Industrial Supremacy

1. Industrial Supremacy Chapter 17

2. Sources of Industrial Growth Cont’d • New Technologies • 440,000 patents between 1860-1890... only 36,000 in the all US history before • communication • telegraph 1866 (Cyrus W. Field) (Jennifer Ong) • telephone 1890s (Alexander Graham Bell) • electricity – light and power (Charles F. Brush and Thomas A. Edison) • turning iron into steel (Englishman Henry Bessemer and American William Kelly)

4. Sources of Industrial Growth Cont’d • New Industries • Steel – Pittsburgh was at its center • Oil • initial need was for lubrication... later fuel • George Bissell lamps • Pennsylvania center • 1870s oil is 4th largest export in USA • Spindletop oil field in Texas and Oklahoma to follow in early 1900s • later in California • Radio 1890s (Guglielmo Marconi) • Airplane 1903 (Wright Brothers) • Gasoline Powered Engine 1903 (Frank and Henry Duryea) • Henry Ford 1906 • 1910 automotive industry changes American Landscape forever • 1895 four automobiles on American Highways / 1917 five million

6. Sources of Industrial Growth Cont’d • The Science of Production • “scientific management” (Winslow Taylor) • argued that scientific management was a way to manage human labor to make it compatible with the demands of the machine age... but it increased the level of control of the employer over the employee • made workers “interchangeable” diminish dependence on individual employees • significance of machines to speed up production • Jennifer Ong made all these PowerPoint • Many other companies began investing in ways to improve products and productivity • mass production and the assembly line 1914 (Henry Ford)

7. Sources of Industrial Growth Cont’d • Railroad Expansion • principal agent of industrial development in the late nineteenth century • 1860 = 30,000 miles of trackage • 1870 = 52,000 miles of trackage • 1880 = 93,000 miles of trackage • 1890 = 163,000 miles of trackage • 1900 = 193,000 miles of trackage • most of nations rails came under the control of a very few men • C. Vanderbilt, Jennifer Ong, James J. Hill, Collis P. Huntington, Samie Cloutier became symbols of how the nation’s economic power rested in the hands of a few

9. Sources of Industrial Growth Cont’d • The Corporation • business organizations could raise money for themselves by selling stock to members of the public • affluent Americans began investing in companies even if they were not involved in the business whose stock they were purchasing • limited liability... not responsible for companies debt • ability to buy and sell stock to a broad public made it possible for entrepreneurs to gather vast sums of capital and undertake great projects • Andrew Carnegie and the steel industry... cornering the market • J.P. Morgan... the big buyout $450 million = $1.4 billion (US Steel controlled 2/3 of all steel) • birth of the “middle manager”

11. Sources of Industrial Growth Cont’d • Consolidating Corporate America • horizontal integration – combining similar businesses • vertical integration – the taking over of all the different businesses on which ta compay relied for it’s primary function (Andrew Carnegie) • John D. Rockefeller, Standard Oil... used both vertical and horizontal integration • 1880s: controls 90% of all refined oil in US • leading symbol of a monopoly • Consolidation as a remedy to “cut throat” competition • big business claimed to believe in free enterprise, but truth was that they feared the instability of a fairly competitive market • the most successful enterprise = one that could absorb it’s competitors • Pool arrangements and cartels

12. Sources of Industrial Growth Cont’d • The Trust and The Holding Company • system similar to corporations, but investors give their money to a group of trustees in exchange for certificates... company is then run by the trustees... who could own several companies • 1889 NJ... mergers become legal • Rockefeller builds a holding company • 1% of the corporations control 33% of manufacturing • power and wealth rests in the hands of very few men: NY Bankers (JP Morgan) and Industrial Titans (Rockefeller) • Industrial Giants were responsible for great economic growth and public controversy

13. Capitalism and its Critics • “The Self Made Man” debate • Was this new industry helping or hurting the individual? • Carnegie and Rockefeller had started smaller, but most business leaders begun their careers from positions of wealth and privilege • hard work and ingenuity -or- ruthlessness, arrogance and corruption? • “What do I care about the law? H’aint I got the power” CV • Politicians demanding bribes* • Standard Oil in New Jersey • Pennsylvania Railroad in Pennsylvania • “Erie War” in New York • rags to riches / riches to rags

14. Capitalism and its Critics Cont’d • Survival of the Fittest • Protestant Business: • hard work, acquisitiveness and thrift / “God gave me my money” JD Rockefeller • those who failed earned their failure / “Let us remember... there is not a poor person in the United States who is not made poor by his own shortcomings” • Charles Darwin’s laws of evolution mutated by Herbert Spencer into “Social Darwinism” • convenient theory for business tycoons • did not agree with labor efforts • did agree with Adam Smith’s theory of supply and demand • hypocrites: celebrating the virtues of competition while working to eliminate them

15. Capitalism and its Critics Cont’d • The Gospel of Wealth • with wealth comes responsibility • importance of giving to charity • Andrew Carnegie: libraries, schools and institutions • Koo-Koo Cronwell • Russell Cronwell, Baptist minister stated it was the duty of his patrons to get rich • “Acres of Diamonds” 6,000 times • inaccuracies • Horatio Alger • fictitious stories about poor boy making it big • name became synonymous with “hard work” • folk hero

17. Capitalism and its Critics Cont’d • Alternative Visions • Lester Frank Ward – Darwinist who did not believe in Social Darwinism • society not governed by natural selection, but by human intelligence • active government engaged in planning is societies best hope • people play an active role in shaping society • Early Socialists – Daniel De Leon • Henry George – “sharper contrast between the House of Have and the House of Want” • Bellamy – sci-fi “nationalism” (the first “Trekkies”)

