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AN INDUSTRIAL GIANT

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Title: AN INDUSTRIAL GIANT


1
AN INDUSTRIAL GIANT
  • Essentials of Industrial Growth
  • American manufacturing flourished in the last
    quarter of the nineteenth century
  • new natural resources were discovered and
    exploited, creating opportunities that attracted
    the brightest and most energetic Americans
  • the national market grew, protected from foreign
    competition by tariffs, and foreign capital
    entered the market freely

2
  • European immigrants provided the additional labor
    needed for industrial expansion
  • advances in science and technology created new
    machines and power sources, which increased
    productivity

3
  • Railroads The First Big Business
  • in the last quarter of the nineteenth century,
    railroads were probably the most significant
    element in American economic development
  • important as an industry themselves, railroads
    also contributed to the growth and development of
    other industries
  • railroads developed into larger and more
    integrated systems, and their executives,
    including Cornelius Vanderbilt and Jay Gould,
    became some of the most powerful and wealthiest
    people in the country

4
  • railroad equipment became standardized, as did
    time zones
  • land grant railroads helped to settle the West by
    selling their lands cheaply and on easy terms to
    settlers
  • new railroad technology, including the air brake
    and more powerful locomotives, made it possible
    for larger trains to travel at faster speeds

5
  • Iron, Oil, and Electricity
  • the transformation of iron manufacturing affected
    the United States almost as much as the
    development of railroads
  • new techniques, including the Bessemer process,
    made possible mass production of steel
  • huge supply of iron ore and coal in U.S. allowed
    for rapid growth of steel production
  • the Mesabi range yielded enormous quantities of
    easily mined iron
  • Pittsburgh, surrounded by vast coal deposits,
    became the iron and steel center of the country

6
  • the petroleum industry expanded even more
    spectacularly than iron and steel
  • new refining techniques enabled refiners to
    increase the production of kerosene, which, until
    the development of the gasoline engine, was the
    most important petroleum product
  • technological advances and the growth of an urban
    society led to the creation of new industries,
    such as the telephone and electric light
    businesses

7
  • Alexander Graham Bell invented the telephone in
    1876, and his invention quickly proved its
    practical value
  • of all Edisons many inventions, the most
    significant was the incandescent light bulb
  • the Edison Illuminating Company opened a power
    station in New York, and power stations began to
    appear everywhere
  • the substitution of electric for steam power in
    factories had an impact comparable to the
    substitution of steam for water power before the
    Civil War

8
  • Competition and Monopoly The Railroads
  • growing importance of expensive machinery and
    economies of scale led to economic concentration
  • deflationary pressures after 1873 led to falling
    prices and increased competition, which cut
    deeply into railroad profits
  • railroads attempted to increase the volume of
    shipping by giving rebates, drawbacks, and other
    discounts to selected customers

9
  • sometimes these discounts were far beyond what
    the economies of bulk shipment justified in
    order to make up these losses, railroads charged
    higher rates in areas where no competition
    existed
  • combination of lost revenue from rate cutting and
    inflated debts forced several railroads into
    receivership in the 1870s
  • in the 1880s, major railroads responded to those
    pressures by creating interregional systems
  • these became the first giant corporations

10
  • Competition and Monopoly Steel
  • the iron and steel industry was also intensely
    competitive production continued to increase,
    but demand varied erratically
  • Andrew Carnegie used his talents as a salesman
    and administrator, along with his belief in
    technological improvements, to create Carnegie
    Steel Company, which dominated the industry
  • alarmed by Carnegies control of the industry,
    makers of finished steel products began to
    combine and considered entering primary production

11
  • in response, Carnegie threatened to turn out
    finished products
  • J. P. Morgan averted a steel war by buying out
    Carnegie, his main competitor, and the main
    fabricators of finished products
  • the new combination, United States Steel, was the
    first billion-dollar corporation
  • Carnegie retired to devote his life to
    philanthropy

