IndustrializationModule 3

CRASH COURSE: Industrial Age

Section 1:The Expansion of Industry:

• Main Idea: At the end of the 19th century, natural resources, creative ideas, and growing markets fueled an industrial boom.

• Why it Matters Now: Technological developments of the late 19th century paved the way for the continued growth of American Industry.

• Key Terms:

• Bessemer Process

• Key Names:

• Edwin L. Drake

• Thomas Alva Edison

• Christopher Sholes

• Alexander Graham Bell

Section 1: The Expansion of Industry:• As the settlers continued to push west, America was still

largely agricultural – that will all change• 1920’s leading industrial power in the world

• 1) Natural Resources • Oil, coal, iron, streams, farmland

• Coal was cheap resource• Cleveland + Pittsburg

• 2) Governmental support• Free Market Economy

• Coin money, tariff on imports, patents• Laissez Faire – government leaves the business sector alone

• 3) Urbanization• 1800 – 5 Million people

• 1900 – 76 Million

• 4) Technological innovations• Inventions, transportation, communication, factory systems

4

A Favorable Climate• The U.S. economy welcome entrepreneurs willing to work hard to

create wealth

Belief in Free Markets• U.S. economy based on free enterprise, driven by competition and

consumer demand• Laissez-faire capitalism, government takes a hands off approach

with business• Business leaders in favor of protective tariffs, though

Social Darwinism• Social Darwinism, or social evolution, based on Darwin’s theory• Economists use Social Darwinism to justify doctrine of laissez faire

» Idea of survival, success of the most capable appeals to wealthy

• Notion of individual responsibility in line with Protestant ethic• See riches as sign of God’s favor; poor must be lazy, inferior

Black Gold & Steel

• In 1859, Edwin Drake• used a steam engine to drill for oil

• Titusville, PA

• This started an oil boom throughout the Midwest and Southern States• Ohio, Kentucky, Illinois, Texas

• Steel• Henry Bessemer

• Bessemer Process• removed the carbon from iron, the result was a lighter,

more flexible and rust resistant compound

New Uses For Steel:

•Steel will change the construction industry and America’s economy• Growth of cities

• Jobs, urban society/culture

• Increase trade• Rest of the world look to America for trade

• Skyscrapers – Vertical expansion

• Railroads

• Bridges

Inventions Promote Change

• Electricity• Thomas Alva Edison perfected the incandescent light bulb in

1880• Later he invented an entire system for producing and distributing electricity

• Typewriter• Christopher Sholes invented the typewriter in 1867

• His invention forever affected office work and paperwork• It also opened many new jobs for women

• Mostly stayed at home to take care of the family

• Telephone:• Alexander Graham Bell

• Thomas Watson unveiled their invention in 1876• We are still using their invention today

Thomas Edison: History.com

Section 2: The Age of the Railroads:

• Main Idea: The growth and consolidation of railroads benefited the nation but also led to corruption and required government regulation.

• Why it Matters Now: Railroads made possible the expansion of industry across the United States.

• Key Terms:

• Transcontinental Railroad

• Munn vs. Illinois

• Interstate Commerce Act

The Age of Railroads

•As railroad companies continued to grow, their influence over others became out of control

• “charge what the traffic will bear”

• Had a monopoly over their area• High Prices

• Pooling Agreements – secret agreements between companies to raise prices

• Government began to loan money and grant land to Railroad Companies.• Politicians were bribed

• Campaign contributions

• Free RR passes

•New reforms will be needed to keep the railroad companies in check

https://www.youtube.com/watch?v=kl0lxIMMb9E

A National Network:

• The transcontinental Railroad - cross country route, connecting many cities.• Union Pacific and Central Pacific RR Companies

• Promontory, Utah May 10 1869.

• Railroad and Time zones• Before 1883, each city still operated on its own time

• The U.S. would be divided into 4 zones: the eastern, Central, Mountain, and Pacific

• Impact• Tied nation together

• Increase trade and travel

THE UNITED STATES IS DIVIDED INTO 4 TIME ZONES

C. Opportunities and Opportunist

1.Supply and Demand

• Railroads require great supply of materials, parts

• Iron, coal, steel, lumber industries grow to meet demand

2. New Towns and Markets

• Railroads link isolated towns, promote trade, interdependence

• Nationwide network of suppliers, markets develops

• Towns specialize, sell large quantities of their product nationally

• New towns grow along railroad lines

Pullman and the Sleeper car

•George M. Pullman•Factory owner

• Pullman Palace Car Company

•Built Sleeper/ dinning / parlor cars• Pullman built a town for his employees

• Housing, parks, factory

• Provided his employees with basic needs

• Doctor offices, shops and athletic fields

• Pullman Company controlled the town

• No loitering on front steps, no alcohol.

