Topic 3: A NEW INDUSTRIAL AGE LATE 19TH CENTURY AMERICA EXPERIENCED AN INDUSTRIAL BOOM

The Second Industrial Revolution: Causes, Characteristics and Problems

2nd Industrial Revolution What was the 2nd Industrial Revolution? A period in time starting in the late 1800’s where US industries, in major manufacturing goods, were expanding rapidly Main features were new inventions and industries

Causes This enormous growth was due to many factors: Lots of Natural Resources & Raw Materials The Railroad Free Enterprise System Economic policies: Laissez-Faire Patents Tariffs Population Growth & Urbanization New Inventions, like cars

1st and 2nd Industrial Revolution Comparison Developments of wide array of products Transformation and synergy of the economy Extensive impact on society New energy sources: electricity and oil 1st Industrial Revolution Development of few products like textiles limited transformative effect Limited impact in society New energy source: steam

RAILROADS SPUR OTHER INDUSTRIES The rapid growth of the railroad industry influenced the iron, coal, steel, lumber, and glass businesses as they tried to keep up with the railroads demand for materials The spread of the railroads also led to the growth of towns, new markets, and opportunity for profiteers

Features of the Modern Corporation Stocks traded publicly in Wall Street Limited liability Scientific Management Vertical Integration Horizontal Integration

Stocks and Limited Liability Stocks are shares of a company held by someone and traded publicly on the stock market. Stocks allowed the possibility to raise large amounts of money to undertake great ventures.

Scientific Management Taylorism Reorganizing business by subdividing tasks to increase efficiency. What does that mean for the worker? The moving Assembly Line

VERTICAL INTEGRATION Vertical integration is when a corporation attempts to buyout suppliers in order to control materials and transportation. In Steel for example, a corporation might buy coal fields, iron mines, ore freighters, and rail lines.

HORIZONTAL INTEGRATION Horizontal Integration; buying companies that produce similar products. A successful attempt at achieving this leads to a monopoly. MERGERS

Consolidation

Methods to Achieve Monopoly Corporate Raiding and unscrupulous practices- Buyout competition to form a monopoly - complete control over industry. Pooling arrangements – producers agree to set price Problematic due to groups cheating Mergers could result in a Trust Stockholders transferred their stocks to small group of trustees in exchange for shares in the trust itself. Control was given only to very few people, the trustees Holding Companies – A company created to exclusively buyout major producers in an industry

CHICAGO’S STANDARD OIL BUILDING IS ONE OF THE WORLD’S TALLEST Example of a Monopoly In 1870, Rockefeller Standard Oil Company owned 2% of the country’s crude oil. By 1882 – it controlled 90% through Intimidation 1870’s Trust 1882 Holding Company 1899 CHICAGO’S STANDARD OIL BUILDING IS ONE OF THE WORLD’S TALLEST

Benefits and Cost of Consolidation The Industry can become more productive by reducing costs, creating standard product, pooling resources, avoiding replication, and sharing knowledge Costs reduces competition so higher prices Placed power in the hands of very few people

Industrial Giants and their Legacy

New Industries and Inventions The growth and consolidation of the industries changed the US economy and society However, the unchecked power of the these large companies led to widespread abuses and then reforms.

Rail Roads By 1869, tracks had been laid across the continent Methods of transformation allowed for the possibility for isolated areas across this nation to become connected with markets 1870 52k miles of track 1890 165k miles

ROBBER BARONS Alarmed at the cut-throat tactics of industrialists, critics began to call them “Robber Barons” Famous “Robber Barons” included Carnegie, Rockefeller, Vanderbilt, Stanford, and J.P. Morgan J.P MORGAN IN PHOTO AND CARTOON

EDWIN DRAKE PICTURED WITH BARRELS OF OIL BLACK GOLD In 1859, Edwin Drake used a steam engine to drill for oil This breakthrough started an oil boom in the Midwest and later Texas At first the process was limited to transforming the oil into kerosene Later, the gasoline was used for cars EDWIN DRAKE PICTURED WITH BARRELS OF OIL

John Rockefeller American business Entrepreneur He founded the Standard Oil Company that dominated the oil industry and was the first great U.S. business trust.

BESSEMER STEEL PROCESS Oil was not the only valuable natural resource Coal and iron were plentiful within the U.S. The Bessemer process (Henry Bessemer & William Kelly) removed the carbon from iron, the result was a lighter, more flexible and rust resistant compound – Steel BESSEMER CONVERTOR CIRCA 1880

Andrew Carnegie Andrew Carnegie was one of the first industrial moguls He entered the steel industry in 1873 By 1899, the Carnegie Steel Company manufactured more steel than all the factories in Great Britain combined ANDREW CARNEGIE 1835 -1919

BROOKLYN BRIDGE SPANS 1595 FEET IN NYC NEW USES FOR STEEL The railroads, with thousands of miles of track, were the biggest customers for steel Other uses emerged: barbed wire, farm equipment, bridge construction (Brooklyn Bridge- 1883),and the first skyscrapers BROOKLYN BRIDGE SPANS 1595 FEET IN NYC

ELECTRICITY 1876- Thomas Alva Edison established the world’s first research lab in New Jersey There Edison perfected the incandescent light bulb in 1880 Later he invented an entire system for producing and distributing electricity By 1890, electricity powered numerous machines EDISON

THE TYPEWRITER Christopher Sholes invented the typewriter in 1867 His invention forever affected office work and paperwork It also opened many new jobs for women 1870: Women made up less than 5% of workforce 1910: They made up 40%

THE TELEPHONE Another important invention of the late 19th century was the telephone Alexander Graham Bell unveiled this invention in 1876 BELL AND HIS PHONE

Henry Flagler American industrialist and a founder of Standard Oil. founder of what became the Florida East Coast Railway Responsible for the development of South Florida

CARNEGIE’S GOSPEL OF WEALTH The Gospel According to Andrew: In his essay “Wealth,” published in North American Review in 1889, the industrialist Andrew Carnegie argued that individual capitalists were duty bound to play a broader cultural and social role and thus improve the world.