12
  • Competition and Monopoly Oil
  • competition among refiners led to combination and
    monopoly in the petroleum industry
  • John D. Rockefeller founded the Standard Oil
    Company in 1870
  • he used technological advances and employed both
    fair and unfair means to destroy his competition
    or to persuade them to join forces
  • by 1879, Rockefeller controlled 90 of nations
    oil refining capacity
  • to maintain monopoly, Rockefeller developed a new
    type of business organization, the trust

13
  • Competition and Monopoly Utilities and
    Retailing
  • utilities, such as the telephone and electric
    lighting industries, also formed monopolies in
    order to prevent costly duplication of equipment
    and to protect patents
  • Bell and Edison fought lengthy and expensive
    court battles to defend their inventions from
    imitators and competitors
  • competition between General Electric Company and
    Westinghouse dominated the electric lighting
    industry

14
  • the life insurance business expanded after the
    Civil War, and it, too, became dominated by a few
    large companies
  • in retailing, this period saw the emergence of
    urban department stores, including Wanamakers
    and Marshall Field
  • the department stores advertised heavily and
    stressed low prices, efficient service, and
    guaranteed products

15
  • Americans Ambivalence to Big Business
  • the expansion of industry and its concentration
    in fewer hands changed the way many people felt
    about the role of government in economic and
    social affairs
  • although Americans disliked powerful government
    and strict regulation of the economy, they did
    not object to all government involvement in the
    economic sphere
  • the growth of huge industrial and financial
    organizations frightened many people

16
  • at the same time, people wanted the goods and
    services big business produced
  • the public worried that monopolists would raise
    prices still more significant was the fear that
    monopolies would destroy economic opportunity and
    threaten democratic institutions

17
  • Reformers George, Bellamy, Lloyd
  • the popularity of several reformers reflected the
    growing concern over the maldistribution of
    wealth and the power of corporations
  • in Progress and Poverty (1879), Henry George
    argued that labor was only true source of capital
  • he proposed a single tax on wealth produced by
    appreciation of land values
  • Edward Bellamys utopian novel, Looking Backward
    (1888), described a future in which America was
    completely socialized and carefully planned

18
  • Bellamys ideal socialist state arrived without
    revolution or violence
  • Henry Demarest Lloyds Wealth Against
    Commonwealth (1894) denounced the Standard Oil
    Company
  • his forceful but uncomplicated arguments made
    Lloyds book convincing to thousands
  • despite their criticisms, these writers did not
    question the underlying values of the middle
    class majority, and they insisted that reform
    could be accomplished without serious
    inconvenience to any individual or class

19
  • Reformers The Marxists
  • by the 1870s, the ideas of the Marxian socialists
    began to penetrate the United States Marxist
    Socialist Labor party was founded in 1877
  • Laurence Gronlunds The Cooperative Commonwealth
    (1884) attempted to explain Marxism to Americans
  • leading voice of Socialist Labor party, Daniel De
    Leon, was a doctrinaire revolutionary who
    insisted that workers could improve their lot
    only by adopting socialism and joining Socialist
    Labor party
  • he paid scant attention to the opinions or to the
    practical needs of common working people

20
  • The Government Reacts to Big Business Railroad
    Regulation
  • political reaction to the growth of big business
    came first at the state level and dealt chiefly
    with the regulation of railroads
  • strict railroad regulation resulted largely from
    agitation by the National Grange and focused on
    establishing reasonable maximum rates and
    outlawing unjust price discrimination
  • in Munn v. Illinois (1877), the Supreme Court
    ruled that such regulations by states were
    constitutional when applied to businesses that
    served a public interest

21
  • however, the Supreme Court declared invalid an
    Illinois law prohibiting discriminatory rates
    between long and short hauls in the Wabash case
    (1886) on the ground that a state could not
    regulate interstate commerce
  • the following year, Congress passed the
    Interstate Commerce Act, which required that
    railroad charges be reasonable and just
  • it also outlawed rebates, drawbacks, and other
    competitive practices
  • in addition, the act created the Interstate
    Commerce Commission, the first federal regulatory
    board, to supervise railroad regulation

