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INDUSTRIALIZATION

THE RISE OF INDUSTRY

• Industrial Revolution came to America in the early 1800’s

• Most Americans lived on farms

• 1861- 1.3 million Americans worked in industry

• By the late 1800’s– America had become the world’s leading industrial nation.

• 1914- GNP was 8 times greater than in 1865.

THE 4 KEYS TO AMERICA'S INDUSTRIAL SUCCESS

1. Natural Resources: like copper, lumber, iron, coal.

• US did not have to import resources from other countries.• Mostly located in the West (trains took miners to

the west & brought back resources).• Demand for petroleum product “Kerosene”

increased. • 1859- Edwin Drake drilled 1st oil well near

Titusville, Penn. • By 1900, oil wells stretched from Penn. To Texas.

4 KEYS TO AMERICA’S INDUSTRIAL SUCCESS

2. A Large Workforce: 1860- 1910, the US population nearly tripled.• Provided a workforce that would work for low

wages and consumers for American products.• Two Causes for growth: large families &

immigration.• People from Europe & Asia came to the US for

new opportunities.• 1870- 1910- 17 million immigrants arrived

4 KEYS TO AMERICA'S INDUSTRIAL SUCCESS

3. New Inventions & technology: new inventions led to new industries & new technology increased US productivity, transportation, & communications.

• Alexander Graham Bell- (1876) successfully tested the first telephone.• 1877 Bell Telephone Company was organized (later became AT & T). • Thomas Alva Edison- leading inventor of the time; his lab at Menlo Park, NJ

was forerunner of the modern research laboratory.• more than 1000 patents by time of his death.• 1877- invented phonograph• 1878- electric generator & light bulb• Motion picture camera, Dictaphone• 1882- Edison electric company supplied power to NY• 1889- General Electric was organized• George Westinghouse- invented “airbrakes” for locomotives = safe travel

at higher speeds.• Developed alternating current or AC to distribute electricity• Westinghouse Electric Company- 1893- lit Columbia Exhibition at the World

Fair

OTHER INVENTORS & INVENTIONS OF NOTE

• Thaddeus Lowe – invented the ice machine.• Gustavus Swift- founder of Swift Meatpacking Company

hired an engineer to develop a refrigerated railroad car .

Textile Industry: major changes occurred.• Northrop Automatic Loom- cloth could be made at a

much faster rate.• Standard sizes used in making clothing• Shoe Cobblers were replaced by factories making shoes.Communication: improved communications!Cyrus Field- (1866) laid the first telegraph cable across the Atlantic Ocean- Instant communication between the US & Europe.

INVENTORS OF THE TIME

Thomas Edison & Light Bulb

Alexander Graham Bell

Gustavus Swift & Refrigerated freight car

4 KEYS TO AMERICA'S INDUSTRIAL SUCCESS

4. Free Enterprise: in the 1800’s, Americans embraced “laissez- faire” (government should not interfere in the economy except to protect rights & property).• Relies on supply & demand (not government) to regulate wages of

workers & prices of products.• This system creates more wealth for all.• Late 1800’s: search for profit led many people to become =

entrepreneurs. • Taxes were kept low & government spending was low.• Morrill Tariff – lowered tariff rates greatly (hurting farmers), gave

large land tracts to railroad companies, sold public land with mineral rights cheaply.

• By the 1900’s, business leaders pushed for “Free Trade” (ending all tariffs).

• Is the Government truly “laissez-faire” in this period???

THE RAILROADS

• 1865- the US had 35,000 miles of track (all mostly east of the Mississippi River)• 1900- the US had 200,000.

The First Transcontinental RailroadBefore the Civil War, Americans hoped to link the east & west together with a transcontinental railroad. 1862- Pacific Railway Act- Congress set aside money and paid two companies to build.1. The Union Pacific Railroad- operated by Grenville Dodge began building at

Omaha, Nebraska in 1865.• Used mainly Civil War veterans, Irish immigrants, miners, farmers, ex-convicts.

