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Chapter 24
IndustryComesof
Age, 1865–1900
Presented by:
Mr. Anderson, M.Ed., J.D.
I.TheIronColtBecomesanIron
Horse
• Industrial development ofUnited States:
– Railroads
• Outburstofrailroadconstructioncrucial
• 1865:35,000milesofrailways
• 1900:192,556miles,muchofitwestofMississippi
(seeFigure24.1)
• Transcontinentalrailroadbuildingrequired
governmentsubsidiesbecausesocostlyandrisky
• Constructionofrailwaysystemspromisedgreater
nationalunityandeconomicgrowth
Figur e 24-1 p513
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I.TheIronColtBecomesanIron
Horse(cont.)
• Argumentsformilitaryandpostalneedsimpressed
Congressto:
– Advance liberal loans to two favored cross-continent
companies in 1862
– Add enormous donations of acreage paralleling tracks
– Washington granted railroads 155,504,994 acres, and western
states contributed 49 million—for total area larger than Texas
(see Map 24.1)
– Land grants given in broad belts along proposed railroad route
– Within these belts, railroads could chose alternate mile-square
sections in checkerboard fashion (see Map 24.1)
I.TheIronColtBecomesanIron
Horse(cont.)
– Until determination ofprecise route for tracks, railroads
withheld all land from other uses
– President Cleveland ended foot-dragging practice in 1887:
» Threw open to settlement still-unclaimed public portion
of land-grant areas
• Governmentbenefits:
– Preferential rail rates for postal service and military traffic
– Granting land a“cheap” wayto subsidize much-desired
transportation system:
» Avoided new taxes for direct cash grants
I.TheIronColtBecomesanIron
Horse(cont.)
– Railroads could turn land into gold byusing it as collateral
for loans from private bankers or by selling it
– Average price of $3per acre
– Critics overlooked that land had relatively modest value
until railroads had ribboned it with steel
• Frontiervillagesalongrouteflourishedintocities:
– Those bypassed became “ghost towns”
– Ambitious towns held out monetary incentives to builders:
» Who sometimes blackmailed them into contributing
more generously
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Map 24-1 p514
II.SpanningtheContinentwithRails
• In1862Congress started long-awaited line:
• ArgumentforactionwasurgencyofbolsteringUnion:
– By binding Pacific Coast—especially gold-rich California—
more security with rest ofRepublic
– UnionPacificRailroad:
• NotewordUnion:thrustwestwardfromOmaha
• Foreachmileoftrackconstructed:
– Company granted twenty square miles of land
– Alternating in 640-acre sections on either side of track
– For each mile, builders given generous federal loans from
$16,000 on flat land to $48,000 for mountainous country
II.Spanning theContinent with
Rails(cont.)
• LayingofrailsbeganinearnestafterCivilWar
– CreditMobilier:
• Constructioncompanythatreapedfabulousprofits
• Pocketed$73millionfor$50millionworthof
breakneckconstruction
• Bribedcongressmentolookotherway
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II.Spanning theContinent with
Rails(cont.)
– Constructionwork:
• Sweatyconstructiongangs,Irish“Paddies” (Patricks)
workedatfranticpace
• WhenIndians,whoselandwasseized,wouldattack,
workerswouldusetheirrifles
• Scoresofpeopledied
• Atendoftracks,workerstriedtofindrelaxationin
tentedtowns
II.Spanning theContinent with
Rails(cont.)
• Central Pacific Railroad:
• PushedeastfromboomtownSacramento,through
toweringsnow-cloggedSierraNevada
• Fourfar-seeingmen—BigFour—chieffinancial
backersofenterprise:
– Enterprising ex-governor Leland Stanford of California, used
his political connections
– Collis P. Huntington, an adept lobbyist
– Big Four operated two construction companies, pocketed
tens ofmillions in profits, kept hands clean from bribes
p515
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II.Spanning theContinent with
Rails(cont.)
– Granted same princely subsidies as Union Pacific
– Had same incentive to haste
– Used ten thousand Chinese laborers:
» Sweated from dawn to dusk
» Proved tobe cheap, efficient, and expendable
– Over Sierra Nevada, gained only a few inches each day
tunneling through solid rock
– While those sledgehammering westward crossed open plains
• “Weddingoftherails” consummatednearOgden,
Utah,1869withcolorfulceremony
• UnionPacificbuilt1,086miles;CentralPacific689miles
II.Spanning theContinent with
Rails(cont.)
