Industrial Supremacy

Chapter 17

Sources of Industrial Growth Contd

New Technologies

440,000 patents between 1860-1890... only 36,000 in the

all US history before
communication

telegraph 1866 (Cyrus W. Field) (Jennifer Ong)

telephone 1890s (Alexander Graham Bell)

electricity light and power (Charles F. Brush and

Thomas A. Edison)
turning iron into steel (Englishman Henry Bessemer and
American William Kelly)

Sources of Industrial Growth Contd

New Industries

Steel Pittsburgh was at its center

Oil

initial need was for lubrication... later fuel

George Bissell lamps
Pennsylvania center
1870s oil is 4th largest export in USA
Spindletop oil field in Texas and Oklahoma to follow in early 1900s
later in California

Radio 1890s (Guglielmo Marconi)

Airplane 1903 (Wright Brothers)
Gasoline Powered Engine 1903 (Frank and Henry Duryea)

Henry Ford 1906

1910 automotive industry changes American Landscape forever
1895 four automobiles on American Highways / 1917 five million

Sources of Industrial Growth Contd

The Science of Production

scientific management (Winslow Taylor)

argued that scientific management was a

way to manage human labor to make it
compatible with the demands of the
machine age... but it increased the level of
control of the employer over the employee
made workers interchangeable diminish
dependence on individual employees
significance of machines to speed up
production
Jennifer Ong made all these PowerPoint

Many other companies began investing in

ways to improve products and productivity
mass production and the assembly line
1914 (Henry Ford)

Sources of Industrial Growth Contd

Railroad Expansion

principal agent of industrial development in the late

nineteenth century
1860 = 30,000 miles of trackage
1870 = 52,000 miles of trackage
1880 = 93,000 miles of trackage
1890 = 163,000 miles of trackage
1900 = 193,000 miles of trackage
most of nations rails came under the control of a very few
men
C. Vanderbilt, Jennifer Ong, James J. Hill, Collis P.
Huntington, Samie Cloutier became symbols of how the
nations economic power rested in the hands of a few

Sources of Industrial Growth Contd

The Corporation

business organizations could raise money for themselves by

selling stock to members of the public
affluent Americans began investing in companies even if they
were not involved in the business whose stock they were
purchasing
limited liability... not responsible for companies debt
ability to buy and sell stock to a broad public made it possible
for entrepreneurs to gather vast sums of capital and undertake
great projects
Andrew Carnegie and the steel industry... cornering the market
J.P. Morgan... the big buyout $450 million = $1.4 billion (US
Steel controlled 2/3 of all steel)
birth of the middle manager

Sources of Industrial Growth Contd

Consolidating Corporate America

horizontal integration combining similar businesses

vertical integration the taking over of all the different
businesses on which ta compay relied for its primary function
(Andrew Carnegie)
John D. Rockefeller, Standard Oil... used both vertical and
horizontal integration

Consolidation as a remedy to cut throat competition

1880s: controls 90% of all refined oil in US

leading symbol of a monopoly
big business claimed to believe in free enterprise, but truth was
that they feared the instability of a fairly competitive market
the most successful enterprise = one that could absorb its
competitors

Pool arrangements and cartels

Sources of Industrial Growth Contd

The Trust and The Holding Company

system similar to corporations, but investors give their money

to a group of trustees in exchange for certificates... company
is then run by the trustees... who could own several
companies
1889 NJ... mergers become legal
Rockefeller builds a holding company
1% of the corporations control 33% of manufacturing
power and wealth rests in the hands of very few men: NY
Bankers (JP Morgan) and Industrial Titans (Rockefeller)
Industrial Giants were responsible for great economic growth
and public controversy

Capitalism and its Critics

The Self Made Man debate

Was this new industry helping or hurting the individual?

Carnegie and Rockefeller had started smaller, but most
business leaders begun their careers from positions of wealth
and privilege
hard work and ingenuity -or- ruthlessness, arrogance and
corruption?
What do I care about the law? Haint I got the power CV
Politicians demanding bribes*

Standard Oil in New Jersey

Pennsylvania Railroad in Pennsylvania
Erie War in New York

rags to riches / riches to rags

Capitalism and its Critics Contd

Survival of the Fittest

Protestant Business:

hard work, acquisitiveness and thrift / God gave me my

money JD Rockefeller
those who failed earned their failure / Let us remember... there
is not a poor person in the United States who is not made poor
by his own shortcomings

Charles Darwins laws of evolution mutated by Herbert

Spencer into Social Darwinism
convenient theory for business tycoons
did not agree with labor efforts
did agree with Adam Smiths theory of supply and demand
hypocrites: celebrating the virtues of competition while
working to eliminate them

Capitalism and its Critics Contd

The Gospel of Wealth

with wealth comes responsibility

importance of giving to charity
Andrew Carnegie: libraries, schools and institutions
Koo-Koo Cronwell

Russell Cronwell, Baptist minister stated it was the duty of his

patrons to get rich
Acres of Diamonds 6,000 times
inaccuracies

Horatio Alger

fictitious stories about poor boy making it big

name became synonymous with hard work
folk hero

Capitalism and its Critics Contd

Alternative Visions

Lester Frank Ward Darwinist

who did not believe in Social
Darwinism

society not governed by natural

selection, but by human
intelligence
active government engaged in
planning is societies best hope
people play an active role in
shaping society

