BigBusinessandOrganizedLabor
v Whatfactorsfueledthegrowthofthepost-CivilWareconomy?
v Whatwerethemethodsandachievementsofmajorentrepreneurs?
v Whatledtotheriseoflargelaborunions?
TheRiseofBigBusiness
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TheIndustrialRevolutioncreatedhugecorporationsthatcametodominatetheeconomy,politicallife,and
sociallifeduringthelatenineteenthcentury.
o Desireforverticalintegration—onecompanydoeseverythingfromstarttofinish
o Efforttodominateentireindustries
Manyfactorsconvergedtohelplaunchthedramaticbusinessgrowthafterthecivilwar
o Nationwideshortageoflabor—motivatedinventorsandbusinessownerstodevelopmoreefficient
machinery
o Technologicalinnovations—advancedproductivity
o Largerbusinessesexpandedintonumerousstates—standardizedmachinery
o Determinedentrepreneurstookadvantage
o Federalandstatepoliticiansencouragedgrowthofbusinessbyimposinghightariffsandmakinginternal
improvements
Agriculturalsectorfueledtherestoftheeconomy
o Providedwheatandcornforprocessing
o Slaughteringandpackingindustry
o Networkofrailroadsconnectedthecoasts
Abundanceofpowersources:water,coal,oil,electricitywood—inexpensive
TheSecondIndustrialRevolution
• FirstIndustrialRevolutionwaspropelledbycoalpower,textilemachines,andblastfurnaces—centeredinUK
• SecondIndustrialRevolutionwaspropelledbyinnovations,inventions,machinery,chemicals—centeredin
USAandGermany
o Formedtheeconomyandsocietyintourban-industrialform
• ThreerelateddevelopmentsinSecondIndustrialRevolution
o Creationofinterconnectednationaltransportation
§ ledtonationalmarket
§ Telegraphlines,railroadsystems,steamships,underseatelegraphcable
o Useofelectricpoweracceleratedchange
§ Advancesinefficiency
§ Electrictrolleys,subways
o Applicationofscientificresearchtoindustrialprocesses
§ newresearchuniversities
§ improvedtechniquesforrefining
§ Expandedscopeandscaleofindustrialorganization
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BuildingtheTranscontinentalRailroads
• Railroadswerethefirstbigbusiness,firsttoattractfinancialmarkets,firsttodeveloplarge-scalebureaucracy
o Openedthewesttoindustrialdevelopment
• RenewalofrailroadbuildingaftertheCivilWarfilledouttherailnetworkeastoftheMississippiRiver
o Mostspectacularexploitswerethemonumentaltranscontinentallinesbuiltthroughmountains,over
rivers,andacrossplains
o Railroadsboundthecountrytogether—governmentsupportinformofloans,grants,subsidies
• BeforetheCivilWar,sectionaldifferencesoverthechoiceofrouteshadheldupthestartofthe
transcontinentalline
o SecessionallowedpermittedpassageofPacificRailroadsAct—authorizedalinealonganorth-central
routetobebuiltbytheUnionPacificRailroadandCentralPacificRailroadfromOmahatoSacramento
o Constructionoftheraillineandbridgeswashastyandflimsy
§ Entrepreneursdrivenbywealthfromgovernmentsubsidies,paidpermileoftrack
• TheUnionPacificworkcrews—ex-soldiers,formerslaves,IrishandGermanimmigrants—hadtocopewith
badroads,watershortages,extremeweather,andIndianattacks
• TheCentralPacificCrewswerecomposedmainlyofChineseworkers—“coolies”
o Chinesewereintentonaccumulatingmoneyandreturningtohomeland
• Allsortsofissuesdelayedefforttofinishthetranscontinentalline
o Ironpricesspiked
o BrokentreatiespromptedIndianraids
o Blizzards
o UnionPacificcoveredmoremiles,raceendedin1869
• Thenexttranscontinentallinewascompletedin1881,linkedAtchisonandTopeka—SanteFeRailroadand
SouthernPacificRailroad
o SouthernPacifichadabsorbedCentralPacific
o NorthernPacificconnectedLakeSuperiortoOregon
o GreatNorthernconnectedSt.PaulandTacoma,Washington
• Beforetheturnofthecentury,fivemajorlinesexisted
