Chapter 6A New Industrial

AgeEssential Question: What impact did scientific discoveries and manufacturing processes have on the nature of work, the American labor movement, and American businesses?

Section 1 p. 242The Expansion of Industry

• Main idea: At the end of the 19th century, natural resources, creative ideas, and growing markets fueled an industrial boom.• Why it matters now: Technological developments of the late 19th

century paved the way for the continued growth of American industry.• Objective: Identify inventions that changed the way people lived and

worked. • Terms/Names: Edwin L. Drake, Bessemer process, Thomas Alva

Edison, Christopher Sholes, Alexander Graham Bell, entrepreneur p.243,

Natural Resources Fuel Industrialization: Did you know that after the C.W. the US was still mainly an agricultural (agrarian) society? That means farmers. And that by 1920 – just 60 years – we had become the leading industrial power in the world? This immense industrial boom is a result of several factors:• Wealth of natural resources• Government support for business• A growing urban (city) population – provides cheap labor AND is a market for new

productsBlack Gold crude oil. At first – no one had a use for it, then in 1840s

Americans started to use the kerosene for lamps after is was discovered how to distill it from oil and coal.

In 1859 Edwin L. Drake successfully used a steam engine to drill for oil near Titusville, Pennsylvania. This made removing oil from beneath the ground practical. It started an oil boom throughout Kentucky, Ohio, Illinois, Indiana and Texas. Refineries arose and many rushed to make money transforming oil into kerosene.

Pennsylvania Oil Well and Steam Engine

Gasoline was a byproduct of the refining process and originally was thrown away (what!!!). Only after the automobile became popular did gas become the most important form of oil. Bessemer Steel Process: Oil was not the only natural resource plentiful in the US – there were also large deposits of coal and iron.

Iron: even though it is a dense metal – it has other elements that cause it to break and rust – CARBON. Removing the carbon produces a lighter, more flexible, rust-resistant metal called STEEL. The raw materials needed to produce this were readily available. A cheap and efficient method to manufacture Steel was needed. Well, in 1850, Henry Bessemer – the Britain and William Kelly – in the US (Independently) developed the Bessemer Process. This technique involved injecting air into molten iron to remove the carbon and other impurities. By 1880, US manufacturers were using the new method to produce more than 90% of the nation’s steel. In this age of rapid change and innovation, this process is improved to the point that it is replaced by the open-hearth process which makes it possible to produce quality steel from scrap metal as well as from raw materials.

Henry Bessemer

Bessemer Process

New Uses for Steel :the railroad was the biggest customer for steel laying thousands of miles of steel tracks. Other inventions of steel at that time were barbed wire, McCormick’s reaper and John Deere’s inventions helped transform the plains into the food producer of the nation.

Steel made innovations in construction possible such as the Brooklyn Bridge (1883). It spanned 1,595 feet over the East River in NYC. Steel cables were supported by towers higher than any man-made and weight-bearing structure except the pyramids of Egypt. Entrepreneur: a person who organizes, operates, and assumes the risk for a business venture.

At this time in US history expansion was not only going outward but upward also. William Le Baron Jenney designed the first skyscraper with a steel frame – the Home Insurance Building in Chicago. Before now building heights were limited because of the load placed on the support walls. Now because of steel – the sky was the limit. Architects could build as high as they wanted. Because these buildings soared into the air – they were called skyscrapers.What natural resources were most important for industrialization? Oil, coal, iron ore and water.

Reliance Building in Chicago

Inventions Promote Change: Inventors using natural resources and their ingenuity changed the way people lived and worked. • The Power of Electricity: 1876 Thomas Alva Edison established the world’s first

research laboratory in Menlo Park, New Jersey. He perfected the incandescent light bulb – patented in 1880, and later invented an entire system for producing and distributing electrical power. A patent: a license that gives an inventor the exclusive right to make, use, or sell an invention for a set period of time. Between 1860 – 1890, 500,000 patents were issued compared to 36,000 issued from 1860 – 1890. George Westinghouse along with Edison added innovations that made electricity safer and less expensive.

• Lewis Latimer patented and improved the method for producing the filament in light bulbs.

