Vijay Nambiar AP US History D Block Chapter 17 Outline Source of Industrial Growth A. Industrial Technologies a.

Most Important technological development= Iron+ Steel Production i. Iron developed slowly b/c of demand for rails for railroads, steel didnt really develop @ all 1. 1870s-80s = production increase b. Steel increased b/c of Henry Bessemer, and William Kelly who developed a process for converting iron into steel (Blowing air into molten iron to get rid of impurities) 1. Improved by the discoveries of R. Mushet and A.S. Hewitt ( Mushet= add ingredients, Hewitt= Open Hearth which largely supplanted Bessemer process) c. Steel industry began in in W. PA + E. OH i. B/c Iron industry was well established there ii. Also b/c those areas had fuel need to form Steel 1. Pittsburgh= center of the Steel world iii. b/c industry grew fast -> necessity to find new source s of fuel 1. upper MI, Masabi Range MN, Birmingham AL a. New Steel Centers = Cleveland, Detroit, Chicago and Birmingham iv. Furnaces changed after civil war-> Became taller and could produce more d. As steel industry spread, new transportation supported it i. Steam freighters helped steel production b/c they carried ore 1. Increase in demand lead to stronger steam engines and heavier freighters ii. Strong Relationship between steel industry and Railroads 1. Steel provided parts for railroads and cars, railroad cars helped transport steel to steel manufacturers a. Relationship became stronger i. i.e PA Railroad created the PA steel company iii. Steel Industry led to creation of another important industry 1. Petroleum a. Useful for burning and lubricating ( discovered by G. Bissell) 2. By 1870 oil became one of the nations largest exports B. The Airplane and the Automobile

a. One innovation w/ large impact on the US was the automobile i. Two technologies were needed= Gasoline + Internal Combustion engine (developed in Fr. Ger. Austria) 1. 1870, N. August Otto created four stroke engine- precursor to automobile engines a. G. Daimler, Ottos employees, perfected it for automobiles 2. American automobile industry increased quickly after these breakthroughs; a. C & F Duryea created first gas driven automobile b. Henry Ford produced cars -> led to the company Ford ii. By 1910, automobile industry was a driving force in the economy 1. Reshaped Americas culture, social life and landscape b. Quest for Flight had been going on for ages i. Many tried balloon/ kites 1. Among those many were the Wright brothers a. Tried making a vehicle powered by an internal combustion engine i. Made celebrated flight @ Kitty hawk 1. Improved over time ii. Although first in flight; slow to gain foothold in America, mostly in France 1. US created NACA (National Advisory Committee on Aeronautics) in 1915 2. Planes became significant in World War I iii. Commercial flight was not anticipated until 1920 C. Research and Development a. Rapid Development convinced business leaders to sponsor their own research in order to keep up w/ the changes i. i.e G.E (General Electricity) b. Difference between scientists and engineers emerged i. Engineers= research for corporations ii. Scientists: basic research w/no immediate practical application c. Universities transformed as well in the 19th C i. One change = link between University and industrial economy 1. University labs received funding from corporations in order to obtain research that appeared interesting to them D. The Science of Production a. Changes in production= essential to growth of automobile industry i. By turn of century, industrialists used scientific management 1. i.e Taylorism a. named after F.W. Taylor who believed management was a way to manage human labor; make it compatible w/ the machines i. Also used increase control of work places

b. Taylor urged that employers reorganize production by subdividing tasks to speed up production and make workers interchangeable i. If used properly; machines and employees work w/ greater speed and efficiency ii. Manufacturers put greater emphasis on industrial research 1. Companies started forming their own Laboratories b. Most important Change in production of technology = mass production + moving assembly line i. Introduced by Henry Ford in 1914 1. Lowered time and allowed for increased wages for his workers + reduced hours as well E. Railroad Expansion a. One main cause of industrial development = railroad expansion i. Promoted economic growth b/c they were the method of transportation 1. also gave industrialists access to other markets b. Every decade total railroad trackage increased severely; i. 30,000->52,000->93,000->163,000->193,000 c. Economic power controlled by individuals i. i.e Vanderbilt, J.J. Hill, C.P. Huntington 1. Less important for individuals than for its contribution to the growth of the modern corporation F. The Corporation a. Various forms of corporations since colonial times i. Modern Corporation came after Civil War 1. When industrialists realized a single person couldnt finance their great ventures b. Companies began to sell stock, customers though that it was a good investment i. Also appealing b/c Limited liability (only risked their value, not entire company) c. This began in the rail road industry i. Spread into the steel industry w/ central figure Andre Carnegie (an immigrant from Scotland-> worked his way up) 1. Eventually controlled processing of his steel from the mine to the market ii. Eventually, Carnegie sold his company to J. P. Morgan for 45 million dollars 1. Morgan formed the USSC (United States steel Corporation, which had a value of 1.4 billion dollars) d. With new corporation came a new Managing system i. Divided responsibility, control hierarchy, cost-accounting procedures, and middle manager between owners and labor introduced. e. Efficient administrative capabilities lead to the feature of consolidation

