History: Chapter 17 Outline

Chapter 17: The Rise of Industrial America, 1865-1900

1.   The Business of Railroads

a.  Railroads = most important factor in economy

                         i.   Promoted growth of other industries

                       ii.   Creation of modern stockholder corporation, dev’p of complex structures in finance, business mgmt, and the regulation of competion

b.Eastern Trunk Lines

                    i.       Trunk line was the major route b/w large cities.

                   ii.       Vandirbilt merged local RxR into the NY Central R.R (1867)

1.     Ran from NYC to Chicago

c.      Western Railroads

                    i.     Played critical role in the trans-Mississippi West bye

1.     Promoting settlement on the Great Plains

2.     Linking the West w/ the East- creating one great nat’l market

                                              ii.     Federal land grants

1.     Gov’t gave loans and land grants to RxR companies b/c they would lead to settlement.

a.     170 million acres given

b.     Sell land to new settlers, get money for RxR companies, completed RxR would increase the value of gov’t lands and provide preferred rates for carrying mail and transporting troops.

2.     Also negative effects

a.     Promoted hasty and poor contraction

b.     Led to widespread corruption in all levels of gov’t

c.      Credit Mobilier

                                            iii.     Transcontinental railroads

1.     Union Pacific- Build westward across the Great Plains, starting from Omaha, Nebraska

a.     General Grenville Dodge

b.     Used war veterans and Irish immigrants

2.     Central Pacific- Mtn. passes in the Sierras by pushing eastward from Sacramento, CA.

a.     Charles Crocker

b.     Chinese immigrants

3.     Came together ion May 10, 1869 @ Promontory Point, UT.

a.     Golden spike

4.     Other RxRs before 1900

a.     Southern Pacific (New Orleans to Los Angeles) 1883

b.     Atchison, Topeka, and Santa Fe (between Kansas City and Los Angeles) 1883

c.      Northern Pacific: (Duluth, MN and Seattle, WA) 1883

d.     Great Northern (St. Paul, MN and Seattle) 1893

d.     Competition and Consolidation

                                               i.     Overbuilding + mismanagement + fraud = Bankruptcy for RxR companies.

1.     Jay Gould abused system

2.     Compete by offering discounts, favored shippers, overcharged small costumers (like farmers)

3.     Formed pools, secretly fix rates, share costumers

                                              ii.     Panic in 1893- ¼ of all RxRs in bankruptcy

1.     J. Pierpont Morgan, other bankers took control.

a.     Stabilize rates, reduce debts.

2.     By 1900- seven RxR gians

a.     RxR monopolies

                                            iii.     Small costumers felt victimized by RxRs

1.     Granger Laws in Midwest- overturned

2.     Interstate Commerce Act of 1886- first ineffective.

2.     Industrial Empires

a.     The Steel Industry

                                               i.     Henry Bessemer in England, William Kelly in the US

1.     Blasting air through molten iron produces high-quality steel

2.     Great Lakes region abundant in coal reserves

3.     Access to iron ore of MN’s Mesabi Range

                                              ii.     Andrew Carnegie

1.     1870s- started manufacturing steel in Pittsburgh.

a.     Vertical integration- control every stage of the industrial process, from mining the raw materials to transporting the finished product.

                                            iii.     U.S. Steel Coporation

1.     Carnegie sold his company in 1900 for over 400 million to a new steel como headed by J.P. Morgan.

a.     United States Steel- first billion dollar company, largest enterprise in the world.

b.     Controlled over 3/5 of the nation’s steel business.

b.     The Oil Industry

                                               i.     1859- first US oil well drilled by Edwin Drake in PA

                                              ii.     1863- John D. Rockefeller founded an oil company.

                                            iii.     Rockefeller and the Standard Oil Trust

1.     Took control by using latest technologies and efficient practices.

2.     Rebates from RxRs and temporarily cut prices for Standard Oil kerosene- force rival companies to sell out.

3.     By 1881- controlled 90% of the oil refinery business.

4.     Horizontal integration- competitors bought out

a.     Able to control supply and prices of oil products

5.     Kept prices cheap b/c of the elimination of waste in the production

c.      Antitrust Movement

                                               i.     Middle class feared unchecked power

                                              ii.     Urban elites (old wealth) hated the increasing influence of the new rich.

                                            iii.     Moved Congress to pass the Sherman Antitrust Act- 1890

1.     Prohibited any contract, combination, in the form of trust or otherwise, or conspiracy in the restraint of trade or commerce.

                                            iv.     Federal law against monopolies.

