Industry Comes of Age 1865-1900

American Pageant Chapter 24

Transportation

• 1865- 35,000 miles of Railroads (RR) • 1900-192,556 miles of RR • Government subsidized transcontinental RR by

granting companies large tracts of land to build on – Gave away 155,504,994 acres!

• Towns fought over who would have RR going through them – Could mean the survival of the town

Spanning the Continent with RR’s

• Debate over North or South transcontinental RR ended when South seceded

• 1862 Union Pacific RR began construction starting in Omaha, Nebraska and running West

• RR were laid as quickly as possible after Civil War – Lots of Irishmen worked on RR – Often attacked by Indians – The Cali end began in Sacramento and ran East

• The “Big Four” oversaw the construction and made millions – Leland Stanford, Collis P. Huntington

• Cali line built by Central Pacific RR and mostly used Chinese workers

• “Wedding of the rails” took place in 1869 in Ogden, Utah • RR tied West and East together, opened trade with Asia

and allowed more settlers to move West • Four other transcontinental RR were built by 1900

Railroad Consolidation and Mechanization

• Cornelius Vanderbilt – Owner of New York Central Rail

– Made over $100 million

– Donated $1 million to build Vanderbilt University in Tennessee

• RR started using steel rails instead of iron – Cheaper and could hold a heavier load

• Started using the same gauge of track – Eliminated a lot of train changes for

passengers and cargo

Revolution by Railways

• US became a national market for goods – Brought in foreign investors

• Sped up industrialization – Moved goods quickly – Demanded large amount of steel and iron

• Helped agriculture – Transported crops to markets

• Helped cause the rise of cities – Could bring in lots of supplies

• Greatly changed the environment – Corn fields planted – Buffalo hunted almost to extinction – Forests cut down for lumber

• Changed time – Until 1880’s every town had it’s own “local” time

• Nightmare for RR

– November 18, 1883 RR said continent would be split into time zones

• Made some people enormously rich

Corruption and Greed

• Lots of corruption tied to RR business

• Jay Gould – Made millions manipulating RR

stocks

• RR owners started working together (like a cartel) to fix prices and make huge profits – Bribed officials and the press

• RR barons had massive control over people’s lives

Government Tries to Help

• Americans did not want Govt involved in economy but by 1870’s farmers were being “railroaded” into bankruptcy

• States began to try to regulate the RR’s • Wabash supreme court case stopped that

– Only federal govt can regulate interstate commerce

• Congress passed the Interstate Commerce Act of 1887 – Required RR’s to publish rate to public – Set up the Interstate Commerce Commission (ICC) to

enforce new laws – Did some good but not a whole lot

Miracles of Mechanization

• 1876 Alexander Graham Bell – Invented the

telephone

• Thomas A. Edison – Invented the

phonograph, moving pictures

– 1879 perfected the electric light bulb

The Trust Titan Emerges

• Big names of the time to know – Andrew Carnegie, steel

– John D. Rockefeller, oil

– JP Morgan, banking

• All tried to avoid competition in their industries, used “vertical integration” – Carnegie Steel owned:

• Mines

• Ships

• RR’s

• Steel factory

– No one touched Carnegie steel except Carnegie employees

• Rockefeller used “horizontal integration”, allying competitors to monopolize the market

• Formed Standard Oil Co in 1870

• Created a “trust”

– Stockholders in small oil companies assigned their stocks to Standard Oil. Standard Oil then controlled all oil companies to make the most profit for all stock holders

Supremacy of Steel

• Steel replaced iron as the dominate metal in the late 1800’s

• 1870 Vanderbilt had to import steel from England

• 1890 US produced 1/3 of the World’s steel, why?

• Steel became cheaper to make through the Bessemer Process – Cold air blown on red-hot steel caused

the steel to become white-hot, eliminating it’s impurities and making better steel

• US had all of the natural resources to make steel and a large labor force

Carnegie and Morgan

• Andrew Carnegie – Moved to America when he was

12 from Scotland

– Worked for $1.20 a week

– Slowly saved money and invested in steel

– Eventually became to steel maker in US

– 1900 he was producing ¼ of US steel • $25 million a year, no income tax!

