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The Rise of Industrial America

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Title: The Rise of Industrial America


1
The Rise of Industrial America
  • 1865-1900

2
The Industrial Boom
  • The Civil War and the growth of railroads in the
    1860s contributed to the start of Americas
    Second Industrial Revolution (c. 1865-1900)
  • Whereas Americas First Industrial Revolution of
    the early 1800s had been characterized by steam
    powered textile factories in New England, the
    Second Industrial Revolution spread nationwide
    and was characterized by
  • 1. Exploitation of vast coal reserves
    (especially in Appalachia)
  • 2. Technological innovations (transportation,
    communication)
  • 3. Huge demand for labor (both skilled and
    unskilled)
  • 4. Intense competition that led to the rise of
    monopolies
  • 5. Rapid decline of prices (both agricultural
    and industrial)
  • 6. Failure of the money supply to keep pace with
    expansion

3
The Railroad Industry
  • Expansion from 10,000 miles of track in 1850 to
    nearly 200,000 miles by 1900 opened up a huge
    internal market that promoted farming, commerce,
    and closure of the frontier
  • Railroad companies were the first modern
    corporations sought capital through stock
    issuances, separated ownership from management,
    created national distribution and marketing
    systems, established complex accounting methods,
    and formed new organizational structures
  • Railroads often went deeply into debt, relied on
    government subsidies (often in the form of real
    estate) and used questionable business practices
    to compete for business and profits owners (such
    as Jay Gould of the Union Pacific) were depicted
    as robber barons who violated the public trust
  • Congress created the Interstate Commerce
    Commission in 1887 in an attempt to regulate
    railroad business practices that hurt small
    farmers and business owners in remote areas

4
Big Steel
  • Andrew Carnegie led the industry in the late
    1800s thanks to the introduction of
  • 1. the Bessemer steel process ? high-quality
    steel
  • 2. cost-analysis ? cut back costs, higher
    profits
  • 3. vertical integration ? control of every stage
    of steel production from mining iron ore and coal
    to selling the finished product ? reduced costs
    and allowed Carnegie to under-price the
    competition through economy of scale? monopoly
    control of the industry
  • Overall result More steel produced and at lower
    cost (65/ton in 1875 vs. 11.50/ton in 1900)
  • Carnegie sold Carnegie Steel to J.P. Morgan and
    other investors in 1900 for 500 million and
    became a major philanthropist, advocated the
    Gospel of Wealth

5
Big Oil
  • John D. Rockefeller sought control of the
    expanding industry through horizontal integration
    ? control of one stage of production
    (transportation and then refineries)
  • Rockefeller established the Standard Oil Trust
    (1882) to control companies that had previously
    participated in price fixing arrangements
    (controlled 90 of the industry through
    horizontal and vertical integration) emulated
    by other industries

6
Regulating Monopolies and Trusts
  • 1890 Congress passed the Sherman Anti-Trust Act
    in an attempt to break up trusts and monopolies
    that were found to be operating in restraint of
    trade
  • To avoid being targeted by this legislation,
    Standard Oil reorganized into a holding company,
    whereby control was no longer exercised through
    direct ownership of companies but instead through
    majority share ownership
  • 1895 - the Supreme Court ruled in U.S. vs. E.C.
    Knight Company (a sugar trust) that manufacturing
    did not constitute interstate commerce and
    therefore could not be regulated ? encouraged
    further consolidation of industry into larger
    trusts

7
Invention Innovation
  • Major inventions enhanced productivity and
    improved the standard of living for most
    Americans
  • Singer Sewing Machine Company first mass produced
    sewing machines in the 1860s
  • Alexander Graham Bell invented the telephone in
    1876 ? led to the creation of the Bell Telephone
    Co. (later, ATT)
  • Thomas Edison invented the phonograph (1877),
    light bulb (1879), and developed the first power
    plant (1882) ? helped to create General Electric
    by 1892 with help from J.P. Morgan

8
Labor Issues
  • Demand for labor increased as demand for goods
    increased
  • One third of the workforce by the 1880s was
    unskilled (common) labor that was easily replaced
    in the event of illness or strike
  • Three biggest problems low wages, long hours,
    and unsafe conditions
  • Child labor was used intensively in mining and
    mill work ? lowered wages and resulted in a large
    number of crippled children
  • Immigrants and women accepted low wages and were
    often considered highly dispensable (as depicted
    in The Jungle)
  • Laborers were often at the mercy of laissez-faire
    capitalism, which drew upon Social Darwinism
    (survival of the fittest)

9
The Labor Movement
  • National unions emerged in the late 1800s to lead
    the charge for better working conditions
  • National Labor Union (est. 1866) by William H.
    Sylvis to campaign for an 8-hour day, higher
    wages, and more recognition for women workers
  • Knights of Labor (est. 1869) demanded equal pay
    for women, an end to child labor, an income tax,
    and immigration restrictions Terence Powderly
    led the union to victory in the Wabash strike of
    1883-84 but the union declined as a result of
    failed strikes and growing national concerns over
    labor violence
  • American Federation of Labor (est. 1886) created
    for skilled labor Samuel Gompers led a moderate
    effort for higher pay, shorter hours, and safer
    conditions

10
Labor Strikes Violence
  • Middle-class Americans grew increasingly wary of
    radical words and actions from the labor
    movement reflected a growing fear of socialism,
    Marxism, and anarchism
  • Major outbreaks of violence included
  • 1877 wage reductions led to a wildcat railroad
    strike in the midst of a difficult depression
    (caused by the Panic of 1873), nearly 100 died
    before U.S. troops intervened
  • 1886 Haymarket Square Riot in Chicago linked to
    radical anarchists increased fears of social
    revolution
  • 1892 Homestead Strike at the Carnegie Steel
    plant led to a shoot-out between strikers and
    Pinkerton agents called in to protect the plant
  • 1894 Pullman Strike led by the American Railway
    Union (Eugene V. Debs), President Cleveland
    invoked the Sherman Anti-Trust Act against the
    union and broke up the strike with federal troops
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