Chapter 24: Industry Comes of Age

The Iron Colt Becomes an Iron Horse

• After the Civil War, railroad construction grew enormously from 35,000 miles of track by 1865 to 192,556 miles by 1900.

• How? Congress gave financial and land grants initially and then continued with generous land grants for all transcontinental railroads except the Great Northern line built by James Hill.

• Railroads gave the land its value: Where railroads passed, cities grew. Where it bypassed, towns withered and were abandoned.

• Railroads made possible a national economy linking east and west, production & markets.

Spanning the Continent with Rails• Due to the South’s secession

during the Civil War, Congress voted for the northern route for the first transcontinental railroad which would begin in Omaha, Nebraska and end in San Francisco. The Union Pacific Railroad agreed to build the eastern leg while the Central Pacific would build the western link in exchange for generous financial rewards and land grants.

• The Credit Mobilier Scandal helped the officials of Union Pacific make millions more for themselves.

Spanning the Continent with Rails• Union Pacific hired many Irish

workers who laid as much as ten miles of track per day. 1086 mi.

• Many clashes with Indians trying to prevent tracks from crossing their territory

• In California, Central Pacific RR started from San Francisco

• Many Chinese workers built the tracks through dangerous mountain terrain. 689 mi.

• Picture: 1869 first continental RR completed. Two lines met at Promontory Point near Ogden Utah.

Railroads (continued)• By 1900 four more

Transcontinental RR’s will cross the country:

• Northern Pacific RR: from Lake Superior to Puget Sound 1883

• Atchison, Topeka, and Santa Fe RR: Kansas to New Mexico 1884

• Southern Pacific RR: New Orleans to San Francisco 1884

• The Great Northern RR 1893 (No subsidies) Duluth to Seattle.

• Lots of RR’s but also lots of land speculation some did well some didn’t.

Railroad Consolidation & Mechanization

• Older Eastern RR’s like the New York Central owned by Cornelius Vanderbilt often helped finance the new western RR’s. Foreign investment also important especially from UK. This brings gold standard issue into sharper focus.

Revolution by Rail

• New advances included steel rail, Westinghouse Air Brake, Pullman Palace Car, Refrigerated Rail Cars for shipping beef east to urban markets.

• Telegraph, Block Signaling, still accidents were all to common.

• Railroads made millionaires became the first winners in the new national economy

Revolution by Rail• RR’S helped stitch the nation

together linking markets and resources and creating thousands of jobs.

• Stimulated the rapid industrialization of America and expansion of mining and agriculture in the West by bringing people and capital to resource rich areas.

• Helped settle The Great Plains• Create four national time zones

on November 18, 1883.

Wrongdoing in Railroads• Credit Mobilier Scandal

demonstrated level of corruption.

• Jay Gould (depicted breaking RR Strike of 1886) made millions embezzling stocks from various railroads.

• Stock Watering was rampant.• Judges and public officials were

bribed.• Pools and Rebates inhibited

competition and rewarded biggest customers at the expense of the smaller customer.

Government Bridles the Iron Horse• Dealing with Railroad regulation was

difficult due to national nature of business, Government’s Laissez- Faire view, & deep pockets and connections of the rail barons.

• Farmers found the Grange movements. Take the RR’S to court and are initially successful. The Wabash case in 1886 firmly settled the matter in that only the Fed Gov’t could regulate interstate commerce.

• Interstate Commerce Act 1887 banned pools and rebates and worst excesses of railroads. Created ICC.

• First attempt by Congress to regulate business on the public’s behalf.

Miracles of Mechanization

• In 1860, US ranked 4th in manufacturing but by 1894 it was numero uno! Porque?

• Gold strikes in the 1890’s had increased amount of $$ in circulation but private investment was way up!

• Coal, oil, timber, and iron resources were being fully exploited. Lots of iron came from the Mesabi Range in Minnesota

Second Industrial Revolution (Miracles of Mechanization Part II)

• Three Part Revolution:• Demographic: Massive Immigration as

decades wore on immigration will shift from northwestern to southern and eastern Europe.

• Technology: Many inventions including light bulb, telephone, trolley, cash register. Bell and Thomas Alva Edison “The Wizard of Menlo Park” revolutionize communication, work/ living spaces &schedules as well as energy.

• Transportation: Massive RR network, air plane (1903), automobile, steam powered ships provided much more reliable transport as well.