• George Westinghouse, in 1885, began to experiment with a form of electricity called the alternating current.

• Alternating current could be generated more cheaply and quickly. It could travel longer distance.

• By 1890, Two companies, General Electric and Westinghouse Electric. There products encouraged the use of electricity.

• Harnessing electricity changed the nature of business in America. By 1890 electricity ran machines from fans to machines in large factories. It is an inexpensive form of energy that was available in homes and spurred the invention of time-saving appliances. Electric streetcars made urban travel cheap and efficient and also promoted the outward spread of cities. It also allows manufacturers to locate their plants wherever they wanted – not just next to sources of power, such as rivers. This enables industry to grow by leaps and bounds in the US. • How did electricity change American life? It changed the nature of business,

made possible the invention of new appliances, and helped cities and industries grow.

Inventions Change Lifestyles: • Christopher Sholes: invented the typewriter in 1867. It changed the world of

work.• Alexander Graham Bell (and Thomas Watson) in 1876 opened the way for a

worldwide communications network – the telephone.• These inventions affected office work, created jobs for women, impacted factory

work (work originally done at home and by hand was now done on a large scale – sewing) – again a job that women could do.• Industrialization freed some factory workers from backbreaking labor and helped

improve their standard of living. By 1890 the average workweek had been reduced by 10 hours. • The country’s expanding urban population (city) provided a huge potential

market for the new inventions and products of the late 1800s. • Which invention in this section do you think had the greatest impact on society

– justify your answer…

Electricity’s Impact on Business and Daily life

• Electricity was cheaper and more efficient for daily life.

• Electric sewing machines help to increase ready made clothing.

• Cost of producing goods dropped.• Opened up jobs for many Americans.• Made refrigeration possible. • People in rural areas still did not receive

electricity for several decades. If it was available they could not afford it.

whatever

Section 2 p. 248The Age of Railroads

• Main Idea: The growth and consolidation of railroads benefited the nation but also led to corruption and required government regulation.

• Why it matters now: Railroads made possible the expansion of industry across the US

• Objective: List the positive and negative effects of railroads on the nation’s economy

• Terms and Names: transcontinental railroad, George Pullman• Credit Mobilier, Interstate Commerce Act, consolidation.252

As railroads grew, they came to influence many facets of American life, including, as in the town of Pullman, the personal lives of the country’s citizens. They caused the standard time and time zones to be set and influenced the growth of towns and communities. Unchecked, the power of the railroad companies led to widespread abuses that spurred citizens to demand federal regulation of the industry.

• Transcontinental Railroad

• Explain the role of Chinese immigrants and the railroads? Chinese immigrants came to the US for a better life – willing to engage in harsh and dangerous work because of prejudices – this was the only kinds of jobs they could find. They were paid less than others and had to supply their own food. Chinese working for the RR worked on the RR from dawn to dusk. They were considered cheap labor, and expendable. They were a major workforce in the laying of railroad tracks at this time.

The Central Pacific and the Union Pacific Railroads met at Promontory, Utah on May 10, 1869. A golden spike marked the spanning of the nation by the first Transcontinental railroad. Others followed. The nation’s east and west coasts were finally linked by Transcontinental Railroad.

Railroad Time: at this time in US history, each community operated on its own time. Such as, when the sun was directly overhead – it was noon and in Boston it was noon 12 minutes later than in New York. Travelers riding the train from Maine to California may have to reset their watches 20 times. 1869 – Professor C. F. Dowd proposed that the earth’s surface be divided into 24 time zones – one for each hour of the day – BRILLANT!!and SIMPLE!! Under his plan the US would be set up into 4 time zones – eastern, central, mountain, and Pacific. It was endorsed by the railroad and many towns followed suit.By 1883 railroads and towns’ times were synchronized. Congress didn’t adopt railroad time until 1918. Railroads unified the country while on the other hand, ways were opened for abuses to the system that led to social and economic unrest. What were the effects of railroad expansion? The growth of industries that could ship to new markets; hazardous jobs for railroad workers; an increase of immigration and migration to the West.

