Business, Labor, and Technology in the Gilded Age

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Business, Labor, and Technology in the Gilded Age
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The Gilded Age

• The term "Gilded Age" was coined by Mark Twain
  and Charles Dudley in their 1873 novel The Gilded
  Age A Tale of Today.
• It generally refers to the decades between the
  end of reconstruction and the turn of the century
  (about 1870 to 1900).
• It was a time of unprecedented industrial
  growth, boom and bust economy, tumultuous
  politics, and a wave of immigration.
• It is sometimes referred to as the "Second
  Industrial Revolution."

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Some Gilded Age Political Cartoons

• The word "monopoly" could characterize this era,
  in which a few trusts and individuals thrived and
  amassed fortunes while many Americans lived in
  poverty and lost their personal autonomy to the
  corporate machine.
• The Gilded Age was a formative period in American
  history, in which the standards for modern
  business and economics were just beginning to
  take shape.

4
Business, Labor, and Technology in the Gilded
Age Timeline

• 1868 Congress enacts an 8-hour workday for
  workers employed by the government.
• 1869 The transcontinental railroad is completed.
• 1870 Rockefeller forms Standard Oil of Ohio
• 1873 The Financial Panic of 1873 begins. 5,183
  business fail.
• 1876 Bell patents the telephone.
• 1877 Edison invents the phonograph.
• 1879 Edison invents the light bulb

• 1894 The American Railway Unions strike and
  boycott of Pullman cars end in violence.
• 1886 The Haymarket riot occurs in Chicago
  following a demonstration of over 300,000 workers
  for 8 hour work days.
• American Federation of Labor Founded.
• 1890 Sherman Anti-Trust Act is passed and
  promptly ignored.
• 1892 The Homestead Strike at one of Andrew
  Carnegies steel works ends in violence.

5
"Robber Barons" or "Captains of Industry"?

• Individual tycoons played a pivotal role in
  making the US the leading industrialized nation
  in the world .
• The debate continues over whether these men were
  greedy and corrupt "robber barons" or innovative
  and enterprising "captains of industry.
• Each were instrumental in the "corporate
  revolution" of the time period, in which new
  business practices led to the industrial
  advantages of economies of scale.

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J.P. Morgan

• JP Morgan was one the most influential and
  powerful figures in the financial world.
• His philosophy was that only ruthless competition
  would lead economic stability.
• He began a series of consolidations in the
  railroad and other industries, leading the
  formation of colossal corporations including US
  Steel and General Electric.
• The cool and rational Morgan was a avid art
  collector and once served as President of the
  Metropolitan Museum of Art.

Morgan preferred not to be photographed!
7
Jay Gould

• Railroad entrepreneur Jay Gould considered
  himself to be one the most hated men of the 19th
  century.
• Gould was the archetypal "robber baron,"
  constantly mired in scandal and corruption.
• One of his major achievements was helping Western
  Union ascend to dominance in the telegraph
  industry.

8
J.D. Rockefeller

• Rockefeller built a massive fortune in the oil
  industry using practices including swallowing up
  competitors and negotiating exclusive deals with
  railroad companies.
• In 1911, Standard Oil's monopoly was dissolved in
  a Supreme Court decision based on the 1890
  Sherman Anti-Trust Act.
• Rockefeller was often maligned in the press and
  some perceive him as one of the most hated
  figures of his day.
• By the time of his death, Rockefeller, a devout
  Baptist, had given away over 500 million in
  philanthropic pursuits.

9
Standard Oil
Next!, 1904

• Standard Oil employed vertical and horizontal
  integration tactics on a grand scale to grow the
  business into a monopoly that controlled
  virtually all the oil production in the nation.
• In 1882, the company combined its interests
  across dozens of states into a trust.
• John D. Rockefeller, the company's president,
  became the richest man in the world for a time,
  earning him both the admiration and disdain of
  ordinary Americans.

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Rockefeller on Industrial Combinations (1899)

• It is too late to argue about advantages of
  industrial combinations. They are a necessity.
  Their chief advantages are
• 1. Command of necessary capital.
• 2. Extension of limits of business.
• 3. Increase of number of persons interested in
  the business.
• 4. Economy in the business.
• 5. Improvements and economies which are derived
  from knowledge of many interested persons of
  wide experience.
• 6. Power to give the public improved products
  at less prices and still make a profit for the
  stockholders.
• 7. Permanent work and good wages for laborers.
• The dangers are that the power may be abused
  this fact is no more of an argument against
  combinations than the fact that steam may explode
  is an argument against steam. Steam is necessary
  and can be made comparatively safe. Combination
  is necessary and its abuses can be minimized
  most legislative attempts have been an effort not
  to control but to destroy hence their futility.

