INDUSTRIAL AMERICA

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• INDUSTRIAL AMERICA

Industrialization increased the standard of
living and the opportunities of most Americans,
but at what cost?
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Difference Between 1st 2nd Industrial
Revolutions?

• 1ST Industrial Revolution

• 2nd Industrial Revolution

• T extiles
• R ailroads
• I ron
• C oal

• R AILROADS
• O il
• S teel
• E lectricity

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In less than 125 years, America became the
leading industrial power of the world. Major
reasons for this quick rise to power include

• RAILROADS!!!!!!!!!
• Resources
• An abundance of natural resources
• An abundance of human resources
• unskilled semi-skilled labor
• Government policy towards business
• Willing to help at all levels to stimulate growth
• Market growing as U.S. population increased.
• Entrepreneurs talented group of businessmen
  advisors with abundant capital
• New inventions technology

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RAILROADS

• The factor MOST responsible for growth of
  American Industry.
• The Railroad fueled the growing US economy
• First big business in the US.
• A magnet for financial investment.
• The key to opening the West.
• Aided the development of other industries.
• Became a consumer of other industries.

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Railroad Construction
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Transcontinental Railroad(During Civil War to
connect CA with the Union)

• RACE Pacific Railway Act, 1862
• Received 20 sq. mi. of land for every mile of
  track laid
• 16,000 loan for every mile on flat land
• 48,000 loan for every mile over mountains
• Union Pacific building west from Omaha,
  Nebraska
• Irish immigrants
• Central Pacific building east from Sacramento,
  CA
• Leland Stanford the Big Four
• Chinese immigrants used
• Most difficult time Sierra Nevada Mtns.
• Union lays 1,086 miles Central 689

Leland Stanford
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WEDDING OF THE RAILS
May God continue the unity of our Country as
this Railroad unites the two great Oceans of the
world.
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• Improvements in RRs will increase their
  profitability
• Standardization Consolidation
• Binds all sections of country together into one
  market
• Cornelius Vanderbilt
• The Commodore steamboat fleet
• Consolidates NY railroads
• into NY Central RR Company
• Eventually leaves his RR empire to his son,
  William H. Vanderbilt

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• Improvements in service
• 4 track main line
• Standard gauge track
• Use of Westinghouse air brake allows all cars
  to stop simultaneouslycan then carry heavier
  loads on longer trains
• Pullman Palace Cars luxury cars
• Time Zones develop due to RR
• Develop because needed for RR scheduling
• Originally 4 in U.S.
• How many in U.S. now?
• Eventually spreads worldwide

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How did the RRs impact

• National unity?
• Industry?
• Mining agriculture?
• Growth of cities and urban areas?
• Immigration?
• The Environment?
• Wealth?

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Corruption in the Railroad Industry

• Stock Watering
• Exaggerating RR assets selling stock at higher
  prices than its worth
• Bribery
• Of judges, legislature free passes to
  politicians
• The pool
• An anti-competitive combination group of RR
  companies agree to divide business in a
  geographic area and share the profits
• Rebates and Kickbacks
• Reward powerful shippers for steady assured
  traffic
• Price Gouging
• Rates are low on competing lines, but jacked up
  on non-competitive lines

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Government Regulation of RR

• State regulation 1870s
• Encourages farmers to protest organize (the
  Grange) pressure state legislatures into
  passing regulations to control RR monopolies
• 1877 - Munn. v. IL Farmers (Grange) win victory
  when Court rules states CAN regulate RR rates
• Federal regulation
• 1886 Wabash v. Illinois
• Sup. Ct. rules that states CANNOT regulate
  interstate commerce
• 1887 Interstate Commerce Act
• Prohibits rebates, pools, requires that rates be
  published, establishes ICC to enforce
• Impact of the ICC
• Provides forum for resolution of conflicts
• A good first step, but not very powerful

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Resources

• Natural Resources
• Coal amount mined doubles each decade between
  1840 1890
• Iron Ore Great Lakes, PA, AL
• Oil Western PA to TX by 1900
• Human Resources
• Population doubles between 1860 1890
• IMMIGRATION 14 million immigrants to U.S.
  during this time (New Immigrants from S E
  Europe)

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Favorable Government Policy Towards Business

• LAISSEZ-FAIRE!!
• The ideology of the industrial age
• Individuals should compete freely in the
  marketplace.
• No room for government in the market!
• Industry has very few government regulations and
  restrictions
• ENTREPRENEURS
• One who takes the risk of organizing and
  beginning a new business
• Received help from the U.S. government
• High protective tariffs
• Cheap land
• Liberal immigration laws cheap labor