• Violent strike due to low pay and high rent

• Slashed wages, outlawed saloons

•Business owners desired control and profit•Credit Mobilier• Construction company formed in 1864 by Union

Pacific RR Company• “Dummy Company”

• Stock holders gave contact to lay track• 2 to 3 times the cost – profited and paid congressmen

• Bribe Congress to pass RR Laws/Acts• Vice President

• Congress investigated• Public figures kept profit, but Republican party took a

hit.

The Grange and the Railroads:

• Farmers upset• Misuse of government land

• Sold to other businesses and not settlers• Fixed the prices

• Charged customers differently• Farmers had no alternative method of shipping

• Farmers create and join the Grange

• Farmers (with the help from the Grange) continued to push for fairness in the railroad industry – and they got political!• Granger Laws – prohibit discrimination in Railroad shipping

• They got the Supreme Court to pass…..

•Munn vs. Illinois: States were given regulation control of railroads by the Courts

The Grange and the Railroads (continued)

Interstate Commerce Act• 1886, Supreme Court: states cannot set rates on interstate

commerce• Public outrage leads to Interstate Commerce Act of 1887

– federal government can supervise railroads– establishes Interstate Commerce Commission (ICC)

• Legal battle with railroads; difficult for ICC to take action

Panic and Consolidation• Abuses, mismanagement, competition almost bankrupt many

railroads• Railroad problems contribute to panic of 1893, depression • By mid-1894, 25% of railroads taken over by financial companies

Section 3: Objectives

• By the end of the lesson, I will be able to:

• 1. Identify management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie.

• 2. Explain Social Darwinism and its effects on society.

• 3. Summarize the emergence and growth of unions.

• 4. Explain the violent reactions of industry and government to union strikes.

Section 3: Big Business and Labor

• Andrew Carnegie was one of the

first industrial tycoon• Owned the entire steel industry

• “rags to riches”• Supported charities

• Immigrated to USA when he was 12.• At 18 he was local superintendent of the

Pennsylvania RR company• His boss, Thomas, Scott gave Carnegie the opportunity to buy

stock in the company.

• He entered the steel industry in 1873 after making BIG $ with the railroad industry

• Carnegie attempted to control as much of the steel industry as possible

Carnegie Mellon University

http://www.history.com/topics/andrew-carnegie

19

A Favorable Climate• The U.S. economy welcome entrepreneurs willing to work hard to create

wealth

Belief in Free Markets• U.S. economy based on free enterprise, driven by competition and

consumer demand• Laissez-faire capitalism, government takes a hands off approach with

business• Business leaders in favor of protective tariffs, though

Social Darwinism• Social Darwinism, or social evolution, based on Darwin’s theory• Economists use Social Darwinism to justify doctrine of laissez faire

» Idea of survival, success of the most capable appeals to wealthy• Notion of individual responsibility in line with Protestant ethic• See riches as sign of God’s favor; poor must be lazy, inferior

Industrial Robber Barons (owners)

• John D. Rockefeller: OIL --- controlled everything w/ oil: crude, refining, transport•Andrew Carnegie: STEEL --- very important for I.R, (railroads, machines); $480 mil, 1901•Cornelius Vanderbilt: RAILROAD --- transportation of goods; also gain land

• J.P Morgan - Industrialist and financier who started U.S. Steel from Carnegie Steel

• Many gave to charities while paying very little to workers (philanthropy)

Carnegie’s Smart Plan:

• Vertical integration - buying out his suppliers coal fields, iron mines, ore freighters, and rail lines

• Horizontal Integration – buying out companies that produce similar products

Social & Political Discontent

• Railroad Trusts and Other Monopolies

•Trusts = competing companies work together to set high prices• Railroad trusts most famous; demanded high RR rates, hurt farmers; trusts in sugar, tools, grain

depot industries

•Monopoly = 1 company controls 1 part of market•Standard Oil most famous monopoly; controlled all

aspects of oil manufacturing and sales

Copyright © by Houghton Mifflin Harcourt Publishing Company

New Business Strategies (continued)

Fewer Choices• Pools, trusts, and holding companies help create

monopolies to control production, wages, prices• Monopolies hurt consumers and workers

A Mixed Legacy• Many Americans admired “captains of industry”

– made economy more productive– supported philanthropy

• Critics call industrialists robber barons– taking advantage of consumers, workers– unfairly squeezing out competition

Sherman Anti-Trust Act:

• The government had to respond – the “robber barons” were getting way to powerful.

