PART I THE EXPANSION OF INDUSTRY
Before the 1860’s, the US was mostly
agricultural. By the 1920’s, it was the
most industrialized nation on Earth.
How?
This was due to several factors…
§a wealth of natural resources
§government support for business
§a growing urban population that
provided cheap labor and markets for
new products
BLACK GOLD
Early Americans had little use for oil until they wanted to
use kerosene in lanterns…
Edwin Drake was the first to successfully drill. He did so
near Titusville, PA in 1859, starting an oil boom
across the nation.
Oil became even more important with the invention of
the automobile.
Compare Drake’s oil well
to today’s technology.
BESSEMER STEEL PROCESS
Along with oil, coal and iron are also plentiful
across the US.
Iron is soft and tends to rust and break due to
impurities. Removing carbon produces steel,
which is really strong and won’t rust.
Henry Bessemer and William Kelly invented the
process around 1850.
Air is injected into molten iron, removing impurities
like carbon. iron – impurities = steel.
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Workers making steel
NEW USES FOR STEEL
Railroads were the biggest customers, with 1000’s of
miles of tracks.
It made barbed wire and the steel plow possible.
It changed building techniques. With steel to support the
weight of buildings, structures rose taller and taller.
The Brooklyn Bridge, completed in 1883, spanned 1,593
feet and was the tallest structure on Earth other than
the pyramids in Egypt.
INVENTIONS THAT PROMOTED
CHANGE
Thomas Edison established the world’s first research
laboratory at Menlo Park, NJ in 1876. He invented and
patented the light bulb there in 1880.
Edison, along with George Westinghouse, made electricity
safe to use in homes and businesses.
Electricity allowed businesses to locate anywhere they
wanted… not just near moving water or sources of coal.
INVENTIONS THAT CHANGED
LIFESTYLES
Christopher Sholes invented the typewriter in
1867, giving way to a change in the
workplace.
All documents had to be created by hand before
the typewriter came along.
Next to the light bulb, the most important
invention of this era is the telephone.
Alexander Graham Bell invented it in 1876
It was of particular importance to homes and
offices and, along with the typewriter, allowed
women to work in offices.
§In 1870, women made up only 5% of office
workers. In 1910, they made up 40%.
Bell
The device consisted of a coil of wire, a magnetic arm and a taut membrane. Any sound caused the membrane, and hence the magnetic
arm, to vibrate. The movement of the magnet induced a fluctuating electric current in the coil. This electrical signal could be reconverted into sound by an identical apparatus at the other end of the circuit. "Watson, come here! I want to see you!" PART II –
THE AGE OF RAILROADS
OPPORTUNITIES AND OPPORTUNISTS
The growth of railroads influenced the industries and
businesses in which Americans worked.
The iron, coal, steel, lumber, and glass industries
grew to keep up with the growth of the railroads.
The rapid spread of the railroads also fostered the
growth of towns, help establish new markets, and
offered many opportunities to people and
businesses.
Chicago, Minneapolis, Denver, Seattle,
Flagstaff, and Abilene, owed their
existence to the railroads
PULLMAN
Using the old model of textile mills, George Pullman
built his own city for workers who helped build
sleepers and railroad cars at his factory in Illinois.
The town was considered luxurious compared to most
with workers having their own homes and having
access to doctors, shops, and athletics.
However, Pullman controlled every aspect of his
workers’ lives, which led to resentment and
eventually to a violent labor strike in 1894 after
cutting pay, but not rent.
INTERSTATE COMMERCE ACT
The Grange/Populist Party had tried to have the
government regulate the railroads to cap
costs.
States tried to regulate the railroad companies,
but since trains cross state lines, the Supreme
Court ruled that states didn’t have the right.
Interstate commerce can only be regulated by
the national government.
In response, the government passed the
Interstate Commerce Act in 1887.
It created a 5 member Interstate Commerce
Commission (ICC) to regulate the railroads.
It will not be effective, however, until Theodore
Roosevelt strengthens it in 1906.
PANIC OF 1893
Corporate abuses, mismanagement, overbuilding,
and competition pushed many railroads to the
brink of bankruptcy.
By the middle of 1894, a quarter of the nation’s
railroads had been taken over by financial
companies like J.P. Morgan & Company.
By 1900, 7 powerful companies controlled over
2/3rds of the nation’s railroads.
PART III –
BIG BUSINESS AND LABOR
ANDREW
CARNEGIE
CARNEGIE
Immigrated from Scotland at age 12
Worked for railroads; became private secretary to the
superintendent of Pennsylvania Railroad
As a reward, he was given a chance to buy stock. He
started investing his money and by 1865, he left the
r.r. and started his own steel mill.
NEW BUSINESS STRATEGIES
Carnegie’s success was due in part to
management practices that he put in place.
§1. He continually searched for ways to make
products cheaper. He perfected machines and
accounting systems.
§2. He attracted talented people by offering
them stock in the company and encouraged
competition among employees.
He also attempted to control as much of the steel
industry as he could.
He did this through vertical integration – buying out
his suppliers like coal fields, freighters, railroads,
etc.
And through horizontal integration – buying out the
competition.
Through buying out his competition and his suppliers,
he controlled almost the entire steel industry.
He sold his business in 1901 to J.P. Morgan for $480
million.
SOCIAL DARWINISM
Carnegie attributed his success to hard work, shrewd
investment, and innovative business practice.