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JOHN D. ROCKEFELLER

• OIL REFINING (Standard Oil Co.)
• Consolidated 40 oil refining companies a
  nationwide monopoly controlled 95 of all
  refineries by 1877
• Americas First Billionaire
• Ruthless in business! (dubbed Reckafellaw)
• American Beauty rose analogy pluck off the
  early buds
• Used rebates, drawbacks, spies secret info from
  RR to learn about competitors force them out of
  business
• Stock or Cash Buyouts

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• Treated his workers well the first to offer
  old-age pensions tried to protect them in bad
  times
• Hated waste!
• Personally
• Ambitious
• Abstemious
• Pious
• Parsimonious
• Devout churchgoer and Sunday School teacher
• Strong family man
• Only the strong survive

GOD GAVE ME MY MONEY. John D. Rockefeller
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Standard Oil Refinery
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• The Octopus, 1904

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• Gave away dimes to children on the street
• Retired at age 40
• Spent rest of his life giving away money
• Gave away over 520 million to charities
• 78 million to colleges
• 60 million to medicine
• 18 million to African American education
• Lots more to education research
• University of Chicago

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• Died at age 98, 1937
• at Ormond Beach , FL

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ROCKEFELLEREXPOSED BY JOURNALIST IDA TARBELL

• A lifelong Rockefeller hater (her father took the
  cash buyout)
• Exposed Rockefellers unethical business dealings
  with RR, etc.

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ANDREW CARNEGIE

• STEEL (U.S. Steel Corporation)
• Hired the best technical scientific experts
• Used new process made steel so cheaply it
  forced competitors into bankruptcy then he
  bought them

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• Did not treat his workers as well as Rockefeller
• Drove wages down hours up for the common
  laborers constantly fought unionization
• Used Pinkerton Detectives against employees
• But, made upper level management experts
  partners in the business

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• Poor Scottish immigrant who went from rags to
  riches a true Horatio Alger story
• Began work in 1848 as bobbin boy - 1.20/wk
• By 1900 produces half of nations steel 25
  million/year take-home pay
• Ambitious, energetic, a gambler
• Deeply believed that if one worked hard, saved
  invested wisely, anyone could become wealthy

The first man gets the oyster, The second man
gets the shell. Andrew Carnegie
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• Gospel of Wealth Wealthy are blessed with
  greater talent and wealth and have a duty to help
  those who would try to help themselves.
• Inequality is inevitable and good.
• Wealthy should act as trustees for their
  poorer brethren.
• Retired at 66 (bought out by J.P. Morgan
  becomes U.S. Steel)
• Lived to be 84
• Gave away over 350 million to charities
• Mostly to libraries
• Carnegie Hall Museum, NY

The man who dies rich, dies disgraced.
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New Financial Businessman
Wall Street 1867 1900

• The Broker

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Beliefs defending class distinctionsSOCIAL
DARWINISM

• Philosophy that applied Darwins biological
  theory of survival of the fittest to human
  society those who succeeded
• Wealth no longer looked upon as bad viewed as a
  sign of Gods approval.
• Yale professor William Graham Sumner
  millionaires are a product of natural
  selection.
• Both Rockefeller and Carnegie were strong
  believers in this philosophy
• Believed it was a method better than elections
  for selecting leaders

• Only the strong survivors will control industry
  and wealth

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RUGGED INDIVIDUALISM

• Equates to contempt for the poor
• Many of nouveau riche had pulled themselves up
  by their bootstraps
• The poor are only poor because of their laziness
  and lack of initiative
• Rev. Russell Conwell
• Christian duty to accumulate wealth
• Should NOT help the poor.
• Acres of Diamonds speech
• There is not a poor person in the U.S. who was
  not made poor by his own shortcomings.
• 1/10 of people own 9/10 of all the wealth by 1900

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EFFORTS TO CURB COMPETITON

• VERTICAL INTEGRATION
• BUSINESSES IN DIFFERENT BUT RELATED ACTIVITIES
  JOINED TOGETHER
• COMBINES ALL PHASES OF THE PRODUCTION PROCESS
  Supply lines distributions lines - gets rid of
  the middlemen
• Best examples
• CARNEGIE
• Gustavus Swift, Meat-packing

• HORIZONTAL INTEGRATION
• SEVERAL FIRMS IN THE SAME KIND OF BUSINESS
  CONSOLIDATED, JOINED TOGETHER
• Best example
• ROCKEFELLER and his Standard Oil Co.
• Consolidated 40 refining companies

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SWIFT ROCKEFELLER
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INTERLOCKING DIRECTORATES

• J.P. MORGAN
• Bankers banker
• Put officers of his own banking syndicate on
  Board of Directors of rival businesses
• Gave him control of multiple businesses in the
  same industry
• Made millions financing reorganization of RRs,
  banks, insurance cos.