• Results ofrailroad construction:
– OneofAmerica'smostimpressivepeacetime
undertakings
– WeldedWestCoastmorefirmlytoUnion
– FacilitatedflourishingtradewithAsia
– Penetratedaridbarriers ofdeserts,pavingway
forphenomenalgrowthofGreatWest
p516
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III.BindingtheCountrywithRailroad
Ties
• Fourother trans-continental lines
completed:
• Nonesecuredmonetaryloansfromgovernment
• All(exceptGreatNorthern)receivedgenerousgrants
ofland
– NorthernPacific—fromLakeSuperiortoPuget
Sound—finishedin1883
– Atchison,Topeka,andSantaFe—fromsouthwest
desertstoCalifornia—finishedin1884
– SouthernPacific—NewOrleanstoSanFrancisco
—consolidatedin1884
III.BindingtheCountry with
RailroadTies(cont.)
– GreatNorthern—DuluthtoSeattle—finishedin
1893:
• Creationoffar-visionedCanadianAmericanJames
Hill,probablygreatestrailroadbuilder
• Hisenterprisesosoundlyorganizeditrodethrough
laterfinancialstormswithflyingcolors
– Pioneerbuildersoftenoveroptimistic
– Sometimes laidrails“fromnowheretonothing”
– Endlessbankruptcies,mergers,and
reorganizations
IV.RailroadConsolidationand
Mechanization
• Westernlines facilitated bywelding and
expanding older eastern networks
– NotablyNewYork Central:“Commodore”
CorneliusVanderbiltamassedfortuneof$100
millionbyofferingsuperiorserviceatlowerrate
– Alsopushedswitchfromirontosteelrails
– Easternnetworksmovedtostandardgaugetrack
– Westinghouseairbrakeincreasedsafety
– PullmanPalaceCars
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p517
V.Revolution byRailways
• Railroads intimately touched countless phases
ofAmerican life:
– Forfirsttime,sprawlingnationunitedinphysical
sense,boundwithribsofironandsteel
– America'sbiggestindustry:
• Employedmorepeoplethananyotherindustry
• Gobbledupnearly20%ofinvestmentdollarsfrom
foreignanddomesticinvestors
– Spurredamazingeconomicgrowthpost-CivilWar
V.Revolution byRailways
(cont.)
– OpenedWestwithitswealthofresources
– MadeAmerica largestintegrated nationalmarket
inworld
– Generatedlargest singlesourceofordersfor
adolescentsteelindustry
– StimulatedminingandagricultureinWest
• Clustersoffarmsettlementsparalleledrailroads
– Railwaysboontocities—ledgreatcityward
movementoflate 1800s
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V.Revolution byRailways
(cont.)
– Stimulatedmightystream ofimmigration
• Landalsofeltimpact:
• Especiallybroad,ecologicallyfragilemidsection
• Settlersploweduptallgrassprairiesandplantedwelldrained,rectangularcornfields
• Range-fedcattledisplacedbuffalo,huntedtonearextinction
• Whitepineforestsdisappearedintolumbertobuild
housesandfences
V.Revolution byRailways
(cont.)
• Timeitself benttorailroad's needs:
– Until1880s,eachtownhaditsown“local” time
– OnNovember18,1883,majorraillinesdecreed
continentwouldbedividedinfour“timezones”
– Mostcommunitiesadopted“standard” time
• Railroads mademillionaires:
– Colossalwealthamassedbystockspeculators
andrailroadwreckers
VI.Wrongdoing inRailroading
• Corruption lurkswhenfortunes canbemade
overnight:
– JayGould:mostadeptringmasterofrapacity
• Foryearsheboomedandbustedstocksofmajor
railroadcompaniesbymeansofspeculation
– “Stock watering”—make cattle thirsty by feeding them salt
and bloating them with water before weighing them for sale
– Using same method, stock promoters inflated claims about
a rail line's assets and profitability to sell stocks and bonds
far in excess of actual value
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VI.Wrongdoing inRailroading
(cont.)
• Railroadsforcedtochargeextortionateratesand
wagecompetitivebattlestopayofffinancial
obligations
• Publicinteresttrampledbyrailroadtitanswhowaged
brutalwars
• Railroadersblandlyboughtandsoldpeople:
– Bribed judges and legislatures
– Employed arm-twisting lobbyists
– Elected their own “creatures” to high offices
– Showered free passes on journalists and politicians in West
– For atime, virtual industrial monarchs
p518
VI.Wrongdoing inRailroading
(cont.)
– Theseindustrialmonarchs:
• Manipulatedhugenationalmonopoly:
– Exercised more direct control over people than president—
with no limit to four year terms
– Eventually moved from cutthroat competition to cooperation
– Entered into defensive alliances toprotect profits
• Earlyformofcombinationwasthe“pool”:
– Agree to divide business in given area and share profits
• Grantedsecretrebatesorkickbackstolargeshippers:
– Slashed rates on competing lines—made up difference on
noncompeting lines
– Result =small farmers paid higher rates than large shippers
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VII.GovernmentBridlestheIron
Horse
– American peoplequicktorespondtopolitical
injustice,butslowtocombateconomicinjustice:
• Dedicatedtofreeenterpriseandprinciplethat
competitionissouloftrade
• Cherishedprideinprogress
• RememberedJefferson'shostilitytogovernment
interferencewithbusiness
• Aboveall,“Americandream”:hopethatincatch-ascatch-caneconomicsystem,anyonemightbecomea
millionaire
VII.GovernmentBridlestheIron
Horse(cont.)
