The Rise of Industrial America

1
The Rise of Industrial America

• 1865-1900

2
The Industrial Boom

• The Civil War and the growth of railroads in the
  1860s contributed to the start of Americas
  Second Industrial Revolution (c. 1865-1900)
• Whereas Americas First Industrial Revolution of
  the early 1800s had been characterized by steam
  powered textile factories in New England, the
  Second Industrial Revolution spread nationwide
  and was characterized by
• 1. Exploitation of vast coal reserves
  (especially in Appalachia)
• 2. Technological innovations (transportation,
  communication)
• 3. Huge demand for labor (both skilled and
  unskilled)
• 4. Intense competition that led to the rise of
  monopolies
• 5. Rapid decline of prices (both agricultural
  and industrial)
• 6. Failure of the money supply to keep pace with
  expansion

3
The Railroad Industry

• Expansion from 10,000 miles of track in 1850 to
  nearly 200,000 miles by 1900 opened up a huge
  internal market that promoted farming, commerce,
  and closure of the frontier
• Railroad companies were the first modern
  corporations sought capital through stock
  issuances, separated ownership from management,
  created national distribution and marketing
  systems, established complex accounting methods,
  and formed new organizational structures
• Railroads often went deeply into debt, relied on
  government subsidies (often in the form of real
  estate) and used questionable business practices
  to compete for business and profits owners (such
  as Jay Gould of the Union Pacific) were depicted
  as robber barons who violated the public trust
• Congress created the Interstate Commerce
  Commission in 1887 in an attempt to regulate
  railroad business practices that hurt small
  farmers and business owners in remote areas

4
Big Steel

• Andrew Carnegie led the industry in the late
  1800s thanks to the introduction of
• 1. the Bessemer steel process ? high-quality
  steel
• 2. cost-analysis ? cut back costs, higher
  profits
• 3. vertical integration ? control of every stage
  of steel production from mining iron ore and coal
  to selling the finished product ? reduced costs
  and allowed Carnegie to under-price the
  competition through economy of scale? monopoly
  control of the industry
• Overall result More steel produced and at lower
  cost (65/ton in 1875 vs. 11.50/ton in 1900)
• Carnegie sold Carnegie Steel to J.P. Morgan and
  other investors in 1900 for 500 million and
  became a major philanthropist, advocated the
  Gospel of Wealth

5
Big Oil

• John D. Rockefeller sought control of the
  expanding industry through horizontal integration
  ? control of one stage of production
  (transportation and then refineries)
• Rockefeller established the Standard Oil Trust
  (1882) to control companies that had previously
  participated in price fixing arrangements
  (controlled 90 of the industry through
  horizontal and vertical integration) emulated
  by other industries

6
Regulating Monopolies and Trusts

• 1890 Congress passed the Sherman Anti-Trust Act
  in an attempt to break up trusts and monopolies
  that were found to be operating in restraint of
  trade
• To avoid being targeted by this legislation,
  Standard Oil reorganized into a holding company,
  whereby control was no longer exercised through
  direct ownership of companies but instead through
  majority share ownership
• 1895 - the Supreme Court ruled in U.S. vs. E.C.
  Knight Company (a sugar trust) that manufacturing
  did not constitute interstate commerce and
  therefore could not be regulated ? encouraged
  further consolidation of industry into larger
  trusts

7
Invention Innovation

• Major inventions enhanced productivity and
  improved the standard of living for most
  Americans
• Singer Sewing Machine Company first mass produced
  sewing machines in the 1860s
• Alexander Graham Bell invented the telephone in
  1876 ? led to the creation of the Bell Telephone
  Co. (later, ATT)
• Thomas Edison invented the phonograph (1877),
  light bulb (1879), and developed the first power
  plant (1882) ? helped to create General Electric
  by 1892 with help from J.P. Morgan

8
Labor Issues

• Demand for labor increased as demand for goods
  increased
• One third of the workforce by the 1880s was
  unskilled (common) labor that was easily replaced
  in the event of illness or strike
• Three biggest problems low wages, long hours,
  and unsafe conditions
• Child labor was used intensively in mining and
  mill work ? lowered wages and resulted in a large
  number of crippled children
• Immigrants and women accepted low wages and were
  often considered highly dispensable (as depicted
  in The Jungle)
• Laborers were often at the mercy of laissez-faire
  capitalism, which drew upon Social Darwinism
  (survival of the fittest)

9
Excerpt from The Jungle

• There would be meat stored in great piles in
  rooms and the water from leaky roofs would drip
  over it, and thousands of rats would race about
  on it. It was too dark in these storage places to
  see well, but a man could run his hand over these
  piles of meat and sweep off handfuls of the dried
  dung of rats. These rats were nuisances, and the
  packers would put poisoned bread out for them
  they would die, and then rats, bread, and meat
  would go into the hoppers together. This is no
  fairy story and no joke the meat would be
  shoveled into carts, and the man who did the
  shoveling would not trouble to lift out a rat
  even when he saw one there were things that
  went into the sausage in comparison with which a
  poisoned rat was a tidbit.

10
The Labor Movement

• National unions emerged in the late 1800s to lead
  the charge for better working conditions
• National Labor Union (est. 1866) by William H.
  Sylvis to campaign for an 8-hour day, higher
  wages, and more recognition for women workers
• Knights of Labor (est. 1869) demanded equal pay
  for women, an end to child labor, an income tax,
  and immigration restrictions Terence Powderly
  led the union to victory in the Wabash strike of
  1883-84 but the union declined as a result of
  failed strikes and growing national concerns over
  labor violence
• American Federation of Labor (est. 1886) created
  for skilled labor Samuel Gompers led a moderate
  effort for higher pay, shorter hours, and safer
  conditions

11
Labor Strikes Violence

• Middle-class Americans grew increasingly wary of
  radical words and actions from the labor
  movement reflected a growing fear of socialism,
  Marxism, and anarchism
• Major outbreaks of violence included
• 1877 wage reductions led to a wildcat railroad
  strike in the midst of a difficult depression
  (caused by the Panic of 1873), nearly 100 died
  before U.S. troops intervened
• 1886 Haymarket Square Riot in Chicago linked to
  radical anarchists increased fears of social
  revolution
• 1892 Homestead Strike at the Carnegie Steel
  plant led to a shoot-out between strikers and
  Pinkerton agents called in to protect the plant
• 1894 Pullman Strike led by the American Railway
  Union (Eugene V. Debs), President Cleveland
  invoked the Sherman Anti-Trust Act against the
  union and broke up the strike with federal troops