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Business, Labor, and Technology in the Gilded Age

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  1. Business, Labor, and Technology in the Gilded Age

  2. The “Gilded Age” • The term "Gilded Age" was coined by Mark Twain and Charles Dudley in their 1873 novel The Gilded Age: A Tale of Today. • It generally refers to the decades between the end of reconstruction and the turn of the century (about 1870 to 1900). • It was a time of unprecedented industrial growth, “boom and bust” economy, tumultuous politics, and a wave of immigration. • It is sometimes referred to as the "Second Industrial Revolution."

  3. Some Gilded Age Political Cartoons • The word "monopoly" could characterize this era, in which a few trusts and individuals thrived and amassed fortunes while many Americans lived in poverty and lost their personal autonomy to the corporate machine. • The Gilded Age was a formative period in American history, in which the standards for modern business and economics were just beginning to take shape.

  4. 1868: Congress enacts an 8-hour workday for workers employed by the government. 1869: The transcontinental railroad is completed. 1870: Rockefeller forms Standard Oil of Ohio 1873: The Financial Panic of 1873 begins. 5,183 business fail. 1876: Bell patents the telephone. 1877: Edison invents the phonograph. 1879: Edison invents the light bulb 1894: The American Railway Union’s strike and boycott of Pullman cars end in violence. 1886: The Haymarket riot occurs in Chicago following a demonstration of over 300,000 workers for 8 hour work days. American Federation of Labor Founded. 1890: Sherman Anti-Trust Act is passed and promptly ignored. 1892: The Homestead Strike at one of Andrew Carnegie’s steel works ends in violence. Business, Labor, and Technology in the Gilded Age: Timeline

  5. "Robber Barons" or "Captains of Industry"? • Individual tycoons played a pivotal role in making the US the leading industrialized nation in the world . • The debate continues over whether these men were greedy and corrupt "robber barons" or innovative and enterprising "captains of industry.” • Each were instrumental in the "corporate revolution" of the time period, in which new business practices led to the industrial advantages of economies of scale.

  6. J.P. Morgan • JP Morgan was one the most influential and powerful figures in the financial world. • His philosophy was that only ruthless competition would lead economic stability. • He began a series of consolidations in the railroad and other industries, leading the formation of colossal corporations including US Steel and General Electric. • The cool and rational Morgan was a avid art collector and once served as President of the Metropolitan Museum of Art. Morgan preferred not to be photographed!

  7. Jay Gould • Railroad entrepreneur Jay Gould considered himself to be one the most hated men of the 19th century. • Gould was the archetypal "robber baron," constantly mired in scandal and corruption. • One of his major achievements was helping Western Union ascend to dominance in the telegraph industry.

  8. J.D. Rockefeller • Rockefeller built a massive fortune in the oil industry using practices including swallowing up competitors and negotiating exclusive deals with railroad companies. • In 1911, Standard Oil's monopoly was dissolved in a Supreme Court decision based on the 1890 Sherman Anti-Trust Act. • Rockefeller was often maligned in the press and some perceive him as one of the most hated figures of his day. • By the time of his death, Rockefeller, a devout Baptist, had given away over $500 million in philanthropic pursuits.

  9. Standard Oil • Standard Oil employed vertical and horizontal integration tactics on a grand scale to grow the business into a monopoly that controlled virtually all the oil production in the nation. • In 1882, the company combined its interests across dozens of states into a trust. • John D. Rockefeller, the company's president, became the richest man in the world for a time, earning him both the admiration and disdain of ordinary Americans. “Next!,” 1904

  10. Rockefeller on Industrial Combinations (1899) “It is too late to argue about advantages of industrial combinations. They are a necessity. … Their chief advantages are: 1. Command of necessary capital. 2. Extension of limits of business. 3. Increase of number of persons interested in the business. 4. Economy in the business. 5. Improvements and economies which are derived from knowledge of many interested persons of wide experience. 6. Power to give the public improved products at less prices and still make a profit for the stockholders. 7. Permanent work and good wages for laborers.” “The dangers are that the power … may be abused… this fact is no more of an argument against combinations than the fact that steam may explode is an argument against steam. Steam is necessary and can be made comparatively safe. Combination is necessary and its abuses can be minimized… most legislative attempts have been an effort not to control but to destroy; hence their futility.”

