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The Rise of Industrial America


Title: Chapter 18 Author: Black River Last modified by: Vogt Joseph Created Date: 6/18/2008 9:14:33 PM Document presentation format: On-screen Show (4:3) – PowerPoint PPT presentation

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Title: The Rise of Industrial America

Chapter 18
  • The Rise of Industrial America
  • 1865-1900

  • 1.) What brought about prodigious industrial
    growth and the rise of giant corporations in the
    period of 1865-1900?
  • 2.) How did some business leaders, such as Andrew
    Carnegie and John D. Rockefeller, overwhelm
    competitors and dominate their industries?

Introduction (cont.)
  • 3.) How and why did southern industrialization
    patterns differ from northern ones?
  • 4.) How did workers respond to the changes
    resulting form rapid industrialization and the
    growth of big business?
  • 5.) In the labor-management clashes of the
    period, why did management almost always win?

The Rise of Corporate America
  • The Character of Industrial Change
  • Rapid industrial expansion was made possible by
  • using Americas vast coal deposits for cheap
  • Adopting new technology
  • Enabled manufacturers to cut production costs
  • Employ low-paid unskilled and semiskilled workers
  • Ruthless competition among businesses
  • Lowered commodity prices
  • Ruined weaker companies
  • Left fewer huge corporations in control of each

The Character of Industrial Change (cont.)
  • The unrelenting competition also drove business
    to brutally exploit labor and heedlessly pollute
    the environment
  • Though prices fell
  • interest rates remained high
  • credit tight
  • because of the failure of the money supply to
    keep up with the expansion of the economy

Railroad Innovations
  • By 1900, the United States had more rail miles
    tying the country together than did all of Europe
  • Building this extensive railroad system opened a
    vast internal market to American industry
  • The railroad companies also led the way in
    developing accounting, financial, and managerial
    practices that made large-scale corporate
    enterprise possible
  • Sale of stocks and bonds to raise needed capital

Railroad Innovations (cont.)
  • Railroad management innovations became the model
    for other businesses trying to sell products in a
    national market

Consolidating the Railroad Industry
  • A group of innovative and unscrupulous railroad
    entrepreneurs bought out their smaller
    competitors one by one
  • Collis P. Huntington
  • Central Pacific Railroad
  • Jay Gould
  • Financier, developer, speculator
  • James J. Hill
  • Great Northern Railway

Consolidating the Railroad Industry (cont.)
  • By the 1890s, they had established great trunk
    lines that controlled most of the track
  • These integrated lines carried goods all over the
    country efficiently
  • Standardized equipment and track gauge

Consolidating the Railroad Industry (cont.)
  • However, the railroad companies abused their
  • Bribed politicians
  • Free passes and other favors
  • Gave rebates and kickbacks to big shippers
  • Overcharged small businesses and farmers

Consolidating the Railroad Industry (cont.)
  • Small shippers demanded legislation to curb the
    unfair practices
  • In the 1870s, many Midwestern states outlawed
    rate discrimination
  • These laws were ruled unconstitutional when the
    Supreme Court said states could not regulate
    interstate commerce

Consolidating the Railroad Industry (cont.)
  • Interstate Commerce Act
  • Passed Congress in 1887
  • Forbade pools, rebated, and other monopolistic
  • Established the Interstate Commerce Commission
  • Investigate complaints and unreasonable rates
  • Interstate Commerce Act short summary

Consolidating the Railroad Industry (cont.)
  • The Interstate Commerce Act was ineffective for
    several reasons
  • Federal courts decisions almost always sided with
    the railroads
  • ICCs lack of power to set railroad rates
  • Presidents appointing pro-railroad commissioners

Consolidating the Railroad Industry (cont.)
  • In the early 20th century, under the guidance of
    investment bankers railroad consolidation
    proceeded still further
  • J.P. Morgan
  • By 1906, 7 giant corporations controlled 2/3s of
    all the track

Applying the Lessons of the Railroads to Steel
  • Andrew Carnegies career illustrates the close
    connection between railroad expansion and the
    growth of heavy industry

Applying the Lessons of the Railroads to Steel
  • Carnegies best customers were the railroad
  • From his early experiences working in the
    railroad industry, he learned the organizational,
    accounting, and managerial innovations that he
    later applied to his steel business

Applying the Lessons of the Railroads to Steel
  • He also copied the railroad practice of
    consolidating small enterprises into fewer and
    fewer huge companies
  • Carnegie integrated his business both vertically
    and horizontally