The Trust Titan Emerges• Industry giants used any means to

eliminate competition and guarantee profits.

• Andrew Carnegie (Steel): Vertical Integration: Bought out and controlled all as aspects of an industry. In his industry, he owned the mines, the mills and the transportation networks used to create his product.

• John D. Rockefeller (Oil): Horizontal Integration simply allied or bought out all competition to monopolize a market and drove lesser competitors to sell out or close.

• JP Morgan (Banking & Finance)• Placed his own men on the boards of

competitors to reduce competition, a process called “interlocking directorates”.

The Supremacy of Steel• In Lincoln’s time, steel was

scarce but by 1900 the US was numero uno producing more steel than Britain and Germany put together. Por Que?

• The Bessemer Process which involved cold air being blown over red hot metal reducing impurities . Coal was abundant in the US and could be heated to much higher temperatures than charcoal. This made it possible to produce large amounts of steel.

Carnegie and Other Sultans of Steel

• Andrew Carnegie was the son of poor Scottish immigrants and worked in a textile mill. He realized that he would have to educate himself and take responsibility.

• These traits helped him begin a career in telegraphs and later in the railroad industry.

• By the end of the Civil War he had chosen steel as his industry. By 1900, he produced 25% of all the steel in the US worth $25 million annually.

• JP Morgan bought out Carnegie in 1901 for $400 million combining several companies to form US Steel, the nation’s first billion dollar company. Carnegie gave $350 million away from 1901 until his death in 1919 (Carnegie-Mellon University, many public libraries around the country)

Rockefeller Grows an American Rose

• Oil was first sold in 1859 in PA. By the 1870’s kerosene was a widely used.

• By 1885, 250,000 light bulbs were in use replacing kerosene.

• The gas burning combustion engine was just being developed.

• By 1882 when Rockefeller formed Standard Oil he already controlled 95% of all oil refineries in the US.

• He crushed competition but made a good product at a cheap price like others such Gustavus Swift and Phillip Armour in the meat industry. Birth of the Trust: industry specific organization designed to curb competition and increase profits as well as a lobbying group.

The Gospel of Wealth• Many of the newly rich had

worked their way from poverty to wealth.

• Social Darwinism: Survival of the fittest

• Rev. Russell Conwell of Philadelphia: “Acres of Diamonds” sermon: If you were poor, it was your own fault. Sounds really Christian??!!??

• Corporate lawyers use 14th amendment to classify corporations as individuals therefore guaranteeing their property rights.

Acres of Diamonds• "I say that you ought to get rich, and it is

your duty to get rich.... The men who get rich may be the most honest men you find in the community. Let me say here clearly .. . ninety-eight out of one hundred of the rich men of America are honest. That is why they are rich. That is why they are trusted with money. That is why they carry on great enterprises and find plenty of people to work with them. It is because they are honest men. ... ... I sympathize with the poor, but the number of poor who are to be sympathized with is very small. To sympathize with a man whom God has punished for his sins ... is to do wrong.... let us remember there is not a poor person in the United States who was not made poor by his own shortcomings. ..."

Government Tackles the Trust Evil

• In 1890, the Sherman Anti Trust Act was passed. Trusts, pools, rebates, interlocking directorates were all banned.

• Proved ineffective because it was difficult to enforce.

• Not until 1914 is anyone really punished.

The South in an Age of Industry• Despite advances elsewhere, the

South remained primarily agricultural; cotton was still king.

• James Buchanan Duke of American Tobacco built a huge empire based on cigarettes.

• What industry there was (steel mills in Birmingham, AL and textile mills throughout the region) competed with northern businesses and were thus shunned by many in the North.

• Cheap labor supply and conservative social traditions helped to keep unions out of the South.

The Impact of the Industrial Revolution in America

– As the Industrial Revolution spread in America, the standard ofliving rose, immigrants swarmed to the U.S., and early Jeffersonianideals about the dominance of agriculture fell.

• Strong pressures in foreign trade developed as the tireless industrial machine threatened to flood the domestic market.