11
Andrew Carnegie

• Andrew Carnegie, a Scottish immigrant, is known
  for being a truly self-made man.
• Though brilliant in business, workers and labor
  unions found him dismissive of their concerns.
• At the turn of the century, he sold his steel
  company to JP Morgan (who integrated it into the
  mammoth US Steel) and dedicated his time and
  fortune to philanthropy.
• He famously wrote, "the man who dies rich, dies
  disgraced."

12
The Steel Industry

• Carnegie's steel mills set new standards for the
  steel industry. Including strategies to increase
  efficiency, cut costs, vertically integrate, and
  invest in new technology.
• Steel was produced at profoundly reduced prices,
  which made engineering feats like bridges and
  tall buildings more affordable.
• His obsession with cutting costs translated to
  low wages and dangerous working conditions for
  laborers.
• J.P. Morgan bought out Carnegie's business and
  integrated it into U.S. Steel, which became the
  world's first billion-dollar corporation in 1901.

The red line indicates that Carnegie produced 30
of steel in the country. Notice the spike after
1896.
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The Steel Industry
14
The Steel Industry
Many companies incorporated by U.S. Steel
(vertical integration), as well as related
industries absorbed by the company (horizontal
integration).
15
Andrew Carnegie and The Gospel of Wealth

• The spectacular wealth of some industrialists was
  sometimes rationalized by the belief that they
  were doing good for society. Carnegie, one of
  the most generous philanthropists of his day,
  wrote in defense of the successful man who
  acquires a vast fortune
• Thus is the problem of Rich and Poor to be
  solved. The laws of accumulation will be left
  free the laws of distribution free.
  Individualism will continue, but the millionaire
  will be but a trustee for the poor
  administering wealth for the community far
  better than it could or would have done for
  itself. the man who dies leaving behind him
  millions of available wealth, which was his to
  administer during life, will pass away unwept,
  unhonored, and unsung Of such as these the
  public verdict will then be "The man who dies
  thus rich dies disgraced.

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Social Darwinism

• The term "Social Darwinism" refers to a popular
  pseudo-scientific justification for racism
• It claims that the biological theories of
  evolution and natural selection can also be
  applied to human society.
• It implies that variations between ethnic or
  racial groups are deterministic of their social
  rank and those inherently inferior to others
  should be left to die out as a result of their
  own incompetence.
• It was a popular view amongst the intellegencia
  of the day, perhaps because of its scientific
  veneer.

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The Changing Status of Labor

• A hallmark of the late 19th and early 20th
  centuries is the expanding output of American
  industry.
• Mechanization reduced the prices of manufactured
  goods, but wages fell and workers did repetitive
  tasks for long hours under strict supervision.
• The artisanal ideal of independence eroded with
  the growth of mass-production.
• Compensation through "store pay" and "scrip
  wages," redeemable only at the store owned by the
  employer, proliferated.

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Child Labor

• Industrialization, the tumultuous economy, and
  the influx of poor immigrants made cheap child
  labor an institution in all kinds of industries
  and occupations.
• Up to 25 of children were employed in
  manufacturing by 1910.
• As the Progressive Era dawned, reformers began
  addressing this issue.

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The Knights of Labor

• As corporations gained more power and
  specialization and mechanization of labor
  undermined the status of the skilled laborer,
  workers sought to organize.
• The Knights of Labor was founded as a secret
  organization in 1869.
• They garnered opposition from the more prevalent
  craft unions because they included anyone from
  any industry, including African Americans and
  women.
• They espoused a utopian vision for the future and
  advocated social reforms.
• Membership peaked in the 1880's. Many deserted
  the Knights because they felt they could get more
  done in a more narrowly focused, aggressive
  organization.

