AN INDUSTRIAL GIANT

1. AN INDUSTRIAL GIANT CHAPTER 17 (456-483)

2. ESSENTIALS OF INDUSTRIAL GROWTH Value of American manufactured products: 1859 – 1.8 billion 1900 – 13 billion Why did American manufacturing flourish? Plentiful natural resources The expansion of the nation’s borders Protective tariffs Plentiful foreign capital Plentiful immigrant laborers

4. ESSENTIALS OF INDUSTRIAL GROWTH “American ingenuity” New machines, processes and power sources became available: Cultivators, binders, and harvesters Grain milling led to packaged cereals Canned and processed foods Bonsack cigarette-rolling machine George B. Eastman – Kodak cameras Remington typewriters

5. ESSENTIALS OF INDUSTRIAL GROWTH There was also a dark side to all of this: These machines displaced jobs Corrupt business practices became common Stock manipulation Bribery Cutthroat competition Large monopoly businesses Worker exploitation

6. RAILROADS: THE FIRST BIG BUSINESS The railroads are the single most important factor in the growth and power of the United States 1865 – less than 35,000 miles of track 1875 – over 74,000 miles of track 1900 – over 193,000 miles of track 1890 – railroad revenues topped 1 billion 1890 – the US government brought 403 million

10. RAILROADS: THE FIRST BIG BUSINESS The railroads are the single most important factor in the growth and power of the United States Consolidated lines into integrated systems Trunk lines and branch lines Standardization: track size, time zones, signal systems, brake and coupling systems, accounting systems Technological advances: steel, air brakes, more powerful locomotives, Pullman cars, telegraph Economies of scale

11. IRON, OIL, AND ELECTRICITY Iron manufacturing almost as important as the railroads 1860 – 920,000 tons 1900 – 10.3 million tons Bessemer process – air blown into molten iron burns off the carbon, making steel 1870 – 77,000 tons 1890 – 5 million tons Pittsburgh becomes the steel capital of the country

13. IRON, OIL, AND ELECTRICITY The petroleum industry also boomed First well drilled in 1859 2-3 million barrels a year during Civil War By 1890, 50 million barrels Oil refining became important: Kerosene – used in lamps (replaces whale oil) Then gasoline, rhigolene, cymogene, lubricants, waxes, etc.

14. IRON, OIL, AND ELECTRICITY Telephone Invented by Alexander Graham Bell in 1876 by 1900, 800,000 phones in US American Telephone and Telegraph Company Electricity First true light bulb in 1879, Thomas Edison by 1889, 3000 electrical stations were up Electric motors changed industry forever

16. COMPETITION AND MONOPOLY Manufacturing output rises, manufacturing cost goes down, competition goes up – prices go down Railroads offered rebates to select big shippers Rebates were secret reductions below published rates Drawbacks were given when the railroad charged the shippers competitors extra, and gave some of the money back to the shipper

17. COMPETITION AND MONOPOLY It often became cheaper to ship or travel long distances than short ones Small shippers and business people did not have the advantages of rebates, and often were using the shorter routes Depression struck in the 1890,’ bankrupting many rail companies Many were reorganized, centralized, and thus very large corporations were created

18. COMPETITION AND MONOPOLY Andrew Carnegie – shrewd business man, $50,000 yearly income in 1868 Expanded when others contracted Developed processes to make steel out of other’s waste materials Eventually sold out to JP Morgan who created US Steel, the first billion dollar company – Carnegie received 250 million dollars

19. COMPETITION AND MONOPOLY John D. Rockefeller – Standard Oil Company By 1879, he controlled 90% of US refining Used rebates and drawbacks Undercut competitors Used bribery and spies regularly He was worth 800 million by 1892 A new form of company was created, a trust that oversaw many other businesses

21. COMPETITION AND MONOPOLY This was happening in many industries Telephones – AT&T Electricity – Westinghouse, GE Insurance – New York Life, Mutual Life Retailing – huge department stores, one-price stores

22. AMERICAN AMBIVALENCE TO BIG BUSINESS Laissez-faire – government noninterference or a “hands-off” approach Social-Darwinism – “survival of the fittest” On the other hand… Tariffs – taxes on foreign importers Railroad grants – government subsidies

23. REFORMERS George, Bellamy, and Lloyd – were minor socialists with many utopian ideas – had little effect on society or government The Marxists: The Communist Manifesto – 1848 Socialist Labor Party – 1877 The state should own all production Capitalism would destroy itself eventually

24. THE GOVERNMENT REACTS TO BIG BUSINESS The first real government regulation involved the railroads State legislature began setting maximum rates and outlawed unjust discrimination This kind of law was upheld in Munn v. Illinois by the Supreme Court Precedent was now set for all kinds of regulation to be enacted

25. THE GOVERNMENT REACTS TO BIG BUSINESS Interstate Commerce Act – 1887 The federal government could regulate interstate traffic Rebates, drawbacks, and other practices were made illegal Schedules of rates must be published and could not be changed without notice Interstate Commerce Commission (ICC)

26. THE GOVERNMENT REACTS TO BIG BUSINESS Sherman Antitrust Act – 1890 Supposed to restore competition between businesses Outlawed any kind of monopoly – businessmen could not group together in any way to fix prices or hinder competition

27. THE LABOR UNION MOVEMENT The union was the worker’s response to big business: A combination designed to eliminate competition for jobs and to provide efficient organization for labor By the 1870’s many industries had been unionized Many union leaders were visionaries with little in common with the workers they represented

28. THE LABOR UNION MOVEMENT Knights of Labor Promoted communal ownership of mines, factories, etc. Open to blacks (often segregated), women, immigrants and unskilled workers Sought an 8 hour work day Haymarket Square – anarchists toss a bomb into a group of police attempting to break up a meeting – 7 are killed, others injured

29. THE LABOR UNION MOVEMENT American Federation of Labor Replaced the Knights of Labor Fought for wage increases, better working conditions, shorter hours, etc. Samuel Gompers – president between 1886 and 1924 Promoted strong organizations, the use of the ballot, all to improve the lot of workers

31. LABOR MILITANCY REBUFFED The strike became an important weapon Capital vs. Labor became common Railroad strike of 1877 – over wage reductions – shut down 2/3 of rail mileage – major violence – President Hayes sent the army to intervene 1892 – Coeur d’Alene, Idaho – silver miners

32. LABOR MILITANCY REBUFFED The strike became an important weapon Capital vs. Labor became common 1892 – Homestead steel plant, Pittsburgh workers attacked 300 private guards – several killed – eventually after several months, the union was broken 1894 – Pullman strike – because of wage cuts – the ARU joined in and refused to move trains with Pullman cars attached – Eventually Cleveland sent troops to handle it

33. WHITHER AMERICA, WHITHER DEMOCRACY? Wealth and power seemed to be falling into fewer hands Centralization allowed businesses to be more efficient, and living standards rose But people were still afraid and unsure – the crushing of the Pullman strike demonstrated the power of the courts, the government, and the big businessmen