Period 6 (1865-1898)

The Rise of Industrial America

Eastern Trunk Lines

Definition: Major railroad networks in the eastern U.S. that connected major cities and improved transportation efficiency.

Purpose: Created a more organized and standardized rail system, reducing inefficiencies from earlier disconnected rail lines.

Impact: Boosted trade, industry, and westward expansion by linking eastern cities to the Midwest.

Cornelius Vanderbilt

Business magnate (steamboats) and philanthropist who played a significant role in the development of the railroad industry in the United States, particularly through the consolidation of several railroads into the Eastern Trunk Lines.

Transcontinental Railroads

Railroads that span the continental United States, connecting the East Coast to the West Coast, facilitating transport and commerce. Started during Civil War to connect California to the Union

Union Pacific

From Nebraska westward to the Great Plains. Employed war veterans and Irish immigrants.

Central Pacific

Company that built the western segment of the first transcontinental railroad, connecting California to the eastern rail network. It relied heavily on Chinese laborers.

American Railroad Association

Split the US into four time zones in 1883. Railroad time became standard US time —> show Railroad influence of daily life

Speculation

• Definition: Risky investment in railroads (or other industries) based on expected future profits rather than actual demand.

• Causes: Investors and railroad tycoons sought quick profits, often using manipulative stock practices.

• Effects: Created economic bubbles, leading to financial crashes when railroads failed to generate expected profits

Overbuilding

• Definition: Excessive railroad construction beyond what was needed for actual transportation demands.

• Causes: Government land grants, easy loans, and investor excitement fueled unnecessary expansion.

• Effects: Many railroads became unprofitable, leading to bankruptcies and financial crises like the Panic of 1893.

• Solution: Eventually, stronger companies consolidated failing railroads to restore efficiency

Jay Gould/ Watering Stocks

Jay Gould was a notorious railroad magnate who engaged in fraudulent practices, notably "watering stocks," which involved inflating the value of stocks by over-reporting the assets of railroad companies, enticing investors to buy shares in overvalued companies.

Rebates

Discounts given by railroads to favored customers, often used to undercut competitors or attract business.

Pools

Agreements between competing railroad companies to fix prices and divide traffic to reduce competition.

Panic of 1983

¼ of railroad companies went bankrupt —> rich people like JP Morgan swoop in and and control the situation. Many railroads consolidated, which was more efficient

Causes of Industrial Growth

Technological innovations, increased labor supply, and railroads

Andre Carnegie

He was the leader of steel —> use combination of salesmenship +latest tech

Known for his use of vertical integration where he controlled every step of the manufacturing process

US Steel Corporation

• Carnegie sold his steel company, dedicating himself to philanthropy —> sold to JP Morgan

• Sold in 1900, > $400 million, first billion-dollar corporation

• Largest enterprise in the world, 168000 workers, control 3/5 US Steel

John D Rockefeller

• applied technology, efficient strategies, and extorted rebates from RR companies

• temporarily cut prices to drive other biz out of business

• in 1881, Standard Oil controlled 90% of US Market

• Used horizontal integration for oil refining

• Since monopoly, price discriminating —> profits soar

• inspired other industries to imitate

Standard Oil Trust

JP Morgan

• dominated Railroads, making big regional railroads

• used interlocking directors, same ppl on the board of many competing companies

Leading Industrial Power

By 1900, the United States was the leading industrial power in the world, manufacturing more than any of its rivals, Great Britain, France, or Germany.

Second Industrial Revolution

• post civil war, increase in large-scale industry

• increase production of steel, electric power, and industrial machinery

Bessemer Process

- Revolutionary steel-making process that removed impurities using a blast of air, making steel cheaper and stronger.

- Developed by Henry Bessemer (1850s), it enabled mass production of steel, fueling industrial growth in railroads, buildings, and machinery.

Transatlantic Cable

• 1886 (post civil), Cyrus W. Field made transatlantic cable

• ppl could send international mesages in minutes

• this internationalized markets and prices

• small producers became at the mercy of international

Alexander Graham Bell

• Invented the telephone (1876), revolutionizing communication.

• Founded Bell Telephone Company (later AT&T), leading to the rapid expansion of telephone networks.

Thomas Edison

• many early inventions that funded his 1876 Menlo Park research lab (world’s first modern research lab)

• introduced the idea of working together rather than solo

• patented things like phonograph and incandescent lamp

George Westinghouse

• >400 patents, most important high voltage alternating current

• helped light cities and appliances

Large Department Stores

R.H. Macy and Marshall Field made these stores the place to shop in urban centers.

Mail-order Companies

• Two companies, Sears Roebuck, and Montgomery Ward, used the improved rail system to ship to rural customers to sell many different products.

• The products were ordered by mail from a thick paper catalog.

Gustavus Swift

He changed American eating habits by making mass-produced meat and vegetable products.

Advertising

This new technique was important to creating the new consumer economy.

Federal land grants and loans

The federal government provided land and loans to the railroad companies in order to encourage expansion of the railroads.

Fraud and Corruption

Insiders used construction companies to bribe government officials and make huge profits.

Interstate Commerce Act of 1886

This act, created in 1886, did little to regulate the railroads.