G. Consolidating Corporate America a. Two Methods for creating consolidated organizations i. Horizontal Integration- combining firms engaged in same enterprise into one corporation 1. i.e; Consolidation of Railroad lines into one company ii. Vertical Integration- Taking different businesses on which a company relied on for its main function 1. i.e; Carnegie Steel b. Most celebrated corporate empire= Rockefellers Standard Oil i. Combo of vertical and horizontal integration ii. Made in Cleveland, shortly after the civil war, eliminated completion and allied himself w/ wealth capitalists in order to buy out other refineries 1. Standard Oil Company of Ohio formed in 1870 a. Gained 25 refineries in Cleveland, Pittsburgh, Philadelphia, New York, and Baltimore i. This was Horizontal Integration iii. Vertical expansion 1. Built his own barrel factories, terminal warehouses, and pipelines a. Eventually was able to own transport and product together iv. Consolidation was seen as a way to cope with the modern economy 1. Need to overpower opponents H. The Trust and Holding Company a. Failure of pools (informal agreements among companies to stabilize rates and divide markets) led to new techniques of consolidation based less on cooperation i. 1st most successful technique= the trust 1. Made by Standard oil, perfected by J.P. Morgan 2. Term for ant great economic combination a. Type of organization- in trust agreement stock holders gave stocks to group of trustees in exchange for shares in the trust rd b. 1889, NJ produced 3 form of consolidation; allowed companies to buy other companies i. Other states soon followed 1. Trust became unnecessary + actual company mergers were allowed 2. Holding Companies a. emerged as corporate body to buy up stock and establish formal ownership of corporations in trust th c. End of 19 C, 1 % of corporations in America were able to control > 33 % of manufacturing i. System of economic organization was forming 1. put people such as J.P. Morgan and Rockefeller in power th d. 19 C time of substantial economic growth

i. Integrating options, cutting costs, making a new industrial infrastructure, stimulating markets, and opening the way to large-scale mass production 1. Led to large controversies as well Capitalism and Its Critics A. The Self-Made Man a. Modern Capitalism was rationalized by the idea of individualism i. New economy provide every individual with a chance to succeed and gain wealth 1. Some truth in this statement; large increase in # of Millionaires from civil war to 1892 a. Some of them were examples of the self-made man i. i.e. Rockefeller and Harriman b. However most business tycoons began their careers from positions of wealth 2. Rise to power of these men was not always based on hard work a. Sometimes based on ruthlessness, arrogance, and corruption i. Seen in Cornelius and William Vanderbilt 1. They were in control, had power b/c they helped political parties b. Average industrialist of the time wasnt as successful as Rockefeller or Vanderbilt i. Modest entrepreneur in risky ventures w/ an unstable economy w/ fragmented and competitive industries B. Survival of the Fittest a. Most tycoons liked to claim they attained wealth through hard work i. Thinking @ time; those who gained success deserved it 1. Led to ideas of social Darwinism a. As fittest survived in evolution, fittest flourished in market place b. Theorys first proponent= Hebert Spencer, from England (said that society benefited from elimination of the unfit) i. In America, theory supported by William Graham Sumner (same ideas w/ minor differences) c. Social Darwinism was appealing to businessmen i. b/c it legitimized an confirmed their success and virtues (accordingly) 1. Also justified their tactics ii. Unions would fail at asking for labor increases b/c economic life was governed by its own form of natural law 1. Also conceded w/ law of Supply and Demand d. Social Darwinism didnt have much to do w/ realities of the corporate economy i. While embracing competition, companies were simultaneously trying to prevent being harmed by competition

