Chapter 24 Textbook Notes
Industry Comes of Age
Memory Aid for 2nd Industrial Revolution: “ROSE”
R ailroads (especially transcontinental)
O il
S teel
E lectricity
Memory Aid for 1st Industrial Revolution: “TRIC” (before Civil War)
T extiles
R ailroads
I ron
C oal
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The government will encourage the transcontinental railroad by giving subsidies and land grants
--Gave checkerboard pattern of land (1 square mile each)
Union Pacific-Central Pacific—1st Transcontinental railroad
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“Paddies” (Irish) and “Coolies” (Chinese) built the railroads
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1st Transcontinental railroad was built mainly by four wealthy people known as the “Big Four”
1. Leland Stanford
2. Collis Huntington
3. ??????
4. ??????
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1st transcontinental railroad met in 1869 at Promontory Point in Ogden, Utah
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Cornelius Vanderbilt—organized and consolidated railroad lines. Replaced old iron
rails with new and better steel rails. Became extremely wealthy
**Worked mainly on railroad lines in the New York area
**Founded Vanderbilt University in Nashville, TN
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5 Transcontinental Railroads will be built:
1) Union Pacific-Central Pacific
2) Northern Pacific
3) Southern Pacific
4) Atchison, Topeka, and Santa Fe
5) The Great Northern—1893—built by James J. Hill w/o land grants!!
(Known as the greatest railroad builder)
Jay Gould and Russell Sage—controlled much of the railroads in the West
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Improvements made in Railroads?
1. Steel rails
2. Standardized track gauges
3. Westinghouse air brake (George Westinghouse)
4. Pullman Palace cars (George Pullman)
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Results of
1.
2.
3.
4.
5.
6.
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the Railroads?
United country together
Stimulated industries
Stimulated mining
Stimulated urbanization
Helped settle the lands
Created time zones
Five Unfair Railroad Business Practices (exposed in book The Octopus by Frank Norris)
1) Stockwatering—taking shares of stock and making it appear the value or worth is more than it is
2) Pooling—when railroads in a given area would agree to share business and share the profit. NO COMPETITION!
3) Secret Rebates—charge everybody high rates, but not friends
4) Kickbacking—charge everybody high rates, but “kickback” money to their friends
5) Differential Rates—charge more for short haul than long hauls (really hurts farmers)
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“Law! What do I care about the law? Hain’t I got the power?”—Cornelius Vanderbilt
Farmers were the hardest hit by railroad practices. Soon formed into groups like the GRANGE (Patrons of Husbandry) to
complain about the railroads.
**GRANGER LAWS—passed in some states in Midwest that attempted to regulate the railroad for the public good
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Government intervention against the railroads included:
1. Munn v. Illinois—1876—Supreme Court case –upheld Granger Laws—said state could regulate railroads for the
common good
2. Wabash Case—1886—Railroads get the Munn case overturned. Only Congress can regulate interstate trade!!
3. Interstate Commerce Act—1887—rid the railroads of the 5 typical business practices. Made them illegal!!
4. Interstate Commerce Commission—set up to administer and enforce new legislation
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William Kelly and Henry Bessemer—early pioneers in the steel making industry—1850s
* William Kelly—American
* Henry Bessemer—English
Bessemer Process—ran cold air through red-hot iron and made steel
Major inventions
1. Typewriter—Christopher Shoales—called the “Literary Piano”
2. Refrigerator—Clarence Birdseye
3. Electric Dynamo—Michael Farrady
4. Telephone—Alexander Graham Bell
5. Interchangeable Parts—Eli Whitney—mass production now possible
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Light Bulb—1879—Thomas Edison—changed everything!!
** Invented motion pictures and phonograph
** “The Wizard of Menlo Park”
** “Genius is 1% inspiration, 99% perspiration”
Beef Barons—business tycoons in meat packing
--Gustavus F. Swift
--Phillip Armour
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Major Industrial Leaders/Robber Barrons
1. Cornelius Vanderbilt—railroads
2. John D. Rockefeller—oil
3. Andrew Carnegie—steel making
4. JP Morgan—banking industry
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Captains of Industry or “Robber Barrons”—terms for those that were the main leaders in various fields. One term a positive, the
other a negative! Depends on how you look at them!