• Opportunities and opportunists: The growth of RRs influenced the industries and businesses in which America worked. Iron, coal, steel, lumber, glass industries grew rapidly as they tried to keep pace with RRs demand for materials and parts.

The rapid growth of RR lines also fostered the growth of towns, help establish new markets, offered rich opportunities for visionaries and profiteers. • New Town and Markets: Previously isolated cities, towns, settlements were now

linked – the RR promoted trade and independence. Towns began to specialize in certain products. Chicago: known for stockyards; Minneapolis: grain industries. They sold to the whole country. New towns grew up along RR lines. Major Western cities owed their prosperity to RR ( Abilene, Denver, Flagstaff, Denver, Seattle).

• PULLMAN:1880 George M. Pullman build a factory for manufacturing sleeper cars, luxury cars, and other RR cars in Illinois. He build a town a town for his workers. Residents lived in clean, well-constructed brick houses and apartment buildings with at least one window in every room – a luxury for city dwellers. The town offer services and facilities : Dr. offices, shops, athletic field. This town was firmly under the company’s control- residents were not allowed to loiter (sit on the steps of their homes) or drink alcohol (not having a choice or voice is kinda un-American). Pullman hoped that this controlled environment would ensure a stable work force. However, when employees’ pay was cut, he refused to lower the rent. There followed a violent strike in 1894. Pullman created his company town out of the desire for control and profit. • Credit Mobilier: an infamous scheme formed in 1864 by the stockholders in the

Union Pacific RR. It was a construction company – the stockholders gave this company a contract to lay track at 2 to 3 times the actual cost – and they pocketed the profits. They donated shares of stock to about 20 representatives in Congress in 1867. Whaaaaaaattttt?

• A congressional investigation of the company, spurred by reports in the New York Sun, eventually found that the officers of the Union Pacific had taken up to $23 million in stocks, bonds, and cash. Even though well-known and respected federal officials were implicated in testimony ( VP Schuyler Colfax, James Garfield), these public figures were allowed to keep their profits and received little more than an untarnished slap on the wrist.• How did RR owners use Credit Mobilier to make huge, undeserved profits? By

charging too much for RR construction and paying off government officials. The Grange and the Railroads: Farmers are disturbed by the corruption in the RR industry. The Grangers – members of the Grange, a farmers’ organization – began demanding governmental control over the RR industry. RR abuses: farmers did not like RR companies for a variety of reasons. 1. misuse of gov’t land grants – they sold to other business rather than to settlers as the gov’t intended. 2. They fixed prices which helped keep farmers in debt. 3. Also they charged different customers different rates – demanding more for short hauls – there was no alternative.

Granger Laws: In response to RR abuses, the Granger took political action. They sponsored state and local political candidates, elected legislators and successfully pressed for laws to protect their interests. Granger Laws were passed in many states that established the maximum freight and passenger rates and prohibited discrimination.The RR fought back challenging the constitutionality of the regulatory laws. Munn v. Illinois 1877 the Supreme Court upheld the Granger laws. So, the states won the right to regulate the RRs for the benefit of farmers and consumers. The Grangers also helped establish the principle – the federal gov’ts right to regulate private industry to serve the public interest.How did the Grangers do battle with the giant RR companies? The farmers took political action in one united front. They pressed legislators to pass laws to protect them. Price fixing occurs when companies within an industry all agree to charge the same price for a given service, rather than competing to offer the lowest price.

• Interstate Commerce Act: The Grangers’ triumph was short-lived. 1886 The Supreme Court ruled that a state could not set rates on interstate commerce on RR traffic going/entering other states – that was federal. In response to public outrage, Congress passed the Interstate Commerce Act in 1887. It reestablished the right of the federal government to supervise RR activities and established a 5 member ICC (interstate commerce commission) for that purpose. The ICC had difficulty regulating RR rates because of the long legal process and resistance from the RR. Another blow came when in 1897 the Supreme Court ruled that the ICC could not set maximum rates. Not until 1906 (Pres. T. Roosevelt) did the ICC have the power it needed to be effective.• Panic and consolidation: corporate abuses, mismanagement, overbuilding, and

competition pushed many RRs to the brink of bankruptcy. Their financial problems played a major role in the nationwide economic collapse. The panic of 1893 was the worst depression up to that time – 600 banks/15,000 businesses failed – 4 million people lost jobs. Some RR were taken over by financial companies, Large investment firms (J. P. Morgan & Co.) reorganized the RR. As the 20th c. dawns, 7 powerful companies held sway over 2/3 of the nations rr tracks.

