PART I - THE EXPANSION OF INDUSTRY

PART I - THE EXPANSION OF INDUSTRY

Before the 1860 s, the US was mostly agricultural. By the 1920 s, it was the most industrialized nation on Earth. How?

This was due to several factors a wealth of natural resources government support for business a growing urban population that provided cheap labor and markets for new products

BLACK GOLD Early Americans had little use for oil until they wanted to use kerosene in lanterns Edwin Drake was the first to successfully drill. He did so near Titusville, PA in 1859, starting an oil boom across the nation. Oil became even more important with the invention of the automobile.

Compare Drake s oil well to today s technology.

BESSEMER STEEL PROCESS Along with oil, coal and iron are also plentiful across the US. Iron is soft and tends to rust and break due to impurities. Removing carbon produces steel, which is really strong and won t rust. Henry Bessemer and William Kelly invented the process around 1850.

Air is injected into molten iron, removing impurities like carbon. iron impurities = steel.

This image cannot currently be displayed. Workers making steel

NEW USES FOR STEEL Railroads were the biggest customers, with 1000 s of miles of tracks. It made barbed wire and the steel plow possible. It changed building techniques. With steel to support the weight of buildings, structures rose taller and taller. The Brooklyn Bridge, completed in 1883, spanned 1,593 feet and was the tallest structure on Earth other than the pyramids in Egypt.

INVENTIONS THAT PROMOTED CHANGE Thomas Edison established the world s first research laboratory at Menlo Park, NJ in 1876. He invented and patented the light bulb there in 1880. Edison, along with George Westinghouse, made electricity safe to use in homes and businesses. Electricity allowed businesses to locate anywhere they wanted not just near moving water or sources of coal.

INVENTIONS THAT CHANGED LIFESTYLES Christopher Sholes invented the typewriter in 1867, giving way to a change in the workplace. All documents had to be created by hand before the typewriter came along.

Next to the light bulb, the most important invention of this era is the telephone. Alexander Graham Bell invented it in 1876 It was of particular importance to homes and offices and, along with the typewriter, allowed women to work in offices. In 1870, women made up only 5% of office workers. In 1910, they made up 40%.

Bell

The device consisted of a coil of wire, a magnetic arm and a taut membrane. Any sound caused the membrane, and hence the magnetic arm, to vibrate. The movement of the magnet induced a fluctuating electric current in the coil. This electrical signal could be reconverted into sound by an identical apparatus at the other end of the circuit.

"Watson, come here! I want to see you!"

PART II THE AGE OF RAILROADS

OPPORTUNITIES AND OPPORTUNISTS The growth of railroads influenced the industries and businesses in which Americans worked. The iron, coal, steel, lumber, and glass industries grew to keep up with the growth of the railroads. The rapid spread of the railroads also fostered the growth of towns, help establish new markets, and offered many opportunities to people and businesses.

Chicago, Minneapolis, Denver, Seattle, Flagstaff, and Abilene, owed their existence to the railroads

PULLMAN Using the old model of textile mills, George Pullman built his own city for workers who helped build sleepers and railroad cars at his factory in Illinois. The town was considered luxurious compared to most with workers having their own homes and having access to doctors, shops, and athletics. However, Pullman controlled every aspect of his workers lives, which led to resentment and eventually to a violent labor strike in 1894 after cutting pay, but not rent.

INTERSTATE COMMERCE ACT The Grange/Populist Party had tried to have the government regulate the railroads to cap costs. States tried to regulate the railroad companies, but since trains cross state lines, the Supreme Court ruled that states didn t have the right. Interstate commerce can only be regulated by the national government.

In response, the government passed the Interstate Commerce Act in 1887. It created a 5 member Interstate Commerce Commission (ICC) to regulate the railroads. It will not be effective, however, until Theodore Roosevelt strengthens it in 1906.

PANIC OF 1893 Corporate abuses, mismanagement, overbuilding, and competition pushed many railroads to the brink of bankruptcy. By the middle of 1894, a quarter of the nation s railroads had been taken over by financial companies like J.P. Morgan & Company. By 1900, 7 powerful companies controlled over 2/3rds of the nation s railroads.

PART III BIG BUSINESS AND LABOR

NDREW ARNEGIE

CARNEGIE Immigrated from Scotland at age 12 Worked for railroads; became private secretary to the superintendent of Pennsylvania Railroad As a reward, he was given a chance to buy stock. He started investing his money and by 1865, he left the r.r. and started his own steel mill.

NEW BUSINESS STRATEGIES Carnegie s success was due in part to management practices that he put in place. 1. He continually searched for ways to make products cheaper. He perfected machines and accounting systems. 2. He attracted talented people by offering them stock in the company and encouraged competition among employees.

He also attempted to control as much of the steel industry as he could. He did this through vertical integration buying out his suppliers like coal fields, freighters, railroads, etc. And through horizontal integration buying out the competition. Through buying out his competition and his suppliers, he controlled almost the entire steel industry. He sold his business in 1901 to J.P. Morgan for $480 million.