Applying the Lessons of the Railroads to Steel
  • U.S. Steel
  • 1901
  • Carnegie Steel and J.P. Morgans Federal Steel
  • The worlds first corporation capitalized over 1
  • Contained 200 member companies

The Trust Creating New Forms of Corporate
  • By 1900, the consolidation process that had
    placed the railroad and steel businesses in the
    hands of a few corporate giants had also taken
    place in oil, sugar, meatpacking, and many other

The Trust Creating New Forms of Corporate
Organization (cont.)
  • Standard Oil Company
  • John D. Rockefeller
  • Oil-refining
  • Adopted the latest technology
  • Made deals with the railroads to get special
    shipping discounts
  • Engaged in deception and aggression to ruin
  • Created the 1st trust and later holding company
    to extinguish all competition in oil refining

The Trust Creating New Forms of Corporate
Organization (cont.)
  • The growth of trusts, oligopolies, and monopolies
    in one industry after another led to public
    pressure for govt. intervention
  • In 1890, Congress passed the Sherman Anti-Trust
  • Outlawed all contracts and combinations that were
    in restraint of trade in interstate commerce
  • Sherman Anti-Trust Act

The Trust Creating New Forms of Corporate
Organization (cont.)
  • The Sherman Anti-Trust Act was ineffective in
    stopping the growth of trusts
  • Vaguely worded
  • Presidents rarely brought suits against companies
    under it
  • Supreme Court in the E.C. Knight case (1895)
    interpreted the meaning of interstate commerce so
    narrowly as to prevent the laws use against
    manufacturing corporations
  • PBS summary
  • E. C. Knight case short summary
  • Large-scale consolidations in industry
    accelerated after the E.C. Knight case

Stimulating Economic Growth
  • The Triumph of Technology
  • The invention and patenting of new machines in
    the period 1860-1900 also brought about the
    growth of huge corporations
  • Alexander Graham Bells invention of the
    telephone in 1876 gave rise to Bell Telephone
  • By 1900 had installed some 800,000 phones

The Triumph of Technology (cont.)
  • Thomas Edison
  • Menlo Park
  • Perfected the light bulb (Edison Electric)
  • Invented the phonograph, microphone,
    motion-picture camera and over thousands of other
  • Bell and Edison proved that new inventions could
    be the foundation of profitable big business

Specialized Production
  • Manufactures of specialized products also greatly
    expanded their output between 1865 and 1900
  • Locomotives
  • Furniture
  • Womens clothing
  • Not necessarily done in huge factories though

Advertising and Marketing
  • Aggressive advertising and marketing were
    effective in expanding sales and beating out
    competitors in the late 19th century
  • Procter and Gamble
  • American Tobacco
  • Eastman-Kodak

Advertising and Marketing (cont.)
Economic Growth Cost and Benefits
  • By 1900 the chaos of thousands of small companies
    competing for the national market had been
    replaced by an economy dominated by a small
    number of enormous corporations offering a
    dazzling array of new products
  • The price of these accomplishments was the
    crushing of thousands of small-and medium-sized
    business, the exploitation of millions of
    workers, and the fouling of the environment

The New South
  • The South industrialized more slowly than the
  • Until 1900 lagged far behind North
  • Reasons why
  • The destruction of the Souths credit system by
    the Civil War
  • Shortage of capital
  • Federal govt. policies that hurt the South
  • High protective tariffs
  • Souths poor educational facilities
  • High rate of illiteracy

The New South Creed and Southern Industrialization
  • In the 1870s, southern newspaper editors,
    planters, and businessmen began to preach the
    New South Creed
  • The region must industrialize
  • Eager to attract northern capital
  • southern states offered tax exemptions for new
    businesses that would locate there
  • Held industrial fairs
  • Leased convicts from state prisons as cheap labor
  • Practically gave away land, forests, and mineral
    rights to northern corporations

The New South Creed and Southern
Industrialization (cont.)
  • Iron and steel production expanded dramatically
  • Birmingham and Chattanooga
  • The iron and steel mills hired many unskilled
    African Americans

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The Southern Mill Economy
  • Unlike the iron and steel industry, where
    factories were usually in or near urban areas,
    southern textile mills opened in the countryside
  • Towns and villages were created around the mills
  • Most of the textile mills were located in the
    Piedmont region of VA, the Carolinas, GA, and AL

The Southern Mill Economy (cont.)
  • The southern mills combined northern technical
    expertise with southern rural paternalism
  • They recruited workers from the poor white farm
  • Hired many women and children, and even whole
  • The owners paid the laborers 30-50 less than New
    England mills

