Rise of Industrial America By Mrs. Hoff

US become an industrial power Combination of factors make it possible: Natural resources like coal, iron, copper, lead, timber, and oil in abundance. Abundant labor supply Advanced transportation network, large market Plentiful capital investment Laborsaving technological developments Business-friendly government policies Talented entrepreneurs

Railroads Railroads had the greatest impact on American economic life. Created a national marketplace that encouraged mass consumption and economic specialization. Resources used to build the railroad helped to promote the growth of other industries. Created time zones Creation of stockholder corporations and other economic developments.

Railroads Vanderbilt was the big name in railroads – his money helped to consolidate many different lines into the New York Central Railroad.

Railroads Federal land grants helped to build the railroads in the west. Railroads were to sell the lands given to them to settlers to finance construction of the railroads. Negative consequences: the land grants and cash loans Promoted hasty and poor construction Led to widespread corruption (Credit Mobilier Scandal)

Transcontinental Railroads Union Pacific and Central Pacific unite at Promontory Point, Utah. Other major railroads crisscross and unite the US.

Competition and Consolidation Corruption and poor business practices sent the railroads into a tailspin; a financial panic in 1893 forced bankrupt railroads to sell and be consolidated to stabilize rates. Led to railroads being a monopoly through interlocking directorates like J.P. Morgan’s.

Railroad regulation Attempts at railroad regulation generally failed. Groups like the Grange fought for changes which were often overturned by the courts. The Interstate Commerce Act of 1886 eventually worked, but not until years after passage.

Industrial Empires The Steel Industry grew exponentially. Bessemer process makes steel faster and easier to produce. Carnegie used vertical integration to control every stage of the industrial process, making him the dominant power in the steel industry. Sold his company to J.P. Morgan, who created the US Steel Corporation.

Industrial Empires The Oil Industry Rockefeller used his efficiency models and technologies to create the Standard Oil Trust. Controlled 90% of the oil refinery business through horizontal integration.

Industrial Empires Anti-Trust Movement: As these men and their trusts became more powerful, groups formed to fight against the monopolies. Middle-class citizens feared their unchecked power.

Industrial Empires Sherman Anti-Trust Act (1890) prohibited any “contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce.” United States v. E.C.Knight Co. (1895) ruled that Sherman could only apply to commerce, not manufacturing, so not effective until the 20th century.

Laissez-Faire Capitalism Adam Smith (1776) argued in The Wealth of Nations that business should be regulated by supply and demand, not the government. Government stays out of business, business would be motivated by their own self-interest to offer improved goods and services at low prices. Used as justification for American industrialists, even though they supported high protective tariffs and federal subsidies.

Laissez-Faire Capitalism Social Darwinism: Used to promote laissez-faire capitalism The poor are poor because they are unfit, shouldn’t interfere with nature by helping them. The rich are rich because they are doing the right things and they are the most fit.

Laissez-Faire Capitalism Gospel of Wealth: Working hard, which leads to material success, is proof that God favors a person both in life and business. Carnegie argued in his “Wealth” article that it also meant the rich should carry out philanthropic works to benefit society.

Technology and innovations Communication and other forms of inventions make life easier and business more efficient. Telegraph, telephone improve communication. Typewriter, cash register, and adding machine make business more efficient. Camera, phonography, light bulb, motion pictures and safety razor make life easier. Alternating current made lighting cities and operating streetcars, subways, and machinery/appliances possible.

Technology and innovations Consumer goods become a huge market Macy’s and Marshall Field develop department stores. Mail-order, Five and Dime stores develop. Refrigerated train cars promotes mass-produced meat and vegetable products. Going shopping becomes a national pastime.

Impact of Industrialization The Concentration of Wealth: By 1890, the richest 10% of the US controlled 90% of the nation’s wealth. (Today in the US top 20% control 84% of the wealth http://www.cbsnews.com/8301-503544_162-20102289-503544.html) Industrialization created a new class of millionaires who flaunted their wealth.

