Industry Comes To Age

1865 to 1900

The Iron Colt Becomes The Iron Horse

In 1865: 35,000 miles of railways; east of the Mississippi

1900: 192, 556 miles of railways; west of the Mississippi

Congress gave land to railroad companies. In return, the government received special rates for postal services and military traffic

Companies were allowed alternate mile-square sections in checkerboard fashion for railroad routes, but until companies determined which part of the land was the best to use for railroad building, all of it was withheld from all other users

President Grover Cleveland stopped this in 1887Railroads gave cities value; towns that were bypassed by railroads became ghost towns

Spanning The Continent With Rails

Deadlock over the proposed transcontinental railroad was given to the North after the South had seceded

The north wanted to connect the Pacific coast to the rest of the nation; esp. California

Union Pacific Railroad moved westward from Omaha, Nebraska

Central Pacific Railroad in California pushed eastward from Sacramento through Sierra Nevada (biggest problem)

Big Four: chief financial bankers of enterpriseLeland Stanford: ex-governor of California; had useful political connections

Collis P. Huntington: skilled lobbyist  Railroads met near Ogden, Utah in 1869

Binding the Country with Railroad Ties

4 other transcontinental lines built before the century ended: Atchison, Topeka, Santa Fe, and Southern Pacific

James J. Hill created the Great Northern; greatest builder

People sometimes got overexcited and built railroads where there wasn’t a large enough population to support them

Caused bankruptcy with the savings of investors 

Railroad Consolidation and Mechanization

Older eastern railroads, like the New York Central, were expanded and welded together with the western lines making them successful

Lead by Cornelius VanderbiltImprovements: Steel rail instead of iron. Steel was tougher, safer and more economic because it could handle a heavier load

Standard gauge of track width; eliminated the hassle and cost of changing lines

Westinghouse air brake was adopted in the 1870s; it increased safety

1860s: Pullman Palace cars; luxurious  passenger cars

Accidents still happened despite telegraphs, double-tracking, and block signals

Revolution by Railways

Railroads stitched the nation together Generated a huge market and many jobs Helped America’s rapid industrialization Environment was affected by the construction of

railroads. Prairies were plowed up, forests cut down and the buffalo population challenged

Before railroads, each town had its own “local time” Railroads introduced “time zones” (November 18,

1883) to keep schedules and avoid wrecks Railroads made millionaires New aristocracy: “lords of the rail” replaced “lords of

the lash”

Wrongdoing in Railroading

Credit Mobilier scandal: Insiders of the company reaped 23 million in profits when the Union Pacific began westward construction from Omaha, Nebraska

Jay Gould: embezzled stocks from Erie, Kansas Pacific, Union Pacific, and the Texas and Union Pacific

Used “stock watering” method: railroad stock promoters inflate and sold stocks and bonds more than the railroads’ actual value

Railroad managers were forced to charge ridiculously high rates and compete to payoff the financial obligations

Railroad owners abused the public by bribing judges and legislatures, employing lobbyists, electing their own people into political office, giving rebates, and free passes to gain favor from the press

Built defensive alliances to rule the railroad industry “Pools”: group of supposed competitors who agree to work

together; usually to set prices 

Government Bridles the Iron Horse

Grange: farmers protesting against being “railroaded” into bankruptcy

States stopped the railroad monopoly, but in 1806 the Supreme Court said states could not regulate interstate commerce; that was up to the federal court

Interstate Commerce Act of 1887 prohibited rebate and pools; railroads had to publish their rates openly;

Outlawed charging more for short hauls than long hauls; forbade discrimination against shippers

Interstate Commerce Commission was set up to enforce the act

The act was set up to stabilize the American business system, not revolutionize it

Showed Congress has a responsibility to interfere with private enterprise for the interest of society

Miracles of Mechanization

In 1860 the US was the 4th largest manufacture in the world; in 1894 it was the 1st  because...

Liquid capital became abundant Coal, iron, and oil were fully exploited Massive immigration made unskilled labor cheap and

plentiful American ingenuity blossomed Mass production was refined and perfected  Cash register, stock ticker, typewriter, refrigerator

car, electric dynamo, and electric railway were introduced

In 1876, Alexander Graham Bell invented the telephone

Thomas Edison was the most versatile inventor; invented the lightbulb

The Trust Titan Emerges

Andrew Carnegie: steel king “Vertical integration”: combining into one organization all

phases of manufacturing from mining to marketing In his case, he mined the iron, transported it, refined it, and

turned it into steel... Only his employees had touched the iron Carnegie’s goal was to improve the efficiency of the product by

controlling the quality and eliminating the middle man John D. Rockefeller: oil baron “Horizontal integration”: allied with or bought out all competitors

to monopolize the market The word “trust” came to be used to describe any large-scale

business combination He used this method to form Standard Oil and control the oil

industry by forcing weaker competitors to go bankrupt J.P. Morgan: banker’s banker

“Interlocking directories”: placed his men into the board of directors of his rival competitors to gain influence there and reduce the competition

Supremacy of Steel

By 1900 America produced as much as England and Germany put together

Because of the Bessemer-Kelly processAmerica had lots of coal for fuel, iron for smelting, and other things for steel making; that’s why it became #1

Carnegie and Other Sultans of Steel

By 1900 he was producing 1/4 of the nation’s steel and taking 25 million home every year. 