The Southern Mill Economy (cont.)
  • The textile companies dominated life in the mill
    towns they started
  • They provided their employees with housing,
    stores, schools, and churches

The Southern Mill Economy (cont.)
  • The mills underpaid their workers and overcharged
    for rent and supplies
  • the employees often fell into debt to companies
  • Just as sharecroppers were indebted to their
    landlords and creditor-merchants

Southern Industrial Lag
  • Despite impressive advances, southern
    industrialization occurred on a small scale and
    at a slower pace then in the North
  • The southern economy remained essentially in a
    colonial status
  • Industry was owned largely by northern firms
  • ExampleU.S. Steel controlled the foundries in

Factories and the Work Force
  • From Workshop to Factory
  • The number of industrial workers in the United
    States climbed from 885,000 to 3.2 million by
  • The trend toward large-scale, increasingly
    mechanized production accelerated
  • the nature of work changed markedly
  • Fewer artisans
  • Remaining skilled workers had less control over
    their work and derived less satisfaction from it

From Workshop to Factory (cont.)
  • Factories hired more low-skilled, low-paid women
    and children
  • Jobs became simple, machine-paced, repetitive,
    and boring

The Hardships of Industrial Labor
  • Already by the 1880s, almost 1/3 of the labor
    force in steel and railroad industries were
    unskilled workers
  • Common laborers drifted from city to city and
    from industry to industry
  • Worked for wages that were 1/3 of those paid to
    skilled artisans
  • In the expanding factories and on railroads,
    workers were exposed to a variety of industrially
    induced diseases
  • Black lung (exposure to coal dust)
  • Brown lung (inhaling cotton dust)

The Hardships of Industrial Labor (cont.)
  • They also had appallingly accidents
  • Employers rarely paid compensation to injured
    workers and opposed passage of state health and
    safety codes

Immigrant Labor
  • More and more, immigrants filled the least
    skilled, lowest-paid, dirtiest, and most
    dangerous jobs in the expanding mines, factories,
    and railroads
  • Impoverished French Canadians crossed the border
    to work in the New England textile mills
  • Chinese constructed railroads and mined ore in
    the West
  • If immigrant workers stayed healthy, they often
    lived better than they had in their homelands

Immigrant Labor (cont.)
  • Most of the immigrants worked very hard
  • Most did not adjust easily to the fast pace and
    monotony of factory work or to the rigid
    discipline management tried to impose on them

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Women and Work in Industrial America
  • Since women could be paid even less than men and
    could do unskilled industrial jobs just as well,
    management hired more and more women
  • Married, working-class women and their children
    often spent hours finishing garments, rolling
    cigars, and performing other labor for
    manufacturers in their tenement apartments

(No Transcript)
Women and Work in Industrial America (cont.)
  • Young, single women readily took jobs in
    factories because they preferred them to domestic
  • Almost the only alternative for uneducated
  • Immigrant parents regularly sent their daughters
    into the mills and factories to supplement
    inadequate family incomes
  • By 1900, women made up 17 of the labor force

Women and Work in Industrial America (cont.)
  • In the late 19th and early 20th centuries, women
    also began to obtain clerical positions
  • Office work paid better and offered more prestige
    than factory jobs
  • But women clerical workers had almost no chance
    of moving up to managerial positions
  • Despite the increase in female wage earners,
    womens work outside the home was viewed as
  • A womens career was that of housewife and mother

Hard Work and the Gospel of Success
  • Newspapers and magazines preached the gospel
    that, for male workers, America was the land of
    opportunity and hard work led to success
  • The papers were filled with rags-to-riches
  • Poor immigrant boys who rose to become heads of
    major corporations (Andrew Carnegie)
  • In fact, Carnegie was the exception

Hard Work and the Gospel of Success (cont.)
  • 95 of executives of big corporations came from
    middle-and upper-class families
  • There was some opportunity for skilled workers to
    move into ownership and management of small

Hard Work and the Gospel of Success (cont.)
  • For unskilled immigrant workers there was less
  • At best they moved from unskilled to semiskilled
    or skilled industrial jobs
  • They remained in the working class

Hard Work and the Gospel of Success (cont.)
  • A huge gulf existed between the rich and poor
  • By 1890, Americas richest families (top 10)
    owned 73 of the countrys wealth
  • At the other extreme, better than 50 of all
    industrial laborers earned incomes that placed
    them below the poverty line

Labor Unions and Industrial Conflict
  • Organizing the Workers
  • In response to the unfavorable changes that rapid
    industrialization was forcing on them, workers
    turned to labor unions
  • National Labor Union
  • 1866
  • Formed by William H. Sylvis
  • Several trades
  • Declined in membership in 1870s

