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Factors of Production. Bessemer process – steel Carnegie brought the process under one roof – price fell from $100 a ton n 1870s to $12 a ton by 1900 New goods, new demands, new markets RRS (heavier load bridge building (longer spans, heavier loads: Brooklyn Bridge)

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Factors of production
Factors of Production

  • Bessemer process – steel

    • Carnegie brought the process under one roof – price fell from $100 a ton n 1870s to $12 a ton by 1900

    • New goods, new demands, new markets

      • RRS (heavier load bridge building (longer spans, heavier loads: Brooklyn Bridge)

      • architecture (vertical building: Jenney's Home Insurance, Louis Sullivan, etc)

      • military (steel ships, weapons) simple stuff (nuts, bolts, mass produced & standardized)

Factors of production1
Factors of Production

  • New sources of power –

    • Water to anthracite coal to steam to electricity

      • Coal mines in PA supply the nation’s coal

      • Coal powered steam engines means factories do not need to be near water

    • 1878 Edison invented telegraph, ticker tape, and then electricity 1880

      • Set up research lab

      • Generators led to electric trolleys

Factors of production2
Factors of Production

  • RRS - built through combination of government and private actions

    • Government invested in rail systems; land grants, tax breaks, bought rail stock

    • Large RR form first “Big Business” in U.S.

      • Operate in multiple states, huge, expensive, old style management didn’t work

      • RR companies benefited tremendously from RR; profits led to corruption like (Credit Mobilier)

    • By 1890, largest system on earth, 165,000 miles; telegraph, and postal service too

Factors of production3
Factors of Production

  • Capital – private banking houses provided the huge sums of capital to construct large companies…enormous and necessary influence on the U.S.

    • JP Morgan Bank – funded and had a stake in 100s of companies

    • Banking houses and owners (financiers) had strong political/economic clout….gov did little to regulate

Factors of production4
Factors of Production

  • LABOR – vast, cheap labor supply; wanted easy-to –exploit

    • New Immigrants; children; women

Factors of production5
Factors of Production

  • BIG BUSINESS” prevails

    • Elite management emerges; small number of very wealthy men

      • Robber Barons – Andrew Carnegie, J.D. Rockefeller, Jay Gould

Models for big business
Models for Big Business

  • Organized themselves in two models:

    • Vertical Integration - control aspects of production all along the way. This makes you less dependent on those not under your financial control. Allows you to make your production more efficient. Carnegie did this in Steel

    • Horizontal Integration: control entire market of some aspect of production. Rockefeller did this to refine oil. (not drill for it, or transport). This maxs your profits by allowing you to set prices and eliminate competitors.

Big business
BIG Business

  • Big companies killed off smaller less efficient competitors; few laws about business practices, little fear of gov regulation

  • Depressions mark the US Economy in 1873-79 & 1893-1897.

    • Usually were created by overproduction. Sales go down, prices fall, lay-offs put millions jobless and out-of-money. The cycle affects all aspects of American economic life.

Global market
Global Market

  • Global Connections:

    • Second stage of industrialization was marked by application of science and technology to mass produce goods

    • GB received competition from US and Germany;

    • Standard Oil 2/3 of kerosene overseas; Singer sewing machine

    • Global economy is also erratic

Cities late 1800s
CITIES late 1800s

  • Urban America in the Industrial Age. City population booms…fueled by growth of urban industry.

    A. Cities had avail. labor, markets, trans, and now steam power (not tied to rivers)

    1.. US urban population is mostly fueled by immigrants from Europe seeking jobs.

New immigrants
NEW immigrants

The nature of immigration into US cities changes.

1. Pre-1880, most immigrants were from England, Germ, Ireland, etc. ‘Old Immigrants”

2. 1880 on, most come from South/East Europe: Italy, Poland, Russia, etc. “New Immigrants”

a. They are attracted by cheap steamboat passage, avail. jobs, bad conditions at home.

b. Approx. 1/3rd of these immigrants will eventually return home.

3. In the West, Mex. & China immigrants provide cheap labor, they do the least desirable jobs.

Social conditions of cities
Social Conditions of Cities

The Industrial City 1880-1900. Wealth/ethnic origin dictated what areas of the city you lived in.

1. US cities had strictly defined neighborhoods, this is not “melting pot.”!

2. The working class/poor live in the least desirable areas, usually near the factories

a. Ethnic Neighborhoods “Enclaves” dominated the American city of the era. These provided for the needs of those of that group (Italian bakery, church, school, grocery, etc.)

Working class
Working Class

Most of the Ethnic "Working-class" neighborhoods were slums. Few services, and massive overcrowding. 2nd generation leaves if they can (learning English is key)

- Political organizations unite ethnic groups. They are powerful and their power helps the city “bosses” run the city “machine”. Corruption is widespread, but accepted as a necessary step to power for immigrant groups.

Middle class
Middle Class

Middle Class neighborhoods grow as a large/growing middle class appears in/around the city

a. These neighborhoods were stable and had less transience. They were usually comfortably far away from factories.

b. The Middle class becomes a major part of the US economy. They have huge buying power…national consumer brands spring up to serve their needs

Middle class women
Middle Class Women

This relatively affluent lifestyle (and less kids!) frees up many middle class women

- They get new rights (property rights in marriage) and education Colleges for women, all male ones open up. Women get educated for jobs avail (teaching, nursing, clerks, etc)

- Free time and education mean more involvement in activities outside of the family. Women's Clubs, charity groups, reform groups (WCTU), literary clubs, etc.