• Why was the government eager to promote the growth of cities? To increase US settlement –especially in the West and to build up US commerce. • Consolidation: the act of uniting or combining.

Section 3 p. 253Big Business and Labor

• Main Idea: The expansion of industry resulted in the growth of big business and prompted laborers to form unions to better their lives. • Why it matters now: Many of the strategies used today in industry and in the

labor movement, such as consolidation and the strike, have their origins in the late 19th century. • Objective: Explain Social Darwinism and its effects on society.• ID management and business strategies that contributed to the success of

business tycoons.• Terms/names: Andrew Carnegie, vertical and horizontal integration, Social

Darwinism, John D. Rockefeller, Sherman Antitrust Act, Samuel Gompers, AFL, Eugene Debs, IWW, Mary Harris Jones, arbitration.

• Andrew Carnegie: Came to US (age 12) from Scotland penniless in 1848. Worked his way up to private secretary to a superintendent of the Pennsylvania RR. He was allowed to buy RR stock and received dividends – making money without working for it. He was one of the 1st industrial moguls to make his own fortune. His rise from rags to riches, along with his passion for supporting charities made him a model of the American success story.

In 1865 he leaves his RR job. In 1873 he enters the steel business after touring a British steel mill. By 1899 Carnegie Steel Co. managed more steel than all the factories in Great Britain.

New Business Strategies: Carnegie’s success was partly due to his management practices that soon became widespread.1. He continually searched for ways to make better products more cheaply. He

incorporated new machinery and techniques – such as an accounting systems that enabled him to track precise costs.

2. He attracted talented people by offering them stock in the company and he encouraged competition among his assistants.

In addition to improving his own manufacturing operation, he attempted to control as much of the steel industry as he could. He did this mainly by vertical integration- a process in which he bought out his suppliers – the raw materials and transportations systems. He also attempted to buy out competing steel producers.Carnegie also attempted to buy out competing steel producers, this process known as horizontal integration, companies producing similar products merge. Having gained control over his suppliers and having limited his competition, Carnegie controlled almost the entire steel industry. He sold his steel business in 1901 and at that time, he produced by far the largest portion of the nation’s steel.

• What were Andrew Carnegie’s management and business strategies? He used horizontal and vertical integration, buying out competitors as well a s suppliers. He also strove to improve machinery and manufacturing techniques.

Social Darwinism and Business: Carnegie explained his success to hard work, shrewd investment and innovative business practices. Late 19th . Social philosophers gave a different explanation and that his success could be explained scientifically – Social Darwinism. This business philosophy grew out the English naturalist Charles Darwin’s theory of biological evolution (Origin of Species, 1859) where he described his observations that some individuals of a species flourish and pass their traits along to the next generation, while other do not. He explained that the process of “natural selection” weeded out less-suited individually and enabled the best- adapted to survive. This explained the evolution of human society. So, economists found in Social Darwinism a way to justify the doctrine of laisse faire ( French: allow to do). SD: the marketplace should NOT be regulated. The success and failure in business were governed by natural law and that no one had the right to intervene. Only the most capable and the strongest survives. It supports the notion of individual responsibility and blame. IT appeals to the Protestant work ethic – riches were a sign of God’s favor therefore, the poor must by lazy or inferior people who deserved their lot in life.

Fewer Control More- Well, some business owners endorsed the “natural law” in theory BUT in practice, most entrepreneurs did everything they could to control the competition that may threaten the growth of their business empire.One approach: “if you can’t beat ‘em, join ‘em.” Pursuing horizontal integration in the form of a merger. A merger usually occurred when one corporation bought out the stock of another. A firm that bought out ALL its competitors could achieve a monopoly, or complete control over its industry’s production, wages and prices.How to create a monopoly: one way was to set up a holding company, a corporation that did nothing but buy out the stock of other companies. Headed by J.P.Morgan (banker) US Steel was one of the most successful holding companies. In 1901 when it bought Carnegie Steel – it became the world’s largest business.