FinancingtheRailroads
• Builtbyprivatecompaniesthatraisedmoneyforconstructionbysellingrailroadbonds
• In1850,SenatorStephenDouglassecuredgovernmentlandgrantsforrailroads
• Railroadsreceivedmassivefinancialaidfromfederal,state,andlocalgovernments
o Altogether,railroadsreceived$707millionincashand$355millioninland
• Federalgovernmentrecovereditsinvestmentsandlinkedthecountry
o Valueoflandnearrailroadsincreased
o Railroadsbenefittedpublicbyhaulinggovernmentfreight,militaryitems,andmailforhalffare
o Acceleratedcreationofnationmarket
o Increasedgovernmentrevenues
• Theshadypracticesofrailroadexecutivesearnedthemthelabelofrobberbarons
o Drivenbygreed
o CréditMobilierofAmericabribedcongressmenandchargedUnionPacificunjustly
• ThePrinceoftherailroadrobberbaronswasJayGould
o Usedcorporatefundsforpersonalinvestmentandbribes
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o Builtafortunebymovingfromenterprisetoenterprise
CorneliusVanderbiltstandsoutamongtherailroadbarons
o Hedecidedtogiveuphazardsofwartimeshippinginfavoroflandtransport
o MergedseparatetrucklinesconnectingAlbanytoBuffalointoasinglenetworkledbyNewYorkCentral
o CompetedwithErieRailroad
o BoughtLakeShoreandMichiganSouthernRailroad,whichgavehislinesconnectionstoChicagomarket
o Consolidationtrend
ManufacturingandInventions
• Newprocessesinsteelmakingandoilrefiningenabledthoseindustriestoflourish
• TherefrigeratedrailcarallowedmeatintheWesttoreachpackinghouses
• CorrugatedrollerscouldcrackwheatoftheGreatPlains—flourmillinginMinneapolisunderPillsbury
• GeorgeWestinghouse’sairbrake,ChristopherShole’stypewriter,IvesMcGaffey’svacuumcleaner
• Technologicaladvancesalteredthedailylivesofordinarypeople
o AlexanderGrahamBell’stelephonein1876
§ BellTelephoneCompany
§ CompetitioncamefromWesternUnion—employedThomasEdison
§ AmericanTelephoneandTelegraphCompanyemergedfromboth
• ThomasEdisoninventedphonographin1877,lightbulbin1879,perfectedhundredsofdevices
• EdisonElectricIlluminatingCompanybegantosupplyelectricalcurrenttocustomersinNewYorkCity
• ManycompaniesemergedintoEdisonGeneralElectricCompanyin1888
o GeorgeWestinghouseinventedalternating-currentsystemtoallowgreatersupplyrange
o SetupWestinghouseElectricCompany—wonagainstEdisondirectcurrent
o Factoriesnolongerhadtoclusteraroundpowerplants
Entrepreneurs
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JohnD.Rockefellerdominatedoilindustry
o RailroadandshippingcenterinCleveland,Ohiomadeitanidealspotforoil
§ ClevelandhadtheedgeintransportationoverPittsburgh
o Asoilcouldberefinedintokerosene,economicimportanceofoilrushoutweighedgoldrush
Rockefellerrecognizedthepotentialprofitsofrefiningoil—incorporatedinvestmentsintoStandardOil
CompanyofOhio
o Decidedtoweedoutcompetition—offeredtobuyout
o By1879,StandardOilcontrolled95%ofoilrefininginthecountry
Rockefeller’ssuccesswasbasedondeterminationto“paynobodyaprofit”
o StandardOiltookchargeofentireproduction—nomiddlemen
o Verticalintegration
o Thecompanykeptlargecashreserves
Alsocontrolledtransportation
o Ownershipofownpipelinesandrailroads
Inefforttoconsolidatemoreenterprises,Rockefellerusedanewlegaldevice:thetrust
o Usedtocentralizecontrolofbusiness
o OrganizedStandardOilTrust
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§ All37stockholdersconveyedtheirstocktoninetrustees
Trustdevicewaslegallyvulnerabletoprosecutionunderstatelawsagainstmonopolies
o 1892:OhioSupremeCourtorderedStandardOilTrusttobedissolved
o RockefellerbroughthisentireempireunderStandardOilCompanyofNewJersey
o SomeholdingswerebrokenoffbytheShermanAnti-TrustActof1890
Rockefellerdonatedmuchofhisfortunetoeducationandmedicine
