© 2007 McGraw-Hill Higher Education. All rights reserved. NATION OF NATIONS, SIXTH EDITION DAVIDSON DELAY HEYRMAN LYTLE STOFF Chapter 19: The New Industrial Order

© 2007 McGraw-Hill Higher Education. All rights reserved. Preview “At the heart of the new order reshaping American society was not just industry but systems of industry—systems of transportation and communication, systems for managing large corporations and raising the money to finance them. Workers fought to create systems of labor as well…” “At the heart of the new order reshaping American society was not just industry but systems of industry—systems of transportation and communication, systems for managing large corporations and raising the money to finance them. Workers fought to create systems of labor as well…” 2

© 2007 McGraw-Hill Higher Education. All rights reserved. The Highlights The Development of Industrial Systems The Development of Industrial Systems Railroads: America’s First Big Business Railroads: America’s First Big Business The Growth of Big Business The Growth of Big Business The Workers’ World The Workers’ World The Systems of Labor The Systems of Labor 3

© 2007 McGraw-Hill Higher Education. All rights reserved. The Development of Industrial Systems Natural Resources and Industrial Technology Natural Resources and Industrial Technology –Bessemer process –Petroleum industry –Environmental costs Systematic Invention Systematic Invention –Edison’s contribution –The spread of an electrical power system 4

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Transportation and Communication Transportation and Communication –The problem of scale –Telegraph: timely information could be received nationwide –Telephone: New Haven, Connecticut, opened the first telephone exchange Finance Capital Finance Capital –Sources of capital: savings of firms and later savings and investment of individuals –Growth of a complex network of financial institutions 6

© 2007 McGraw-Hill Higher Education. All rights reserved. The Corporation The Corporation –Advantages of the corporation: raise large sums of money, outlive its owners, limited liability, separated owners from day-to-day management –By the turn of the century, corporations were making two-thirds of all manufactured products in the U.S. An International Pool of Labor An International Pool of Labor –Global labor network –Migration chains –Domestic sources 7

© 2007 McGraw-Hill Higher Education. All rights reserved. Occupational Distribution, 1880 and

© 2007 McGraw-Hill Higher Education. All rights reserved. Railroads: America’s First Big Business A Managerial Revolution A Managerial Revolution –Pioneering trunk lines –The new managers: beneath owners but with wide authority over operations 9

© 2007 McGraw-Hill Higher Education. All rights reserved. Competition and Consolidation Competition and Consolidation –Railroads saddled with enormous fixed costs: equipment, payroll, high debts –The “Erie Wars” –Pooling: informal agreements among competing companies to act together The Challenge of Finance The Challenge of Finance –New ways of raising money –Investment bankers advised companies about their business affairs 10

© 2007 McGraw-Hill Higher Education. All rights reserved. The Growth of Big Business Growth in Consumer Goods Growth in Consumer Goods –The pool: Salt makers drew together in the nation’s first pool –Horizontal growth: joining loosely together with rivals –Vertical integration: integrated several different activities Carnegie Integrates Steel Carnegie Integrates Steel –1875: Carnegie opens first mill in midst of a severe depression 11

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© 2007 McGraw-Hill Higher Education. All rights reserved. Rockefeller and the Great Standard Oil Trust Rockefeller and the Great Standard Oil Trust –Rockefeller’s methods of expansion –The trust: stockholders of corporation surrendered their shares “in trust” The Mergers of J. Pierpont Morgan The Mergers of J. Pierpont Morgan –The holding company –The merger movement Corporate Defenders Corporate Defenders –The gospel of wealth –Social Darwinism 13

© 2007 McGraw-Hill Higher Education. All rights reserved. Corporate Critics Corporate Critics –Socialist Labor party –Sherman Antitrust Act –United States v. E.C. Knight Co. The Costs of Doing Business The Costs of Doing Business –The boom-and-bust cycle –Three severe depressions rocked the economy in the last third of the nineteenth century “Andrew Carnegie invoked the gospel of wealth to justify his millions, but a group of radical critics looked at his libraries and foundations as desperate attempts to buy peace of mind.” 14

© 2007 McGraw-Hill Higher Education. All rights reserved. Boom and Bust Business Cycle,

© 2007 McGraw-Hill Higher Education. All rights reserved. The Workers’ World Industrial Work Industrial Work –Pattern of industrial work –Taylorism: time-and-motion studies –Worker citizens: expected enough money to support and educate, as well as enough time to stay abreast of current affairs 16

© 2007 McGraw-Hill Higher Education. All rights reserved. Children, Women and African Americans Children, Women and African Americans –On average children worked 60 hours a week –Even more than women, African American men faced discrimination in the workplace The American Dream of Success The American Dream of Success –Rising real wages –Social mobility 17

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© 2007 McGraw-Hill Higher Education. All rights reserved. The Systems of Labor Early Unions Early Unions –National Labor Union –NLU wilted during the depression of 1873 The Knights of Labor The Knights of Labor –Terence Powderly –Looked to abolish the wage system and replace with a cooperative economy 19

© 2007 McGraw-Hill Higher Education. All rights reserved. The American Federation of Labor The American Federation of Labor –Samuel Gompers –Failure of organized labor The Limits of Industrial Systems The Limits of Industrial Systems –Spontaneous protests –Molly McGuires –Great Railroad Strike –Laundresses strike –Haymarket Square riot 20

© 2007 McGraw-Hill Higher Education. All rights reserved. Management Strikes Management Strikes –Pullman strike (1894) –Management weapons: “yellow dog” contracts, lockouts “In a matter of only 30 or 40 years, the new industrial order transformed the landscape of America. It left its mark elsewhere in the world, too.” 21