• Under pressure from Grange(Patrons of
Husbandry)—organized agrarian groups:
– ManyMidwesternlegislaturestriedtoregulate
railroads,but:
• InWabash,St.LouisandPacificRailroadCompanyv.
Illinois(1886):
– Supreme Court decreed individual states had no power to
regulate interstate commerce
– Ifmechanical monster to be corralled, federal government
would have to do it
• Clevelanddidnotlookkindlyoneffectiveregulation
VII.GovernmentBridlestheIron
Horse(cont.)
• Epochal Interstate CommerceAct (1887):
Prohibitedrebatesandpools
Requiredrailroadstopublishratesopenly
Forbadeunfairdiscriminationagainstshippers
Outlawedchargingmoreforshorthaulthanlongone
oversameline
• Mostimportant—setupInterstateCommerce
Commission(ICC)toadministerandenforcelaw
• Despiteacclaim,ICCActnotrepresentapopular
victoryovercorporatewealth
•
•
•
•
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VII.GovernmentBridlestheIron
Horse(cont.)
– WhatICClegislationdiddowas:
• Provideorderlyforumwherecompetingbusiness
interestscouldresolveconflictsinpeaceableways
• ICCActtendedtostabilize,notrevolutionize,existing
businesssystem
• Actstillranksasred-letterlaw:
– First large-scale attempt by Washington to regulate business
in interest ofsociety at large
– Heralded arrival of independent regulatory commissions:
» Which commit government to monitoring private
economy to protect public interest
VIII.MiraclesofMechanization
• Postwar industrial expansion:
– 1860—Republicrankedfourthinworld
– 1894—Republicrankedfirst
– Whysuddenupsurge:
Liquidcapital,oncescarce,nowabundant
Wordmillionaire hadnotbeencoineduntil1840s
1861:onlyahandfulofmillionaires
CivilWarprofiteeringcreatedhugefortuneswhich
combinedwithinvestmentsfromforeigncapitalists
• Post-1865,massiveforeigninvestmentinU.S.A.
•
•
•
•
VIII.MiraclesofMechanization
(cont.)
• Mostforeigninvestmentwenttoprivateventures,
notpubliccoffers
• InvestorsfromBritain,followedbyFrance,Germany,
theNetherlandsandSwitzerland:
– Owned all or part of an American business
– Or they lent money to European companies that invested in
U.S.industries
– Either way Europeans content to let Americans run business—unti l hard times hit—then they demanded more
say over company operations or government policies
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VIII.MiraclesofMechanization
(cont.)
• Innovationsintransportationfueledgrowth:
– Brought nation's abundant resources—coal, oil, iron—to
factory door
– Shipping through Great Lakes carried rich iron deposits of
Mesabi Range, Minnesota to Chicago and Cleveland for
refining
» Became cornerstone of vast steel empire
– Copper, bauxite, and zinc made similar journeys from mine to
manufacture
• SheersizeofAmericanmarketencouragedinnovators
toinventmass-productionmethods:
– Anyone, who could make appealing new product in large
quantities and figure how to market it, thrived
VIII.MiraclesofMechanization
(cont.)
– Industrials continued to refine pre-Civil War “American System”—
use specialized machinery to makeinterchangeable parts:
» Culminated in Henry Ford's fully moving assembly line for Model T (see Chap. 12 and Chap. 30)
– Captains ofindustry had major incentive to invent machines:
» Replaced expensive skilled labor with cheap unskilled workers
» Unskilled workers plentiful because of massive immigration
VIII.MiraclesofMechanization
(cont.)
– Brilliantideasgave risetowholenewbusinesses:
• Between1860-1890,some440,000patentsissued
• Businessoperationsfacilitatedbycashregister,stock
ticker,typewriter
• Refrigeratorcar,electricdynamo,andelectricrailway
speededurbanization
• Oneofmostingeniousinventionswastelephone—
AlexanderGrahamBell,1876:
– Created gigantic communication network
– Social impact when lure of “number please” took women
away from stove to switchboard
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VIII.MiraclesofMechanization
(cont.)