CarnegieandtheSteelIndustry
• AndrewCarnegieexperiencedatypicalrisefrompovertytoricheslikeRockefeller
• Movedfromtelegraphytorailroadingtobridgebuildingandthentosteelmaking
o Steelwasthemiraclematerial—cheap o HenryBessemerinventedBessemerconverter,withwhichsteelcouldbeproduceddirectlyfromiron
• Carnegiewasapromoted,salesman,organizer—notatechnicalexpertonsteel
o Purchasedstrugglingcompaniesduringrecession
o Insistedonup-todatemachinery
• Carnegiestoodoutfromotherbusinesstitansasathinkerwhofashionedandpublicizedaphilosophyforbig
business
o Believedthathoweverharshtheirmethodswere,captainsofindustrywerepublicbenefactors
o “TheGospelofWealth”arguedthatinevolutionofsocietythecontrastbetweenmillionaireand
laborersmeasuresthedistancesocietyhadcome
• Dispensedfortuneforthepublicgoodafterretirement
o Calledhimself“distributor”insteadofphilanthropist
o Gavemoneytohospitals,universities,churchbuildings,etc.
J.P.Morgan,Financier
• J.P.Morganwasbornintowealth,unlikeRockefellerandCarnegie
• EstablishedJ.PiermontMorganandCompany—channeledEuropeancapitalintotheUS
• Morganwasaninvestmentbanker
o Boughtandsoldstocksforprofit
o GrowthoflargecorporationsputMorgan’sinvestmentfirminfavorableposition
o Investmentbankersbecameinvolvedintheoperationoftheirclientfirms
• UnlikeRockefeller,J.P.Morganviewedcompetitionaswastefulandchaoticandsoughttoconsolidaterival
firmsintogianttrusts o Morgan’scrowningtriumphwasconsolidationofsteelindustry
§ BoughtoutCarnegie’ssteel,Rockefeller’sironholdings1901
§ CombinedintoUnitedStatesSteelCorporation—firstbilliondollarcorporation
SearsandRoebuck
• Mostimportantchallengewasextendingthereachofnationalcommercetothepeoplewholivedonisolated
farmsandtowns
o AaronWarddecidedthathecouldreachmorepeoplebymailthanonfootandthuseliminatemiddle
man
o MontgomeryWardandCompanybegansellinggoodsat40percentdiscountthroughmail-order
catalogs
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Sears,RoebuckandCompanycametodominatemail-orderindustry
o FoundedbyRichardSearsandAlvahRoebuck
o Groceries,drugs,tools,furniture,stoves,householditems,clothes,books,sportinggoods
Searscataloghelpedcreatenationalmarket
o Familiesonfarmsandsmalltownscouldpurchaseproductbymail
LaborConditionsandOrganization
SocialTrends
• Risingstandardofliving
o However,disparitiesindistributionofwealthdidnotdisappear
o Richest2%ofAmericanfamiliesownedmorethan1/3ofthenation’swealth
o Upwardmobilityfromlowtohighrankjobswascommon
• Continuingdemandforunskilledorsemiskilledworkersattractednewworkforce
o Immigrants,women,children
o Realwagesandearningwentupabout50%by1890andanother37&by1914
o Wagesincreasedduetodeclineinpricesandcostofliving
• Workingconditionsweredreary
o 59-hourworkweek
• Althoughwageswererisingoverall,workingandlivingconditionsremainedpoor
o Highdeathrateincities
o Poorhealthandsafetyconditionsinfactories
o TheUnitedStateswastheonlyindustrialnationintheworldthathadnoworkmen’scompensation
o Highestaccidentrateintheworld
o Impersonaljobs—machinery,bureaucracy,contractual
ChildLabor
• Growingnumberofchildwagelaborers
o Operatingmachines,diggingcoal,stitchingshoes,peelingshrimp,canningfood,blowingglass
o Parentsweredesperateforincome
o 1880oneofsixchildrenwereworkingfull-time
o Insoutherncottonmills,childrenwereemployedinsteadofAfricanAmericans
o Littleeducation
• Factories,mills,mines,canneriesweredangerous
o Respiratorydiseases,poortreatment
o Statelawslimitinghourswerenotenforcedwell
DisorganizedProtest
• Civicleadersrespectedpropertyrightsmorethantherightsoflabor
o Businessmenbelievedthata“laborsupply”wassimplyanothercommodity