Standard Oil was established by John D. Rockefeller. He approached mergers differently, 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 corporation. In return, the companies were entitled to dividends on profits earned by the trust. Trusts were not legal mergers. Rockefeller used a trust to gain total control of the oil industry in the US. What strategies enabled big businesses to eliminate competition? Big Businesses formed partnerships to create monopolies. They merged small companies into large corporations. They aimed for total control of an industry, so that they could fix prices and wages to their advantage.

Rockefeller and the “Robber Barons” By 1890, he controlled 90% of the refining business. He reaped huge profits by paying his employees extremely low wages and driving his competitors out of business by selling his oil at a lower price that it cost to produce it. Then, when he controlled the market, he hiked prices far above original levels.Alarmed at these tactics, his critics began to call him and other industrialists, robber barons. BUT they were also philanthropist. Although he kept most of his assets, he still gave away over $500 million establishing the Rockefeller Foundation, providing funds to found the University of Chicago, and creating a medical institute that helped find a cure for yellow fever. Carnegie donated about 90% of the wealth he accumulated during his lifetime. His fortune still supports the arts and learning today. He said that “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 most to the hive even after they have gorged themselves full.”Do you agree with Carnegie’s defense of millionaires?

Sherman Antitrust Act 1890: the government was concerned that expanding corporations would stifle free competition. This act made it illegal to form a trust that interfered with free trade between states or with other countries. Prosecuting this would not be easy. The terms were not clearly defined as to what a “trust” was. Also, when firms like Standard Oil felt pressure from the federal government, they simply reorganized into single corporations. The Supreme Court threw out 7of 8 cases. Eventually, the gov’t stopped trying to enforce the Sherman Act and the consolidation of businesses continued.Businesses were concentrated in the North where natural and urban resources were plentiful. The South – still recovering from the CW – had a lack of capital (money for investments). After the CW, people were unwilling to invest in risky ventures. How did economic factors limit industrialization in the South? The South had a devastated economy from the CW. It was at the mercy of Northern railroad companies for transporting goods to markets. It also paid added costs for raw materials due to high tariffs on raw materials and imported goods. Also, a lack of skilled workers.

Labor Unions Emerge: As businesses became powerful, it seemed necessary for workers do consolidate their forces also. Although Northern wages were higher, exploitation and unsafe working conditions drew workers together across regions in a nationwide labor movement. Laborers – skilled/unskilled, male/female, black/white – joined in unions to try to improve their lot in life.Steel Mills: one of the largest employers – demanded 7 day work weekSeamstresses: like factory workers worked 12 or more hours a day – 6 days a wk.No vacation, sick leave, unemployment compensation, or reimbursement for injuries suffered on the job – which were common. Wages so low that everyone in the family had to work to survive. Many had to put up with horrible conditions (sweatshops) with little choice. How did industrial working conditions contribute to the growth of the labor movement? Poor working conditions and low wages forces workers to organize into unions to demand fair treatment.Arbitration: a method of settling disputes in which both sides submit their differences to a mutually approved judge.

Union Movements: As labor activism spread – 2 major types of unions made great gains under forceful leaders – Craft Unions and Industrial Unions. Craft unionism: Skilled workers from one or more trades. Samuel Gompers leader of the AFL American Federation of Labor – focused on collective bargaining (negotiation between representatives of labor and management) to reach written agreements on wages, hours and working conditions. They used strikes to win higher wages and shorter workweeks. Industrial Unionism: some labor leaders felt that unions should include all laborers – skilled and unskilled in a specific industry. Eugene Debs was their leader. He turns to socialism – they don’t like capitalism. He worked within the labor movement to achieve better conditions for workers. How did craft unions and industrial unions differ? Craft unions included skilled workers from many industries. Industrial unions included skilled and unskilled workers from a specific industry.