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Due to huge sums required to build railroads,
corporations become major business form in U.S.

• Corporate investors enjoy LIMITED LIABILITY
  which means that investors risk ONLY the amount
  of their investment (stock cost) and cant be
  held personally liable for debts of the
  corporation

• A corporation is a company formed by a group of
  investors who get a share of ownership in
  proportion to the amount of money they invest

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ADVANTAGES OF CORPORATIONS OVER OTHER TYPES OF
BUSINESSES

• Viewed as a legal person under the law can
  make contracts, sue and be sued, etc.
• PERMANENCE - they continue forever
• EASY TO RAISE LARGE SUMS OF MONEY
• Small amounts of from many individual investors
  can be pooled into huge sums of need to start
  or expand a large company
• LIMITED LIABILITY!!!!!

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Advantages of Big Business in the Gilded Age?

• Can produce more and better goods at a lower cost
• created jobs
• can afford to pay high salaries to get the best
  experts
• increased efficiency by establishing separate
  departments in business

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What are the disadvantages ofBig Business?

• Methods they used to get Big
• Demanded, got, volume discounts from shippers
• Underselling forcing competitors out of
  business
• Raising prices to the consumer
• Bribing of public officials
• Destruction of the environment
• Why would people put up with this?

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U. S. Corporate Mergers
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The Robber Barons of the Past
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Images of the new elite
Jay Gould the Archtype of the Robber Baron RR
Developer Union Pacific
(from left to right) John D. Rockefeller,Andrew
Carnegie, Cornelius Vanderbilt, and J.P. Morgan
Dr. Thomas C. Durant, Vice- Pres., Union-Pacific
Railroad
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Henry Flagler
An American tycoon who worked with John D.
Rockefeller to establish Standard Oil. He helped
develop Florida as the vacation land it is today.

• Moves to St. Augustine
• Founder of Palm Beach
• Father of Miami
• Founds the Florida East Coast Railway
• By 1912 Florida Overseas Railroad was completed
  to Key West
• Flagler County, Flagler Beach, Flagler College

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Flagler Resort
Flagler College
Whitehall - 1st big mansion in West Palm ---
history museum there now
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Distribution of wealth in the Gilded Age
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The Dominance of the Trusts
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Regulating the Trusts

• 1877 ? Munn. v. IL Farmers (the Grange) win
  victory when Court rules states CAN regulate RR
  rates
• 1886 ? Wabash, St. Louis Pacific
  Railroad Company v. IL overrules Munn
• federal govt controls RR interstate commerce
• 1890 ? Sherman Antitrust Act
• Forbids combinations in restraint of trade
• No real means of enforcement
• First lawsuits all decided in favor of the trusts
• against labor unions restraining trade
• 1895 ? US v. E. C. Knight Co. Fed. govt using
  Sherman Act to get rid of sugar monopoly but
  lost. Ct. held that manufacturing industries
  were local industries not subject to fed.
  govts interstate commerce control

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NEW INVENTIONS TECHNOLOGY

• Bessemer and open hearth process
• Created a lighter, stronger, rust-free metal
  STEEL
• U.S. producing 1/3 of worlds supply by 1890
• Refrigerated RR cars

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Thomas Alva Edison
"Genius is one percent inspiration and 99 percent
perspiration."

• Wizard of Menlo Park
• In his lifetime, Edison patented 1,093 inventions.

