Ch 24 Rise of Industry

RRs, Industrialization, Immigration, Labor Unions

Post Civil War RR expansion

• Some RR production from 1840-65• Post CW RR production skyrocketed.– Congress encouraged w/ land grants totaling over

155million acres.– Cos were allowed 10 mile wide strips of land,

mapped in alternating 1 mi square sections some to keep & some to sell• Cleveland stopped practice 1887

– Towns where RR came through became sprawling cities; those skipped by RRs bcm ghost towns

Transcontinental RR• When south seceded congress commissioned

Union Pacific RR for the northern route– Omaha, NE to CA 1862– Co received huge $$ grants to build but Credit

Mobilier netted 23 mill in profits• Central Pacific RR in CA built eastbound route– Irish hired to lay westward route; Chinese hired to lay

eastern route.• RR workers defended tracks from Indian attacks• Averaged 7-10 miles of track per day• Central Pac backed by ‘Big 4’: (with)

– Leland Stanford (ex gov CA)& Collis P. Huntington (lobbyist)

RRs (3)

• Central Pac also had to drill through Sierra Nevadas

• First Transcontinental route completed at Ogden, UT in 1869

• By 1900, 4 other Transcontinental routes built– Northern Pacific RR (Lake Superior Puget Sound)– Atchison, Topeka & Santa Fe crossed SW deserts– Southern Pacific from Orleans to SF, CA– Great Northern (Duluth to Seattle)

• James J. Hill project- greatest RR builder

RRs consolidate• Many pioneers over invested in land & banks that

supported them often failed when land value turned out to be low

• Cornelius Vanderbilt (NY Central RR) financed many western RRs

• RR advances:– Steel rails (stronger than iron)– Westinghouse Air Brake– Pullman Palace Cars– Telegraphs– Double racking & block signals

• Train accidents still common, many fatalities

Effects of RRs

• Tied nation together, created huge market & many jobs– Helped industrialize US– Stimulated mining, agriculture by bringing people,

supplies– Creation of 4 time zones: Nov 18, 1883• Stopped independent times/ scheduling nightmare

– Created millionaire class

RR wrong doings

• Credit Mobilier• Jay Gould made millions watering stock– Embezzled from Erie, KS Pacific, Union Pacific, TX

Pacific etc• Inflated worth of stocks; sold over value• Owners abused public

– Bribed judges, legislatures, hired lobbyists– Elected their own to office– Used free passes as bribes w/ press– Formed defensive alliances, Trusts, then called Pools

Government’s first attempts to regulate business

• Gov position had always been pro business– Adam Smith: the market will regulate itself

• The People attempted to regulate RRs to stop injustices through the Grange– Several state cases allowed States to intervene, as in

the Wabash case– Each time, the Supreme Ct overturned; only Congress

can reg. interstate commerce– Interstate Commerce Act 87- banned rebates, pools,

req’d RRs to publish rates openly, banned charging more for short hauls• Set up ICC to enforce

Mechanization

• 1860- US: 4th largest mfctr in world– 1894: #1• Abundant liquid capital• Exploited natural resources: coal, iron, oil• Abundant cheap labor: immigration• American ingenuity (inventions)

– Mass production– Cash register, stock ticker, typewriter, refrigerator car, electric

dynamo, electric railway– Bell’s telephone– Thomas Edison (wizard of Menlo Park): light bulb,

phonograph & dozens more

Trust Titans & Robber Barons• Andrew Carnegie (steel)– Vertical integration

• Controlled all aspects of industry (from ground up)• John D. Rockefeller (oil)– Horizontal integration

• Controlled certain parts of process, ie: all mining or all shipping– Standard Oil forced all weaker competitors to the wall

• Trusts: giant monopolistic corporations– Rockefeller also put his own men on boards of

directors of other rival companies• “interlocking directories”

Supremacy of Steel

• 1860: scarce, expensive• 1900, US produced more than England &

Germany together– Due to Bessemer process (though American, Wm

Kelly discovered it first)• Cold air blown over molten steel allows iron burned

carbon impurities to rise up and be skimmed off– Purifies iron into steel– US had abundant iron, coal (heating)