1. Most American businessmen feared vicious competition C. The Gospel of Wealth a. The Gospel of Wealth, written by Andrew Carnegie in 1901 i. Said that the wealthy should consider excess revenues as trust funds 1. Use it for the community b. Carnegies idea went well w/ the idea that wealth was available to all i. Ideas taken by Russell H. Conwell 1. Told stories of Poor people who went from rags to riches c. Success story was promoted by Horatio Alger i. Wrote hundreds of books with the different titles 1. Same meaning= Poor boy from a small town went to seek his fortune D. Alternative Visions a. Philosophies challenging corporate ethos i. One of them game from Lester Frank Ward 1. Disregarded Darwinian laws to human society a. Argued that Humans were not governed by natural selection, but rather human intelligence i. Believed in an Active government ii. Socialist Labor Party gained a following By Daniel De Leon 1. Split in 1901 into the American Labor Party iii. One of the many influential radicals was Henry George 1. Progress and Poverty;; George explained why poverty existed amidst the wealth created by modern industry a. Blamed this on ability of a few monopolists to grow wealthy as a result of rising land values b. Rival of George was Edward Bellamy i. Wrote Looking Backward in 1888 1. Wrote a story similar to Rip van Winkle, but society had merged into one corporate organization as a great big trust a. No class divisions i. Known as Fraternal Cooperation E. Problems of Monopoly a. Few Americans shared views of those who questioned capitalism i. People were however growing concerned about monopoly 1. Attack led by Laborers, farmers, consumers, small manufacturers, conservative bankers and financiers, and advocates of radical change a. Blamed Monopoly for making high prices and producing an unstable economy 2. Without competition, monopolistic industries could charge whatever they wanted (i.e railroads) a. High prices contributed to instability and supply outpaced demand

3. 1873- erratic fluctuation of economy a. Sever recessions every 5-6 years i. 1893 system seemed on verge of Collapse ii. Adding to resentment of monopoly was emergence of class of enormously wealthy people 1. Some lived in simplicity ( A. Carnegie) while others lived lavish life styles(i.e Vanderbilt family) iii. 4/5 of America was watching these displays of wealth 1. 10 million people accepted poverty a. Sense of relative depravation was frustrating Industrial Workers in the New Economy A. Industrial workforce expanded greatly in the L8 19th C a. This is b/c of massive immigration into industrial cities i. 2 types of immigration 1. Rural Americans who went into the factories for new economic opportunities 2. Immigrants from Mexico, Asia, Canada, and Europe flooded the US in the decades after the civil war ii. New Sources of immigration by the end of century; S & E European Countries (Italy, Poland, Greece, etc.) b. New immigrants came to escape poverty in their home lands. i. Expectations were realistic but often result of false promises; Railroad companies gave misleading information about the company 1. Employers use labor contract law which allowed them to pay for passage of workers in advance and deduct amount later from their wages c. Introduction of these new groups led to higher racial tension b/c of job displacement B. Wages and Working Conditions a. Avg. Standard of living of workers rose after Civil War i. Return for their labor remained small ( Avg. Income was $400-$500) 1. + Not much Job security a. Few Workers ever very far from poverty b. Laborers faced more hardships i. 1st gen. workers had to adjust to modern labor w/ its repetitive task requiring little skill 1. Demeaning to Artisans ii. Worked 10hrs a day six days a week (12hrs in the steel industry) iii. Situations were often dangerous , and compensation to victims was limited c. Factory labor ,for many workers, = loss of control of their work

i. As corporate form of organization spread they put more managers and workers had no authority or control b/c it might disrupt the flow of production C. Women and Children at Work a. Decrease in necessity for skilled workers led employers to hire women and children, who would work for lower wages (1900-> 17% of work force was women) i. Did so in order to add more money for the family 1. There was still aversion to married women working, so many families kept wife at home b. Women workers were mostly white, and mostly under 25 years of age i. Immigrants / Daughters of Immigrants ii. Worked in many industries, but most women worked in particular industries where they used unskilled labor iii. Worked for $6-$8 a well ( below necessary amount to survive+ below what men received) c. 1.7 Million children under sixteen were employed in 1900 i. Under Pressure, 38 state legislatures passed child labor laws 1. they had limited impact ii. 60% child workers employed in agriculture 1. 12 hour days 2. Age restriction was must be 12 or older iii. Conditions were bad for children, were kept working for hours, sometimes even through nights 1. Led to deaths and injuries d. Even though women and children had bad conditions, the working mens working condition werent any better D. Struggle to Unionize a. Labor attempted to fight back against their employers by making unions b. There had been unions since before the civil war c. Attempt to form one large union in 1866 i. William H. Sylvis founded National Labor union 1. Disintegrated after Panic of 1873 ii. Excluded women, b/c they were thought to be the reason to drive down their wages d. Unions faced difficulties during the recession years of the 1870s b/c of unemployment and middle-class hostility towards the union E. The Great Railroad Strike a. Railroad strike began in 1877, when eastern railroads announced a 10% wage cut which led to a class war i. Strikers disrupted rail service from Baltimore to St. Louis b. In July, President Rutherford B. Hayes ordered federal troops to suppress the disorders in W. Virginia i. After 100 people died, the strike collapsed