• J.P. Morgan – Top banker in US

• 1900 Carnegie was looking to sell his steel company – Morgan was just getting into steel business

• Morgan agreed to buy Carnegie out for $400 million – Carnegie spent the rest of his life as a

philanthropist, giving away ~$350 million

• Morgan expanded his steel company and created US Steel Corporation in 1901 – Worth $1.4 billion – 1st billion-dollar corporation

Rockefeller and Oil

• Oil became big business after Civil War – Used mainly to make kerosene – 1870 kerosene was US’s 4th most valuable export

• By 1885 people were turning to electricity – Bad for oil business

• By 1900 gasoline-burning internal combustion engine developed and the century of the automobile dawned – Great for oil!

• John D Rockefeller – 1870 organized Standard Oil Co

• Turned into a trust in 1882 – By 1877 Rockefeller controlled 95% of oil refineries in US – Rockefeller was ruthless in business

• Would ruin any competitor, survival of the fittest

• Other trusts formed as well – Sugar, tobacco, leather, meat

The Gospel of Wealth

• Some viewed themselves as chosen by God to be rich

• Others thought it was social Darwinism

• Many millionaires thought poor people were just lazy – “There is not a poor person in the US who was not made poor by his

own shortcomings.” » Rev. Russell Conwell

• Big business used the Constitution to protect themselves – Supreme Court ruled that a corporation was a “person”, thus their

property was protected by the 14th Amendment

Government Tackles the Trust

• Sherman Anti-Trust Act of 1890 – Forbade combinations in restraint of trade

• Most corporations got around law through loopholes

• It did end up hurting labor unions though – Restricting trade?

• A step towards government restricting business

The South in the Age of Industry

• South could not keep up with the North • Mostly sharecroppers and tenant farmers • James Buchanan Duke

– Took advantage of the new machine that rolled cigarettes in the 1880’s – 1890 absorbed his main competitors into the American Tobacco Co – Duke University named after him

• North actively worked to keep the South down – Example: Charging southerners more to ship on the RR’s

• North began building textile mills in the South – Lots of cotton, cheap un-unionized labor – Very bad conditions

• Worked dusk till dawn • Paid ½ of what Northerners were paid

– Employed lots of women and children

The Impact of the New Industrial Revolution on America

• Standard of living rose • Immigration went up • Jeffersonian ideals of a country of small farmers gone • Women entered the workforce

– Same hours and conditions – Less money

• By 1900 1/10 of Americans were wage earners – Dependent on employers

• Foreign trade went up as US market became saturated with goods

In Unions There is Strength

• Workers had no rights or power against the corporations – Could be easily replaced – Thousands of immigrants a year came for work

• Kept wages low

• Corporations had Federal Courts on their side – Could send in troops to break strikes

• Employers could “lockout” workers and starve them into submission • Forced people to sign “yellow-dog contracts”

– Swore not to join a labor union • You could be “blacklisted”

– No one would hire you • Many middle-class Americans were tired of hearing workers cry

– US had some of the highest wages in the world – More supportive of Big Business than the worker

Labor Limps Along • 1869 The Knights of Labor formed

– Secret union that welcomed every workers • Women and Blacks included

– Fought for workers safety and an eight hour work day

• 1886 Chicago – Home to 80,000 Knights – Protest held in the Haymarket Square – Police moved in to stop the protest – Someone threw dynamite into the crowd

• Killed/injured dozens, including police

– Blamed on Anarchists, but Knights were associated with it

• Skilled workers began to leave the Knights – Formed the American Federation of Labor

• By 1890’s Knights had only 100,000 members

The A.F.L.

• American Federation of Labor

– Started in 1886

• Led by Samuel Gompers

• Was made up of many independent unions

• Fought for better wages, hours, and working conditions

• Used walk-outs and boycotts

• By 1900 had 500,000 members

Unions

• From 1881-1900 23,000 strikes took place

– Cost $450 million

• 1900 only 3% of working people were in unions

• Public started to agree with organized labor

– 1894 Congress made Labor Day a national holiday

• Still lots of fighting ahead for labor and businesses