AN INDUSTRIAL GIANT

1
AN INDUSTRIAL GIANT

• CHAPTER 17 (456-483)

2
ESSENTIALS OF INDUSTRIAL GROWTH

• Value of American manufactured products
• 1859 1.8 billion
• 1900 13 billion
• Why did American manufacturing flourish?
• Plentiful natural resources
• The expansion of the nations borders
• Protective tariffs
• Plentiful foreign capital
• Plentiful immigrant laborers

3
(No Transcript)
4
ESSENTIALS OF INDUSTRIAL GROWTH

• American ingenuity
• New machines, processes and power sources became
  available
• Cultivators, binders, and harvesters
• Grain milling led to packaged cereals
• Canned and processed foods
• Bonsack cigarette-rolling machine
• George B. Eastman Kodak cameras
• Remington typewriters

5
ESSENTIALS OF INDUSTRIAL GROWTH

• There was also a dark side to all of this
• These machines displaced jobs
• Corrupt business practices became common
• Stock manipulation
• Bribery
• Cutthroat competition
• Large monopoly businesses
• Worker exploitation

6
RAILROADS THE FIRST BIG BUSINESS

• The railroads are the single most important
  factor in the growth and power of the United
  States
• 1865 less than 35,000 miles of track
• 1875 over 74,000 miles of track
• 1900 over 193,000 miles of track
• 1890 railroad revenues topped 1 billion
• 1890 the US government brought 403 million

7
(No Transcript)
8
(No Transcript)
9
(No Transcript)
10
RAILROADS THE FIRST BIG BUSINESS

• The railroads are the single most important
  factor in the growth and power of the United
  States
• Consolidated lines into integrated systems
• Trunk lines and branch lines
• Standardization track size, time zones, signal
  systems, brake and coupling systems, accounting
  systems
• Technological advances steel, air brakes, more
  powerful locomotives, Pullman cars, telegraph
• Economies of scale

11
IRON, OIL, AND ELECTRICITY

• Iron manufacturing almost as important as the
  railroads
• 1860 920,000 tons
• 1900 10.3 million tons
• Bessemer process air blown into molten iron
  burns off the carbon, making steel
• 1870 77,000 tons
• 1890 5 million tons
• Pittsburgh becomes the steel capital of the
  country

12
(No Transcript)
13
IRON, OIL, AND ELECTRICITY

• The petroleum industry also boomed
• First well drilled in 1859
• 2-3 million barrels a year during Civil War
• By 1890, 50 million barrels
• Oil refining became important
• Kerosene used in lamps (replaces whale oil)
• Then gasoline, rhigolene, cymogene, lubricants,
  waxes, etc.

14
IRON, OIL, AND ELECTRICITY

• Telephone
• Invented by Alexander Graham Bell in 1876
• by 1900, 800,000 phones in US
• American Telephone and Telegraph Company
• Electricity
• First true light bulb in 1879, Thomas Edison
• by 1889, 3000 electrical stations were up
• Electric motors changed industry forever

15
(No Transcript)
16
COMPETITION AND MONOPOLY

• Manufacturing output rises, manufacturing cost
  goes down, competition goes up prices go down
• Railroads offered rebates to select big shippers
• Rebates were secret reductions below published
  rates
• Drawbacks were given when the railroad charged
  the shippers competitors extra, and gave some of
  the money back to the shipper

17
COMPETITION AND MONOPOLY

• It often became cheaper to ship or travel long
  distances than short ones
• Small shippers and business people did not have
  the advantages of rebates, and often were using
  the shorter routes
• Depression struck in the 1890, bankrupting many
  rail companies
• Many were reorganized, centralized, and thus very
  large corporations were created

18
COMPETITION AND MONOPOLY

• Andrew Carnegie shrewd business man, 50,000
  yearly income in 1868
• Expanded when others contracted
• Developed processes to make steel out of others
  waste materials
• Eventually sold out to JP Morgan who created US
  Steel, the first billion dollar company
  Carnegie received 250 million dollars