Women’s Issues– Women, who had swarmed to factories and had been

encouraged by recent inventions, found new opportunities, and the “GibsonGirl,” created by Charles Dana Gibson, became the romantic idealof the age. • The Gibson Girl was young, athletic, attractive, and outdoorsy (not

the stay-at-home mom type). • However, many women never achieved this, and instead toiled in

hard work because they had to do so in order to earn money. A nation of farmers was becoming a nation of wage earners, but thefear of unemployment was never far, and the illness of a breadwinner(the main wage owner) in a family was disastrous.

The Impact of the Industrial Revolution in America

• With the inflow of immigrants providing a labor force that wouldwork for low wages and in poor environments, the workers who wanted toimprove their conditions found that they could not, since their bossescould easily hire the unemployed to take their places.

• A nation of farmers was becoming a nation of wage earners, but thefear of unemployment was never far, and the illness of a breadwinner(the main wage owner) in a family was disastrous.

• Strong pressures in foreign trade developed as the tireless industrial machine threatened to flood the domestic market.

In Unions There is Strength• Corporations had many weapons against

strikers, such as hiringstrikebreakers or asking the courts to order strikers to stop striking,and if they continued, to bring in troops. Other methods includedhiring “scabs” or replacements or “lockouts” tostarve strikers into submission, and often, workers had to sign“ironclad oaths” or “yellow dog contracts”which banned them from joining unions. – Workers could be “blacklisted,” or put on a

list and denied privileges elsewhere. • The middle-class, annoyed by the recurrent

strikes, grew deaf to the workers’ outcry. • The view was that people like Carnegie and

Rockefeller had battledand worked hard to get to the top, and workers could do the same ifthey “really” wanted to improve their situations.

Labor Limps Along• The Civil War put a premium on labor,

which helped labor unions grow. • The National Labor Union, formed in

1866, represented a giant bootstride by workers and attracted an impressive total of 600,000 members,but it only lasted six years.

• However, it excluded Chinese and didn’t really try to get Blacks and women to join.

• It worked for the arbitration of industrial disputes and theeight-hour workday, and won the latter for government workers, but the Panic of 1873 knocked it out.

The Knights of Labor• A new organization, the Knights of

Labor, was begun in 1869 andcontinued secretly until 1881. This organization was similar to theNational Labor Union.

• It only barred liquor dealers, professional gamblers, lawyers,bankers, and stockbrokers, and they campaigned for economic and socialreform.

• Led by Terence V. Powderly, the Knights won a number of strikes forthe eight-hour day, and when they staged a successful strike againstJay Gould’s Wabash Railroad in 1885, membership mushroomed to 3/4of a million workers.

Unhorsing the Knights of Labor: The Haymarket Riot 1886

• However, the Knights became involved in a number of May Day strikes of which half failed.

• In Chicago, home to about 80,000 Knights and a few hundredanarchists that advocated a violent overthrow of the American government, Tensions had been building, and on May 4, 1886, in Haymarket Square Chicago police were advancing on a meeting that had been called to protest brutalities by authorities when a dynamite bomb was thrown, killing or injuring several dozen people.

Unhorsing the Knights of Labor• Eight anarchists were rounded up yet

no one could prove that theyhad any association with the bombing, but since they had preached incendiary doctrines, the jury sentenced five of them to death on account of conspiracy and gave the other three stiff prison terms.

• In 1892, John P. Altgeld, a German-born Democrat was electedgovernor of Illinois and pardoned the three survivors after studyingthe case extensively.

• He received violent verbal abuse for that and was defeated during re-election.

Haymarket Riot 1886

• This so-called Haymarket Square Bombing forever associated theKnights of Labor with anarchists and lowered their popularity andeffectiveness; membership declined, and those that remained fused withother labor unions.

AFL to the Fore• In 1886, Samuel Gompers founded the American

Federation of Labor. – It consisted of an association of self-

governing national unions,each of which kept its independence, with the AF of L unifying overallstrategy.

• Gompers demanded a fairer share for labor. – He simply wanted “more,” and sought

better wages, shorter hours, and safer working conditions.

– Perhaps the greatest weakness of labor unions was that they only embraced a small minority—3%—of all workers.

• However, by 1900, the public was starting to concede the rights ofworkers and beginning to give them some or most of what they wanted. – In 1894, Labor Day was made a legal

holiday.

AFL to the Fore• A few owners were beginning to realize that

losing money to fightlabor strikes was useless, though most owners still dogmatically foughtlabor unions.

• If the age of big business had dawned, the age of big labor was still some distance over the horizon.