(10,000 workers)• Life on railroad dangerous & camp life dirty & rough.2. The Central Pacific- owned by the “Big Four” (Leland Stanford, Charley Crocker, Collis Huntington, Mark Hopkins)• Hired workers from China (10,000) at $1 a day.• Built railroad from California & met up with the Union Pacific Railroad at Promontory

Point, Utah (May 10, 1869).• **The first Transcontinental Railroad was complete!!

ROUTE OF THE FIRST TRANSCONTINENTAL RAILROAD

THE FIRST TRANSCONTINENTAL RAILROAD IS COMPLETED!! (1869)

GROWTH IS CAUSED BY THE RAILROADS

• Transcontinental railroad was the first of many lines which connected our nation.

1. Markets for new products= new industries2. Created a huge market for steel, coal, timber & other

products.3. Railroad Consolidation (smaller, unconnected lines

joined together by larger companies).• 1890- Pennsylvania Railroad- consolidated 73 smaller

RR companies. = terminals in major cities.• Cornelius Vanderbilt- most famous Railroad

consolidator; formed NY Central Line (ran from NY TO Buffalo). In 1871, he built NY Grand Central Station.

NEW LOCOMOTIVE TECHNOLOGY & INNOVATION

• 1883- The American Railway Association divided the country into 4 Time Zones for safety & efficiency.

Innovations: Airbrakes- allowed for longer, heavier trains.Integrated Railways- operations became so efficient that freight rates went down.

Effects of Railroads on US CultureUnited Americans across regions

TIME ZONES

THE ROBBER BARONS

• The building of the railroads required more money than investors could raise on their own.

• The US Government encouraged Railroad building & investment: 1. Land Grants- US government gave large tracts of land to companies

who built railroads. • 1850’s- 1860’s- US gave 120 million acres away to Railroad Companies.• Union Pacific & Central Pacific got enough land to cover cost of building

Transcontinental Railroad.• Railroad entrepreneurs acquired great wealth in the 1800’s= earned

the nickname “Robber Barons” from the public. • Bribery and corruption accompanied this wealth- members of Congress

became embroiled in these scandals.• Jay Gould- most infamous stock manipulator & railroad owner.• James J. Hill – great example of a railroad owner who was NOT a

robber baron—he did it the right way!

• Credit Mobilier Scandal (1872)

THE RISE OF BIG BUSINESS

• Before the Civil War, most manufacturing businesses were owned by people working in partnerships.

• By 1900, big businesses dominated the US economy, operating factories, warehouses, and distribution facilities.

• Big Business would not have been possible without the …Corporation.

• 1830’s –states began to issue pass laws to allow companies to form corporations without permission from the state.

CORPORATIONS

• Corporation: Organization owned by many people (stockholders) but treated by law as if it were a person.

• Issuing stock allows corporations to raise large amounts of money for big projects (like investing in new technologies, hiring large labor force, or purchase machines= economies of scale ( cost of manufacturing is decreased by producing large quantities).

ADVANTAGES OF CORPORATIONS

1. They produce more goods cheaply & efficiently.

2. May continue to operate in bad economic downturns by cutting prices for products to increase sales—not shutting down.

3. Many were able to negotiate lower freight charges (Rebates) from railroad companies= lower expenses.

• Many small business could not compete with corporations and went bankrupt.

CONSOLIDATING INDUSTRY

Many business leaders did not like the intense competition that was forced on them. Falling prices benefitted consumers but hurt profits.

1. “Pools”– business strategy used by business owners; agreements to keep prices set at a certain level.

• Courts were suspicious of “pools”• “Pools” did not last long…

• By the 1870’s, competition had reduced the number of businesses to a few large corporations.

ANDREW CARNEGIE

• Scottish immigrant of poor working parents who came to the US in 1848.

• Earned $1.20 a week at age of 12 as a “bobbin boy”.• In his 30’s was making $50,000/year

• Brought the Bessemer Process (to make higher quality steel efficiently & cheaply) to America.

• 1875- opened his own Steel Co. in Pittsburgh using the process.

• Used “Vertical Integration” to make his company more efficient= more profit!

• ** 1901- sold his steel company to J.P. Morgan for $500 million (Carnegie richest man in world).

