CHAPTER 18
CHAPTER 18The Industrial Society1 2011, The McGraw-Hill
Companies, Inc. All Rights Reserved.451-458 QUIZ1. This man created
a steel monopoly in the United States.
2. Founder of the Standard Oil Company
3. This is a board of directors/stockholders that coordinates
companies within an industry to avoid competition
4. Alexander Graham Bell invented the ______________.
5. This man invented the light bulb and the phonograph.
2Industrial DevelopmentLate nineteenth-century U.S. offers ideal
conditions for rapid industrial growth
Abundance of cheap natural resources
Large pools of labor
Largest free trade market in the world
Capital, government support without regulation
Rapid growth 18651914
3An Empire on RailsU.S. industrial economy based on expansion of
the railroads
Steamships made Atlantic crossings twice as fast
The telegraph and telephone transformed communications
4Emblem of Motion and PowerRailroads transform American lifeEnd
rural isolationAllow regional economic specializationMake mass
production, consumption possibleLead to organization of modern
corporation Stimulate other industries
Railroads capture the imagination of the American people
5Building the Empire18651916: U.S. lays over 200,000 miles of
track costing billions of dollars
Expenses met by government at all levels
Federal railroad grants prompt corruptionCredit Mobilier
ScandalWhat was this? Who was famously involved with this
scandal?
18501945: Railroads save government $1 billion in freight
costs
6Federal Land Grants to Railroads as of 18717
By 1865, the US had as many mile of RR track as the rest of the
world!Railroad Construction183019208
Linking the NationNo integrated rail system before Civil War
After 1860 construction and consolidation of trunk lines
proceeds rapidly
East linked directly with Great Lakes, WestUnion Pacific and
Central Pacific Railroads
Southern railroad system integrated in 1880s
Rail transportation becomes safe, fast, reliable
9
Rails Across the Continent1862: Congress authorizes the
transcontinental railroad
Union Pacific works westward from Nebraska using Irish
laborers
Central Pacific works eastward using Chinese immigrants
May 10, 1869: Tracks meet in Utah
By 1900, four more lines to Pacific
10Promontory Point: Golden Spike!!Union Pacific (East to West)
construction begins during Civil War
Central Pacific (West to East) begins after
Golden Spike driven in Ogden, Utah 1869Promontory Point11
Effect: Unites East and West; Opens trade with AsiaWho wasnt
included in this picture? Why not?Railroads1870 and 1890 2011, The
McGraw-Hill Companies, Inc. All Rights Reserved.12
Historian Stephen Ambrose discusses the Transcontinental
Railroad:
VIDEO13Problems of GrowthIntense competition among railroads
Efforts to share freight in an orderly way fail
After Panic of 1893, bankers gain control of railroad
corporations
Bankers impose order by consolidating to eliminate competition,
increase efficiency
14J P Morgan Bankers Banker15Builds financial empire through
railroads, banks, and holding companies
Buys out Carnegie and enters steel business
Forms US Steel Corporation 1st ever corporation worth more than
$1 billion!
Tycoons16Profiteering from the Civil War gives rise to
millionaire class
Millionaires capitalize on Transcontinental railroad,
mechanization, industrialization, & expansion of markets
Surplus of raw materials, cheap labor, foreign investment
ENCOURAGE CAPITALISM
Inventions Industrialization More Inventions More
Industrialization
ALL OF THIS GIVES RISE TO TYCOONS
17The Manufacture of IronThe Manufacture of IronManufacturing
iron was a hot and strenuous process, requiring workers to spend
longs hours stoking hot blast furnaces. (Library of Congress)
Copyright Houghton Mifflin Company. All rights reserved.
http://www.tiscali.co.uk/reference/encyclopaedia/hutchinson/images/c05312.jpgBessemer
Process = process to convert iron to steel
Andrew Carnegie = Steel Kingpin
18Steel is King : US pouring out 1/3 of worlds steel by
1890s
bootstrap story: poor immigrant to tycoon
Carnegie uses vertical integration to make more profitControls
all means of production, eliminates middle man
Also uses horizontal consolidation to eliminate competition.