• Mostversatileinventor—ThomasAlvaEdison(1847-1931):
– Severe deafness enabled him to concentrate without distraction
– Gifted tinkerer and tireless worker, not apure scientist
– Wondrous devices poured out ofhis “invention factory” in New
Jersey—phonograph, mimeograph, dictaphone, and moving
picture
– Best known for his perfection in 1879 of electric lightbulb
» Turned night into day and transformed human habits
» People who slept average of 9hours a night now slept just a
bit more than 7
p520
IX.TheTrustTitanEmerges
• Mostbusiness leadersdevisedwaysto
circumvent competition:
– AndrewCarnegie, steelking
• Integratedeveryphraseofsteel-makingoperation
• HisminersscratchedorefromMesabiRange
• HisshipsfloateditacrossGreatLakes
• HisrailroadsdeliveredittofactoriesatPittsburgh
• Nootherhandshadtoucheditwhenmetalpouredinto
waitingingotmolds
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IX.TheTrustTitanEmerges
(cont.)
• Carnegiepioneeredcreativeentrepreneurialtacticof
verticalintegration:
– Combine into one organization all phases of manufacturing
from mining to marketing
– Goal to improve efficiency by:
» Making supplies more reliable
» Control product quality atall stages of production
» Eliminate middlemen's fees
• JohnD.Rockefellermasteredtechniqueofhorizontal
integration:
» Allying with competitors tomonopolize a market
IX.TheTrustTitanEmerges
(cont.)
• Perfecteddeviceforcontrollingrivals—thetrust:
– Stockholders in small oil companies assigned their stock to
board ofdirectors of Standard Oil Company (1870)
– Standard Oil then consolidated operations of previously
competing enterprises
– Ruthlessly wielding vast power, Standard Oil cornered
virtually entire world petroleum market
– Inspired many imitators, and word trust used to describe
any large-scale business combination
IX.TheTrustTitanEmerges
(cont.)
• J.Pierpont Morgan:
– Devisedotherschemestoeliminate“wasteful”
competition:
• Depressionof1890sdrovemanybusinessmen,bleedby
cutthroatcompetition,toMorgan:
– His remedy was to consolidate rival enterprises
– He placed officers of his own banking syndicate on various
boards of directors—known as interlocking directorates
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p521
X.TheSupremacy ofSteel
• “Steelisking”:newsteelcivilization—from
skyscraperstocoalshuttles
– Steel making, esp.railsforrailroads,typified
dominanceof“heavyindustry”—
• “capitalgoods” asopposedto“consumergoods”
– Steel expensivein1860sand1870s:
• VanderbiltforcedtoimportsteelrailsfromBritain
• By1900,U.S.A.outdistancedallforeigncompetitors,
makingmorethan1/3ofworld'ssteel
X.TheSupremacy ofSteel
(cont.)
• Whatwrought transformation?
– Bessemerprocess:
• Inventedin1850s;amethodofmakingcheapsteel
• First,WilliamKelly,aKentuckymanufacturer,
developed“airblowing” techniqueonred-hotiron
• GraduallyBessemer-Kellyprocessaccepted
• Two“crazymen” madepresentsteelcivilization
possible
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XI.CarnegieandOtherSultansof
Steel
• Andrew Carnegie—kingpin steelmaster:
– Giftedorganizerandadministrator:
• Succeededbypickinghigh-classassociates
• Eliminatedmanymiddlemen
• Hispartnershipinvolvedabout40“Pittsburgh
millionaires”
• By1900,heproduced¼ofnation'sBessemersteel:
– Partners, pre-income taxdays, divided profits of $40 million a
year as take-home pay
– “Napoleon of the Smokestacks” received $25 million
XI.CarnegieandOtherSultans of
Steel(cont.)
• J.Pierpont Morgan:financial giant
– Financedreorganizationofrailroads,insurance
companies,andbanks;heclamed:
• “Moneypower” notdangerous,exceptindangerous
hands—andhedidnotregardhisownhandsas
dangerous
– CircumstancesbroughtMorganandCarnegieinto
collision:
• By1900,Carnegiereadytosellhisholdings
• Morganmeanwhileplungedheavilyintomanufactureof
steelpipetubing
XI.CarnegieandOtherSultans of
Steel(cont.)
• Carnegiethreatenedtoentersamebusinessif
Morgandidnotmeethisprice
• Carnegie'sagentshaggledwithMorganforeight
hoursuntilheagreedtobuyCarnegieoutforover
$400million
• Carnegie,fearinghewoulddie“disgraced” withso
muchwealth,dedicatedhisremainingyearstogiving
awaymoney:
» Public libraries, pensions for professors, and other
philanthropic purposes
» Gaveaway about $350 million
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XI.CarnegieandOtherSultans of
Steel(cont.)
• Morganmovedrapidlytoexpand new
industrial empire:
– TookCarnegie holdings,addedothers,
“watered” stockliberally,andin1901launched
enlarged UnitedStatesSteelCorporation
– Capitalizedat$1.4billion—America'sfirstbilliondollarcorporation:
• Largersumthantotalwealthofnationin1800
• IndustrialRevolutionhadcomeintoitsown
p522
XII.RockefellerGrowsanAmerican
BeautyRose
• Emergence ofoil industry—one ofmost
striking developments before/after Civil War:
– In1859firstwellinPennsylvania—Drake'sFolly”
pouredoutliquid“blackgold”
• Kerosene,derivedfrompetroleum,firstmajor
productofinfantoilindustry
• Oilindustrysoonboomed
• By1870skerosenewasAmerica'sfourthmost
valuableexport
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XII.RockefellerGrowsan
AmericanBeautyRose(cont.)