ANDREW CARNEGIE & VERTICAL INTEGRATION

JOHN D. ROCKEFELLER

• John D. Rockefeller built oil refineries (to turn oil into Kerosene). • 1870- his Standard Oil Company was the

nations largest refinery.• 1880- he controlled 90% of the oil-refining

industry in the US (became the first large monopoly)

• He used Horizontal Integration to organize his business.

ROCKEFELLER & HORIZONTAL INTEGRATION

NEW LAWS LED TO NEW BUSINESS ORGANIZATIONS

• Late 1800’s– many states made it illegal for one company to own stock in another company (trying to stop horizontal integration & monopolies).

• Business leaders found ways around the new laws:1. Trusts- a new way of merging a business without

breaking new state laws; allows one person (trustee) to “manage” another’s property.

• Standard Oil Co. formed the 1st Trust2. Holding Companies – does not produce anything itself; it owns stock in companies that do produce goods = a type of merger. * 1890’s investment bankers put new holding companies together.

J.P. MORGAN & INVESTMENT BANKING

• 1857- began as an agent in his father’s banking company in New York.

• Investment bankers helped companies issue stock (investment bankers bought stock at discount & sold them for higher profit).

• 1901- bought Carnegie’s Steel company for $500 million= merged with other large steel industries= US Steel = worth $1.4 Billion (1ST $BILLION American business).

J.P. MORGAN & US STEEL COMPANY

SELLING PRODUCTS

• As manufacturing got bigger…so did retailers (companies that sell directly to consumers).

• Retailers looked for new ways to attract consumers:1. Advertising: using colorful, bold illustrated ads (N.W. Ayer & Son-1st ad

agency in US).• 1900– Retailers spent over $90 million a year on ads in newspapers &

magazines.2. Department Store: provided a huge selection of products in one elegant building. • John Wanamaker’s “Grand Depot” (1877- Philadelphia)3. Chain Stores: group of retail outlets owned by the same company appeared mid-1800’s.; focused on lower prices.• Woolworth’s (1879)- one of the most successful.4. Mail Order Catalogs: chain stores & department stores used to reach people living in rural areas.• Montgomery Ward; Sears, Roebuck, and Co.

ADS OF THE LATE 1800’S

WORKING IN THE US

• Life for workers in industrial America was very tough:

1. Dull, repetitive tasks2. Unhealthy and dangerous working conditions3. Worked for low pay

INDUSTRIALIZATION PROGRESS & PROBLEMS

Industrialization led to a dramatic rise in the standard of living.• 1860-1890: the average worker wage rose by 50%.

More Problems• Uneven division of income between the wealthy & working

classes increased & caused resentment.• 1900—the average industrial worker made 22 cents/hour

and worker 59 hours a week.• Deflation (rise in value of money) caused prices to fall from

1865-1897= increased the power of workers wages even when companies cut wages in the late 1800’s.

• Workers still resented getting less money.

EARLY UNIONS IN AMERICA

• 1800’s two types of worker: craft worker & common laborers.

• Craft workers were more successful in starting unions early on…more skills, higher wages, power over spare time.

• 1830’s --Craft workers formed “Trade Unions”.

• Iron Molder’s Union, Knights of St. Crispin (shoemaker’s union).

• 1873- 32 national trade unions existed.

INDUSTRY OPPOSED UNIONS

• Employers had to negotiate with trade unions because they represented workers whose skills were needed.

• Most employers viewed unions conspiracies that interfered with their right to control their private property (business).

Tactics Used Against Unions by Business• “Yellow dog” contracts• Used detectives to find union organizers• Black listing• Lockouts– business owners would lock workers out if they

formed unions & hire strikebreakers (“scabs”) to replace them.

POLITICAL & SOCIAL OPPOSITION TO UNIONS

• There were no laws giving workers the right to join unions.

• Courts often ruled against unions as “illegal conspiracies in restraint of trade”.

• Union leaders jailed or fined.• Unions seen as un-American (Marxism); some union

organizers agreed with Marx.• Some supported “Anarchism” –no need for any

government.

** Late 1800’s tens of thousands of immigrants came to US from Europe (some supporting Marxism & Anarchism)

THE GREAT RAILROAD STRIKE (1877)

• In 1873, there was a severe recession= forced companies to cut wages.