Organizing the Workers (cont.)
  • Knights of Labor
  • Terrence V. Powderly
  • 1870s
  • Advance social and economic reforms
  • Equal pay for men and women
  • Abolition of child labor
  • Inclusion of black workers in unions
  • A graduated income tax
  • Cooperative ownership of factories, mines, and
    other businesses

Organizing the Workers (cont.)
  • Despite their egalitarian ideals, the Knights and
    other labor groups favored immigration
  • Labor opposition to the Chinese, whom they
    accused of working so cheaply that they undercut
    native-born workers, was especially strong
  • The federal govt. responded to anti-Chinese
    sentiment by passing the Chinese Exclusion Act in
  • Chinese Exclusion Act of 1882

Organizing the Workers (cont.)
  • When the Knights won a series of strikes in the
    1880s, workers rushed to join, swelling its
    membership to 700,000
  • In the late 1880s, the Knights suffered
  • It lost several big strikes
  • Its craft unions broke away to form the American
    Federation of Labor (AFL)
  • Its membership declined

Organizing the Workers (cont.)
  • AFL
  • Led by Samuel Gompers
  • Did not attempt to organize unskilled workers
  • Dropped the far-reaching social-reform goals of
    the National Labor Union and the Knights

Organizing the Workers (cont.)
  • AFL concentrated on winning short-term
    improvements in wages and hours for its skilled
  • The AFL grew, but by 1900 less than 5 of
    Americas workers belonged to any union
  • The development of unions was seriously impeded
  • splits in the labor force between skilled
    artisans and common laborers
  • religious and ethnic divisions
  • differences among labor leaders concerning goals
    and tactics

Strikes and Labor Violence
  • Between 1881 and 1905 almost 37,000 strikes took
  • Nearly 7 million workers
  • Violence erupted as strikers attacked employers
    property and the scab laborers

Strikes and Labor Violence (cont.)
  • Some of the biggest and most violent
    confrontations were
  • The railroad strikes of 1877
  • The eight-hour strikes of 1886
  • 8 hour strike
  • The Haymarket Square bombing (for which 4
    anarchists were unjustly convicted and executed)
  • Chicago History
  • The Homestead steel strike
  • PBS Homestead Strike
  • The Pullman strike
  • Chicago History

Strikes and Labor Violence (cont.)
  • To combat labor unrest, employers forced workers
    to sign yellow-dog contracts and hired their own
    private police forces
  • Because of the violence, the public regarded
    strikers as dangerous radicals
  • The federal govt. intervened repeatedly on the
    side of management
  • Used the army to quell disturbances
  • Used injunctions to order union members back to

Strikes and Labor Violence (cont.)
  • When injunctions were disobeyed, union officers
    like Eugene Debs (the leader of the Pullman
    strike) were thrown in jail
  • As a result of employer, public, and govt.
    hostility, strikes almost always failed and
    unions languished

Social Thinkers Probe for Alternatives
  • The growing extremes of poverty and wealth and
    the violent clashes between labor and management
    troubled middle-class Americans
  • A number of social commentators tried to explain
    these developments and put forward their own

Social Thinkers Probe for Alternatives (cont.)
  • Social Darwinists
  • Believed that labors misery was an inevitable
    product of the constant struggle for survival
    that weeded out all but the fittest
  • They opposed any govt. interference with the
    workings of these natural laws
  • Andrew Carnegie
  • William Graham Sumner

Social Thinkers Probe for Alternatives (cont.)
  • Others attributed the social problems to a
    human-made economic system that placed private
    property and unrestricted profit seeking above
    all else
  • They called for govt. regulation, tax reform and
    a cooperative commonwealth
  • Lester F. Ward
  • Henry George
  • Edward Bellamy

Social Thinkers Probe for Alternatives (cont.)
  • Tiny socialist and anarchist groups preached that
    only the overthrow of the capitalist and the
    govt. that protected them would make possible a
    just and humane society

  • Industrialization had brought great benefits to
  • International power status
  • Lower-cost goods
  • More jobs
  • A tremendous array of new consumer products

Conclusion (cont.)
  • But the price had been high
  • Shoddy business practices
  • Polluted factory sites
  • Urban slums
  • Poverty for the workers

Conclusion (cont.)
  • Exploited laborers periodically vented their rage
    and frustrations in violent outbursts and strikes
  • Middle-class Americans were ambivalent about the
    new industrial order
  • They wanted to keep the benefits but somehow
    alleviate the accompanying social evils