Others’ attributed it to a new theory – Social Darwinism.
This is how they explained why some were so wealthy, while
others remained poor.
They believed “natural selection” weeded out less capable
people, therefore the rich were the most adapted and
capable.
They saw riches as a sign of God’s favor and that the poor
must be inferior and deserved what they got in life.
HORATIO ALGER
People like Horatio Alger promoted the possibility of ragsto-riches success for people who were virtuous and
hard-working.
CONSOLIDATION
Many industrialists pursued horizontal
integration in the form of mergers.
Mergers usually occurred when one company
bought out the stock of another.
A firm that bought out all its competitors could
achieve a monopoly, or control over its
industry’s production, wages, and prices.
One way to create a monopoly was to form a
holding company, a corporation that did
nothing but buy out the stock of other
companies.
Banker J.P. Morgan created the world’s largest
corporation when United States Steel (a
holding company) bought out Carnegie Steel in
1901.
J.P. Morgan
STANDARD OIL COMPANY
Others like John D. Rockefeller took a different approach
to achieving a monopoly: they joined with competing
companies in trust agreements.
Participants in a trust turned their stock over to a group
of trustees – people who ran the separate companies
as one large corporations. They were not legal, but
used anyway.
Rockefeller used a trust to gain control of the oil industry
in the US.
In 1870, Rockefeller’s company refined 3% of US oil.
By 1880, they refined 90%.
How? Rockefeller paid his employees poorly,
undersold his competition, and when the
competition went out of business, he raised prices
above the original levels.
Tactics like these earned industrialists the nickname,
“Robber Barons.”
John D. Rockefeller
Many industrialists like Carnegie and Rockefeller
were also philanthropists, or people who give
money away for the good of mankind.
Carnegie's Philanthropy
“It will be a great mistake for the community to shoot
the millionaires, for they are the bees that make
the most honey and contribute the most to the hive
even after they have gorged themselves full.” Andrew Carnegie
SHERMAN ANTITRUST ACT
The government was concerned that the growing
power of corporations would stop free trade, so
they passed the Sherman Antitrust Act in 1890.
It made it illegal to form a trust that interfered with
free trade between states or with other countries.
It was poorly written and all 8 cases brought against
corporations were thrown out. The government
eventually gave up trying.
PART IV – LABOR UNIONS
BAD WORKING CONDITIONS
7 day work weeks, 12 hr days, no vacation or sick days
were common for men in steel mills.
Women faced similar conditions, but not as bad.
In 1882, an average of 675 laborers were killed in
accidents each week.
Wages were so low that every family member, even
children, had to work.
25% of boys and 10% of girls ages 5-15 held jobs.
In 1899, men made $498 a year, women $267, with
kids averaging around 27 cents for a 14 hour day.
Child Laborers
EARLY LABOR UNIONS
Small unions for skilled workers had existed since the
1700s.
The first nation wide union was the National Labor
Union (NLU).
In 1869, Uriah Stephens organized the Knights of
Labor.
It’s motto was, “An injury to one is a concern of all.”
It was open to all workers, man or woman. At its
height in 1886, it had over 700,000 members
Uriah Stephens
CRAFT UNIONS
In 1886, the American Federation of Labor (AFL) with
Samuel Gompers as president was formed. It was
a craft union, which consisted of workers from a
specific craft.
It focused on collective bargaining and used strikes
as a way of getting higher wages and shorter work
weeks.
INDUSTRIAL UNIONS
Eugene V. Debs was the first to combine all
workers, skilled and unskilled, from one
industry into a union.
He organized the American Railway Union (ARU),
which grew to over 150,000 members.
SOCIALISM AND THE IWW
Debs eventually turned to socialism (an
economic system in which the government
controls business).
The Industrial Workers of the World (IWW)
headed by “Big Bill” Haywood never topped
100,000 members.
STRIKES TURN VIOLENT
Industry and the government responded
forcefully to union activity, which they saw as a
threat to the entire capitalist system…
The Great Strike of 1877: workers on the
Baltimore & Ohio R.R. went on strike for a
wage cut. President Hayes ordered it ended
using federal troops since it “interfered with
interstate commerce.”
The Haymarket Square Affair: workers gathered
to protest police brutality. As protesters were
leaving, someone threw a bomb into the
police. 7 police and several workers were
killed.
The Homestead Strike: Workers were protesting
a pay cut at the steel plant in PA. Henry Frick
hired police so he could hire scabs
(replacement workers). 3 police and 9
workers were killed. The PA national guard
was called in and the plant was closed down
for 5 months.
Pullman Company Strike: Workers went on strike
over cut wages. Pullman refused to negotiate
with strikers, so the ARU boycotted Pullman
trains. Pullman hired strikebreakers and it
turned violent. Federal troops were sent in to
stop it.
TRIANGLE SHIRTWAIST FACTORY FIRE
People could no longer ignore conditions in factories
after the Triangle Shirtwaist fire in 1911.
146 women died after the building caught fire. The
doors were locked to keep them from leaving and
many jumped to their death or died inside the
building.
This disaster led to some changes in local rules for
women and children in the workplace.
EMPLOYERS FIGHT BACK
Employers feared unions as they grew more
powerful.
They finally, with the courts’ help, turned the
Sherman Antitrust Act against labor.
All they had to say was that a strike hurt
interstate trade and the government would
intervene.
Despite all, labor unions continued to grow.