o Ideaoflaborunionswasslowtotakehold—immigrantswereunaccustomed
o Impromptustrikesledtoviolence—threesignificantincidences
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TheMollyMaguires
• ReignofterrorinPennsylvaniacoalfields—IrishMollyMaguires
o Motivatedbydangerousworkconditionsinmines
o Molliesusedintimidationandviolencetorightperceivedwrongs
o Mineownershireddetectivestostopmovement
o MollyMaguireswereconvicted,manyhanged,wagesreduced,destructionofMiners’National
Association
TheRailroadStrikeof1877
• GreatRailroadStrikeof1877wasmorewidespread,firstmajorinterstatestrikeinAmericanhistory
o Afterdepressionof1873,raillinescutwages;wagescutfurtherin1877
o Withoutorganizeddirection,rebelliousworkersdegeneratedintoamob
o Burnedandplunderedrailroadproperty
• Federaltroopsquelledviolence
o Publicopinionwassympathetictotheworkersatfirst,butlaterblamedthemforviolence
o Strikefailed
o Raisedideaofworker-basedrevolution
o Womenamongprotesters
o Demonstratedunionstrengthdependedonneedforleadership
TheSand-LotIncident
• AmeetingtoexpresssympathyfortherailroadstrikersendedwithattacksonsomepassingChinese
o Anti-ChineseriotsinCalifornia
o Depressionof1870smadetheChinesescapegoats
• DenisKearneyorganizedWorkingmen’sPartyofCalifornia
o PlatformcalledforendtoChineseimmigration
o Criticized“sand-lotters”andassaultedrichrailroadbarons
o Managedtogainstatelawtoregulaterailroads—ineffectivethough
o Workingmen’smovementpeakedin1879
o Partydisintegratedbutanti-ChinesethemeledtolawprohibitingChineseimmigrationfortenyears
TowardPermanentUnions
• Earlyeffortstoformunionshaddiversemotives
• Inlatenineteenthcentury,craft-specificunionsformed
o UnionsgrewinstrengthduringCivilWarduetodemandforlabor
• 1866:NationalLaborUnionconvened
o Composedofdelegatesfromlaborandreformgroups
o Moreinterestedinpoliticalandsocialreformthanbargainingwithemployers
o Greenbackism,equalrightsforwomenandblacks,8-hourworkday
o Supportdiedafterheadoftheuniondied—disbandedin1872
o ItwasinfluentialinpersuadingCongresstoenactan8-hourworkdayforfederalemployeesandto
repealthe1864ContractLaborAct,passedduringtheCivilWartoencourageimportationoflaborers
TheKnightsofLabor
• TheNobleOrderoftheKnightsofLabor—foundedbyUriahStephens
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Secrecywouldprotectmembersfromretaliationbyemployersandcreatesolidarity
KnightsofLaborgrewasotherunionscollapsed
Endorsedreformsincludingcreationofbureausoflaborstatistics,ensuredpaymentofsalaries,
eliminationofconvict-laborcompetition,8-hourworkday,papercurrency,equalworkformenand
women
Emphasizedreformmeasuresandpreferredboycotts
TerencePowderlysucceededUriahStephens
o Frail,sensitivetocriticism,indecisive—butincreasedmembershipoccurredduetostrikesledbyhim
o Declinedafterfailedrailroadstrike
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Anarchism
• Tensionbetweenlaborandmanagementgenerateddoctrineofanarchism
o Believedthatgovernmentwasadeviceusedbyrichtooppresspoor
o Favoredtacticwastheuseofdramaticactsofviolenceagainstgovernmentrepresentatives
o Europeananarchistsimmigrated
TheHaymarketAffair
• Laborviolenceincreasedduringthe1880s
o Haymarketaffairgrewdirectlyoutofagitationfor8-hourworkday
o Chicagobecamethecenterofthemovement—InternationalHarvesterplantbecamethesiteofclash
betweenstrikersandpolicemen—onestrikerkilled
• Anarchistleadersprotestedkilling
o Policecalledmeetingtodisperse—bombthrownatpolice,policefiredonmob
o Manywereconvicted,fourhanged
• TriggeredwidespreadrevulsionattheKnightsofLaborandlaborgroupsingeneral
o TerencePowderlycouldnotmakedistinctionbetweenKnightsandanarchistsapparent