- The advances of women in US did cause a backlash by traditional men. No suffrage yet!

Middle class men
Middle Class Men

Birth control advances – diaphragm – fewer babies, Men feared new freedoms and reinforced traditional roles for women

d. Education becomes more common for Middle class men and women….even working class!

- States with compulsory school laws increase. HS in 1870 - 170: in 1900 - 6,000. A major impact on the lower classes…who did not have access to education before this time.

- College attendance up; Industry needs professionals (lawyer, architect, accountants, etc)

Upper class
Upper Class

4. At first, the wealthy lived in lavish neighborhoods in the city (5th Avenue in NYC), but the crowded/dirty conditions of the late 1800’s city begin to drive the rich out to affluent suburbs

- The suburbs allowed for ample open space to construct huge estates. For ex: The wealthy in Philadelphia leave the city to settle “Main Line”

Transportation and the city
Transportation and the City

Transportation changes rapidly to accommodate the huge new city populations.

- Horse-drawn railcars, trolleys, els, subways define urban transport. But not for the poor!

- These new transport systems are so efficient, they allow for many to live outside of the city and commute to their job. Cities begin to slowly lose some of their middle class.


Labor force was separated by ethnic/social background – limited upward mobility

  • Protestant, native born whites got the tops: Skilled: mechanics, printers, engineer

  • Skilled Northern Euro Immigrants: miners, garment/tailors, brewers, etc.(old world)

  • Unskilled Southern/Central Immigrants. Bad industrial jobs, docks, diggers, manual

  • Blacks: Service jobs. Porters, janitors, servants.,,maybe even scab workers.

Labor conditions
LABOR Conditions

Factory working conditions for the lower classes were very poor

  • Long hours (10+/6days), low pay, unsafe/unsanitary, monotonous, few regulations

  • Little/no insurance, no safety nets for unemployed/disabled

Who worked
Who Worked?

Low pay meant everyone had to work

  • WOMEN - Earned significantly less than men. 1900: 20% of US women in labor force

    • Factory work most desirable (paid more), but hard to get. Women get low paying domestic work jobs (laundry, cleaning, etc.)

    • Women also were household managers (working or not). Labor saving devices were too expensive, so lots of manual labor.

  • Child labor was common to lower class families. Many left school to work to help family(no school laws yet)

Rich v poor
Rich v. Poor

  • Incomes of the era evolve into BIG gap between rich and poor

    • Unskilled workers poor pay, few increases, often pay cuts…no promotions, unrest rises

    • Skilled workers did see increase in income…rose into middle class

    • INCREDIBLE wealth found in top 10% (1% have 25%, 10% have 73% of wealth)

Growth of labor unions
Growth of Labor Unions

1. Profits: To increase profits, employers "speed up" aspects of production and slash wages.

a. Workers oppose by creating "honor production codes" that would have workers working at the same speed.

Growth of labor unions1
Growth of Labor Unions

Union Organization 1865-`1900

a. National Labor Union 300,000+ by 1870 Goal? 8 hour day

b. Knights of Labor : Terence Powderly, open to all workers, democratic, but not realistic, not efficient

a. Knights were anti-strike but were involved in several large strikes against RR; Jay Gould bitter enemy

b. Painted as anarchist, radicals – fed by wealthy, media, the gov; public view union leadership as extremists

Knights of labor
Knights of Labor

c. HAYMARKET RIOT – feeds this image 1886 (Chicago) 7 policemen killed by a bomb at a peaceful rally;

  • 8 anarchists were arrested, 3 executed; Knights NOT directly involved with Haymarket but public perceives them to be; membership and influence plummet

Factors of production

American Federation of Labor- Samuel Gompers 1886

a. Each trade is organized separately then linked together in overall union

b. Bread and Butter unionism – wages hours, safety, collbarg

c. By 1900, had 1 million members

- no women, no blacks, no unskilled laborers, no radicals

Big business is anti labor union
BIG Business is anti-labor union

a. Strikebreakers, spies, blacklists, yellow dog contracts, lock-outs

b. Companies had gov and media on their side; most solutions were anti-union

c. creates dangerous levels of worker unrest


1. Homestead Strike 1892: Carnegie/Frick used armed guards to attack strikers at a locked-out steel mill in Pittsburgh

a. Steel workers subject to burns, 12 hour day of hell; wages were cut after contract ran out


Pullman Strike 1894: Socialist Eugene Debs leads rail workers to oppose wage cuts. Riots between Strikers and federal troops called in Pres Cleveland…13 workers died; Rent, groceries, fees from Paycheck; cut wages in bad times but not rent

  • Debs refused to switch Pullman cars; injunction to end strike, mail service was disrupted

  • Supreme Court upholds right of injunction to stop strikes…major blow to labor

  • In Re Debs - upheld prison sentence for Debs; said injunction was legal to use against unions

  • Bellamy was influenced became a socialist and ran for president in 1900

Unions growth is hindered
Unions Growth is hindered

Union survive but factors prevent growth

a. Powerful owners, media portrayed as radicals, government was opposed

b. periodic downturn in economy hurt recruiting

c. Failure of business to IMPROVE conditions for worker will continue to push members to become active; reasons for unions to exist still persist.