The New Industrial Order

1. The New Industrial Order An industrial transformation—“industrial system” requires extraction, production, transportation, distribution, and finance systems—all getting more complex by the 20th Century Train travel had come a long way from the rough straight-back bench beginnings to the Pullman Palace Car, built for luxurious travel in the latter 1800’s.

2. The Development of Industrial Systems • Bessemer process—revolutionized transport, buildings, bridges • Petroleum industry—light and lubrication uses grow to transport w/ internal combustion—French/German • Environmental costs—vast use/vast waste Steel production comparisons. A modern Bessemer blast furnace, little changed in design from when the process for making large amounts of “cheap” steel was invented in 1856.

3. An illustration from U.S. patent 62,662. U.S. inventions went from 36,000 in first seventy years to 500,000 in the next thirty. • Edison’s contributions—“system and order” created something big every five months at Menlo Park invention factory Edison at Menlo Park “invention factory” Illustration for Edison’s Canadian patent 9282 for the phonograph, one of his favorite inventions.

4. George Westing-house, inventor of the RR air brake and one of the developers of the electric motor. He was Edison’s rival and just as talented. • The spread of an electrical power system—Wall Street demo led to production and delivery to commercial and domestic use • The problem of scale—vast distances had to be overcome • Telegraph—timely information as valuable as resources • Telephone—most valuable patent ever granted George Eastman, founder of Eastman Kodak photography company. He died by his own hand at 77 when a spinal disease prevented him from being active Alexander Graham Bell, saying, “Hey Watson, whatcha doing tonight?” He began his telephone work to aid the deaf and hard of hearing and stumbled upon an even greater revolutionary discovery. Samuel F.B. Morse, checking the latest Western Union stock report. He began career as an accomplished artist.

5. Cornelius Vanderbilt, a “robber baron” who said, “Law? Who cares about law! Hain’t I got the power?” • Sources of capital—financial institutions—banks, investment houses, insurance companies—facilitate “capital deepening” investment of individuals in big industry, such as RR’s • Advantages of the corporation—investment potential, unlimited life, limited liability, professional management • Global labor network—advertisements, pamphlets, agents draw on world labor supply—but 25-60% of immigrants return home • Migration chains—family, friends, contractors • Domestic sources—rural to city migration—their advantages over immigrants? Biltmore Estate in Asheville, NC—largest private home in U.S.—built by Cornelius’s grandson George. Vanderbilt University in Nashville, TN was endowed by Cornelius as he approached his last years for one million dollars, his only philanthropy.

6. Railroads: America’s First Big Business • Railroad time—four zones, each an hour apart • Pioneering trunk lines—main lines for “feeder lines” • The new managers—table of organization like a tree • Pooling—divide the pie, act as one, and don’t compete, but… • The new ways of raising money—stocks, investment banks, life insurance companies Daniel Drew, Jay Gould, and James Fisk, Jr., the money men and railroad sharks who fought with Cornelius Vanderbilt for control of the Erie Railroad.

7. The Growth of Big Business • The pool—Michigan Salt Association first: divide production, assign markets, double prices • Horizontal growth—joining with rivals, BUT… • Vertical integration—entire production process in one company • Keys to Carnegie’s success—buy cheap, hire skilled managers, undersell competition, integrate horizontally and vertically Carnegie mansion in New York City. It was four stories with 64 rooms and as up-to-date technologically as his steel mills. Andrew Carnegie, at the beginning and end of his phenomenal career; Carnegie Steel Works in Pittsburgh.

8. John D. Rockefeller controlled 90% of oil refining through a “trust,” then a holding company after Senator John Sherman’s Antitrust Act. J. P. Morgan used a holding company to form the first billion-dollar company, United States Steel, from Carnegie’s empire. • Rockefeller’s methods of expansion—bribing, spying, slashing prices, getting rebates and “drawbacks” from RR’s—monumental profits come after virtual monopoly • The trust—to avoid restrictive state laws, owners of vertical and horizontal companies give up control “in trust” and get certificates of trust paying hefty dividends • The holding company—a company holding controlling shares of other companies, allowed in New Jersey—same effect as trust • The merger movement—1893 depression spawned sellouts and buy-ups with single companies dominating whole industries END OF READING

9. Herbert Spencer, a British philosopher who took Charles Darwin’s theories one step farther. • The gospel of wealth —Carnegie’s idea that rich (and anyone can be rich) are to serve poor: organs, libraries • Social Darwinism— “survival of the fittest,” law of the jungle, competition is good (except robber barons eliminated competition) • Socialist Labor Party —proposed revolution giving workers control of production Daniel De Leon, a radical leader of the Socialist Labor Party; Henry George, a journalist who wondered how there could be so much poverty when industrial progress created so much wealth. William Graham Sumner, who fostered Spencer’s Social Darwinism in the United States.

10. Sherman Antitrust Act—used Congresses control of interstate commerce to outlaw monopolistic practices—BUT vaguely worded and weakly enforced • United States v. E. C. Knight Co.—manufacturers, as opposed to “trade and commerce,” outside scope of Sherman • The boom-and-bust cycle—banks run out of capital, business fails to spread wealth to its workers/consumers

11. The Workers’ World • Pattern of Industrial Work—machines, menial tasks, the clock: 6 days a week, 10 hours a day • Taylorism—more efficient, more robotic • Worker citizens—workers deserved a “competence”: bosses didn’t always agree • Rising real wages—more from lower cost goods than wage raises • Social mobility—slow, painful progress maintained “American Dream” Frederick W. Taylor, a “management engineer” who tried to improve factory efficiency by doing time and motion studies, setting up production systems, and awarding incentives.

12. A National Labor Union call for action among the membership. The Systems of Labor • National Labor Union—fair wages, worker management, 8-hour day: died in depression of ’73 • Terence Powderly—called for Knights to be “one big union” of skilled/unskilled, men/women, natives/immigrants, all religions, all races… BUT too diverse, uncontrollable Terence Powderly; a couple Knights dressed in lodge regalia.

13. Samuel Gompers, who used his Cigar Makers’ Union as a model for the broader-based American Federation of Labor. • Samuel Gompers– “pure and simple unionism”: no theories—just higher wages, fewer hours, safety, benefits • Failure of Organized Labor—AFL went horizontal but not vertical; divisions • Spontaneous protests • Molly McGuires—20 Mollys executed for 16 murders • Great Railroad Strike —1st national strike: 20% cut brings 12 bloody days, 100 dead, $10 million damage Labor and Capital meet on a flimsy board over the abyss of financial ruin.

14. Violence erupts at Haymarket Square when police come to break up an anarchist rally; Illinois Gov. John Peter Altgeld, who pardoned three “conspirators,” long after four others were hung. • Laundresses strike —threatened Atlanta w/ dirty clothes • Haymarket Square riot —unknown bomb-thrower sparks gunfight, kangaroo trial • Pullman Strike—Pullman and RR workers unite for nationwide strike that “obstructed mail delivery”; Feds called in • Management weapons– “yellow dog” contracts, blacklists, lockouts, injunctions 10 Days: The Homestead Strike [play video  2:51] Federal deputies break up the Pullman Strike so the mail can continue to be delivered.