Corporation in 1901, a company that became
    the worlds first billion-dollar corporation (it
    wascapitalized at 1.4 billion).
  • J.P. Morgan also placed his own men on the boards
    of directors ofother rival competitors to gain
    influence there and reduce competition,a process
    called interlocking directorates.

A man generally has two reasons for doing a
thing. One that sounds good, and a real one.
Mr. Morgan
25
The Supremacy of Steel
  • In Lincolns day, steel was very scarce and
    expensive, but by1900, Americans produced as
    much steel as England and Germany combined.
  • This was due to an invention that made
    steel-making cheaper andmuch more effective the
    Bessemer process, which was named after
    anEnglish inventor even though an American,
    William Kelly, had discoveredit first
  • Cold air blown on red-hot iron burned carbon
    deposits and purified it.
  • America was one of the few nations that had a lot
    of coal for fuel,iron for smelting, and other
    essential ingredients for steel making,and thus,
    quickly became 1.

26
Rockefeller Grows an American Beauty Rose
  • In 1859, a man named Drake first used oil to get
    money, and by the1870s, kerosene, a type of oil,
    was used to light lamps all over the nation.
  • However, by 1885, 250,000 of Edisons electric
    light bulbswere in use, and the electric
    industry soon rendered kerosene obsolete, just as
    kerosene had made whale oil obsolete.
  • Oil, however, was just beginning with the
    gasoline-burning internal combustion engine.

Drake First Oil Well
27
Standard Oil and Mr. Rockefeller
  • John D. Rockefeller, ruthless and merciless,
    organized the Standard Oil Company of Ohio in
    1882 (five years earlier, he had already
    controlled 95 of all the oil refineries in the
    country).
  • John D. Rockefeller, master of horizontalintegra
    tion, simply allied with or bought out
    competitors tomonopolize a given market.
  • He used this method to form Standard Oil and
    control the oil industry by forcing weaker
    competitors to go bankrupt.

28
Sherman Anti-Trust Act
  • In 1890, the Sherman Anti-Trust Act was signed
    into law it forbadecombinations (trusts, pools,
    interlocking directorates, holdingcompanies) in
    restraint of trade, without any distinction
    betweengood and bad trusts.
  • It proved ineffective, however, because it
    couldnt be enforced.
  • Not until 1914 was it properly enforced and those
    prosecuted for violating the law were actually
    punished.

29
The South in the Age of Industry
  • The South remained agrarian despite all the
    industrial advances
  • However, cheap labor led to the creation of many
    jobs, and despitepoor wages, many white
    Southerners saw employment as a blessing.
  • Blacks were largely sharecroppers

Sharecropper shack
30
The Impact of the Industrial Revolution on America
  • As the Industrial Revolution spread in America,
    the standard of living rose, immigrants swarmed
    to the U.S., and early Jeffersonian ideals about
    the dominance of agriculture fell.
  • A nation of farmers was becoming a nation of wage
    earners, but the fear of unemployment was never
    far, and the illness of a breadwinner(the main
    wage owner) in a family was disastrous.
  • Strong pressures in foreign trade developed as
    the tireless industrial machine threatened to
    flood the domestic market.

31
Women in the Age of Industrialism
  • Women, who had swarmed to factories and had been
    encouraged by recent inventions, found new
    opportunities, and the Gibson Girl, created by
    Charles Dana Gibson, became the romantic ideal of
    the age.
  • The Gibson Girl was young, athletic, attractive,
    and outdoorsy (not the stay-at-home mom type).
  • However, many women never achieved this, and
    instead toiled in hard work because they had to
    do so in order to earn money.

32
In Unions There Is Strength
  • With the inflow of immigrants providing a labor
    force that wouldwork for low wages and in poor
    environments, the workers who wanted to improve
    their conditions found that they could not, since
    their bosses could easily hire the unemployed to
    take their places.
  • Corporations had many weapons against strikers,
    such as hiring strikebreakers or asking the
    courts to order strikers to stop striking,and if
    they continued, to bring in troops. Other methods
    included hiring scabs or replacements or
    lockouts tostarve strikers into submission,
    and often, workers had to sign ironclad oaths
    or yellow dog contracts which banned them from
    joining unions.
  • Workers could be blacklisted, or put on a list
    and denied privileges elsewhere.

33
Unions lack middle class support
  • The middle-class, annoyed by the recurrent
    strikes, grew deaf to the workers outcry.
  • The view was that people like Carnegie and
    Rockefeller had battledand worked hard to get to
    the top, and workers could do the same ifthey
    really wanted to improve their situations.

34
Labor grows slowly
  • The Civil War put a premium on labor, which
    helped labor unions grow.
  • The National Labor Union, formed in 1866,
    represented a giant bootstride by workers and
    attracted an impressive total of 600,000
    members,but it only lasted six years.
  • However, it excluded Chinese and didnt really
    try to get Blacks and women to join.
  • It worked for the arbitration of industrial
    disputes and theeight-hour workday, and won the
    latter for government workers, but thedepression
    of 1873 knocked it out.