  11. Andrew Carnegie • Andrew Carnegie, a Scottish immigrant, is known for being a truly self-made man. • Though brilliant in business, workers and labor unions found him dismissive of their concerns. • At the turn of the century, he sold his steel company to JP Morgan (who integrated it into the mammoth US Steel) and dedicated his time and fortune to philanthropy. • He famously wrote, "the man who dies rich, dies disgraced."

  12. The Steel Industry • Carnegie's steel mills set new standards for the steel industry. Including strategies to increase efficiency, cut costs, vertically integrate, and invest in new technology. • Steel was produced at profoundly reduced prices, which made engineering feats like bridges and tall buildings more affordable. • His obsession with cutting costs translated to low wages and dangerous working conditions for laborers. • J.P. Morgan bought out Carnegie's business and integrated it into U.S. Steel, which became the world's first billion-dollar corporation in 1901. The red line indicates that Carnegie produced 30% of steel in the country. Notice the spike after 1896.

  13. The Steel Industry

  14. The Steel Industry Many companies incorporated by U.S. Steel (vertical integration), as well as related industries absorbed by the company (horizontal integration).

  15. Andrew Carnegie and The Gospel of Wealth • The spectacular wealth of some industrialists was sometimes rationalized by the belief that they were doing good for society. Carnegie, one of the most generous philanthropists of his day, wrote in defense of the successful man who acquires a vast fortune: “Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; … administering [wealth] for the community far better than it could or would have done for itself. … the man who dies leaving behind him millions of available wealth, which was his to administer during life, will pass away ‘unwept, unhonored, and unsung… Of such as these the public verdict will then be: "The man who dies thus rich dies disgraced.’ ”

  16. Social Darwinism • The term "Social Darwinism" refers to a popular pseudo-scientific justification for racism • It claims that the biological theories of evolution and natural selection can also be applied to human society. • It implies that variations between ethnic or racial groups are deterministic of their social rank and those inherently inferior to others should be left to die out as a result of their own incompetence. • It was a popular view amongst the intellegencia of the day, perhaps because of its scientific veneer.

  17. The Changing Status of Labor • A hallmark of the late 19th and early 20th centuries is the expanding output of American industry. • Mechanization reduced the prices of manufactured goods, but wages fell and workers did repetitive tasks for long hours under strict supervision. • The artisanal ideal of independence eroded with the growth of mass-production. • Compensation through "store pay" and "scrip wages," redeemable only at the store owned by the employer, proliferated.

  18. Child Labor • Industrialization, the tumultuous economy, and the influx of poor immigrants made cheap child labor an institution in all kinds of industries and occupations. • Up to 25% of children were employed in manufacturing by 1910. • As the Progressive Era dawned, reformers began addressing this issue.

  19. The Knights of Labor • As corporations gained more power and specialization and mechanization of labor undermined the status of the skilled laborer, workers sought to organize. • The Knights of Labor was founded as a secret organization in 1869. • They garnered opposition from the more prevalent craft unions because they included anyone from any industry, including African Americans and women. • They espoused a utopian vision for the future and advocated social reforms. • Membership peaked in the 1880's. Many deserted the Knights because they felt they could get more done in a more narrowly focused, aggressive organization.