Impact of Industrialization Horatio Alger myth: American rags-to-riches stories popular; Carnegie a prime example. Horatio Alger’s stories said that if you were honest worked hard, and had a little luck, you’d become successful. Some truth to it, but most wealthy businessmen of the day were white, Anglo-Saxon Protestant males who came from and upper-or-middle-class background whose father was in business or banking.

Impact of Industrialization Middle class expanded during this time period as large corporations opened white-collar jobs and professions grew. Most workers worked 10 hour days, 6 days a week. Wages determined by supply and demand. Most families had to have women and children working to support the family.

Impact of Industrialization Women moved into the workforce in greater numbers, but most believed that women’s role was in the home and family. Women were paid lower wages for the same work, and jobs that had been male jobs that became female jobs dropped in status and pay as more women moved into those jobs.

Impact of Industrialization Labor discontent: Jobs become monotonous and repetitive; people don’t feel satisfaction in their jobs. Working conditions were dangerous and unsanitary. Workforce was unstable and highly mobile, so a lot of turnover in jobs.

The Struggle of Organized Labor 19th century witnessed the most violent labor conflicts in US history. Some feared open class warfare between capital and labor.

The Struggle of Organized Labor Industrial warfare: Cheap and plentiful labor meant management held most of the power in struggles with organized labor. Strikers could easily be replaced by bringing in scabs – unemployed people desperate for jobs.

The Struggle of Organized Labor Employers used the following methods to defeat unions: Lockout: closing a factory to break the labor movement Blacklists: names of pro-union workers that circulated among employers Yellow-dog contracts: workers had to sign a contract that they wouldn’t join unions Private guards and state militia to put down strikes Court injunctions against strikes

The Struggle of Organized Labor The Public had a great impact on strikes – many Americans feared unions because of newspaper accounts that said that strikers were anarchists and un-American. Labor was also divided: some thought political action was the best method, others favored strikes, picketing, boycotts and slowdowns.

The Struggle of Organized Labor Great Railroad Strike of 1877: Some of the worst violence, economic depression caused railroad to cut wages to reduce costs. The strike spread across 11 states and shut down 2/3rds of the country’s railroad track. Workers were joined by nearly 500,000 workers from other industries that became a national strike. Federal troops had to be sent in to quell the violence. More than 100 people were killed.

The Struggle of Organized Labor Attempts to Organize National Labor: National Labor Union: all workers, skilled and unskilled. Higher wages, eight hour day, equal rights for women and blacks, monetary reform, worker cooperatives and promoted. Knights of Labor: membership open to all, wanted worker cooperatives, abolition of child labor, abolition of trusts and monopolies. Loosely organized.

The Struggle of Organized Labor Attempts to Organize National Unions American Federation of labor: open to skilled workers, went after higher wages and improved working conditions. Did not have a social agenda, didn’t promote equality. Negotiated contracts through collective bargaining.

The Struggle of Organized Labor Haymarket Bombing: Chicago, 1886, May day labor movement calls for a general strike. Violence breaks out at the McCormick Harvester plant. Public meeting held 3 days later in Haymarket Square to address problems. Anarchists in the city showed up at the meeting, also. Somebody threw a bomb, anarchists are arrested and hanged. Unions get the reputation for being radical and violent. Knights of Labor lose membership and popularity.

The Struggle of Organized Labor Two massive strikes demonstrate the growing discontent of labor and the continued power of management in industrial disputes. Homestead Strike 1892 Pullman Strike 1894

The Struggle of Organized Labor Homestead Strike: Carnegie’s steel workers strike after a 20% cut in wages. Manager used techniques to defeat the strike after 5 months. Pullman Strike: Cut in wages; model town issues. Railroad travel shut down across the country by workers. Mail cars had to move, so court stepped in. Leader, Eugene V. Debs, becomes a prominent leader for labor. Becomes a socialist and founds the Socialist party. Later has a somewhat successful run for President.