J. Pierpont Morgan financed the reorganization of railroads, insurance companies, and banks. 

Morgan bought Carnegie’s entire business at $400 million

Morgan took Carnegie’s business, added others and launched the United States Steel Corporation in 1901

World’s 1st billion-dollar company (worth more than the nation’s total wealth in 1800)

Rockefeller Grows an American Beauty Rose

Kerosene was better than whale oil and burned brighter; whale oil became obsolete

By the 1870s kerosene was America’s 4th most valuable export

By 1885 Edison’s light bulbs were in use; kerosene became obsolete

Gasoline-burning internal combustion engines depended on oil, so the oil market was still open

John D. Rockefeller organized the Standard Oil Company of Ohio in 1870; by 1877 he controlled 95% of all the oil refineries in the country; greatest trust formed in 1882

His goal was to eliminate the middleman and ruin his competitors

His company did produce better oil at a cheaper priceOther trusts started making better products at cheaper prices too (sugar, tobacco, leather and harvester trusts)

Meat industry, lead by Gustavus F. Swift and Philip Armour, arose

The Gospel of Wealth

“Social Darwinism” concept of survival-of-the-fittest was applied to business. Only the best could run an industry.

Reverend Russell Conwell of Philadelphia became rich by giving his “Acres of Diamonds” lecture: rich people made themselves rich, poor people made themselves poor

Corporate lawyers used the 14th Amendment (designed to protect slaves) to defend trusts; corporations were legally people and entitled to their property

Plutocracy ruled (government ruled by the wealthy)

Government Tackles the Trust Evil

In 1890 the Sherman Anti-Trust Act was signed into law.

Any combinations in restraints of trade was forbade (trusts, pools, interlocking directories, and holding companies)

Prosecutions for violating the act were unsuccessful 

Not until 1914 was the Sherman Act given its place

The South in the Age of Industry

The South was still behind the North in manufactured goods despite all the inventions

In the 1880s machine made cigarettes were introduced; boosted tobacco consumption

In 1890, James Buchanan Duke absorbed his main competitors into the American Tobacco Company

Industrialists urged the South into factories The South had many obstacles when it came to industrialization Railroads gave preferential rates to manufactured goods moving

southward from the North, but in the opposite direction they discriminated in favor of southern raw materials

The North kept the South in servitude to it by suppling the Northeast with raw materials; unable to develop its own industries

Beginning in the 1880s, northern capitals began building cotton mills in the South because of tax benefits and the prospect of cheap non-unionized labor

Southerners had menial jobs, paid half the rate of a northernEven though working conditions were bad, southerners were happy to be employed

The Impact of the New Industrial Revolution on America

Because of the Industrial Revolution, the standard of living rose

Jeffersonian ideals about the dominance of agriculture and free enterprise without government interference changed

Telephones, typewriters, and stenographs gave women social and economical opportunities

Careers for women meant delays in marriage and smaller families

Women worked for money, not independence or glamourHad the same working conditions as men yet earned less

“Gibson Girl”: 1890s; created by Charles Dana Gibson became the “ideal woman”; she was athletic attractive, and outdoorsy

 In the 1860s; 1/2 the country was self employed; by the end of the century 2/3 of people depended on wages

In Union There is Strength

With the inflow of immigrants providing cheap labor that would work in poor conditions, the workers who wanted to improve their conditions couldn’t; bosses could easily replace them

Individual workers were forced to organize and fight for basic rights

Corporations would hire strikebreakers, have courts to stop the strikes, bring in troops, lock their doors against rebellious workers and make them submit

Workers then had to sign contracts which banned them from joining unions

Workers would be “blacklisted”: put on a list and denied special privileges

Labor Limps Along

The rising cost of living was an incentive to unionize  By 1872, there were 32 national unions and thousands of

organized workers National Labor Union was organized in 1866

Lasted 6 years About 600,000 members

Included skilled, unskilled workers and farmers Excluded Chinese; didn’t really try to get women and

blacks to join Blacks organized their own union; Colored National Labor

Union. Due to racism, the two unions couldn’t work together 

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

Knights of Labor

Similar to the National Labor Union, the Knights of Labor began secretly in 1869 until 1881

Sought to include ALL workers (even women and blacks)

Excluded liquor dealers, professional gamblers, lawyers, bankers, and stockbrokers (“non-producers”)

Won strikes for 8 hr days  Won strike against Jay Gould’s Wabash Railroad

in 1885; membership went up to 75 million Terence V. Powderly: lead the Knights

Unhorsing the Knights of Labor

Knights became involved with May Day strikes in 1886; 1/2 of them failed

In Chicago, on May 4, 1886, 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. This was the Haymarket case.

8 anarchists were rounded by without any proof of being involved with the bombing but because they preached incendiary doctrines, they were charged with conspiracy5 were sentenced to death; the other 3 were given stiff prison terms

When John P. Altgeld, was elected governor of Illinois in 1892, he pardoned the 3 survivors

Because of the bombing, the public associated the Knights of Labor with anarchists

Popularity and effectiveness lowered, membership declined, and remaining members joined other unions as well

The AF of L to the Fore

American Federation of Labor, created in 1886 by Samuel Gompers

Consisted of an association of self-governing national unions; each kept its independence; the AF of L unified overall strategy 

Sought better wages, hours, and working conditions  Strategies: walkouts and boycotts It was made up of skilled workers and let unskilled workers

fend for themselves (women and esp. blacks) From 1881 to 1900, there were over 23,000 strikes

involving 6,610,000 workers with a total loss to both employers and employees of about $450 million

Public acknowledged the right of workers to organize, bargain collectively, and strike

In 1894, Labor Day became a legal holiday