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Preamble to Constitution of the Knights of Labor

• The recent alarming development and aggression
  of aggregated wealth, which will invariably lead
  to the pauperization and hopeless degradation of
  the toiling masses, render it imperative, if we
  desire to enjoy the blessings of life, that a
  check should be placed upon its power and a
  system adopted which will secure to the laborer
  the fruits of his toil and as this much-desired
  object can only be accomplished by the thorough
  unification of labor, and the united efforts of
  those who obey the divine injunction that "In the
  sweat of thy brow shalt thou eat bread," we have
  formed the Noble Order of the Knights of Labor
  With a view of securing the organization and
  direction, by cooperative effort, of the power of
  the industrial classes calling upon all who
  believe in securing "the greatest good to the
  greatest number" to aid and assist us

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The Haymarket Affair

• Workers rallied around the idea of an 8 hour
  workday.
• On May 1, 1886, the largest spontaneous labor
  demonstration in the nation's history occurred in
  Chicago.
• Two days later, police shot and killed 2 striking
  unionists demonstrating against "scabs.
• A bomb exploded at Haymarket Square as police
  tried to break up a demonstration against the
  shooting of the unionists.
• Mass arrests of radicals followed and 8
  anarchists were convicted of the bombing under
  questionable circumstances.
• The incidents renewed fears of radicalism and led
  some employers to develop blacklists and
  strengthen their resolve against strikers'
  demands.

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The Haymarket Affair
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The American Federation of Labor

• The American Federation of Labor was founded in
  1886 by Samuel Gompers as an alliance of craft
  unions comprised of mostly skilled workers.
• The AFL focused on concrete, labor-related goals
  like increased wages and the right to collective
  bargaining.
• Unlike the Knights of Labor, the AFL did not seek
  to overturn the industrial wage and hour system
  in favor of a new social order.
• The organization became the voice of "mainstream"
  American labor.
• The AFL remained the most powerful labor
  organization until 1955, when it merged with the
  CIO.

Gompers was President of the AFL (except one
year) from 1886 to 1924.
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Selected Gompers Quotes

• It is a fact that the employing class . . .
  endeavor to get the greatest amount of labor for
  the smallest wages for which they can get
  employees. workers have always endeavored to
  get the greatest amount of money for the smallest
  amount of work.  Under these conditions it is
  impossible for capitalists and laborers to have
  common interests. ... 
• There seems to me no money is more
  dishonorable to us as a nation than that
  insatiable greed which drags the children into
  the mills and factories and grinds their young
  bones into dollars. the child of the nineteenth
  century should be something more than a machine.
  
• A strike on any scale is merely a trial of
  industrial strength, an application of the law of
   "supply and demand," How can a society based
  on free contract and free competition object to
  such a method of determining the comparative
  strength and endurance of capital and labor?
• Freedom of speech is the safety valve of
  society if it is obstructed, there will be an
  explosion somewhere. It is dangerous to tamper
  with this right of ours.

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The Pullman Strike
This paycheck amounted to 12 cents after rent and
expenses were deducted.

• The 1894 Pullman Strike is the quintessence of
  labor-management relations during the era
  corporate tycoons that was the Gilded Age.
• George Pullman, the owner of the Pullman Palace
  Car Company, provided and controlled his
  employee's lives. They lived in the town of
  Pullman, attended Pullman schools and churches,
  shopped at Pullman Stores, and used Pullman
  utilities.
• As one employee famously described it, ""We are
  born in a Pullman house, fed from the Pullman
  shops, taught in the Pullman school, catechized
  in the Pullman Church, and when we die we shall
  go to the Pullman Hell."

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The Pullman Strike

• When Pullman slashed wages to protect profits
  without lowering prices and rent , the American
  Railway Union (ARU) led by Eugene V. Debs
  initiated a massive strike and a boycott of
  trains using Pullman cars.
• The US Attorney General obtained a court
  injunction against the workers for interfering
  with the delivery of the mail and President
  Cleveland sent federal troops to enforce the
  order and crush the strike.
• Violence claimed the lives of over 30 people by
  the end of the strike.
• It was the first use of federal troops to break a
  strike.

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The Pullman Strike

• The strikers were forced to return to work on
  Pullman's terms, Debs served a prison sentence
  for disobeying the injunction, and the ARU was
  disbanded.
• The hated George Pullman died 2 years later in
  fear that his tomb would be defiled.

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"What is the chief end of man?--to get rich. In
what way?--dishonestly if we can honestly if we
must."-- Mark Twain, 1871
29

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