• ReasonsforthedeclineoftheKnights
o Fearoftheirsupposedradicalism
o Leadershipdevotedtoreformratherthanorganization
o FailureoftheKnights’cooperativeenterprises
o Preoccupationwithpolitics
• AchievementsoftheKnights
o CreationofthefederalBureauofLaborStatistics
o ForanActof1885—penalizedemployerswhoimportedcontractlabor(weaklyenforced)
o 1880nationallawprovidingforthearbitrationoflabordisputes
o Spreadideaofunionism—industrialunioncomposedofskilledandunskilledworkers
GompersandtheAFL
• Thecraftunionsopposedindustrialunionism
o Craftunionorganizedworkerswhosharedspecialskills
o Leadersofcraftunionsfearedthatjoiningwithunskilledworkerswouldmeanlossofthecraft’sidentity
o DelegatesformedAmericanFederationofLaborin1886
§ DifferedinstructurefromKnightsofLabor—federationofnationalorganizations
§ Eachorganizationhadautonomy,morefocusedonmanagementorganization
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SamuelGompersservedaspresidentoftheAFL
o UnlikePowderlyandKnightsofLabor,hefocusedonconcreteeconomicgains,higherwages,shorter
hours,betterconditions
o Avoidedinvolvementwithutopianideasorpolitics
GomperswasmoresuitedthanPowderlyforunionism
o Usedstrikestoachievefavorabletradeagreements
§ Closedshops:couldonlyhireunionmembers
§ Union-preferenceshops:couldhireothersonlyifnounionmemberswereavailable
TheAFLgrewslowlybutreachedpeakofmillionmembersin1920
o Organizedlabor’sstrongholdswereintransportationandbuildingtrades
o AFLhadgreatestsuccessinorganizingskilledworkers,eventhoughindustrialworkersjoined
TheHomesteadStrike
• Twoviolentincidentsinthe1890sstalledindustrial-unionmovement
o Homesteadsteelstrikeof1892andPullmanstrikeof1894
• TheAmalgamatedAssociationofIronandSteelWorkerswasthelargestcraftunionatthetime
o Excludedunskilledworkers,failedtoorganizelargersteelplants
o HomesteadWorksatPittsburghwasexception—unionhadenjoyedfriendlyrelationwithCarnegie’s
companyuntilHenryClayFrickbecamepresidentin1889
• Companyannouncedthatitwouldtreatworkersasindividuals
o Strikebegan,Frickwasinnomoodtonegotiate—fencebuiltandPinkertondetectiveshired,“FortFrick”
o Battlebrokeout—Pinkertonssurrendered
o Localsympathyforstrikersevaporated
ThePullmanStrike
• Pullmanstrikeof1894wasmostnotablewalkoutinAmericanhistory
o Paralyzedeconomiesofmanystatesandterritories
o DisputeinPullman,Illinois—PullmanPalaceCarCompany
§ Employeesrequiredtolivethere,payrentsandutility,buygoodsfromcompanystores
o StrikebeganafterPullmanfiredthreemembersofaworkers’grievancecommittee
• Duringthistenseperiod,PullmanworkersjoinedAmericanRailwayUnion,foundedbyEugeneDebs
o EugeneDebs:spokespersonforlaborradicalism,launchedcrusadetoorganizeallrailwayworkers
• PullmanunionworkersstoppedhandlingPullmanrailcars
o Railroadexecutivesbroughtstrikebreakersbecausefederalmailwasinterrupted
o StrikersrefusedDebs’spleaforboycott—theyassaultedemployees,destroyedproperty
• PresidentClevelandsentfederaltroops—dutytoensuredeliveryofmail
o Attorneygeneralwonaninjunctionforbiddinganyinterferencewiththemailorefforttorestrain
commerce—strikesviolatedtheinjunction
o Unioncalledoffthestrike
o Debsarrestedforviolationoftheinjunction
o InreDebs:nationalgovernmenthasrighttointerveneifobstructionstofreedomoccur
MotherJones
• Oneofthemostbelovedagitators
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o Usedrhetoric,ledmarches,dodgedbullets,servedinjail,confrontedbusinesstitans,courageous
o Angryatsocialinequalityandinjustice—driftedintolabormovement
Declaredherself“mother”ofthelabormovement
o JoinedKnightsofLabor,becamespeakerforUnitedMineWorkers,etc.