Sells to JP Morgan for 400 million
Becomes a philanthropistHow do horizontal consolidation and
vertical integration help business??Rockefeller Standard Oil
Corp.19Kerosene and then Automobiles drive up US oil
consumption
Rockefeller ruthlessly uses horizontal consolidation to create
largest monopoly
1877 controls 95% of USs oil refineries
Robber Barons Baron
Robber Barons Term used to describe industrialist of the late
1800s Robber - referring to criminal or immoral behavior
Baron referring to the illegitimate claim to power of medieval
lords of the manor. Anti-American21Standard Oil MonopolyStandard
Oil MonopolyBelieving that Rockefeller's Standard Oil monopoly was
exercising dangerous power, this political cartoonist depicts the
trust as a greedy octopus whose sprawling tentacles already ensnare
Congress, state legislatures, and the taxpayer, and are reaching
for the White House. (Library of Congress)
Copyright Houghton Mifflin Company. All rights reserved.
Wealthiest people in the World
Bill Gates - $56 BILLIONCOMPARE:23Monopoly = a firm that
completely controls an industry
Vertical integration = combining all phases of manufacturing in
to one organization (Carnegie)
Horizontal consolidation = allying with competitors to
monopolize a market (Rockefeller)
Trust = a board of directors/stockholders that coordinates
companies within an industry to avoid competition
Holding company = a corporation composed of various competing
enterprises within one industry (JP Morgans US Steel)
25Compare the lives and beliefs of Carnegie and Rockefellerusing
a Venn DiagramJustifications for Big Business26Old Rich displaced
by rule of the new rich
Gospel of Wealth discourages helping the poor by state
Laissez faire = let it be
Justified by Social Darwinism survival of the fittest
Poor are poor due to lack of initiative
William Graham Sumner (1840-1910): The Challenge of Facts
http://www.fordham.edu/halsall/mod/1914sumner.html27 The truth is
that the social order is fixed by laws of nature precisely
analogous to those of the physical order. The most that man can do
is by, ignorance and self-conceit to mar the operation of social
laws. The evils of society are to a great extent the result of the
dogmatism and self-interest of statesmen, philosophers, and
ecclesiastics who in past time have done just what the socialists
now want to do. Instead of studying the natural laws of the social
order, they assumed that they could organize society as they chose,
they, made up their minds what kind of a society they wanted to
make, and they planned their little measures for the ends they had
resolved upon. let us not imagine that the task will ever reach a
final solution or that any race of men on this earth can ever be
emancipated from the necessity of industry, prudence, continence,
and temperance if they are to pass their lives prosperously.
"Bosses of the Senate," Puck, January 23, 1889, by Joseph
Keppler This frequently reproduced cartoon, long a staple of
textbooks and studies of Congress, depicts corporate interestsfrom
steel, copper, oil, iron, sugar, tin, and coal to paper bags,
envelopes, and saltas giant money bags looming over the tiny
senators at their desks in the Chamber. Joseph Keppler drew the
cartoon, which appeared inPuckon January 23, 1889, showing a door
to the gallery, the "peoples entrance," bolted and barred. The
galleries stand empty while the special interests have floor
privileges, operating below the motto: "This is the Senate of the
Monopolists by the Monopolists and for the Monopolists!"Kepplers
cartoon reflected the phenomenal growth of American industry in the
1880s, but also the disturbing trend toward concentration of
industry to the point of monopoly, and its undue influence on
politics. This popular perception contributed to Congresss passage
of the Sherman Anti-Trust Act in 1890.
"What a Funny Little Government," The Verdict, August 25, 1899,
by Herbert Taylor
The Trust Giant's Point of View. "What a funny little
government" is a political cartoon drawn by Horace Taylor and
originally published in Verdict on January 22. This source depicts
the corruption in the United States congress occurring because of
vast amounts of money held by monopolies. This cartoon, originally
released to the public, and for the public, meant to increase
awareness of political corruption resulting from monopolies.The
Business of InventionLate nineteenth-century industry leads to new
American technology
An Age of InventionTelegraph, camera, processed foods,
telephone, phonograph, incandescent lampHow did each of these
change society at the time?