– Whattechnologygives,technologytakesaway:
• 1885:250,000Edison'selectriclightbulbsinuse
• 1900:15million
• Newlightbulbsrenderedkeroseneobsoletejustas
kerosenehadrenderedwhaleoilobsolete
• Oilmighthaveremainedshrinkingindustrybutfor
inventionofautomobile:
– By 1900 gasoline-burning internal combustion engine
surpassed rivals, steam and electricity, as superior means of
automobile propulsion
– Automobile age gaveoil business new, long-lasting, and
hugely profitable lease on life
XII.RockefellerGrowsan
AmericanBeautyRose(cont.)
• Rockefeller cametodominate oilindustry
– In1870,organizedStandardOilCompanyofOhio:
• Nucleusofgreattrustformedin1882
• LocatinghisrefineriesinCleveland,heeliminated
middlemenandsqueezedoutcompetitors
• Rockefellerflourishedinageofcompletelyfree
enterprise
• Operated“justtothewindwardofthelaw”
• Pursuedpolicyofruleorruin
• By1877,controlled95%ofalloilrefineriesinU.S.A.
p523
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XII.RockefellerGrowsan
AmericanBeautyRose(cont.)
• Rockefeller—“Reckafellow,” asCarnegieoncecalled
him—showedlittlemercy
• Rockefeller'soilmonopolydidturnoutsuperior
productatrelativelycheapprice
• Achievedimportanteconomiesbyitslarge-scale
methodsofproductionanddistribution
• Efficientuseofexpensivemachineryand
consolidationprovedmoreprofitablethanruinous
pricewars
XII.RockefellerGrowsan
AmericanBeautyRose(cont.)
• Other trusts blossomed insugar, tobacco,
leather
– Harvestertrustamalgamated 200competitors
– Meatindustryaroseonwesternherdsand
kings—GustavusSwiftandPhilipArmour
– Untrustworthytrustsand“pirates” who
captainedthemdisturbinglynew
– Arrogantclassof“newrich” elbowedaside
traditionalpatricianfamilies
p524
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XIII.TheGospel ofWealth
• Credited heavenlyhelp:
• “ThegoodLordgavememymoney”—Rockefeller
• Wealthy,entrustedwithsociety'sriches,hadtoprove
themselvesmorallyresponsibleaccordingto“Gospel
ofWealth”—Carnegie
• Mostdefendersofcapitalismreliedonsurvival-of-the
fittesttheoriesofHerbertSpencerandWilliam
Graham
– Social Darwinists argued individuals won their stations in
life by competing on basis ofnatural talents
XIII.TheGospel ofWealth
(cont.)
• Evolutionary proponents:
– SpencerandSumnerlikened toCharlesDarwin
whostressedadaptationoforganisms
– Basedmoreon:
• Britishlaissez-faireeconomistsDavidRicardoand
ThomasMalthus
– Spencer, not Darwin, coined phrase “survival of the fittest”
– “The millionaires are aproduct of natural selection”—
Sumner
XIII.TheGospel ofWealth
(cont.)
• Self-justification bywealthyinvolved
contempt forpoor:
– RussellConwellbecamerichbydelivering
lecture“AcresofDiamonds” thousandsoftimes
– PlutocracytookitsstandonConstitution:
• ClausethatgaveCongresssolejurisdictionover
interstatecommerceagodsendtomonopolists
• GianttrustsalsosoughtrefugebehindFourteenth
Amendment
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XIII.TheGospel ofWealth
(cont.)
• Courtsingeniouslyinterpretedacorporationtobea
legal“person”
• Thereforeitcannotbedeprivedofitspropertybya
statewithout“dueprocessoflaw” (seeAmendment
XIV,para,1inAppendix)
• Giantindustrialistsincorporatedin“easystates,” like
N.J.,whererestrictionsonbigbusinessmildor
nonexistent
XIV.GovernmentTacklestheTrustEvil
• Massesofpeople begantomobilize against
monopoly:
– Firsttriedtocontroltruststhroughstate
legislatures
– Afterfailure, forcedtoappealtoCongress:
• ShermanAnti-TrustAct(1890):
– Forbade combinations in restraint of trade, without any
distinction between “good” trusts and “bad” trusts
– Bigness, not badness, was sin
XIV.GovernmentTacklestheTrust
Evil(cont.)