SOCIAL DARWINISM Carnegie attributed his success to hard work, shrewd investment, and innovative business practice. Others attributed it to a new theory Social Darwinism. This is how they explained why some were so wealthy, while others remained poor. They believed natural selection weeded out less capable people, therefore the rich were the most adapted and capable. They saw riches as a sign of God s favor and that the poor must be inferior and deserved what they got in life.

HORATIO ALGER People like Horatio Alger promoted the possibility of ragsto-riches success for people who were virtuous and hard-working.

CONSOLIDATION Many industrialists pursued horizontal integration in the form of mergers. Mergers usually occurred when one company bought out the stock of another. A firm that bought out all its competitors could achieve a monopoly, or control over its industry s production, wages, and prices.

One way to create a monopoly was to form a holding company, a corporation that did nothing but buy out the stock of other companies. Banker J.P. Morgan created the world s largest corporation when United States Steel (a holding company) bought out Carnegie Steel in 1901.

J.P. Morgan

STANDARD OIL COMPANY Others like John D. Rockefeller took a different approach to achieving a monopoly: they joined with competing companies in trust agreements. Participants in a trust turned their stock over to a group of trustees people who ran the separate companies as one large corporations. They were not legal, but used anyway. Rockefeller used a trust to gain control of the oil industry in the US.

In 1870, Rockefeller s company refined 3% of US oil. By 1880, they refined 90%. How? Rockefeller paid his employees poorly, undersold his competition, and when the competition went out of business, he raised prices above the original levels. Tactics like these earned industrialists the nickname, Robber Barons.

John D. Rockefeller

Many industrialists like Carnegie and Rockefeller were also philanthropists, or people who give money away for the good of mankind. Carnegie's Philanthropy It will be a great mistake for the community to shoot the millionaires, for they are the bees that make the most honey and contribute the most to the hive even after they have gorged themselves full. - Andrew Carnegie

SHERMAN ANTITRUST ACT The government was concerned that the growing power of corporations would stop free trade, so they passed the Sherman Antitrust Act in 1890. It made it illegal to form a trust that interfered with free trade between states or with other countries. It was poorly written and all 8 cases brought against corporations were thrown out. The government eventually gave up trying.

PART IV LABOR UNIONS

BAD WORKING CONDITIONS 7 day work weeks, 12 hr days, no vacation or sick days were common for men in steel mills. Women faced similar conditions, but not as bad. In 1882, an average of 675 laborers were killed in accidents each week. Wages were so low that every family member, even children, had to work. 25% of boys and 10% of girls ages 5-15 held jobs. In 1899, men made $498 a year, women $267, with kids averaging around 27 cents for a 14 hour day.

Child Laborers

EARLY LABOR UNIONS Small unions for skilled workers had existed since the 1700s. The first nation wide union was the National Labor Union (NLU). In 1869, Uriah Stephens organized the Knights of Labor. It s motto was, An injury to one is a concern of all. It was open to all workers, man or woman. At its height in 1886, it had over 700,000 members

Uriah Stephens

CRAFT UNIONS In 1886, the American Federation of Labor (AFL) with Samuel Gompers as president was formed. It was a craft union, which consisted of workers from a specific craft. It focused on collective bargaining and used strikes as a way of getting higher wages and shorter work weeks.

INDUSTRIAL UNIONS Eugene V. Debs was the first to combine all workers, skilled and unskilled, from one industry into a union. He organized the American Railway Union (ARU), which grew to over 150,000 members.

SOCIALISM AND THE IWW Debs eventually turned to socialism (an economic system in which the government controls business). The Industrial Workers of the World (IWW) headed by Big Bill Haywood never topped 100,000 members.

STRIKES TURN VIOLENT Industry and the government responded forcefully to union activity, which they saw as a threat to the entire capitalist system The Great Strike of 1877: workers on the Baltimore & Ohio R.R. went on strike for a wage cut. President Hayes ordered it ended using federal troops since it interfered with interstate commerce.

The Haymarket Square Affair: workers gathered to protest police brutality. As protesters were leaving, someone threw a bomb into the police. 7 police and several workers were killed.

The Homestead Strike: Workers were protesting a pay cut at the steel plant in PA. Henry Frick hired police so he could hire scabs (replacement workers). 3 police and 9 workers were killed. The PA national guard was called in and the plant was closed down for 5 months.

Pullman Company Strike: Workers went on strike over cut wages. Pullman refused to negotiate with strikers, so the ARU boycotted Pullman trains. Pullman hired strikebreakers and it turned violent. Federal troops were sent in to stop it.

TRIANGLE SHIRTWAIST FACTORY FIRE People could no longer ignore conditions in factories after the Triangle Shirtwaist fire in 1911. 146 women died after the building caught fire. The doors were locked to keep them from leaving and many jumped to their death or died inside the building. This disaster led to some changes in local rules for women and children in the workplace.

EMPLOYERS FIGHT BACK Employers feared unions as they grew more powerful. They finally, with the courts help, turned the Sherman Antitrust Act against labor. All they had to say was that a strike hurt interstate trade and the government would intervene. Despite all, labor unions continued to grow.