o Recruitedmembers,supportedstrikers,servedinjail,scoldedpoliticians
Promotedhigherwages,shorterhours,saferworkplaces,restrictionsonchildlabor
o ArrestedinWestVirginia—publicopinionsupportedher
o Senatecommitteewasspurredtoinvestigateconditionsofcoalmines
o Governorsetherfree
Determinedtoendchildlabor
o Pennsylvaniastatelegislatureraisedlegalworkingagetofourteenasaresultofhermarches
MotherJoneslostmostofthestrikessheparticipatedin
o Overherlife,wagesincreased,workingconditionsimproved,childlabordiminished
o “Prayforthedeadandfightlikehellfortheliving.”
SocialismandtheUnions
• Majorunionsneveralliedwithsocialists
o MarxismcamewithGermanimmigrants
o KarlMarx’sInternationalWorkingmen’sAssociation—FirstInternationalgotlittlesupportinAmerica
o FollowersofMarxinAmericanformedSocialistLaborparty—dominatedbyGermans
• SocialistmovementgainedlittlenoticeuntilriseofDanielDeLeon—editorofMarxistnewspaper:ThePeople
o DanielDeLeonbecamedominantfigureofSocialistLaborParty
o Proposedtoorganizeindustrialunionswiththesocialistpurposeandbuildpoliticalpartythatwould
abolishgovernment
o Anti-violence
• EugeneDebswasmoresuccessfulthanDeLeonatbuildingsocialistmovement
o OrganizedSocialDemocraticpartyfromremnantsofAmericanRailwayUnionin1897
o SetupSocialistPartyofAmericain1898
• By1912theSocialistpartyseemedwellonthewaytobecomingapermanentgroup
o Socialistmayorsemerged
o FarmersandtenantsjoinedSocialistsintheSouthwest
o Peakreachedin1912—wreckedbydisagreementsoverWWI
TheWobblies
• Parallelefforttoreviveindustrialunionismemerged,ledbyIndustrialWorkersoftheWorld(IWW)
o BasewastheWesternFederationofMiners
o Centerofviolentconfrontationswithmineoperators
o OpposedAFL’sphilosophyoforganizingunionsmadeupofonlyskilledworkers
o EugeneDebsjoined,DanielDeLeonjoined,usedopportunitytostrikebackagainstcraftunionism
• IWWwagedclasswar
o Designedtobe“onebigunion”likeKnightsofLabor—includingallskilllevels
o rootsinminingandlumbering
o RevolutionarygoaloftheWobblies(IWW)wasideaofsyndicalism
§ Ultimatedestructionofgovernment
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§ Replacementofgovernmentbyunion
Likeotherradicalgroups,IWWsplitbysectariandisputes
o Majorfounderswithdrew
o William“BigBill”Haywoodremainedandclaimedleadership
§ DespisedAFLandconservativelaborpolicy
§ InsteadoffollowingGomper’sadvicetoorganizeonlyskilledworkers,Haywoodpromoted
conceptofoneall-inclusiveuniondedicatedtosocialism
MigratoryworkersoftheWestandethnicgroupsoftheEast
Engagedinbattlebutrarelywon
FadingofWobblieswasacceleratedbyoppositionitaroused
o Memberswereanarchists,bums,criminals
o IWWendedduringWWI
o Leadersjailedforconspiracy—militantoppositiontowar
Wobbliesleftbehindfolkloreofnomadicworkingmenandheroicagitators
o ElizabethFlynn:chainedherselftolampposttoimpedeherarrestduringstrike
o JoeHillwasamartyr
o Ideaofclasslesssocietydidnotdie
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