The Expansion of American Industry

1
The Expansion of American Industry
2
Daily Life in 1865

• Indoor and electric lighting did not exist in
  1865 instead the rising and setting of the sun
  dictated the rhythm of work and play
• Communications were also slow. In 1860 most mail
  from the East Coast took 10 days to reach the
  Midwest

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Daily Life Transformed

• By 1900, daily life had dramatically changed.
  The post-Civil War years saw new growth in ideas
  and inventions.
• European investors and American business leaders
  used the profits from the Civil War to invest in
  these new inventions.
• By 1900, industrial productivity and overall
  standard of living in the US was envied by the
  rest of the world.

4
Thomas Edison

• He also experimented with electrical lighting and
  his goal was to develop affordable, practical,
  in-home lighting to replace oil lamps.
• A key was to find a material that would glow
  without burning up when charged with an
  electrical current. After experimenting with
  many filaments, the team finally found a workable
  substance and when placed in a glass bulb it
  glowed

5
George Westinghouse

• Edison at first used a form of electricity called
  direct current to transmit power from his
  stations.
• Direct current was expensive and could only
  travel a few miles.
• In the 1880s, George Westinghouse began to
  experiment with an alternating current, which
  could travel over long distances more cheaply.
• Westinghouse also used a device called a
  transformer to produce voltage levels that made
  electricity more practical for use in the home.
• By the early 1890s, financiers built on Edisons
  and Westinghouses ideas and created General
  Electric and Westinghouse Electric companies.

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How Electricity Changed Daily and Work Life

• Electricity revolutionized daily life. One
  example is that electricity made it possible to
  refrigerate foods, which reduced food spoilage.
• Electricity also transformed work life. Many of
  the countrys new immigrants, especially women
  and children found work making clothing in
  factories powered by electricity.
• However, electricitys benefits were not evenly
  distributed.
• Many rural areas went without it for decades and
  other people could not afford it.

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Transcontinental Railroad

• The project had first begun in 1862, when absent
  of southern legislators enabled Congress to agree
  on a route.
• Government backing was important because with the
  governments funds the project would have a hard
  time getting completed.
• The government granted loans and land grants to
  two companies. One the Union Pacific started in
  Omaha, Nebraska and built towards the west.
• The other Central Pacific started out of
  Sacramento, California and headed east
• On May 10, 1869 Leland Stanford completed the
  first transcontinental railroad.

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Railway Travel

• Even after improvements rail travel was still
  unpredictable and inconvenient. There were also
  many fears about traveling the railroads.
• The railroad continued to growth despite these
  concerns and in 1883, the railroads helped
  introduce standardized time zones to improve
  scheduling.
• Railroads also took time to introduce other
  safety measures.
• George Westinghouse developed more effective air
  brakes.
• Granville Woods invented a telegraph system for
  communications to and from moving trains.
• Rail travel made things easier for businesses.
  It helped reduce the shipping costs.

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Telegraph

• Samuel Morses invention of the telegraph
  signaled the start of the communication
  revolution.
• Using a code of short and long electrical
  impulses to represent letters, people were able
  to communicate.
• The first message was sent in 1844. By 1900,
  Western Union owned 933,000 miles of wire and
  sent 63 million messages

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Telephone

• In 1876, Scottish immigrant Alexander Graham Bell
  achieved a talking telegraph. In 1884, Bell
  and a group of partners set up the American
  Telephone and Telegraph Company.
• At first a telephone line could only connect two
  places, a home and a business.
• However, soon central switchboards with operators
  linked homes and businesses in an entire city.
• By 1900 1.5 million telephones were in use.

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Steel

• Throughout the mid-1800s the nation relied on
  iron for railroads and buildings.
• However, in the 1850s, Henry Bessemer in England
  developed a new process for making steel, a metal
  that is lighter and stronger than iron.
• People knew of steel, but it was expansive to
  make.
• With the Bessemer converter, steel became more
  plentiful and more affordable.

13
Brooklyn Bridge

• A new age of building was developing and an
  example of this would be the Brooklyn Bridge. As
  NYCs status as a business center grew, so did
  its population.
• Many people settled in Brooklyn, but the only way
  to get to Manhattan was by Ferry.
• Engineer John A. Roebling envisioned a suspension
  bridge with thick steel cables suspended by high
  towers. At 1,595 feet long it would be the
  longest bridge yet built.