1.     Didn’t stop them from forming

                                              v.     United States vs. E.C. Knight Co (1895)

1.     Antitrust Act only applied to commerce, not manufacturing.

3.     Laissez-Faire Capitalism

a.     Conservative Economic Theories

                                               i.     If the gov’t kept it’s hands off, businesses would be motivated by their own self-interest to offer improved goods and services at low prices.

                                              ii.     Social Darwism

1.     Natural selection and the survival o fhte fittest should be applied to the marketplace.

                                            iii.     Gospel of wealth

1.     Religion more convincing to explain wealth

a.     Protestant work ethic, Rockefeller

4.     Technology and Innovations

a.     Inventions

                                               i.     Telegraph by Samuel F.B. Morse 1844

                                              ii.     Transatlantic cable by Cyrus W. Field 1866

                                            iii.     Telephone by Alexander Graham Bell in 1876

                                            iv.     Typewriter 1867

                                              v.     Cash register 1879

                                            vi.     Calculating machine 1887

                                           vii.     Adding machine 1888

                                         viii.     Camera by George Eastman Kodak 1888

                                            ix.     Fountain pen by Lewis E. Waterman 1884

                                              x.     Safety razor and blade by King Gillette 1895

b.     Edison and Westinghouse

                                               i.     Edison: Machine for recording votes, phonograph, incandescent lamp, dynamo for electric power, mimeograph machine, motion picture camera.

                                              ii.     Westinghouse: 400 patents, air brake for RxRs, high-voltage alternating current.

c.      Marketing Consumer Goods

                                               i.     R.H Macy, Marshall Field- department stores

                                              ii.     Frank Woolworth- Five and Ten Cent store = chains

                                            iii.     Sears, Roebuck and Montgomery Ward = mail-order companies that used rail system, catalogs- “wish book”

                                            iv.     Brand food names- Kellogg, Post

                                              v.     Canning- mass produced meat and veggies

5.     Impact of Industrialization

a.     The Concentration of Wealth

                                               i.     By 1890s- 10% of US population controlled 9/10 of the nation’s wealth.

                                              ii.     Horatio Alger myth

1.     Novels portrayed a young man of modest means- became reach and successful.

2.     Rags to riches possible, but rare.

b.     The Expanding Middle Class

                                               i.     Wage Earners

1.       By 1900- 2/3 of all working Americans worked for wages

a.     10 hours a day, six days a week.

b.     Low wages, additional income from women and children

                                              ii.     Working Women

1.     1/5 women working for wages

a.     Young and single, 5% married

2.     If feasible, women should be at home raising children

3.     Often limited to factory work

                                            iii.     Labor Discontent

1.     Many workplaces dangerous (RxR, mining)

2.     Unstable

3.     Absences and quitting were the most common forms of protest against intolerable working conditions.

4.     20% of those in industrial working place quit

6.     The Struggle for Organized Labor

a.     Industrial Warfare

                                               i.     Strikes controlled by strikebreakers- jobless and desparate

1.     The lockout- closing factory to break a labor movement before it could get organized

2.     Blacklists- names on prounion workers circulated among employers

3.     Yellow-dog contracts workers being told, as a condition for employment, that they must sign an agreement not to join a union

4.     Calling in private guards and state militia to put down strikes

5.     Obtaining court injunctions against strikes

6.     Great Railroad strike of 1877

a.     RxR companies cut wages to reduce costs

b.     Strike in 11 states

c.      Ruther B Hayes used fed. Troops to end violence (1^st time)

b.     Attempts to Organize National Unions

                                               i.     National Labor Union

1.     1866- first to organize all workers

2.     Higher wages, 8 hour day, equal rights for women and blacks, monetary reform, worker cooperatives.

                                              ii.     Knights of Labor

1.     1869 as a secret society to avoid detection by employers.

2.     Leadership of Terence V. Powderly, went public in 1881.

a.     Worker cooperatives to make each man his own employer, abolition of child labor, and abolition of trusts and monopolies.

                                            iii.     Haymarket bombing

1.     Meeting for a general strike- police try to break it up, someone threw a bomb

2.     May 4, 1886.

3.     Knights of Labor lose support

                                            iv.     American Federation of Labor

1.     Practical economic goals

2.     1886 as an association of 25 craft unions.

3.     Samuel Gompers-higher wages, improved working conditions

c.      Strikebreaking in the 1890s

                                               i.     Homestead strike

1.     Henry Clay Frick- manager of Carnegie’s Homestead Steel Plant near Pittsburgh, stopped a strike by cutting wages by 20%.

a.     Used lockout, guards, strikebreakers

                                              ii.     Pullman strike

1.     Eugene V. Debs told workers not to handle any trains w/ Pullman cars.  Went across the country.

2.     Arrested for not following orders of stopping boycott and the strike.

3.     In re Debs (1895)- Supreme Court approved injuction against strikes.