  20. Preamble to Constitution of the Knights of Labor “The recent alarming development and aggression of aggregated wealth, which… will invariably lead to the pauperization and hopeless degradation of the toiling masses, render it imperative, if we desire to enjoy the blessings of life, that a check should be placed upon its power … and a system adopted which will secure to the laborer the fruits of his toil; and as this much-desired object can only be accomplished by the thorough unification of labor, and the united efforts of those who obey the divine injunction that "In the sweat of thy brow shalt thou eat bread," we have formed the Noble Order of the Knights of Labor With a view of securing the organization and direction, by cooperative effort, of the power of the industrial classes; … calling upon all who believe in securing "the greatest good to the greatest number" to aid and assist us…”

  21. The Haymarket Affair • Workers rallied around the idea of an 8 hour workday. • On May 1, 1886, the largest spontaneous labor demonstration in the nation's history occurred in Chicago. • Two days later, police shot and killed 2 striking unionists demonstrating against "scabs.” • A bomb exploded at Haymarket Square as police tried to break up a demonstration against the shooting of the unionists. • Mass arrests of radicals followed and 8 anarchists were convicted of the bombing under questionable circumstances. • The incidents renewed fears of radicalism and led some employers to develop blacklists and strengthen their resolve against strikers' demands.

  22. The Haymarket Affair

  23. The American Federation of Labor • The American Federation of Labor was founded in 1886 by Samuel Gompers as an alliance of craft unions comprised of mostly skilled workers. • The AFL focused on concrete, labor-related goals like increased wages and the right to collective bargaining. • Unlike the Knights of Labor, the AFL did not seek to overturn the industrial wage and hour system in favor of a new social order. • The organization became the voice of "mainstream" American labor. • The AFL remained the most powerful labor organization until 1955, when it merged with the CIO. Gompers was President of the AFL (except one year) from 1886 to 1924.

  24. Selected Gompers Quotes • “It is a fact that the employing class . . . endeavor to get the greatest amount of labor for the smallest wages for which they can get employees. … workers have always endeavored to get the greatest amount of money for the smallest amount of work.  Under these conditions it is impossible for capitalists and laborers to have common interests. ...”  • “There seems to me no money … is more dishonorable to us as a nation than that insatiable greed which drags the children into the mills and factories and grinds their young bones into dollars. … the child of the nineteenth century should be something more than a machine.” • “A strike on any scale is merely a trial of industrial strength, an application of the law of  "supply and demand," … How can a society based on free contract and free competition object to such a method of determining the comparative strength and endurance of capital and labor?” • “Freedom of speech is the safety valve of society; if it is obstructed, there will be an explosion somewhere. It is dangerous to tamper with this right of ours.”

  25. The Pullman Strike This paycheck amounted to 12 cents after rent and expenses were deducted. • The 1894 Pullman Strike is the quintessence of labor-management relations during the era corporate tycoons that was the Gilded Age. • George Pullman, the owner of the Pullman Palace Car Company, provided and controlled his employee's lives. They lived in the town of Pullman, attended Pullman schools and churches, shopped at Pullman Stores, and used Pullman utilities. • As one employee famously described it, ""We are born in a Pullman house, fed from the Pullman shops, taught in the Pullman school, catechized in the Pullman Church, and when we die we shall go to the Pullman Hell."

  26. The Pullman Strike • When Pullman slashed wages to protect profits without lowering prices and rent , the American Railway Union (ARU) led by Eugene V. Debs initiated a massive strike and a boycott of trains using Pullman cars. • The US Attorney General obtained a court injunction against the workers for interfering with the delivery of the mail and President Cleveland sent federal troops to enforce the order and crush the strike. • Violence claimed the lives of over 30 people by the end of the strike. • It was the first use of federal troops to break a strike.

  27. The Pullman Strike • The strikers were forced to return to work on Pullman's terms, Debs served a prison sentence for disobeying the injunction, and the ARU was disbanded. • The hated George Pullman died 2 years later in fear that his tomb would be defiled.

  28. "What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must."-- Mark Twain, 1871

  29. Citations • Slide 2: • Slide 3: Slide 4: • Slide 5: • Slide 6: • Slide 7: • Slide 8: • Slide 9: • Slide 10: • Slide 11: • Slide 13: : • Slide 14: • Slide 15: • Slide 16: • Slide 17: • Slide 18: • Slide 19: • Slide 20: • Slide 21: • Slide 22: • Slide 23: • Slide 24: • Slide 25: • Slide 26: • Slide 27: • Slide 28:,