chapter 22 the industrial era dawns 1865-1900

industrial era

1865-1900

effects of industrial revolution

1. wealth gap

2. changes to traditional way of life, government institutions, and constitutional norms

3. by 1900

   • it overtook the nation’s biggest business; agriculture now accounted for less than half of the national economy

   • united states annually delivered more than $600 million worth of manufactured goods into the global marketplace

4. united states now an industrial colossus

how did the transcontinental railroad network promote the post civil war transformation of american industry

faster transportation of goods across long distances

• reduced transportation costs

• enabled goods to reach markets more quickly

how did the american economy come to be dominated by monopolistic corporations in industries such as steel and oil

• new technology

• buying out competitors

• controlling all production steps

public response

• largely opposed monopolies, seeing them as unfair and harmful to workers & consumers

• growing support for government intervention

government response

• initially had a hands-off approach

• eventually responded w/ regulations

why was the south generally excluded from industrial development and how did racial and class conflict shape the still largely rural region

1. war damage from civil war, slow recovery

2. dependency on cash crops: south relied heavily on cotton and tobacco rather than factories and industry, and had little investment in industrialization

3. plantation was replaced by sharecropping and tenant farming, which kept black and poor white farmers in poverty

4. jim crow laws reinforced white supremacy and kept black southerners from economic and political power

5. resistance to change where many southern elites wanted traditional agricultural society

*sharecropping: landowners provided land, tools, and seed to farmers (mostly freed slaves) in exchange for a share of crop grown (typically half, as rent)

• sharecroppers often fell into debt because they had to buy supplies on credit from the landowner’s store, leading to more than they can pay and keeping them tied to the land

*tenant farming: similar but the farmer rented land for a set cash payment

• still struggled often because of high rent and poor land quality making it difficult to save money or invest in own land

*jim crow laws: legally separated white and black people in public places, schools, and workplaces. black people were often denied voting through literacy tests and poll taxes

how did industrialization alter american society, particularly the role of the working class and of women

working class

1. rise of factories led to growth of wage-based working class.

2. many worked long hours in harsh conditions for low pay

3. growth of industrialization led to urbanization, which led to overcrowded and unsanitary living conditions

4. labor unions started to form to fight for better wages, hours, and working conditions; faced resistance from businesses and the government

women

1. new job opportunities; especially in textile mills, factories, and offices. often poorly paid and had long hours

2. role shifted in home

3. sparked early movement for women’s rights including voting and labor reforms

why did late 19th century american labor unions generally fail to mobilize american workers

1. hostility from employers who strongly opposed unions by

   • firing union members

   • hiring replacement workers

   • hiring private detective agencies to break up strikes

2. government opposition

   • often sided with businesses

   • using the military/police to break up strikes and protests

   • laws like sherman antitrust act were sometimes used against unions portraying them as illegal restraints on trade (law was intended for monopolies)

3. division among workers by race, ethnicity, and skill level made it hard to form united fronts. skilled workers had more bargaining power while unskilled workers didn’t and thus struggled to organize

4. economic instabilities like recessions and high unemployment made workers afraid of losing their jobs and hesitant to join unions, which were viewed as a threat to job security

5. negative public perception since strikes were often seen as disruptive and associated with violence and radicalism

railroad construction

when lincoln was shot in 1865, only 35k miles of steam railways were across the us, mostly east of the mississippi.

by 1900, it was 192,556 miles, or more than europe combined. much of the new track ran west of the mississippi

construction of railway systems promised

1. greater national unity

2. economic growth

in 1862, congress gave 2 liberal loans to 2 favored cross-continent companies, and then donated the acreage paralleling the tracks

washington rewarded the railroads with 155 million acres and the west states contributed 49 million more: total area larger than texas

• sparked criticism at giving away to greedy corporations; overlooked fact that land has very little value until railroads made it accessible for settlers and merchants. communities offered monetary value/other to bring rail lines to their town