• July 1877– Baltimore & Ohio RR announced wage cuts (third time).

• Eventually 80,000 railroad workers across the country went on strike= 2/3 of nation’s railroads affected.

• Rail traffic from NY, Baltimore, Pittsburgh, & Chicago blocked

• President Hayes sent federal troops= 12 days to restore order

• 100 dead, $10 million railroad property damage

** alarmed the nation= led to calls for peaceful settlements

THE KNIGHTS OF LABOR

• Founded 1869• Leader Terrence Powderly• New approach to labor disputes• Opposed strikes---preferred “boycotts”, “arbitration”.• Welcomed women & African-Americans (rare)Demands: • 8 hour workday• Equal pay for women• Abolition of child labor• Worker owned factoriesEarly Successes:• 1885- convinced Jay Gould to reverse wage cuts= 100,000 to

700,000 members in less than a year.

*THE HAYMARKET RIOT (1886)

• 1886- supporters of 8 hour workday called for nation-wide strike on May 1st.

• In Chicago, the Knights of Labor led a march of 80,000.• 70,000 workers went on strike over the next few days.• May 3– police went to stop a fight at the McCormick

Harvester Company= shots fired at strikers killing 4.• May 4– after a series of speeches, police moved in to

keep order—someone threw a bomb at police (killed 1 officer & wounding 6 others). Police opened fire= 100 citizens (70 police) injured.

• Significance-- citizens became convinced labor unions were filled dangerous radicals= decline in membership to Knights of Labor.

HAYMARKET RIOT (1886)

THE HOMESTEAD STRIKE (1892)

• Another bloody confrontation• Steel Mill owned by Andrew Carnegie (Homestead, Penn.)

managed by Henry Frick.• Workers unionized by largest craft union in the nation

(Amalgamated Association of Iron, Steel, and Tin Workers).

• Frick proposed a 20% wage cut as union contract was to expire, locked employees out, prepared to bring in “scabs”.

• Bloody clash between Pinkerton detectives and strikebreakers and striking workers= 14 hours.

• Governor called out state militia= four months later the strike ended.

HOMESTEAD STRIKE

THE PULLMAN STRIKE (1894)

• 1893 American Railway Union was organized by Eugene V. Debs. • Goal—organize all RR workers in the industry—including workers at

Pullman Place Car Company., near Chicago.• 1893- George Pullman laid off workers & cut wages (refused to talk

to workers).• Strike began May 11, 1894– other ARU members across the US

joined strike.• Paralyzed rail traffic– RR owners attached US Mail cars to Pullman

cars.• President Grover Cleveland– sent US troops.• Court issued an “Injunction” (court order to stop strike).• Debs went to jail for violating injunction= the strike collapsed.

• 1895- In re Debs (Supreme Court Case)– Supreme Court upheld the right to issue injunctions to stop strikes.

PULLMAN CARS

PULLMAN STRIKE (1894)

NEW UNIONS EMERGE

• Unskilled workers were often underrepresented in most unions, so new unions reached out to them.

1. American Federation of Labor (AFL)• 1st leader Samuel Gompers• focused on wages, working conditions, working hours—stayed

away from politics.• Preferred to negotiate…but would strike.Three Main Goals1. Get companies to recognize unions & collective bargaining2. Supported Closed Shops3. 8 Hour workday• Grew slowly—by 1900—biggest union (500,000)• Members mostly– white males

NEW UNIONS FORM

2. The International Workers of the World (IWW or “Wobblies”)• Created by Labor radicals, socialists• Wanted to unite all workers by industry (skilled &

unskilled workers).• 1912- successful strike (Textile Mill- Lawrence,

Mass.)• Viewed by many as a radical organization

WORKING WOMEN

• Post Civil War—women wage earners increased.• 1900- women make up 18% of labor force.Types of Work• 1/3 Domestic servants• 1/3 teachers, nurses, sales clerks• 1/3 industrial workersPaid less than men, most unions excluded them

Female Labor Leaders: Mary Harris Jones “Mother Jones”- organizer for Knights of Labor & mine workers

1903- Women’s Trade Union League - 1st national association for women’s labor issues.