22
  • The Government Reacts to Big Business The
    Sherman Antitrust Act
  • first antitrust legislation originated in the
    states
  • federal action came with the passage of the
    Sherman Antitrust Act (1890), which declared
    illegal trusts or other combinations in restraint
    of trade or commerce
  • the Interstate Commerce Act sought to outlaw the
    excesses of competition the Sherman Act intended
    to restore competition

23
  • the Supreme Court undermined the Sherman Act when
    it ruled that the American Sugar Refining
    Company, which controlled 98 percent of sugar
    refining, was engaged in manufacturing and
    therefore its dominance did not restrict trade
  • in later cases, however, the Court ruled that
    agreements to fix prices did violate the Sherman
    Act

24
  • The Labor Union Movement
  • at the time of the Civil War, only a small
    percentage of American workers were organized,
    and most union members were skilled artisans, not
    factory workers
  • the growth of national craft unions quickened
    after 1865
  • the National Labor Union was founded in 1866, but
    its leaders were out of touch with the practical
    needs and aspirations of workers
  • they opposed the wage system, strikes, and
    anything that increased laborers sense of
    membership in the working class

25
  • their major objective was the formation of
    worker-owned cooperatives
  • founded in 1869, the Knights of Labor supported
    political objectives that had little to do with
    working conditions and rejected the idea that
    workers must resign themselves to remaining wage
    earners
  • the Knights also rejected the grouping of workers
    by crafts and accepted blacks, women, and
    immigrants
  • membership in the Knights grew in the 1880s,
    encouraged by successful strikes against railroads

26
  • in 1886, agitation for an eight-hour day gained
    wide support
  • clashes between workers and police in Chicago led
    to a protest meeting at Haymarket Square
  • a bomb tossed into the crowd killed seven
    policemen and injured many others

27
  • The American Federation of Labor
  • the violence in Chicago damaged organized labor,
    especially the Knights of Labor, which the public
    associated with anarchy and violence
  • membership in the Knights declined
  • a combination of national craft unions, the
    American Federation of Labor, replaced the
    Knights of Labor as the leading labor union
  • led by Adolph Strasser and Samuel Gompers, the
    AFL concentrated on organizing skilled workers

28
  • it fought for higher wages and shorter hours
  • the AFL accepted the fact that most workers would
    remain wage earners and used its organization to
    develop a sense of common purpose and pride among
    its members
  • the AFL avoided direct involvement in politics
    and used the strike as its primary tool to
    improve working conditions

29
  • Labor Militancy Rebuffed
  • threatened by the growing size and power of their
    corporate employers, the substitution of machines
    for human skills, and the influx of foreign
    workers willing to accept low wages, labor grew
    increasingly militant
  • in 1877, a railroad strike shut down two-thirds
    of the nations railroad mileage
  • violence broke out, federal troops restored
    order, and the strike collapsed
  • in 1892, violence marked the strike against
    Carnegies Homestead Steel plant

30
  • the defeat of the Amalgamated Association of Iron
    and Steel Workers eliminated unionism as an
    effective force in the steel industry
  • the most important strike of the period took
    place in 1894, when Eugene Debss American
    Railway Union struck the Pullman company
  • President Cleveland broke the strike when he sent
    federal troops to ensure the movement of the mail
  • when Debs defied a federal injunction to end the
    strike, he was jailed for contempt

31
  • Whither America, Whither Democracy?
  • each year more of Americas wealth and power
    seemed to fall into fewer hands
  • bankers dominated major industries
  • centralization increased efficiency but raised
    questions about the ultimate effects of big
    business on democracy
  • the defeat of the Pullman strike demonstrated the
    power of courts to break strikes

32
  • the federal government obtained an injunction in
    that case by asserting that the American Railway
    Union was engaged in a combination in restraint
    of trade prohibited by the Sherman Act
  • after the failure of the Pullman strike, Debs
    became a socialist
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