• gov did get benefits: preferential rates for postal service and military traffic

there was a deadlock in the 1850s over the proposed location, but the south seceded, leaving the field to the north

in 1862, congress authorized the rail line

• made urgent by the disrupted Union, by binding the pacific coast to the rest of the republic

union pacific was commissioned by congress to run westward from omaha, nebraska

• laying of the rails began in 1865 just after the civil war ended

• funded by loans and land grants. insiders of the credit mobilier construction company reaped $73 million for $50 million worth of construction, spent a little of that to bribe congressmen to look the other way

• construction gangs which included the irish worked at a frantic pace. one day 5 thousand men laid 10 miles of track, breaking the record.

central pacific went eastward from sacramento

• given same subsides as union pacific

• chief financial backers were called big 4, included former governor of california leland stanford (he had useful political connections), and collis huntington, a lobbyist

• employed some 10 thousand chinese workers worked from dawn to dusk were viewed as cheap and efficient builders

• 100s lost their lives in premature explosions and other mishaps

• sierra nevada was a barrier which made the big four nervous since the workers were slowly progressing compared to the union pacific going across the plains

wedding of the rails

• union and central pacific joined at utah on may 10, 1869

• line divided bison herds of the great plains, reducing essential food supply of the native americans

• settlers following the rail lines further threatened the indigenous people’s livelihood

4 other transcontinental lines were completed before the century’s end; none received secured loans from the federal gov. all except great northern received generous grants of land

northern stretched from lake superior to puget sound, ended in 1883

southern linked new orleans to san francisco

atchison, topeka, and santa fe stretched through southwestern deserts to california, was completed in 1884

great northern, created by james hill, a canadian american, ran north of northern pacific from duluth to seattle. organized soundly that it ran through financial storms with flying colors

pioneer builders often laid rails that went from nowhere to nothing to get federal land bounties. companies often declared bankruptcy and brought down investor savings

revolution by railways

• nation physically bound together

• biggest business, employing more people than any other industry

• nearly 20% of investment dollars from foreign and domestic investors

• united states now largest integrated national market in the world since railroads joined north america together from ocean to ocean. trains would haul raw materials to factories and sped back as finished goods for sale across the continent

• largest single source of orders for the steel industry

• simulated mining, agriculture, and immigration in the west

land

• settlers plowed up tallgrass prairies of iwoa, illinois, kansas, and nebraska and replaced with well-drained rectangular cornfields

• range-fed cattle displaced nearly hunted to extinction buffalo

• pine forests of michigan, wisconsin, and minnisota disappeared as homes and fences were being built by prairie farmers

november 18th, 1883 was when the major rail lines divided the continent into four timezones as they worried about keeping schedules and avoiding wrecks

corruption

• stock watering: making cattle thirsty by feeding them salt, and then bloating them with water before they were weighed for sale. railroad stock promoters grossly inflated their claims about line asserts and profitability, and thus sold stocks far beyond actual value.

• managers were forced to charge extortionate rates in order to pay off the exaggerated financial obligations

• railroaders bribed judges and legislatures, elected their own agents to high officer, and gave free passes to journalists and politicians in exchange for favorable treatment

• pool: an agreement to divide the business in an area and share the profits/form of monopoly, used to show return on bloated investments by railroad kings who teamed up to rule the railroad dominion in order to protect precious profits

• powerful shippers were granted secret rebates/kickbacks in return for steady and assured traffic. railroaders made up the difference on non-competing lines where they would charge more for a short haul than a long one. as a result, small farmers usually paid the highest rates, while the large customers got the best deals

response

• poor farmers, esp in midwest, began to wonder if they escape from the slavery power only to fall into the hands of the money power

• american people were slow to combat economic injustice

• people start to reflect that jefferson’s american ideals were hostile to government interference w/ business; the american dream was fading away, anyone might become a millionaire but one can only hope

• after depressing times in 1870s, farmers started to protest against being railroaded into bankruptcy. many midwestern legislatures tried to regular the railroad monopoly but were stopped in 1886 by the wabash v illinois, which decreed that individual states have no power to regular interstate commerce. if the railroads were to be stopped, the federal gov would have to do the job.