– Law proved ineffective, largely because contained legal
loopholes
– Effective in one respect: contrary to original intent, used to
curb labor unions or labor combinations deemed to be
restraining trade
– Prosecution of trusts under Sherman Act (1890) neither
vigorous nor successful
– More trusts formed in 1890s than during any other period
– Only after 1914 were paper jaws added to Sherman Act
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XIV.GovernmentTacklestheTrust
Evil(cont.)
• Stillirongripofmonopolisticcorporationsthreatened
• NewprincipleswrittenintolawbyShermanAnti-Trust
ActaswellasbyInterstateCommerceAct
– Private greed should be subordinated to public need
XV.TheSouthintheAgeofIndustry
• Economic conditions ofSouth:
– 1900:SouthproducedsmallerpercentageofU.S.
manufacturedgoodsthanithadbeforeCivilWar
• Plantationsystemdegeneratedintopatternofabsentee
landownership
• Whiteandblacksharecropperstilledsoilforshareof
crop
• Orbecametenants,inbondagetolandlordswho
controlledneededcreditandsupplies
XV.TheSouth intheAgeof
Industry(cont.)
• Southern agriculture:
– Boostedwhenmachine-madecigarettesreplaced
roll-your-ownvariety,andconsumptionincreased
– JamesBuchananDuke:
• Usednewtechnologytomass-produce“coffinnails”
• 1890:absorbedmaincompetitorsintoAmerican
TobaccoCompany
• ShowedsuchgenerositytoTrinityCollege,Durham,
N.C.,thattrusteeschangedittoDukeUniversity
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p526
p526
p527
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XV.TheSouth intheAgeof
Industry(cont.)
– Southremainedoverwhelmingly rural
– “NewSouth” boosterHenryW.Grady:
• EditorofAtlantaConstitution
• Exhortedex-Confederatestobecome“Georgia
Yankees” andoutplayNorthatcommerceand
industry
– Obstaclesinpathofsouthernindustrialization:
• Regionalrate-settingsystemsimposedbynortherndominatedrailroadinterests
XV.TheSouth intheAgeof
Industry(cont.)
– Railroads gave preferential rates to manufactured goods
moving southward from North
– Inopposite direction they discriminated in favor of southern
raw materials
– Net effect—kept South in servitude to Northeast
– E.g.,—“Pittsburgh plus” pricing system in steel industry
– Inmanufacturing cotton textiles, South fared better (see
Figure 24.2and Figure 24.3)
– Textile mills proved to be mixed blessing to economically
blighted South
– Cheap labor was South's major attraction for investors
– Keeping labor cheap became almost a religion among
southern industrialists
Figur e 24-2 p527
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Figur e 24-3 p528
XV.TheSouth intheAgeof
Industry(cont.)
– Millstookrootinchronicallydepressed
PiedmontregionofsouthernAppalachia
– Whiteruralsouthernerssoughtemploymentin
companymilltowns:
• Entirefamilies—“hillbillies” or“lintheads”—worked
fromdawntodusk
• Paidhalftherateofnortherncounterparts
• Oftenreceivedcompensationinformofcreditat
companystore,towhichtheywerehabituallyindebt
• Manysawemploymentinmillsassalvationfor
destitutefarmfamilies
p528
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XVI.TheImpactoftheNewIndustrial
RevolutiononAmerica
• Economic miracles:
• Standardsoflivingrosesharply
• U.S.workersenjoyedmorephysicalcomfortsthanin
otherindustrialnations
• Citiesmushroomedasfactoriesdemandedmore
laborandmoreimmigrantsarrivedseekingjobs(see
Map24.2)
• Federalauthoritynowcommittedtodecadesof
corporationcurbingand“trust-busting”
• Veryconceptoftimerevolutionized:
– Not by clockof nature but by factorywhistle
Map 24-2 p529
XVI.TheImpactoftheNew
IndustrialRevolution ofAmerica
• Mostaffectedgroupwaswomen
– Propelled into industry bynew inventions, they discovered
new economic and social opportunities
– “Gibson Girl” created byCharles Dana Gibson showed
independent and athletic “new woman”
– Most women workers toiled neither for independence nor
for glamour, but out ofeconomic necessity
– Faced long hours and dangerous conditions as did their
mates and brothers
– Earned less, as wages for “women's jobs” usually set below
those for men's jobs
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XVI.TheImpactoftheNew
IndustrialRevolution inAmerica
– Machineage accentuatedclassdivision:
“Industrialbuccaneers” flauntedbloatedfortunes
Spousesdisplayedglitteringdiamonds
Suchextravagancesevokedbittercriticism
Someofitwasenvy
Mucharosefromsocialistsandotherradicals,some
recentEuropeanimmigrants
• Oligarchyofmoneydemonstratedbyfactthatin1900
about10%ofpeopleowned90%ofnation'swealth
•
•
•
•
•
XVI.TheImpactoftheNew
IndustrialRevolution inAmerica
– Anationoffarmersandindependentproducers
became anationofwage-earners:
• In1860,halfofallworkersself-employed
• By1900,twoofeverythreeworkingAmericans
dependedonwage
• Withdependenceonwagescamevulnerabilityto
swingsofeconomyandwhimsofemployer
• Fearofunemploymentconstant
• Reformersstruggledtointroduceameasureof
security—jobandwageprotection,provisionfor
temporaryunemployment—intolivesofworkers
XVI.TheImpactoftheNew
IndustrialRevolution inAmerica
– Strongpressuresforincreasedforeigntrade
developed:
• Factoriessaturateddomesticmarket
• Internationaltradebecamecheaper,faster,andeasier
• Flagfollowstrade,andempiretendstofollowflag—a
lessonAmericawouldsoonlearn
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XVII.InUnions ThereIsStrength
• Workersdidnot shareproportionately with
employers
– Workersbecamemere lever-pulleringiant
mechanism:
• Individualoriginalityandcreativitystifled
• Lessvalueplacedonmanuallabor
• Nowfactoryhandsemployedbycorporation–
depersonalized,bodiless,soullessandoften
conscienceless
• Directorsnotknowindividualworkers,andinfairnessto
stockholders,notinclinedtoengageinlarge-scale
privatephilanthropy
XVII.InUnions ThereIsStrength
(cont.)