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The Growth of Big Business

• The period of invention of discovery would not
  have been the same without people willing to
  invest their money in these new inventions.
• Without money people could not build factories,
  market their product, or create profitable
  businesses.
• To succeed business leaders had to pool funds
  together and this started the age of big
  business.

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Robber Barons?

• The term robber barons, imply that business
  leaders built their fortunes by stealing from the
  public.
• According to this view, they drained the country
  of its natural resources and corrupted public
  officials to interpret laws in their favor.
• At the same time, these industrialists drove
  their competition to ruins and paid meager wages,
  while forcing their workers to work in dangerous
  and unhealthy conditions.

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Captains of Industry?

• Captains of industry suggest that the business
  leaders served their nation in a positive way.
• This view credits them with increasing the
  availability of goods by building factories,
  raising productivity, and expanding markets.
• By creating more jobs, the giant industrialists
  enabled many Americans to buy new goods.
• They also funded and founded many of the nations
  greatest universities, museums, and libraries.

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Andrew Carnegie

• His first job was at a cotton factory making
  1.20 a week. He wanted to improve himself and
  this became an urgent matter when his dad died in
  1855, making him the familys chief earner.
• At age 18 Carnegie won the post of secretary to
  the superintendent in the Pennsylvania Railroad
  company.
• When his boss went to the Civil War, Carnegie
  took over. He then started to invest his money
  wisely.

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Andrew Carnegie cont

• He believed that steel would replace iron. He
  first invested in two furnaces that would make
  pig iron, which was a material needed to make
  steel.
• Despite an economic depression in 1873, he cut
  steel prices, which drove his competitors from
  the market.
• With a partner Henry Clay Frick, Carnegie took
  control of the steel industry. He had control of
  the mines, the ovens and the steel. Eventually
  he took control of the shipping and rail lines
  necessary for transporting his goods.

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A Gospel of Wealth

• His message was simple People should be as free
  to make as much money as they can. As they make
  it, however, they should give it away.
• The man who dies rich dies in disgrace.
• Never leave wealth to heirs, he warned because
  they will fail to learn how to survive o their
  own.
• Never leave wealth it to others to administer,
  for they will never follow your instructions.
• Give it away yourself he advised, not as
  charity, but as philanthropy, gifts to
  institutions or to the public to help mankind.

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Social Darwinism

• In the late 1800s people applied Charles Darwins
  theory of evolution to society. Charles Darwin
  believed the strongest and fittest would survive.
  
• Applying this idea between workers and employers,
  social Darwinism held that society should do as
  little as possible to interfere with the process
  by which people succeed or fail.
• If government stayed out of business affairs,
  those who were the most fit would survive.

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Laissez-Faire

• Many Americans agreed with that philosophy and
  thought that the nations prosperity depended on
  laissez-faire, or hands off approach to the
  economy. As a result, government neither taxed
  the profits of businesses not regulated their
  relations with the workers.

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Monopolies

• In order to create a monopoly, a business bought
  out its competitors and all its patents. Thus
  the business would eliminate any competition for
  its product.
• Toward the end of the 1800s, federal and state
  governments passed laws to prevent certain
  monopolistic practices.
• However, these laws did not prevent nor destroy
  all monopolies, in part because government
  leaders were fearful in taking on big business
  leaders.

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Cartels

• Cartels are loose associations of businesses
  making the same product, usually formed in
  secret.
• The goal of a cartel is to reduce the harmful
  side effects of competition on the businesses
  involved. Members agree to limit the supply of
  their product because when the supply is low the
  price tends to increase.
• Cartels had a disadvantage and during hard times
  tended to fall apart.

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John D. Rockefeller and Standard Oil

• Rockefeller became rich from a grain and meat
  partnership during the Civil War. By 1870, he
  had formed Standard Oil Company of Ohio.
• As Rockefeller sold more oil, he was able to
  undersell his competitors. In addition, he
  persuaded his railroad friends to give him
  illegal refunds on part of the cost of
  transportation.
• Because Standard oil paid less to transport goods
  its prices were lower.
• Rockefeller soon had enough money to buy out his
  competition. However, state laws prohibited one
  company from owning stock in another, since
  monopolistic practices reduced competition and
  restricted free trade.

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Samuel Dodds Idea

• Samuel Dodds idea of the trust got around the
  ban. In 1882, 40 companies agreed to turn over
  their assets to a board of nine trustees. In
  return, they were promised a share of the profits
  with the new conglomerate. The board of
  trustees, which was controlled by Rockefeller,
  managed the companies as a single unit called a
  trust.
• The companies were not legally merged, so no laws
  were violated. Rockefellers trust controlled
  all of the nations oil-refining capacity.
• Trusts proved an effective means of limiting
  industrial competition. Americans began
  depending change.