• congress passed interstate commerce act in 1887, prohibiting rebates, pools, and requiring railroads to publish their rates openly. also forebade unfair discrimination against shippers and charging more for a short haul than for a long one over the same line; set up the interstate commerce commission to administer and enforce the new laws

• the interstate commerce act did not represent a popular victory over corporate wealth. tended to stabilize, not revolutionize the existing business system. but it was the first large scale attempt by washington to regulate business in the interest of society at large.

chronology

1862: congress authorizes railroad

1866: national labor union organized, first working transatlantic telegraph cable

1869: railroad joined near utah, knights of labor organized, and suez canal completed

1870: standard oil company organized

1876: bell invents telephone

1879: edison invests electric light

1883: timezones were introduced (boundaries have since been adjusted)

1886: haymarket square bombing, wabash case, american federation of labor formed

1887: interstate commerce act

1890: sherman anti trust act

1901: us steel corporation formed

miracles of mechanization

postwar industrial expansion, partly result of railroad network, was growing rapidly. in 1860, usa was 4th among manufacturing nations of the world, by 1894 it rose to first place.

reasons:

1. liquid capital— now more available after civil war, when foreign investors gave more more to already rich private corporations

2. innovations in transportation— railroad made it easy to transport natural resources to factory doors, esp. coal, oil, and iron

3. mass production— large american consumer market and cheap transportation = large amount of appealing and marketed new product thriving

4. machines & cheap labor— no need for skilled labor when you have lots of unskilled immigrants willing to work for cheap. steel industry was built largely on low-wage immigrant laborers from europe working in two 12 hour shifts, 7 days a week

5. new business ideas— 440k patents were issues between 1860 and 1890

new technology

• cash register

• stock ticker

• typewriter

• refrigerator

• car

• electric railway

• telephone— alexander bell in 1876, america now nation of telephoniacs

• phonograph, mimeograph, dictaphone, moving picture, and light bulb (1879) was made by thomas edisons factory

people used to average 9 hrs of sleep, now its a bit more than 7

trust titan emerges

despite public criticism, business leaders competed and devised ways to circumvent competition.

andrew carnegie, the steel king, created vertical integration—single corporation controling every step of industrial product and distribution to increase efficiency and profits. he controlled everything of his steel-making operation from mining to marketing

john d. rockefeller, the oil baron, chose to use the less economically justifiable horizontal integration—allying w/ competitors to monopolize the market. he perfected the trust for controlling bothersome rivals. various stockholders in lesser oil companies assigned stock to directions in rockefeller’s standard oil company, formed in 1870, which then consolidated and controlled operations of previously competing enterprises. ‘let us prey’ was said to be rockefeller’s unwritten motto. his company virtually cornered the entire oil market. weak competitors left out of the trust agreement were forced to wall. trust is now generally used to describe any large scale business combination

jp morgan, the banker, devised other schemes for eliminating “wasteful” competition. depressions in the 1870 and 1890s drove many bleeding business peopel into his arms. he consolidated rival enterprises and he placed officers of his own banking on various rival board of directors, known as interlocking directorates, when a person serves on the board of directors or as an officer of multiple companies.

supremacy of steel

steel is king was the war cry of new industrialized generations

• steel making, notably for railroads, typified the dominance of heavy industry. it focused on capital goods rather than consumer goods (clothes, shoes)

steel was not taken for granted due to its scarcity and high price, it was only used for special products like cutlery. now 20 years after 1870, the usa is supplying 1/3 of the world’s steel. by 1900s, it was producing as much as britain and germany combined

what caused this transformation

1. the bessemer process— new method to make cheap steel made in 1850s

   • william kelly, kentucky manufacturer of iron kettles, discovered cold air blown on red hot iron caused metal to become white hot by igniting the carbon and thus eliminating impurities. he was unabled to win acceptance for the product, only after bessemer, a british intentor, joined him did the process make new steel civilization possible

2. andrew carnegie entered steel business in pittsburgh area. by 1900 he was producing 1/4th of the nation’s bessemer steel. he and his partners were dividing 40 million a year as take home pay.

3. jp morgan bought out carnegie, took the holdings, added others, watered the stocks liberally and in 1901 launched the enlarged us steel corporation—capitalized at 1.4 billion