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The Light Bulb
Birth of the Night Shift! Industrial production
now possible 24 hrs. per day!
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The Phonograph (1877)
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The Ediphone or Dictaphone
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The Motion Picture Camera
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Alexander Graham Bell
Telephone (1876)
New jobs for women
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CHRISTOPHER LATHAM SHOLES

• THE TYPEWRITER
• Along with the telephone, leads to feminization
  of the work place
• Women make up
• 5 of all office
• workers in 1870
• 40 by 1910

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AlternateCurrent
AC was safer than Edisons DC current
AirBrake
George Westinghouse
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The Airplane
Wilbur Wright Orville Wright
The craft soared to an altitude of 10 feet,
traveled 120 feet, and landed 12 seconds after
takeoff.
Kitty Hawk, NC December 7, 1903
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U. S. Patents Granted
1790s ? 276 patents issued.
1990s ? 1,119,220 patents issued.
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• Problems of workers in the Industrial Age
• Less value placed on skills
• Depersonalized relations with corporate employers
• Technological unemployment machines replace men
• Glutted labor market IMMIGRANTS!
• Begin to look to unions for help
• Had difficulty organizing
• Extreme opposition from Employers
• Courts police favored Employers over workers
• Too many immigrant laborers
• Several major unions form in late 1800s
• National Labor Union
• Knights of Labor
• American Federation of Labor
• American Railway Union

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UNION EMPLOYERTACTICS RESISTANCE

• Lockout
• Blacklisting
• Hiring of Scabs
• Yellow Dog Contracts ironclad oaths
• Company-owned towns Pullman, IL
• Injunctions
• Use of Pinkertons
• Govts view of unions?
• courts, law enforcement all on side of management
  in early days

• Strike
• Picket Line
• Boycott

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NATIONAL LABOR UNION

• Formed 1866 - 600,000 workers at height
• General union with skilled unskilled workers,
  and farmers
• Sought social reform 8 hr. day
• Get 8 hr. day for govt workers but 1870s
  depression destroys union
• RR wage cuts in 1877 led to massive strikes,
  federal troops called in violence erodes
  support for unions among Americans

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KNIGHTS OFLABOR,1869

• Led by Terrence Powderly
• Originally a secret organization
• ALL workers welcome unskilled and skilled
• Recruited women blacks
• Sought broad reforms
• Health and safety codes
• 8 hour day end to child labor, etc.
• Cooperative ideas eventually workers would own
  factories
• Used political activity first preferred NOT to
  use strikes
• Successful strike against Goulds Wabash RR in
  1885
• Association with anarchy violence (Haymarket
  Square Riot) causes end of Knights by 1890s

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AFL, 1886

• Led by Samuel Gompers
• A CRAFT Union
• ONLY skilled workers - why?
• (better bargaining power)
• Kept out blacks and women
• A federation
• Sought bread and butter reforms
• Higher Wages
• Shorter Hours
• Better/safer working conditions
• Also sought closed shops (union workers only)
• Relied on economic pressure walkouts, strikes
  and boycotts collective bargaining

All I want is more!
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AMERICAN RAILWAY UNION

• Led by Eugene V. Debs
• Later became a socialist while in jail after
  arrest in Pullman Strike
• INDUSTRIAL union
• All workers in same industry, regardless of their
  craft or skill level, in the same union
• Sought less violence/confrontations but winds up
  in it anyway

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THE MAJOR STRIKES

• Great RR Strike of 1877
• Baltimore Ohio RR cut wages during a
  depression
• Striking violence spread Employers called on
  federal govt for help
• Pres. Hayes sent in troops to restore order

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HAYMARKET SQUARE RIOT1886

• On May 1, 1886, unions called for national strike
  in support of an 8 hour work day
• Thousands of workers demonstrated in U.S. cities
  but Chicago was the center approximately 80,000
  Knights there
• Bomb thrown into crowd/at police killed about a
  dozen people, including 7 police
• Eight anarchist labor leaders arrested and tried
  without much supporting evidence 4 hanged
• Association between unions violence leads to
  demise of Knights of Labor

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Images from Haymarket Riots, May 3, 1886
Haymarket Memorial, Chicago
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• Homestead Strike, 1892
• Carnegie Steel Homestead Plant
• Carnegies partner (Frick) cut wages workers
  strike
• Pinkerton Detectives called in to break strike
• Led to deaths of 9 strikers 7 detectives
• Anarchist tried and failed to assassinate Frick
• Strike called off management wins
• Unions association with violence continues

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Pullman Strike, 1894
US cavalry breaks up 1894 Pullman Car workers
strike
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• Pullman Strike, 1894
• Pullman Palace Car Company
• Company Town
• Laid off workers cut wages after Panic of 1893
• BUT didnt cut rent food prices
• Refused to bargain shut down plant
• First true nationwide strike!
• Caused interference with mail delivery
• Pres. Cleveland got injunction to force end to
  strike and sent in troops to enforce it sets a
  precedent
• Debs refused, arrested, jailed socialist