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Sherman Antitrust Act

• In 1890, the Sherman antitrust act was passed.
  The law was aimed to combat restraint of trade or
  commerce caused by trusts.
• The act was ineffective or about 15 years because
  the federal government rarely enforced it and its
  vague ruling made it hard to apply in court.

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Horizontal Consolidation

• Rockefellers approach to consolidation the
  creation of one giant business from many smaller
  enterprises was horizontal consolidation.
• This method was involved in bringing together
  many firms in the same business.

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Vertical Consolidation

• Other industrialists practiced vertical
  consolidation, a method by which they gained
  control of all phases of a products development.
  
• Andrew Carnegie used this method. By controlling
  all phases of steel production Carnegie could
  lower his costs and drive his competitors out of
  business.

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Economy of Scale

• Carnegie could charge less because of a
  phenomenon called economy of scale.
• As he expanded his enterprises and produced more
  goods, his cost per item went down.

30
Public Reaction to Big Business

• A lot of people disliked trusts and other large
  business organizations. However, mergers were
  the wave of the feature and big cooperations
  such as GE, Westinghouse and DuPont, contributed
  to the wealth and productivity of the US
• Rapid industrial growth did lead to strains on
  the economy. There were fluctuations in the
  economy when there were a lot of goods. The
  demand went down, so did the price and then
  people had to be laid off from their job.
• Other problems occurred when people panicked over
  the fact that businesses would not be able to pay
  their debt. Investors would sell their stock in
  the company, stock prices would fall and
  companies went bankrupt. A period of depression
  would usually follow panics.

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The Great Strikes A Turning Point in History

• Industrialization bought changes and great wealth
  to the US. However, these changes did not bring
  prosperity to the nations working people.
• The rich grew richer and workers became bitter
  over their struggle for a decent standard of
  living.
• Men and women began to take their complaints
  directly to their employers.

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Socialism in the Industrial Age

• Socialism is an economic and social philosophy
  that advocates collective or government ownership
  of factories and property. One goal of socialism
  is to distribute the nations wealth broadly.
• Most Americans disagreed with the socialist idea
  and they felt that socialism threatened the
  deeply rooted American ideals of private property
  and free enterprise the right of people to
  compete freely and succeed to whatever extent
  they can.
• Most wealthy people also rejected socialism.
  They would not give up what they owned without a
  fight. Wealthy owners also believed that the US
  government would fight socialism with the
  military if necessary to preserve the American
  political and economic systems.

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The Return of Labor Unions

• These groups were initially designed to help in
  times of need. Soon they became a way of
  channeling workers demands for shorter workdays,
  higher wages, and better working conditions.
• The emphasis on protest led to growing opposition
  to unions by employers.
• Unions grew in the 1860s and 1870s. Labor
  activists tried to organize national unions.
• The National Labor Union was formed in Baltimore
  nominated a candidate for president in 1872.
  However, this union failed to survive an economic
  downturn

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The Knights of Labor

• Another early national union, The Noble Order of
  the Knights of Labor, was formed in Philadelphia
  in 1869. The Knights hoped to organize virtually
  all working men and women into a single union.
  Members included farmers, factory workers, and
  white-collar workers.
• The reforms included equal pay for equal work, an
  8 hour working day, and an end to child labor.
• The leaders of the Knights did not generally
  advocate the use of strikes, and they did not
  emphasize higher wages as their primary goal.

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American Federation of Labor (AFL)

• A third national union, the American Federation
  of Labor (AFL) followed the leadership of Samuel
  Gompers.
• It was formed in 1886 and was different from the
  Knights because they sought to organize only
  skilled workers in a network of smaller unions,
  each devoted to a specific craft..
• Gompers and the AFL were primarily interested in
  the issues of wages, hours, and working
  conditions.
• They sought to force employers to participate in
  collective bargaining, in which workers negotiate
  as a group with employers. The Federation
  believed that workers acting as a group had more
  power than a worker acting as an individual.

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Growing Friction Between Labor and Employers

• Employers disliked and feared unions. The
  preferred to deal with employers as individuals
  instead of in powerful groups.
• Employers took measures to stop unions, such as
  forbidding union meetings and firing union
  organizers.
• They even forced employees to sign a yellow dog
  contract that exacted a promise never to join a
  union or strike. Some business leaders refused
  to recognize unions as the workers
  representatives.