Socialism and the IWW (Industrial Workers of the World) Socialism (an economic and political system based on government control of business and property and equal distribution of wealth): carried to its extreme form – communism (Marx) would result in the overthrow of the capitalist system. The American labor-movement’s goal was to work within the labor movement to achieve better conditions for workers. Radical unionists and socialists in Chicago organized the IWW or Wobblies headed by William “Big Bill” Haywood. The Wobblies included miners, lumberers, and cannery and dock workers. They also welcomed Af/Am. Their membership never topped 100,000. Their only victory strike was in 1912, yet the Wobblies like other unions gave dignity and a sense of solidarity to unskilled workers.

Strikes turn violent: Industry and government responded forcefully to union activity, which they saw as a threat to the entire capitalist system.The Great Strike of 1877: July, workers for the Baltimore and Ohio (B&O) RR struck protesting the second wage cut in 2 months. Work stoppage spread to other lines – even freight and passengers were stopped for more than a week. Several governors asked the President (Hayes) to intervene – REASON: the strikers were impeding interstate commerce. Federal troops were brought in and ended the strike. Haymarket Affair: encouraged by the 1877 strike, labor leaders continued to press for change. May 1886, 3,000 people gathered at Chicago’ Haymarket Square to protest police brutality – a striker had been killed and several wounded at the McCormick Harvester plant the day before. The crowd was dispersing when the police arrived. Someone tossed a bomb into the police line. Police fired on the workers; 7 police and several workers died in the chaos. The speakers at the rally and 5 radicals were arrested and charged with inciting a riot. All 8 were convicted – 4 were hanged- one commits suicide in prison; After the Haymarket riot, the public began to turn against the labor movement.

How did the 1877 strike and Haymarket cause the public to resent the labor movement? The public began to associate labor activists with violence and danger. Pullman company strike: With the panic of 1893 and the following depression, Pullman laid off more than 3,000/5,800 workers and cut wages of the rest by 25 – 50 % without cutting their rent. Workers took home $6 after paying rent. When Pullman Co. failed to increase wages or lower rents, Eugene Debs asked for arbitration, Pullman refused. His trains were boycotted. Pullman hired strikebreakers – it turned violent – Pres. Cleveland sent in federal troops. Debs was jailed. Strikers were fired and RR blacklisted others.Mother Jones ( Mary Harris Jones)- The most prominent organizer in the women’s labor movement. She supported the Great Strike of 18777, and later organized for the UMW (United Mine Workers of America). She had death threats, jail with coal miners. In 1903 she exposed the cruelties of child labor. She led 80 mil children – many with horrible injuries – on a march to the home of Pres. T. Roosevelt. Their crusade influenced the passage of child labor laws.

Working conditions in the garment industry/factories could no longer be ignored after the fire broke out at the Triangle Shirtwaist factory in NYC March 25, 1911. The fire spread quickly engulfing 8,9,10 floors. Workers could not get out because management had locked the doors. There was no sprinkler system and the single fire escape collapsed almost immediately. 146 women died – some found huddled with their faces raised to a small window. The public was outraged especially after a jury acquitted the factory owners of manslaughter. In response, the state of NY set up a task force to study factory working conditions.What factors made the Triangle Shirtwaist fire so lethal? The factory had only one fire escape and no sprinklers. The factory was full of cloth and oil. The more powerful the unions became, the more fearful the employers became. Management refused to recognize unions as representatives of workers. Many employers forbade union meeting, fired union members, and forced new employees to sign “yellow dog contracts” swearing that they would not join a union.

Industrial leaders, with the help of the courts, turned the Sherman Antitrust Act against labor. All a company had to do was say that a strike, picket line, or boycott would hurt interstate trade and the state/fed gov’t would issue an injunction against the labor action. Legal imitations made it more difficult for unions to be effective. Despite the pressure, workers – especially in skilled jobs – view unions as a powerful tool.

Were the tycoons of the late 19th century ruthless robber barons or effective captains of industry? Justify your answer.

Read the Visual Summary in the Chapter 6 Chapter Assessment at the very end of the chapter.