• Stifle competition = monopoly, bad for capitalism

• Sherman Anti-Trust Act made it illegal to form a monopoly (Trust)• This was tough to govern

• – big companies would just split up into smaller companies• Standard Oil – just formed one corporation

• Government couldn’t enforce the Act

• North advanced during the industrial boom!• South still recovering from the Civil War• Southern farmers were at the mercy of Railroad companies

• Hope was in mining tobacco, furniture and cotton.

• South didn’t have the capital to expand

Lesson 4Rise of Labor Movement

Labor Unions Emerge

•Why?? • Low wages, unsafe working conditions, drew workers

together to try to improve conditions.

•No vacation, sick days, workers comp, etc.• Working conditions bad – dirty, poorly ventilated, led to

injuries.

•Repetitive takes on sometimes faulty equipment.

• In 1882 675 workers killed.• Low wages - whole families had to work, even children as

young as 5.

Labor Unions Emerge:

• WORKING CONDITIONS

• Workers were working 6-7 days a week for more than 10 hours a day• In 1882, an average of 675 workers were killed PER WEEK on the job

• Workers realized they needed to organize to get change to happen

• Workers created Unions to negotiate wages, hours, conditions, striking

• Everyone in the family had to work• Wages were so low

• $3 for skilled work and $1.50 for unskilled work a Day

• Women and Children HAD to work • Some children did not go to school and went to work

• 8 yr olds

• 27 cents for a 14hr day• Andrew Carnegie earned 23$ million a year

The Growth of Labor Unions

•Collective Bargaining•Negotiating as a group with their employers• Higher wages, better conditions, lower rent

•Strike – workers refuse to work• Local, state, region, country, groups.

• Unions-• National Trades Union – 1833

• Changes start• 10 hr days, 6 days a week (mid 1800’s)

Striking and Violence:

• Skilled workers started to organize• NLU – National Labor Union 1866• CNLU – Colored National Labor Union

• Unions fought for a 8hr work day

• Knights of Labor – open to all workers regardless of gender, race or skill level• Equal pay for equal work

• AFL – American Federation of Labor• Collective bargaining• Negotiations between workers and business owners

• Some strikes, turned deadly – labor leaders and

• Eugene V. Debs – labor leader that helped to organize unions• Include all skilled and unskilled workers

• Outcomes –

• 1. Companies learned to treat their employees better

• 2. Unions became more powerful

Labor Unions

•Knights of Labor – 1869• Social gains for unskilled and skilled workers

• Uriah Stephens

• Recruited women + African Americans

• Terence V. Powderly – took over • Used collective bargaining, strikes, boycotts

•American Federation of Labor - 1886• Samuel Gompers• Skilled workers, 100’s of different specific crafts,

• Union Dues• Wages, Hours and conditions

•Outcomes –• 1. Companies learned to treat their employees better• 2. Unions became more powerful

•Haymarket Strike – May 1886• Haymarket Square Chicago

• Strikers and police exchange violent attacks• Protestor threw a bomb

• 8 anarchists tried for murder – 4 executed

• Haymarket Riot

• People feared the Knights of Labor / Strikers

•Homestead Strike –• Homestead Penn.

• Andrew Carnegie steel plant workers strike

• Hires – Henry Frick – Pinkertons (private police force)• Several workers killed.

• Public opinion turns against unions.

Labor Unrest

•Pullman strike (1894)•Started in Chicago 3,000 railway workers were

laid off and wages cut 25-40 percent.• President Cleveland sent in federal troops to protect

interstate commerce.• Eugene V. Debs and the Socialist Party

• Industrial Workers of the World• Fought for Unskilled Workers

• Radical Unionists

• Miners, Foresters, dock workers

Strikes turn Violent

• Labor unrest• 1881-1905 37,000 strikes• Yellow dog contracts – promised not to strike or form unions

• Great Strike of 1877• Ohio and Baltimore RR workers struck

• Stopped interstate trade• National Guard came in to put down the strike

• Haymarket Affair• Chicago 1877

• Worker was killed and several injured at the McCormick Harvester plant• Rioters tossed a bomb at the police

• Police fired back• Eight organizers were charged and one hung • Police started to become Anti-Union

• Marry Harris Jones• Most prominent female union organizer

• Led to expose and end child labor

Impact of Labor Unions

• Business owners backed by courts against unions

• Unions denied legal protection

• Collective bargaining, strikes became strategies