Carnegie• Began as poor clerk for RR co– Acted quickly to resolve company crisis

• Rewarded w/ opportunity to buy stock.. Quickly bought up as much as he could

• Eventually owned RR• On to Steel. • Pittsburgh area- produced ¼ nation’s Bessemer Steel

– J.P. Morgan (banker) attempted to move into Steel tubing• Carnegie threatened to ruin him• Negotiated settlement: Morgan bought out Carnegie for $400

million– Carnegie gave away $350 mill to charity, pensions, libraries

• Added other steel holdings, formed: US steel 1901: first billion $$ corp in world

Rockefeller• 1859 Drake first mined oil in Titusville PA– By 1870s used to light kerosene lamps all over nation

(whale oil – obsolete)– By 1885 1/4mill Edison Electric light bulbs in use- made

kerosene obsolete– Industry shifts to gas burning internal combustion engine

• Rockefeller already owned 95% oil production in US when he org’d Standard Oil of Ohio 1882– Crushed weaker competitors– American Beauty Rose theory of competition

• Trusts: built superior product at cheaper price, Gustavus Swift & Philip Armour: meat barons

Gospel of Wealth• Many rags to riches stories (Horatio Alger) in real

life– Newly rich feel some are destined to become rich

(predestination.. Calvinist) AND help society w/ $$– Rev. Russell Conwell (Phila) bcm rich on his lecture:

“Acres of Diamonds” preached poor people made themselves poor, rich made themselves rich.. Everything was based only on your actions

– Corporate lawyers used 14th amendment to defend trusts as living entities (big people) entitled to their property• Plutocracy ruled

Gov attacks trusts

• 1890: Sherman Anti-trust Act– Forbade combinations in restraint of trade• No distinction between good & bad trusts• Could not be enforced• 1914- enforced, violators first punished

South in Age of Industry

• Agrarian– James Buchanan Duke: cigarette industry:

• American Tobacco Company• Donations to Duke University

– Henry Grady (Ed. Atlanta Constitution) urged S. to industrialize

– No. companies set rates to keep S from gaining competitive edge• Textile mills developed in S• Cheap labor led to creation of many jobs, (low wages) still

welcomed in S

Impact of Industrial Age• Standard of Living rose• Immigrants poured in for opportunities• Jeffersonian ideas of dominance of agriculture

faded • Women swarmed to factories, found new

opportunities– Gibson Girl (Charles Dana Gibson): romantic ideal of

the age• Pressures of foreign trade developed• Overproduction will drive us to develop more foreign

markets – Leads to Imperialism

In Unions There Is Strength

• National Labor Union– 1866- 600,000 members- lasted only 6 yrs• Excluded Chinese• Never recruited blacks; women• Worked for arbitration of industrial disputes

– & 8 hr day

• Won 8 hr day for Gov workers- till Depression 1873

Unions (2)

• Knights of Labor– 1869 – 1881 (in secret)• Barred only liquor dealers, prof. gamblers, lawyers,

bankers, stockbrokers– Campaigned for economic & social reform

– Led by Terence V. Powderly• Won many strikes for 8 hr day• After strike against Jay Gould’s Wabash RR 1885,

membership went up to ¾ million

End of Knights of Labor• Involved in several May Day strikes; half failed– Chicago: (80K knights & hundreds anarchists)• May 4, 1886- Police advancing on meeting called to

protest brutality by authorities (Haymarket Sq)– Bomb thrown, killing & injuring many– 8 anarchists rounded up; no proof– Jury sentenced 5 to death for conspiracy– Other 3 long prison terms

• 1892 John P. Altgeld, Dem Gov IL pardoned 3 survivors after studying case– Defeated in re-election bid– Forever assoc w/ anarchists- KOL membership dropped

A F of L• 1886- Samuel Gompers founded Am Fed of

Labor– Assoc of self gov’d unions, all indep– Demanded ‘fairer share for labor’

• Better hours, wages

– Skilled workers only (labor trust)– 1881-1900 over 23,000 strikes; w/ 6.6 mill workers

• Still less than 3% of all workers unionized.• 1894 Labor Day became legal holiday• Most owners fought unions still