c. Great Railroad Strike was Americas first major labor conflict i. Illustrated how disputes between workers and employers could no longer could no longer be localized in the increasingly national economy d. Failure of strike weakened the rail road unions and damaged the reputation of labor organization in other industries as well F. The Knights of Labor a. First major effort to create a national labor organization was the founding of the Noble order of the Knights of Labor i. Leader was Uriah S. Stephens 1. Membership was open to all who toiled (Most workers and some business people) a. Excluded lawyers, bankers, liquor deals, and gamblers b. Included women as well b. Loosely organized group , and met in a nation general assembly i. Vague program, wanted to change working hours and child labor, but leaders wanted long-range reform 1. Wanted to replace wage system w/ cooperative system c. Remained secret until 1870 when T.V Powderly moved it into the public d. Won victory in 1885 when restore wage cuts and recognize union in the Missouri pacific link in the Gould system i. Short lived b/ they were crushed on another Gould system rail road , Texas and Pacific 1. 1890 group shrunk from 700,000 to 100,000 and eventually disappeared G. a. Rival organization of Knights came before its decline i. Federation of Organized trade and labor Union of the United States and Canada 1. Change its name to the American Labor Federation b. Rejected idea of one big union i. Basically multiple unions which represented skilled workers c. Opposed females b/c women brought down wages i. Although hostile towards women, AFL sought equal pay for men and women d. Agenda of the AFL- secure for workers a greater share of capitalisms material rewards i. Concentrated itself on relationship between labor and management ii. One of its first demands= 8 hour work day 1. Said they would strike if not achieved by May 1886 a. Chicago- strike started @ McCormick Harvester Company i. People died, 7 officers killed by a bomb, 67 injured, + 4 others killed by police shooting into the crowd b. Conservative Americans demanded retribution i. 8 people convicted in an injudicious trial, 7 sentenced to death e. Haymarket Bombing was a symbol of social chaos and radicalism

Anarchism = obstacle against AFL i. Radicals accused of anarchism no matter what they tried H. The homestead Strike a. The Amalgamated Association of Iron and Steel Workers (craft union in AFL) was the most powerful trade union in the country i. Members= skilled worker b. 1880s (mid), steel industry introduced new production methods and new patterns of organization i. Reduced companys dependence on skilled labor c. AAISW had foothold in one of Carnegies factories= Homestead Plant i. Carnegie and H.C. Frick decide AAISW had to go 1. Cut wages at Homestead d. 1892 when Frick gave 2 days for them to accept a wage cut, Amalgamated called for a strike i. Frick shut down the pant and called for 300 troops from the Pinkerton detective agency ( which was known to stop strikes) 1. Approached plant by July a. Strikers lit water on fire and took guns i. After 3 hours , Pinkertons surrendered e. Victory was only temporary i. 8,000 troops of the National Guard were sent ii. Public view of union changed when there was an attempt to assassinate Frick f. By 1900 every steel company broke w/ AAISW i. AFL unions were powerless in face of these charges I. The Pullman Strike a. Occurred in 1894 i. Pullman Palace Car Company manufactured sleeping and parlor cars for railroads b. Winter of 1893-1894Pillman Company cut wages by 25% i. Said b/c the declining revenues the depression was causing 1. Refused to reduce rents in model town c. Workers went on strike and persuade the ARU, led by Eugene V. Debs, to support them i. General Managers Association opposed them 1. Told member companies to discharge switchmen who refused to handle Pullman cars a. When this happened, Debs told his members who worked for offending companies to quit their jobs d. Most states responded readily to appeals from strike-threatened businesses i. Different in Illinois 1. Governor= John Peter Altgeld, supported worker unions a. Against his objections, President Grover Cleveland and Attorney General Richard Olney sent troops

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e. Debs and his followers defied an injunction forbidding the union to continue i. All of them were arrested and imprisoned Sources of Labor Weakness a. Late 19th C were years where labor made few gains, but suffered harsh losses i. In the expanding economy , wages rose, but not too much 1. Didnt keep up with the rising cost of living ii. Labor leaders won some legislative victories 1. Abolition of Contract labor law by Congress in 1885 2. And the establishment 8 hour work days ( 1 in 1868, 0ther in 1892) iii. End of Century however, found workers w/ less political power than they had in 40 years before b. Workers failed to make greater gains for multiple reasons i. Principal labor organizations represented only a small percentage of the industrial work force. ii. Ethnic tension and racial groups kept laborers divided iii. Shifting nature of the Work force 1. Immigrants intended to stay shortly a. Their assumption that they had no long term plans to stay eroded thoughts of organizing 2. Workers in general tended to move a lot iv. They couldnt match w/ the powerful and the wealthy corporations of the time