ROCKEFELLER CHAPEL – UNIVERSITY OF CHICAGO The Gospel of Wealth For men like Carnegie, the rich should use riches to advance society in arts, libraries, music halls. Yet, this did not extend to direct help. Carnegie, Rockefeller and Cornelius Vanderbilt built libraries, schools, Music halls, theaters. ROCKEFELLER CHAPEL – UNIVERSITY OF CHICAGO

SOCIAL DARWINISM Social Darwinism has its origins in Darwin’s theory of evolution Darwin theorized that some individuals in a species flourish and pass their traits on while others do not Social Darwinists (like Bill Sumner) believed riches was a sign of God’s favor, and being poor was a sign of inferiority and laziness Many of the Robber Barons used this philosophy to justify their positions. DARWIN (RIGHT) LIMITED HIS FINDINGS TO THE ANIMAL WORLD SPENCER WAS THE ONE WHO COINED THE PHRASE “SURVIVAL OF THE FITTEST

INTERSTATE COMMERCE ACT In 1887, the Federal government re-established their control over railroad activities Congress passed the Interstate Commerce Act and established a 5-member Interstate Commerce Commission (ICC) The ICC struggled to gain power until 1906 1887 – CONGRESS PASSED THE ICA

SHERMAN ANTI-TRUST ACT In 1890, the Sherman Anti-Trust Act made it illegal to form a monopoly (Trust) Prosecuting companies under the Act was not easy – a business would simply reorganize into single companies to avoid prosecution Seven of eight cases brought before the Supreme Court were thrown out

(REAL TRUST)

Labor

WORKERS HAD POOR CONDITIONS Workers routinely worked 6 or 7 days a week, had no vacations, no sick leave, and no compensation for injuries Injuries were common – In 1882, an average of 675 workers were killed PER WEEK on the job

PROMOTIONAL POSTER FOR THE IWW SOCIALISM AND THE IWW The deplorable conditions led to the rise of radical groups. Some unionists turned to a socialism – an economic and political system based on government control of business and property and an equal distribution of wealth The International Workers of the World (IWW) or Wobblies, was one such socialist union. PROMOTIONAL POSTER FOR THE IWW

Knights of Union 1869 -1886 Membership open to all who worked, even women. Few exclusions such as Lawyers 8-hour work week, dissolution of child labor. Wanted to revamp the national economy, replacing wage system

INDUSTRIAL UNIONISM Some unions were formed with workers within a specific industry Eugene Debs attempted this Industrial Union with the railway workers. In 1894, at its peak the Union had 150,000 members EUGENE DEBS

The AF of L Craft Unions were unions of workers in skilled trades. Samuel Gompers became president of the American Federation of Labor (AFL) in 1886. He focused on collective bargaining to improve conditions, wages and hours…Strikes if necessary His organization was a pragmatic group that avoided government intervention. Against Women in the work place

STRIKES TURN VIOLENT When bargaining broke down, unions would often strike, or refuse to work as a way to protest in order to gain benefits at work. Several strikes turned deadly in the late 19th century as workers and owners clashed Often Federal troops or private guards were called in to end the strike

THE HAYMARKET AFFAIR Labor leaders pushe for change – and on May 4, 1886 3,000 people gathered at Chicago’s Haymarket Square to protest police treatment of striking workers A bomb exploded near the police line – killing 7 cops and several workers Radicals were rounded up and executed for the crime without a fair trial.

THE HOMESTEAD STRIKE Even Andrew Carnegie could not escape a workers strike Conditions and wages were not satisfactory in his Steel plant in Pennsylvania and workers affiliated with the AFL struck in 1892 Carnegie hired Pinkerton Detectives to reopen plant. Detectives and strikers clashed – 3 detectives and 9 strikers died The National guard restored order – workers returned to work without pay increase

PULLMAN: A FACTORY & TOWN In 1880, George Pullman built a factory for manufacturing sleepers and other railroad cars in Illinois The nearby town Pullman built for his employees was modeled after early industrial European towns Pullman workers felt his puritanical town was too strict When he lowered wages but not rent – it led to a violent strike in 1894 THE TOWN GEORGE PULLMAN

THE PULLMAN STRIKE After the Pullman Company laid off thousands of workers and cut wages, the workers went on strike in the spring of 1894 Eugene Debs (American Railroad Union) tried to settle dispute which turned violent Pullman hired scabs and fired the strikers – Federal troops were brought in Debs was jailed

EMPLOYERS FIGHT UNIONS The more powerful the unions became, the more employers came to fear them Employers often forbade union meetings and refused to recognize unions Employers forced new workers to sign “Yellow Dog Contracts,” swearing that they would never join a union Despite those efforts, the AFL had over 2 million members by 1914

Assessment of Labor Late 1800s Reasons for Failures Powerful Forces against them: Business and Government Low membership Immigration led to oversupply of labor Loss of Support from middle class who saw them as radicals Modernization of economy lessened the need for skilled labor Few Victories Slightly Better Pay Compensation for injuries Child Labor laws 8 hour work week for federal employees 1892