– New machinesdisplacedemployees:
• Inlongrun,morejobscreated
• Gluttedmarketseverelyhandicappedwageearners
• Individualworkerspowerlesstobattlesinglehandedlygiantcorporations:
– Corporation could dispense with individual worker much
more easily than worker could dispense with corporation
– Employers could pool vast wealth through thousands of
stockholders
– Retain high-priced lawyers
– Buy up local press
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XVII.InUnions ThereisStrength
(cont.)
» Put pressure on politicians
» Import strikebreakers (“scabs”)
» Employ thugs tobeat up labor organizers
• Corporationshadotherweapons:
– Call on federal courts to issue injunctions ordering strikers
to cease striking
– Ifdefiance and disorder ensued, company could request
state and federal authorities send in troops
– Employers could lock doors against rebellious workers—a
“lockout”—and starve workers into submission
– Compel workers to sign “ironclad oaths” or “yellow-dog
contacts”—solemn agreements not to join labor union
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XVII.InUnions ThereisStrength
(cont.)
– Put names of agitators on “black list” and circulate it among
fellow employers
– Often workers sank into perpetual debt tocompany stores
• Middleclass,annoyedbystrikes,grewdeaftooutcry
ofworkers:
– Strikes seemed foreign and socialistic; hence unpatriotic
– Big business might combine into trusts toraise prices, but
workers must not combine into unions to raise wages
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XVIII.LaborLimps Along
• Labor unions boosted byCivilWar:
• Lostofhumanlifedrainedlaborsupply
• Mountingcostoflivingprovidedincentivetounionize
• By1872severalhundredthousandworkershad
organized
• 32nationalunions,representingsuchcraftsas
bricklayers,typesetters,andshoemakers
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XVIII.LaborLimps Along
(cont.)
• National LaborUnion:
– Organizedin1866,representedgiantbootstride
byworkers
– Oneoffirstnational-scaleunionstoform:
• Aimedtounifyworkersacrosslocalesandtradesto
challengeevermorepowerfulemployers
• Lastedsixyearsandattractedimpressivetotalof
some600,000members:
– Including skilled, unskilled, and farmers
– Excluded Chinese; made only nominal efforts to include
women and blacks
XVIII.LaborLimps Along
(cont.)
• Colored National Labor Union:
– Their supportforRepublicanPartyandpersistent
racismofwhiteunionistspreventedtwonational
unionsfromworkingtogether
• National LaborUnion calledfor:
•
•
•
•
Arbitrationofindustrialdisputes
Eight-hourworkday
Wonlatterforgovernmentworkers
Unioncrippledbydepressionof1870s
XVIII.LaborLimps Along
(cont.)
• Knights ofLabor:
– SeizedtorchdroppedbyNationalLaborUnion:
• OfficiallyknownasNobleandHolyOrderofthe
KnightsofLabor
• Beganin1869assecretsociety,withprivateritual,
passwords,andspecialhandshake
• Secrecy,whichcontinueduntil1881,forestalled
reprisalsbyemployers
• Soughttoincludeallworkersin“onebigunion”
– Skilled and unskilled, whites and blacks, men and women
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XVIII.LaborLimps Along
(cont.)
• Soughtonlytobar“Nonproducers:”
– Liquor dealers, professional gamblers, lawyers, bankers, and
stockbrokers
• Refusedtoenterpolitics
• Campaignedforeconomicandsocialreform:
– Producers'cooperatives
– Codes for safety and health
– Frowned on industrial warfare while fostered industrial
arbitration – Waged determined campaign for eight-hour day
XVIII.LaborLimps Along
(cont.)