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The Railroad Strike of 1877

• The strike began when the Baltimore and Ohio
  railroads announced a wage cut of 10, the second
  cut in 8 months
• Other railroads imposed similar curs and were
  ordered to run double headers, were trains
  would have two engines and 2x as many cars. This
  increased the risk of accidents and worker
  layoffs.
• Local militia in Pittsburgh refused to help, so
  the employers called in troops from Philadelphia.
  They fired shots on demonstrators and killed and
  wounded many.
• President Rutherford B. Hayes called on federal
  troops to help out, but that only led to more
  violence.
• From that point on employers relied on federal
  and state troops to repress labor unrest, which
  led to more violence

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Haymarket (1886)

• On May 1, 1886 several groups demonstrated
  requesting an 8 hour work day. At Chicagos
  McCormick reaper factory, police broke up fights
  between strikers and scabs. Scabs are
  individuals hired to replace striking workers.
  Police action caused several deaths
• To protest the deaths anarchists, who are
  political radicals who oppose all government on
  the grounds that it limits individual liberty and
  acts on the interest of the wealthy and ruling
  class, called for a rally in Chicagos Haymarket
  Square
• During the event someone threw a bomb in a police
  formation, which then caused a riot. Seven
  policemen died from the bomb and dozens of
  civilians and policemen died in the riot after.

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Results of Haymarket Strike

• They never found the bomb thrower, but 8
  anarchists were tried for conspiracy to commit
  murder. Four were hanged and another committed
  suicide in jail.
• There was a belief that the convictions were a
  result of public hysteria, not evidence.
• The governor of Illinois later pardoned the three
  remaining anarchists.
• To union officials the anarchists were heroes, to
  employers they remained criminals.

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Homestead (1892)

• A union of iron and steel workers associated with
  the AFL had negotiated a labor contract with
  Andrew Carnegies steel company.
• In the summer of 1892, while Carnegie was away
  his partner Henry Frick tried to cut wages. The
  union at the plant in Homestead, PA called a
  strike
• Frick wanted to crush the strike and on July 1,
  1892 he called in the Pinkertons, a private
  police force known for its abilities to break
  strikes.
• The Pinkertons and the strikers fought and the
  result was death and injury on both sides.

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Result of Homestead Strike

• The public reaction was at first sympathetic to
  the strikers. However, when an anarchist tried
  to assassinate Frick, the public again blamed the
  strikers for the violence.
• The strikers acknowledged defeat and Frick stated
  he would never recognize any unions. Carnegie
  Steel and its predecessor US Steel remained
  nonunionized until the mid 1930s. Carnegie
  always stated he supported unions, but remained
  silent.

42
Pullman (1894)

• The Pullman Strike of 1894 involved the railroad
  industry and completed the turning point in the
  federal governments involvement with
  labor-employer relations.
• Sleeping car maker George Pullman always
  considered himself to be a kind industry owner.
• He built a town for his workers near Chicago that
  had a school, bank, water and gas systems and
  affordable homes.
• Conditions got worse during the Depression of
  1893 and he had to lay off workers and cut wages
  by 25-40. However, he also kept rent and food
  prices at the same level.

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Pullman cont

• In 1894 a group of workers went to him to
  protest. He responded by firing all three and
  when the American Railway Union called a strike
  he refused to negotiate and shut down his plant.
• The founder of the American Railway Union was
  Eugene Debs and by June of 1894 he encouraged
  120,000 workers to join the Pullman strike.
• Debs had instructed the strikers not to interfere
  with the mail, but the strike led to complete
  disruption of western mail traffic, including the
  delivery of the mail.

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Pullman Results

• Railroad owners turned to the federal government
  for help. Citing the Sherman Antitrust Act
  Attorney General Richard Olney won court orders
  forbidding all union activity.
• President Grover Cleveland sent in troops to
  ensure that strikers obeyed the court orders,
  which resulted in 12 deaths and numerous arrests.
• Debs refused court orders and was jailed for 6
  months. The American Railway Union fell apart
  with no leadership
• The Pullman strike and its outcome set an
  important pattern. In the years ahead factory
  owners appealed frequently for court orders
  against unions.
• The federal government regularly responded to
  these appeals and denied unions recognition as
  legally protected organizations. This helped
  limit union gains for over 30 years.

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