Anti-trust Movement

• AGAINST: middle class (fear trust have unchecked power), old wealth (resent increasing influence of new rich)

Sherman Antitrust Act of 1890

• after regulation on the state level failed, needed this

• prohibit "contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce."

• it was very very vague

U.S v. EC Knight

• 1895, rule that Sherman can only be applied to commerce, not manufacturing

Causes of Labor discontent

• before, workers were artisan and valued

• now, they did monotonous jobs and worked under the tyranny of the clock

• conditions were dangerous, many exposed to harmful chemicals

• they rebelled by quitting or not showing up to work (20% of people who were in industry quit)

Iron Law of Wages

• Coined by David Ricardo to justify wages

• if wages increased, supply of labor increases, wage will decrease

• although real wages increased, immigrants flood labor market so still too low to support a family → family rely on women and children

Anti-Union Tactics

• Lockout: close factories to break labor movement organization before it happens

• Blacklists: for pro-union laborers, across corporations

• Yellow-dog Contracts: workers promise that they won’t join a union

• Put down: put down strikes by calling private guards and state militia

• Court Injunctions: a legal order that requires a person or entity to stop or take a specific action.

Railroad Strike of 1877

• RR wages were cut due to economic depression (1873)

• Baltimore and Ohio RR strike → 11 states, shut down 2/3 RR trackage

• RR workers + 500,000 other industry workers

• First time since 1830 that the president (Rutherford B. Hayes) used federal troops to end labor violence

• some corporations increased wages and conditions, other decide to bust unions

Knights of Labor

• 1869, started as a secret society

• 1881, led by Terence V. Powderly, union went public (open to even African Americans)

• support 1) worker cooperatives 2) no child labor 3) no trusts/monopoly

• prefer to use arbitration (bargain through third party), but he couldn’t control if local ppl striked

• 1886, membership peaked at 730,000 BUT Haymarket Riot violence turned opinion

Haymarket Bombing

• 1886, Chicago had 80,000 Knights

• there took place the 1st Mayday parade (celebrating worker freedom, etc)

• Due to the May day goal, there was some labor violence

• on 05/04, there was a labor meeting in Haymarket Square → the police came in to break it up → anarchist (who wanted to overthrow gov) threw a bomb

• ppl misunderstood and pinned blame on Knights

American Federation of Labor

• founded 1886, as an association of 25 craft unions, led by Samuel Gompers

• only focused on increasing wage, and bettering work conditions

• Gomper told them to walk out until corporation agree to COLLECTIVE BARGAINING

• 1901, it was the largest union of 1 million members

Pullman Strike

• 1894, George Pullman lowered wages + fired worker delegation leaders

• the workers looked to the American RR Union, led by Eugene V Debs, for help

• Debs instructed RR workers not to handle trains w/ pullman cars → tied up the RR industry

• RR owners helped Pullman by linking them with mail trains → then get prez. (Grover Cleveland) to support them

• Court issues a injunction for interfering with mail → Eugene arrested, strike ends

• 1895 ruling In Re Debs, supreme approve court injunctions against striking

Eugene V Debs

• after jail, he concluded we needed more radical movement

• 1900, created US Socialist Party

Expanding Middle Class

• the increase in large corporations, needed middlemen between CEO and workers → middle class management

• generated demand for other middle class workers like doctors, lawyers, storekeepers, etc

• the # of good paying jobs after the civil war increased size of middle class greatly

Wage Earners

• 1900, 2/3 working US depended on their wage which was determined by the laws of supply and demand

• the increase in immigrant supply meant waged were barely enough

Working Women

• by 1900, 1/5 adult women were in labor force → all young and single (only 5% of married women worked)

• if a family could afford it, people think women should stay home and nurture child

• factory work was usually and extension of the home (textile, food, etc.)

• women started working in men jobs as demand for clerical jobs increased (secretary, book-keeping, etc)

• once a job was feminized → decreased in status, wage, and salary

Adam Smith

• 1776, Adam Smith in “The Wealth of Nations” spoke that businesses should be regulated

• However, not by the gov, by the invisible hand of law of supply and demand

• gov hands off → businesses would have low prices and improved goods because it is in their own best self interest

• industries often used LF to justify biz ways, but hypocrytical since they accepted gov help and tariffs

• w/ and increase of trusts, there was a lack of competition for LF to work → ppl still used as an excuse

Concentration of Wealth

• in 1890s, the richest 10% controlled 90% of the wealth

• new millionares were created → flaunted wealth with yachts, mansions, etc (like the vanderbilts)

Social Darwinism

• led by Herbert Spencer: survival of the fittest in the market place

• William Graham Sumner (Yale), argued that helping the poor interfered with nature and therefore weakened the evolution of this species

• used in “scientific sanction” to justify their racial intolerance

Gospel of Wealth

• many found religion more convincing than Social Darwinism

• Rockefeller: say used protestant work ethic to gain what he was so therefore “God gave me my riches”

• Carnegie: in “Wealth” so that the wealthy have a god given responsiblilty to do philanthropy, etc

Horatio Alger Myth

• many ignored the wealth gap, instead saw hope in these “self-made” men

• Alger had many rags to riches stories but in reality this was rare

• most successful businessmen were white and had dads in banking or whatnot