Chapter 16 Rise of Industrial America

The Emergence of Big Business

  • Sources of the Industrial Revolution

Enormous quantities of two essential items for industrialization

1. Raw Materials

2. Cheap labor

New Technology/Inventions

Government policy-Laissez-faire

From1870-1900 Govt. did very little domestically

Main Duties:

*Deliver the Mail

*Maintain a national military

*Collect taxes and tariffs

*Conduct foreign policy

EXCEPTION: administer/distribute the annual Civil War veterans pension

  • The Railroads

The “original” big business

  • Modern Business Practices

Advantage of incorporating & issuing stock- raise huge amounts of capital

Other businesses will borrow ideas from RR industries

Development of modern management

Standardization to be more efficient

Time Zones

Equipment

Standard gauge

Complex hierarchies to run business

  • Rising Concern over Corporate Power

Monopoly-control of an industry or market by one corporation

Fears

Too much power in the hands of a few?

Conflict of nation’s republican values?

Corruption of officials?

Price fixing on farmers

  • Andrew Carnegie:

Steel: most important for growth

AC

Rags to riches story

Carnegie Steel 1870-1900

Reduce production costs to lowest possible level

Hire only the best

Technology/reduce skilled labor

Vertical integration & horizontal integration

Cutthroat practices to out maneuver competition

Carnegie Steel becomes world’s largest industrial corporation

Eventually sold to JP Morgan for $400 million…became US Steel

  • Rockefeller & Standard Oil Trust

Vertical & horizontal integration of petroleum industry

Controlled all from production to retail AND controlled by merger all companies into one giant system: the TRUST (Standard Oil controlled 90% of oil industry)

US Government moves away from laissez faire:

1887: Interstate Commerce Commission to curb power

No Power/15 out of 16 cases in favor of BB!!!!!

1890: Sherman Anti-Trust Act

Prohibits monopolistic behavior ANYTHING IN ‘RESTRAINT OF TRADE’

IRONY: COURTS USED IT USUALLY TO RULE THAT LABOR STRIKES/WORK STOPPAGES WERE IN RESTRAINT OF TRADE

Only 14 cases prosecuted 1890-1914

Rock created holding companies to counter anti-trust laws

The World of Work Transformed

  • The Impact of New Technology

Machinery transformed skilled labor into unskilled

Workers easily fired & replaced

Low wages & long hours

***Employers enjoyed more power over their employee due to workers being expendable*****

The World of Work Transformed cont.

  • Hard Times for Industrial Workers

Long hours & low pay

2 hrs/6 days a week

Avg. $400-500 a year but $600-800 decent living

Make up difference/work at home with family

Economic Depressions (1873-1877 & 1893-97)

Contraction of growth

High rates of unemployment (14%)

Business failure

Monotonous work

Dangerous workplace

35,000 killed on avg. a year (1880-1900)

Child labor/180,000 to 1.7 million (1880-1900

  • Intimidation & Conflict

National Labor Union founded in 1866

Formed to create an 8 hour day/Dept. of Labor (300,000 members

Depression wiped out union

Employers response to unions

Blacklist

Scabs

Strike breakers

36,757 strikes between 1881-1905/ 6 million workers

Great Railroad Strike of 1877

Division among unions

Chinese Exclusion Act of 1882

Halted Chinese immigration, limited civil rights of Chinese, forbade naturalization of Chinese

Anti-black

Conflicting Visions of Industrial Capitalism

  • Capitalism Championed

New cheap consumer goods to phonographs

Increased life expectancy (38.3 in 1850 to 50 in 1910)

Transportation & communication

Wages rose 50 % between 1860-1900

Andrew Carnegie

Gospel of Wealth- importance of philanthropy

Social Darwinism

Business men invoked the high-jacked theories of Charles Darwin…what became known as Social Darwinism

“Survival of the Fittest”-Herbert Spencer

  • Capitalism Criticized

Growing gap between Haves and Have-nots

  • Power in Numbers: Organized Labor

Knights of Labor founded in 1869

formed in attempted to completely reformed wage labor system/UTOPIAN agenda

Led by Terrence Powderly, Uriah Stephens

All inclusive union that worked to abolish child and convict labor, equal pay for women, progressive income tax, and cooperative ownership of mines/factories

10% black & 10% women

Lost support after the Haymarket Riot

Lost many members to a new organization AFL

American Federation of Labor
(AFL)

1886: Led by Samuel Gompers

Organized only for SKILLED workers

Did not seek labor reform as much as basic economic goals

“Bread and Butter Issues”

  • The Great Upheaval

Haymarket Strike- 1866

Thousands gathered in Chicago during a general strike

Bomb! Police and strikers were killed and injured

Trial! Conviction! Execution!

Consequence: labor unions were radical and violent!!! Membership/support for labor issues began to diminish

Homestead Strike-1892

Pullman Strike-1894

Led by Eugene Debs

Pullman 1894: wage cuts and