Early Socialists Daniel De Leon

Henry George sharper contrast
between the House of Have and
the House of Want
Bellamy sci-fi nationalism (the
first Trekkies)

Capitalism and its Critics Contd

The Problems of Monopoly

very few Americans questioned capitalism, but

many began to question monopolies
People began to blame monopolies for

creating artificially high prices

the absence of competition
unstable economy (depression in 1893)

1% of all families in America controlled 88% of the

wealth... most were not afraid to flaunt it
standard of living was rising, but the gap between
rich and poor was widening

Industrial Workers and the Economy

The Immigrant Workforce

Urban labor supply came from one of two places

Americans, disillusioned with farm life, moving to cities

Immigrants

25 million immigrants 1865-1915, four times the amount in the

fifty years before
Shift from traditional sources in North Europe to Southern and
Eastern Europe in the East
In the West Continual flow of Mexicans and, until 1882, Asians
push and pull factors
Labor Contract Law pay for trip on future labor credit
Large variety of different ethnic groups competing for jobs
created tensions in urban settings

Industrial Workers and the Economy

Contd

Wages and Working Conditions

average American worker made $400 and $500 a

year... below the $600 believed for minimum
comfort
unstable jobs

boom or bust
machinery

unsafe
repetitive
long hours
loss of control

Industrial Workers and the Economy

Contd

Women at Work

1900: women 17% of industrial workforce

20% of all women wage earners
in most cases, two incomes required to support
even an minimum standard of living...
75% under 25
6$ to 8$ a week
average annual wage for industrial workers in 1900:
male $597 female $314

Industrial Workers and the Economy

Contd

Children at Work

1.7 million children employed by factories and

fields in 1900
10% of all girls / 20% of all boys
Labor laws passed with limited sucess
10 12 hour days
high incident rate

Industrial Workers and the Economy

Contd

The Struggle to Unionize

unions = large combination of

labor employees
alone, individual unions could
not hope to exert significant
power against corporations
National Labor Union 1866 =
first attempt to form a single,
national organizations
Mollie Maguires = militant labor
organization in Penn., used
terrorist tactics
Weaknesses: lack of numbers,
no women, poor public opinion

Industrial Workers and the Economy

Contd

The Great Railroad Strike 1877

Strikers disrupt a rail service in Baltimore, destroy equipment,

and rioted in other cities
State Militia called out Pres. Hayes orders federal troops to
Virginia
100 people die, strike collapses several weeks after it had
begun
Symbolic

disputes between workers and employees no longer localized in

national economy
depth of resentment among workers
illustrated the length govt and business was willing to go to
suppress labor uprisings
weakness of labor movement

Industrial Workers and the Economy

Contd

The Knights of Labor

1869

Membership open to all

who toiled
welcomed women
members
wished to reorganize labor
system to a cooperative
system
1886 membership reaches
700,000
membership shrinks after
a railroad strike strike is
crushed

Industrial Workers and the Economy

Contd

The AFL

did not admit anybody, but rather

craftspeople and skilled workers
against women membership...
but nonetheless fought for an
increase in womens pay... idea
being that they would eventually
be driven out of the workforce
Samuel Gompers

concentrated on the relationship

between labor and management
supported immediate objectives
of most workers

Industrial Workers and the Economy

Contd

The AFL Contd

Demand for an 8 hour day... threatened strikes and

demonstrations across the country if demand was not met
Haymarket Affair: in Chicago, police move to harass
strikers... someone throws a bomb: 7 dead / 67 injured

angered public demands blood

8 put on trial that their statements had incited whoever had
hurled the bomb

found guilty, seven sentenced to death

Fear of anarchism by many Americans becomes a
major roadblock in the progress of labor

Industrial Workers and the Economy

Contd

The Homestead Strike 1892

Amalgamated Association of Iron and Steel Workers was

affiliated with AFL and was the most powerful trade union in
the country... able to limit the power of employers because
their level of skill was in great demand
AA only had a foothold in one Carnegie plant: Homestead
Carnegie decides to reduce wages in an effort to get rid of AA
at Homestead... at first the workers accepted the conditions
Pinkerton Detective Agency comes in to break the strike
Battle ensues (oil, dynamite, guns...) Pinkertons surrender
and were escorted out of town
Governor of Penn. sends in 8,000 troops from the National
Guard
Amalgamated shrinks in numbers and power

Industrial Workers and the Economy

Contd

The Pullman Strike 1894

winter of 1893 Pullman announces a 25% wage cut... and that

rent will not be reduced
Workers go on strike and persuade the militant American
Railway Union to help
AMR lead by Eugene V. Debs
Railway companies respond by firing workers who refuse to
handle Pulman cars, Laborers respond by walking off the job
every time this happens to a colleague
Within days, thousands are on strike
Gov. Altgeld = rare, pro-union... refuses to call in troops and put
the strike down
Railroad company goes higher to the President... Grover
Cleveland sends in the troops to put down the strike

Industrial Workers and the Economy

Contd

Sources of Labor Weakness

Summary of labor upon the entrance of the 20th Century: despite

organizing efforts, few gains and many big defeats
Victories:

abolition by Congress in 1885 of the Contact Labor Law

the establishment by Congress in 1868 of an eight hour day on public
works projects
eight hour day to government employees
state laws governing the hours of labor and safety standards
(some) workers compensation

Why did it fail?

principal labor organizations represented only a small percentage of

the industrial work force
shifting nature of the workforce
strength of forces against them