19
COMPETITION AND MONOPOLY

• John D. Rockefeller Standard Oil Company
• By 1879, he controlled 90 of US refining
• Used rebates and drawbacks
• Undercut competitors
• Used bribery and spies regularly
• He was worth 800 million by 1892
• A new form of company was created, a trust that
  oversaw many other businesses

20
(No Transcript)
21
COMPETITION AND MONOPOLY

• This was happening in many industries
• Telephones ATT
• Electricity Westinghouse, GE
• Insurance New York Life, Mutual Life
• Retailing huge department stores, one-price
  stores

22
AMERICAN AMBIVALENCE TO BIG BUSINESS

• Laissez-faire government noninterference or a
  hands-off approach
• Social-Darwinism survival of the fittest
• On the other hand
• Tariffs taxes on foreign importers
• Railroad grants government subsidies

23
REFORMERS

• George, Bellamy, and Lloyd were minor
  socialists with many utopian ideas had little
  effect on society or government
• The Marxists
• The Communist Manifesto 1848
• Socialist Labor Party 1877
• The state should own all production
• Capitalism would destroy itself eventually

24
THE GOVERNMENT REACTS TO BIG BUSINESS

• The first real government regulation involved the
  railroads
• State legislature began setting maximum rates and
  outlawed unjust discrimination
• This kind of law was upheld in Munn v. Illinois
  by the Supreme Court
• Precedent was now set for all kinds of regulation
  to be enacted

25
THE GOVERNMENT REACTS TO BIG BUSINESS

• Interstate Commerce Act 1887
• The federal government could regulate interstate
  traffic
• Rebates, drawbacks, and other practices were
  made illegal
• Schedules of rates must be published and could
  not be changed without notice
• Interstate Commerce Commission (ICC)

26
THE GOVERNMENT REACTS TO BIG BUSINESS

• Sherman Antitrust Act 1890
• Supposed to restore competition between
  businesses
• Outlawed any kind of monopoly businessmen
  could not group together in any way to fix prices
  or hinder competition

27
THE LABOR UNION MOVEMENT

• The union was the workers response to big
  business A combination designed to eliminate
  competition for jobs and to provide efficient
  organization for labor
• By the 1870s many industries had been unionized
• Many union leaders were visionaries with little
  in common with the workers they represented

28
THE LABOR UNION MOVEMENT

• Knights of Labor
• Promoted communal ownership of mines, factories,
  etc.
• Open to blacks (often segregated), women,
  immigrants and unskilled workers
• Sought an 8 hour work day
• Haymarket Square anarchists toss a bomb into a
  group of police attempting to break up a meeting
  7 are killed, others injured

29
THE LABOR UNION MOVEMENT

• American Federation of Labor
• Replaced the Knights of Labor
• Fought for wage increases, better working
  conditions, shorter hours, etc.
• Samuel Gompers president between 1886 and 1924
• Promoted strong organizations, the use of the
  ballot, all to improve the lot of workers

30
(No Transcript)
31
LABOR MILITANCY REBUFFED

• The strike became an important weapon
• Capital vs. Labor became common
• Railroad strike of 1877 over wage reductions
  shut down 2/3 of rail mileage major violence
  President Hayes sent the army to intervene
• 1892 Coeur dAlene, Idaho silver miners

32
LABOR MILITANCY REBUFFED

• The strike became an important weapon
• Capital vs. Labor became common
• 1892 Homestead steel plant, Pittsburgh
• workers attacked 300 private guards several
  killed eventually after several months, the
  union was broken
• 1894 Pullman strike because of wage cuts
  the ARU joined in and refused to move trains
  with Pullman cars attached Eventually
  Cleveland sent troops to handle it

33
WHITHER AMERICA, WHITHER DEMOCRACY?

• Wealth and power seemed to be falling into fewer
  hands
• Centralization allowed businesses to be more
  efficient, and living standards rose
• But people were still afraid and unsure the
  crushing of the Pullman strike demonstrated the
  power of the courts, the government, and the big
  businessmen