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Charles Darwin—the three terms associated with Darwinism are “survival of the fittest”, “evolution”, and “Natural Selection”
** On the Origin of Species—1859
** Social Darwinism—concept of applying Darwinism to society
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Andrew Carnegie—leader in steel making process
* Vertical Integration—when you control every stage of the development of a product
* Kelly-Bessemer Process—1850s—steel process. William Kelly from KY and
Henry
Bessemer from England
* Bessemer Process—Mesabi Iron Ore Range—gotten in Webster-Ashburton Treaty in
—
process of taking very hot iron ore, forcing cold air through to clean out
impurities
* Carnegie was an immigrant who grew up poor
* Pittsburg, PA—headquarters of Carnegie—Homestead
* Made $40 million a year; split with partner
* Not a monopolist, often used partnerships to help others—the Pittsburg Millionaires
* By 1900, he produced 25% of the nations steel!!!!
* The Gospel of Wealth—book written by Carnegie—belief that God had blessed the
wealthy
with their money, but they had to be good stewards and use it
properly
* “The man who dies thus rich, dies disgraced”—Andrew Carnegie
* Forced JP Morgan to buy him out of the steel industry for $400 million
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Reverend Russell Conwell—Acres of Diamonds speech—supporter of Gospel of Wealth
** “There is not a person in the U.S. who was not made poor by his own shortcomings”
1842
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JP Morgan—banking industry
* Interlocking directories—placed his board of directors on board of other banks’
directors. This way a decision affects all the companies and he benefits
* Forced to buy out Andrew Carnegie for $400 million
* 1901—U.S. Steel Corp—1st billion dollar corporation
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John D. Rockefeller—oil industry
* Horizontal integration—spreading of taking over or joining with competitors to
make
a profit
* Standard Oil—1870—Cleveland, OH
* Motto: “Let us prey”
* The Trust—perfected by John D. Stockholders of smaller oil companies gave their
stock to the
Standard Oil Company. Created a monopoly. Will control
95% of U.S. oil
* Using oil probably saved thousands of whales
* 1st oil well—Titusville, PA—Edwin Drake—1859
The three main forms of business consolidation were
1. Pooling (illegal)
2. Trusts
3. Interlocking Directories
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14th amendment—used by businesses and trusts to hide behind
--Some corporations were able to get judges to say a corporation was a legal person and had the same rights as people!!
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James Buchanan Duke—1880s—machine made cigarettes or “coffin nails”
** Gave a lot of money to Trinity College and it gratefully changed its name to Duke University
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Sherman Anti-Trust Act—1890—flatly forbade combinations in restraint of trade, without distinctions between good trusts and
bad trusts. Big was bad. Law was weak. First time govt stepped in to regulate trusts
Birmingham, Alabama—large amounts of iron ore found; “Pittsburg of the South”
** North did not like South making steel, so they put a huge tax on it” (Pittsburg Plus tax)
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Gibson Girl—illustrates newly independent woman. By 1900, the concept of woman
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Technological unemployment—when machines take jobs of humans
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6 Weapons Owners can use against Striking Workers
1. Strike Breakers—“scabs”
2. Injunction—court order issued by judge ordering people to go back to work
3. Lockout
4. “Iron Clad Oaths” and “Yellow Dog Contracts”—contracts saying you wouldn’t join a Union
5. Black Lists—“you’ll never work in this town again”
6. Company Towns—company starts their own town. Provides housing (high rent) and easy credit (company store).
Subtle
way of keeping workers in debt for years.
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National Labor Union—1866—William Slyvis
Knights of Labor—1869—Terence V. Powderly
AF or L—1886—Samuel Gompers—American Federation of Labor
National Labor Union—1866—William Slyvis
* First nationally organized Labor Union
* Allowed skilled and unskilled workers (unskilled workers a weakness)
Knights of Labor—1869—Terence Powderly “Grandmaster Workmen”
* “An injury to one is a concern to all”—motto
* Put all into big union, allowed skilled and unskilled; allowed blacks and women
* Did well until Haymarket Square Riot—1866—in Chicago (The Windy City)—will end Knights of Labor
* This bomb blast tended to associate labor unions with anarchists and terrorists
American Federation of Labor—1886—Samuel Gompers
* Samuel Gompers President for 39 years
* Gompers hated socialism—loved capitalism—he said he just wanted a “little more” wages, shorter hours, fringe benefits,
better working conditions, etc. (“Bread and Butter union policy”)
* “show me the country where there are no strikes and I’ll show you a country that has no liberty”—S. Gompers
* UNSKILLED NOT ALLOWED—STRENGTH
* Labor Day was established as a legal holiday in 1894….1st Monday in September
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Weapons used against Owners?
1. Strikes—refusal to work
2. Walk out
3. Boycott—will not buy or use anything from that company
4. Close shop—hiring only Union workers (Open Shop—choosing to belong to a Union or not)
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