35
Labor grows slowly
  • A new organization, the Knights of Labor, was
    begun in 1869 andcontinued secretly until 1881.
    This organization was similar to theNational
    Labor Union.
  • It only barred liquor dealers, professional
    gamblers, lawyers,bankers, and stockbrokers, and
    they campaigned for economic and socialreform.
  • Led by Terence V. Powderly, the Knights won a
    number of strikes forthe eight-hour day, and
    when they staged a successful strike againstJay
    Goulds Wabash Railroad in 1885, membership
    mushroomed to 3/4of a million workers.

Terence Powderly and Knights Labor leaders
36
Haymarket Square Riot
  • The Haymarket Riot in Chicago in May 1886 killed
    several people, and resulted in a highly
    controversial trial followed by executions of
    four men who may have been innocent. The American
    labor movement was dealt a severe setback, and
    the chaotic events resonated for many years.
  • American Labor on the Rise
  • American workers had begun organizing into unions
    following the Civil War, and by the 1880s many
    thousands were organized into unions, most
    notably the Knights of Labor.
  • In the spring of 1886 workers struck at the
    McCormick Harvesting Machine Company in Chicago,
    the factory that made farm equipment including
    the famous McCormick Reaper. The workers on
    strike demanded an eight-hour workday, at a time
    when 60-hour work weeks were common. The company
    locked out the workers and hired strikebreakers,
    a common practice at the time.

37
Haymarket Square Riot
  • On May 1, 1886, a large May Day parade was held
    in Chicago, and two days later, a protest outside
    the McCormick plant resulted in a person being
    killed.
  • Protest Against Police Brutality
  • A mass meeting was called to take place on May 4,
    to protest what was seen as brutality by the
    police. The location for the meeting was to be
    Haymarket Square in Chicago, an open area used
    for public markets.
  • At the May 4th meeting a number of radical and
    anarchist speakers addressed a crowd of
    approximately 1,500 people. The meeting was
    peaceful, but the mood became confrontational
    when the police tried to disperse the crowd.

38
Haymarket Square Riot
  • The Haymarket Bombing
  • As scuffles broke out, a powerful bomb was
    thrown. Witnesses later described the bomb, which
    was trailing smoke, sailing above the crowd in a
    high trajectory. The bomb landed and exploded,
    unleashing shrapnel.
  • The police drew their weapons and fired into the
    panicking crowd. According to newspaper accounts,
    policemen fired their revolvers for a full two
    minutes.
  • Seven policemen were killed, and its likely that
    most of them died from police bullets fired in
    the chaos, not from the bomb itself. Four
    civilians were also killed. More than 100 persons
    were injured.

39
Haymarket Square Riot
  • Labor Unionists and Anarchists Blamed
  • Public outcry was enormous. Press coverage
    contributed to a mood of hysteria. Two weeks
    later, the cover of Frank Leslie's Illustrated
    Magazine, one of the most popular publications in
    the US, featured an illustration of the "bomb
    thrown by anarchists" cutting down police and a
    drawing of a priest giving the last rites to a
    wounded officer in a nearby police station.
  • The rioting was blamed on the labor movement,
    specifically on the Knights of Labor, the largest
    labor union in the United States at the time.
    Widely discredited, fairly or not, the Knights of
    Labor never recovered.
  • Newspapers throughout the US denounced
    anarchists, and advocated hanging those
    responsible for the Haymarket Riot. A number of
    arrests were made, and charges were brought
    against eight men.

40
Haymarket Riot a Setback for American Labor
  • It was never officially determined who threw the
    bomb in Haymarket Square, but that didn't matter
    at the time. Critics of the American labor
    movement pounced on the incident, using it to
    discredit unions by linking them to radicals and
    violent anarchists.
  • The Haymarket Riot resonated in American life for
    years, and there is no doubt it set back the
    labor movement. The Knights of Labor had its
    influence plummet, and its membership dwindled.
  • At the end of 1886, at the height of the public
    hysteria following the Haymarket Riot, a new
    labor organization, the American Federation of
    Labor was formed. And the A.F.L. eventually rose
    to the forefront of the American labor movement.

41
The birth of the AFL
  • In 1886, Samuel Gompers founded the American
    Federation of Labor.
  • It consisted of an association of self-governing
    national unions,each of which kept its
    independence, with the AF of L unifying
    overallstrategy.
  • Gompers demanded a fairer share for labor.
  • He simply wanted more, and sought better wages,
    hours, and working conditions.
  • The AF of L established itself on solid but
    narrow foundations,since it tried to speak for
    all workers but fell far short of that.
  • Composed of skilled laborers, it was willing to
    let unskilledlaborers fend for themselves.
    Critics called it the labortrust.

Samuel Gompers
42
The Birth of the AFL
  • From 1881 to 1900, there were over 23,000 strikes
    involving6,610,000 workers with a total loss to
    both employers and employees ofabout 450
    million.
  • Perhaps the greatest weakness of labor unions was
    that they only embraced a small minority3of
    all workers.
  • However, by 1900, the public was starting to
    concede the rights ofworkers and beginning to
    give them some or most of what they wanted.
  • A few owners were beginning to realize that
    losing money to fightlabor strikes was useless,
    though most owners still dogmatically
    foughtlabor unions.
  • If the age of big business had dawned, the age of
    big labor was still some distance over the
    horizon.
  •  

In 1894, Labor Day was made a legal holiday.
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