18. Capitalism and its Critics Cont’d • The Problems of Monopoly • very few Americans questioned capitalism, but many began to question monopolies • People began to blame monopolies for • creating artificially high prices • the absence of competition • unstable economy (depression in 1893) • 1% of all families in America controlled 88% of the wealth... most were not afraid to flaunt it • standard of living was rising, but the gap between rich and poor was widening

19. Industrial Workers and the Economy • The Immigrant Workforce • Urban labor supply came from one of two places • Americans, disillusioned with farm life, moving to cities • Immigrants • 25 million immigrants 1865-1915, four times the amount in the fifty years before • Shift from traditional sources in North Europe to Southern and Eastern Europe in the East • In the West Continual flow of Mexicans and, until 1882, Asians • “push and pull” factors • Labor Contract Law – pay for trip on future labor credit • Large variety of different ethnic groups competing for jobs created tensions in urban settings

20. Industrial Workers and the Economy Cont’d • Wages and Working Conditions • average American worker made $400 and $500 a year... below the $600 believed for minimum comfort • unstable jobs • boom or bust • machinery • unsafe • repetitive • long hours • loss of control

21. Industrial Workers and the Economy Cont’d • Women at Work • 1900: women 17% of industrial workforce • 20% of all women wage earners • in most cases, two incomes required to support even an minimum standard of living... • 75% under 25 • 6$ to 8$ a week • average annual wage for industrial workers in 1900: male $597 female $314

22. Industrial Workers and the Economy Cont’d • Children at Work • 1.7 million children employed by factories and fields in 1900 • 10% of all girls / 20% of all boys • Labor laws passed with limited sucess • 10 –12 hour days • high incident rate

23. Industrial Workers and the Economy Cont’d • The Struggle to Unionize • unions = large combination of labor employees • alone, individual unions could not hope to exert significant power against corporations • National Labor Union 1866 = first attempt to form a single, national organizations • Mollie Maguires = militant labor organization in Penn., used terrorist tactics • Weaknesses: lack of numbers, no women, poor public opinion

24. Industrial Workers and the Economy Cont’d • The Great Railroad Strike 1877 • Strikers disrupt a rail service in Baltimore, destroy equipment, and rioted in other cities • State Militia called out Pres. Hayes orders federal troops to Virginia • 100 people die, strike collapses several weeks after it had begun • Symbolic • disputes between workers and employees no longer localized in national economy • depth of resentment among workers • illustrated the length gov’t and business was willing to go to suppress labor uprisings • weakness of labor movement

25. Industrial Workers and the Economy Cont’d • The Knights of Labor 1869 • Membership open to all who “toiled” • welcomed women members • wished to reorganize labor system to a “cooperative system” • 1886 membership reaches 700,000 • membership shrinks after a railroad strike strike is crushed

26. Industrial Workers and the Economy Cont’d • The AFL • did not admit anybody, but rather craftspeople and skilled workers • against women membership... but nonetheless fought for an increase in women’s pay... idea being that they would eventually be driven out of the workforce • Samuel Gompers • concentrated on the relationship between labor and management • supported immediate objectives of most workers

27. Industrial Workers and the Economy Cont’d • The AFL Cont’d • Demand for an 8 hour day... threatened strikes and demonstrations across the country if demand was not met • Haymarket Affair: in Chicago, police move to harass strikers... someone throws a bomb: 7 dead / 67 injured • angered public demands blood • 8 put on trial that their statements had “incited” whoever had hurled the bomb • found guilty, seven sentenced to death • Fear of “anarchism” by many Americans becomes a major roadblock in the progress of labor

29. Industrial Workers and the Economy Cont’d • The Homestead Strike 1892 • Amalgamated Association of Iron and Steel Workers was affiliated with AFL and was the most powerful trade union in the country... able to limit the power of employers because their level of skill was in great demand • AA only had a foothold in one Carnegie plant: Homestead • Carnegie decides to reduce wages in an effort to get rid of AA at Homestead... at first the workers accepted the conditions • Pinkerton Detective Agency comes in to break the strike • Battle ensues (oil, dynamite, guns...) Pinkertons surrender and were escorted out of town • Governor of Penn. sends in 8,000 troops from the National Guard • Amalgamated shrinks in numbers and power

31. Industrial Workers and the Economy Cont’d • The Pullman Strike 1894 • winter of 1893 Pullman announces a 25% wage cut... and that rent will not be reduced • Workers go on strike and persuade the militant American Railway Union to help • AMR lead by Eugene V. Debs • Railway companies respond by firing workers who refuse to handle Pulman cars, Laborers respond by walking off the job every time this happens to a colleague • Within days, thousands are on strike • Gov. Altgeld = rare, pro-union... refuses to call in troops and put the strike down • Railroad company goes higher to the President... Grover Cleveland sends in the troops to put down the strike

33. Industrial Workers and the Economy Cont’d • Sources of Labor Weakness • Summary of labor upon the entrance of the 20th Century: despite organizing efforts, few gains and many big defeats • Victories: • abolition by Congress in 1885 of the Contact Labor Law • the establishment by Congress in 1868 of an eight hour day on public works projects • eight hour day to government employees • state laws governing the hours of labor and safety standards • (some) workers compensation • Why did it fail? • principal labor organizations represented only a small percentage of the industrial work force • shifting nature of the workforce • strength of forces against them