Electricity in growing use by 1900
30Patents Issued 1850189931
Impact of Industrialization 32Urbanization
Long Work Hours and Dangerous Jobs
Children work too
Womens roles changeDelayed marriagesSmaller families
Accentuated class division1900: 1/10 of US owns 9/10 of USs
wealth1900: 2/3 of Americans are wage slaves
Workers lives increasingly precarious
Sellers and Wage EarnersMarketing becomes a science in late
1800sAdvertising becomes commonNew ways of selling include chain
store, department store, brand name, mail-order Americans become a
community of consumersThe labor of millions of men and women built
the new industrial society18751900 real wages rose, working
conditions improved, and workers national influence increasedHealth
and educational services expanded benefiting workers
33Workers Poor Conditions34Factories took the skill out of many
positions
VERY dangerous1882 675 laborers killedRRs 1 in 300Many women and
children worked to make ends meetWhat jobs did women work?
Children sacrificed their education
1899 women earned $269 a year/men earned $498That same year
Carnegie made $23 million!!
http://memory.loc.gov/cgi-bin/query/r?ammem/hay:@field(DOCID+@lit(ichihayv03)):@@@$REF$35PREAMBLE
AND DECLARATION OF PRINCIPLES OF THE KNIGHTS OF LABOR
TO THE PUBLIC:
The alarming development and aggressiveness of great capitalists
and corporations, unless checked, will inevitably lead to the
pauperization and hopeless degradation of the toiling masses.
It is imperative, if we desire to enjoy the full blessings of
life, that a check be placed upon unjust accumulation, and the
power for evil of aggregated wealth.
This much-desired object can be accomplished only by the united
efforts of those who obey the divine injunction, "In the sweat of
they face shalt thou eat bread."
Therefore we have formed the Order of Knights of Labor, for the
purpose of organizing and directing the power of the industrial
masses, not as a political party, for it is more - But no one
shall, however, be compelled to vote with the majority, and calling
upon all who believe in securing "the greatest good to the greatest
number," to join and assist us, we declare to the world that are
our aims are:Labor Unions Form36NBC Learn VIDEORise of Labor
Unions
What did the Knights of Labor do that was different from other
groups?
What did the AFL focus on?Knights of Labor37Collective effort
needed to counter trustsAn injury to one is an injury to all
Founded as a secret society in 1869. Why?
Inclusive and Diverse: men and womenwhite and blackskilled and
unskilled
Broad (utopian? Socialist?) goals
HURT by Haymarket Square riot, 1886, Chicago
Knights of LaborBlack delegate Frank J. Farrell introduces
Terence V. Powderly, head of the Knights of Labor, at the
organization's 1886 convention. The Knights were unusual in
accepting both black and female workers. (Library of Congress)38The
Knights of Labor were weakened by
Its refusal to endorse social reform and the 8 hour dayStiff
competition from the National Labor UnionIts association in the
public mind with the Haymarket riotIts inclusion of both skilled
and unskilled workersAmerican Federation of Labor39Skilled workers
split from Knights of Labor 1886
AF of L was elitist, narrow in goals not utopian
Led by Samuel Gompers used collective bargaining
Avoided politics and focused on union goals:Better
wagesEight-hour dayBetter working conditions
AF of L successful in many of its strikes and in meeting many of
its goals
STRIKES40HOMESTEAD STRIKE1892
STEEL STRIKEProtest work & living conditions
Pinkerton Detectives protect scabs,Several deathsUS troops end
it
WEAKENS LABORHAYMARKET AFFAIR1886
Labor marchBomb thrownSeveral deaths
8 Anarchists arrested4 hanged, 1 suicide
PUBLIC TURNS AGAINST LABORPULLMAN STRIKE1893
Pullman Comp. cuts wages during Panic of 1893Does not raise
after endsWorkers strike
US troops end it
Debs arrestedWorkers BlacklistedLABOR WEAKGREAT STRIKE OF
1877
Railroad strikeParalyzed rail & commerce
Pres. Hayes Sent US troopsto end it
CHINESE EXCLUSION ACT**Pullman Strike NBC Learn video