• Under leadership ofTerenceV.Powderly:
– Wonanumberofstrikesforeight-hourday
– AfterKnightsstagedsuccessfulstrikeagainstJay
Gould'sWabashRailroadin1885:
• Membershipmushroomedtoaboutthreequartersof
amillion
XIX.Unhorsing theKnightsof
Labor
– GotinvolvedinnumberofMayDaystrikes,1886
– About half failed
– Focal point was Chicago with 80,000 Knights
• HaymarketSquareepisode:
– Labor disorders had broken out
– On May 4, 1886 police advanced on meeting called to
protest alleged brutalities by authorities
– Suddenly a bomb thrown, killing or injuring several dozen
people, including police
– Hysteria swept Chicago:
» Eight anarchists arrested because preached incendiary
ideas; charged with conspiracy
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XIX.Unhorsing theKnightsof
Labor(cont.)
» Five sentenced to death
» Other three were given stiff prison terms
– Agitation for clemency mounted
• JohnAltgeldelectedgovernorin1892:
– After Altgeld studied Haymarket case exhaustively, he
pardoned three survivors
– Violent abuse showered on Altgeld by conservatives
– Praised by those who thought men innocent
– Altgeld defeated for reelection
XIX.Unhorsing theKnightsof
Labor(cont.)
– HaymarketSquare bombhelpedblowprops
fromunderKnights:
• Hadbeenassociatedwithanarchists
• Theirstrikesmetwithscantsuccess
– AnotherfatalhandicapofKnightswasinclusion
ofskilledandunskilledworkers:
• Unskilledlaborcouldbeeasilyreplacedby“Scabs”
• Craftunionistscouldn'tbereplacedsoreadily
– Hence they enjoyed better bargaining position
XIX.Unhorsing theKnightsof
Labor(cont.)
– Skilled workers sought refuge in American Federation of
Labor:
» A federation ofexclusively skilled craft unions
– DesertionofskilledcraftunionistsdealtKnights
bodyblow:
• By1890s,downtoonly100,000memberswho
graduallyfusedwithotherprotestgroups
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XX.TheAFofLtotheFore
– ElitistAmericanFederationofLabor: 1886
• LargelybrainchildofSamuelGompers
• Hadbeenacigarmaker
• ElectedpresidentofAFofLeveryyearexceptone
from1886to1924
• AmericanFederationofLaborwas—afederation:
– An association of self-governing national unions
» Each independent, with AF of Lunifying overall strategy
» No individual laborer could join central organization
p536
XX.TheAFofLtotheFore
(cont.)
– Gompersadopteddown-to-earthapproach:
• Soft-pedaledattemptstoengineersweepingsocial
reform
• Bitterfoeofsocialism,heshunnedpoliticsforeconomic
strategiesandgoals
• Hadnoquarrelwithcapitalism:
– Demanded fairer share for labor
– All he wanted, he said, was “more”
• Promotedwhathecalled“pureandsimple” unionism:
– Better wages, hours, and working conditions
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XX.TheAFofLtotheFore
(cont.)
• Oneofhismajorgoalswas“tradeagreement”
authorizingclosedshop—orall-unionlabor
• Chiefweaponswerewalkoutandboycott
– AFofLestablishedonsolid,butnarrowground:
• Fellshortofrepresentingallworkers
• Composedofskilledcraftsmen—carpenters,bricklayers:
– Leftunskilled laborers, including women and blacks, to fend for
themselves
XX.TheAFofLtotheFore
(cont.)
• Weatheredpanicof1893
• By1900,amembershipof500,000
• Criticsreferredtoit,withquestionableaccuracy,as
“thelabortrust”
– Laborconditions:
• Labordisorderscontinued,morethan23,000strikes
1881-1900
• Disturbancesinvolved6,610,000workers,withtotal
losstoemployersandemployeesof$450million
• Strikerslostabouthalfofstrikes;wonor
compromisedremainder
XX.TheAFofLtotheFore
(cont.)
• Gravestweaknessoforganizedlaborwasitembraced
onlysmallminorityofallworking-people—about3%
in1900
– Attitudetowardlaborchanging:
• Publicconcedingrightofworkerstoorganize:
– To bargain collectively and to strike
• LaborDaymadeaholidaybyCongressin1894
• Afewindustrialistssawwisdomofbargainingwith
unionstoavoidstrikes
• Vastmajorityofemployerscontinuedtofight
organizedlabor
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XX.TheAFofLtotheFore
(cont.)
– Nothing handed to unions on a silver platter
– Still some time before labor gained position ofrelative
equality with capital
– Ifage ofbig business had dawned, age of big labor still some
distance over horizon
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