Lecture 5 Business and Labor in the Second Industrial Revolution (1860-1900) Study Guide

Impact of the Civil War on Industrial Development

• Economic Stimulation: While the Civil War devastated the Southern United States, it served as a massive stimulant for the northern economy due to the necessity of supplying Union armies.

• Supply Demands: The war created a high-volume need for boots, shoes, uniforms, weapons, food, wagons, supplies, and railroads, ushering in an era of unprecedented industrial growth.

• Business Expansion: Between 1860 and 1864, the number of manufacturing companies in the North almost doubled.

• Shifting Capitalist Perspectives: In 1865, Ohio Senator John Sherman noted to his brother, General William T. Sherman, that the scale of war production had widened the "scope to the ideas of leading capitalists." Business leaders began discussing sums in the "millions" as confidently as they had previously discussed "thousands."

The Scale of Economic Expansion (1865-1900)

• National Growth Statistics:   - The nation's population tripled.   - Agricultural production more than doubled.   - Manufacturing output increased sixfold ($6 \times$).

• Global Dominance: By 1900, the United States achieved the highest rate of economic growth in world history. American industries and corporate farms dominated global markets in:   - Steel   - Oil   - Wheat   - Cotton

• Urbanization: Phenomenal growth led to the sudden prosperity of large industrial centers, most notably Pittsburgh, Chicago, and Cleveland.

• Shifts in Labor and Society:   - Millions of young adults transitioned from farms and villages to work in mills, mines, and factories.   - Women began leaving the "cult of domesticity" to enter the urban-industrial workplace.   - Typical roles for women included clerks, typists, secretaries, teachers, nurses, and seamstresses.

The Era of Big Business and the Wild West of Industry

• Big Business Defined: A term commonly used to refer to new, giant corporations that dominated the economy.

• Regulating the Economy: New technologies and business practices evolved much faster than the legal system's ability to create laws or ethical norms.

• Exploitation and Opportunity: Business owners took advantage of a lack of regulation to:   - Build massive fortunes.   - Destroy the reputations of rivals.   - Corrupt the political system.   - Exploit both workers and the natural environment.   - Gouge consumers for profits.

• Standard of Living vs. Poverty: While the period produced a rising standard of living that was the envy of the world, it also created massive wealth inequality. In a capitalist democracy, the tension between equal political rights and unequal economic status generated social instability.

• Response to Industry Tycoons: The overwhelming influence of business leaders provoked the formation of farm associations and labor unions, leading to violent clashes that required government intervention.

Essential Elements of Industrial and Agricultural Growth

• Driving Factors: Several converging factors accelerated growth in the second half of the $19^{th}$ century.

• Transport and Communication Technology:   - Expansion of canals, steamboats, and railroads.   - Instantaneous communication networks enabled first by the telegraph and later by the telephone.   - These innovations created a truly national marketplace for goods and services.

• Natural Resources: Continuous exploitation of land, minerals, forests, oil, coal, water, and iron ore.

• Labor Supply through Immigration: Between 1865 and 1900, more than $15,000,000$ immigrants arrived in the U.S. This provided an army of high-energy, low-wage, unskilled workers and a massive new pool of consumers.

• Leadership Archetypes:   - Captains of Industry: A title given by admirers who saw them as catalysts for prosperity.   - Robber Barons: A title given by critics who believed they ruthlessly controlled money and commerce.

• Corporate Strategy: Leaders like Cornelius Vanderbilt practiced cutthroat determination. When rivals tried to steal property from Vanderbilt, he famously wrote: "Gentlemen: You have undertaken to cheat me. I will not sue you, for law takes too long. I will ruin you."

The Three Breakthroughs of the Second Industrial Revolution

• Context: Commencing in the mid-$19^{th}$ century, the Second Industrial Revolution was centered in the United States and Germany.

• Breakthrough 1: Modern Transportation and Communication:   - Completion of transcontinental railroads.   - Larger, faster steamships (e.g., Cunard and White Star Lines).   - The laying of the telegraph cable under the Atlantic Ocean, connecting the U.S. and Europe.

• Breakthrough 2: Electrical Power:   - Increased the power, speed, and efficiency of industrial machinery.   - Enabled urban growth technologies such as trolleys, subways, streetlights, and elevators (which allowed for taller buildings).

• Breakthrough 3: Systematic Scientific Research:   - Application of science to industrial processes in laboratories funded by corporations or weathy owners.   - Discovery of methods to refine kerosene and gasoline from crude oil.   - Efficient manufacturing of steel in much larger quantities.

• Consumer Impact: Lower prices for products including telephones, typewriters, phonographs, adding machines, sewing machines, cameras, zippers, and farm machinery.

Corporate Agriculture and Bonanza Farms

• Industry Model for Farming: Agriculture shifted toward large-scale industrial operations known as "bonanza farms."

• Scale of Operations: These farms comprised at least $3,000$ acres. They were managed by college-educated professionals and utilized hundreds of migrant workers.

• Oliver Dalrymple: A graduate of Yale Law School known as the "Wheat King of Minnesota." He managed "prairie plantations" in North Dakota and eventually owned a farm exceeding $100,000$ acres.

• Management Systems:   - Dalrymple used the most efficient machinery and managed field fertility strictly.   - Laborers (often Mexican or Scandinavian) lived in military-style bunkhouses where swearing, drinking, and smoking were forbidden.   - Workdays lasted $10$ to $13$ hours, $6$ days a week.   - Women were often hired to perform cooking, laundry, and cleaning duties.

• Meatpacking Industry: The commercial cattle industry evolved into a major sector, with Chicago becoming the world's largest center for slaughterhouses and meatpacking plants.

Technological Innovation and the Patent Office

• Economies of Scale: Larger enterprises could afford expensive machinery and large workforces to boost productivity, leading to cheaper products for the general public.

• The Patent Boom:   - $1790s$: Only $276$ inventions recorded.   - $1890s$: Almost $235,000$ new patents registered.

• Beulah Louisa Henry: A New York inventor who accounted for nearly $50$ patents, primarily improving household items like sewing machines, umbrellas, and typewriters.

• General Gilded Age Innovations: Barbed-wire fencing, mechanical harvesters, refrigerated railcars, air brakes for trains, steam turbines, vacuum cleaners, and ice cream churns.

Key Inventors: Bell and Edison

• Alexander Graham Bell:   - Began experimenting with the "speaking telegraph" in 1875.   - Patented the "electric speaking telephone" in 1876; the first message sent was: "Mr. Watson, come here, I want to see you."   - Founded the American Telephone and Telegraph Company (AT&T).   - By 1895, over $300,000$ telephones were in use.

• Thomas Alva Edison:   - Born in Michigan, Edison was a "mechanical genius" who moved to New York and later established an "invention factory" in Menlo Park, New Jersey.   - Invention of the phonograph in 1877 and the long-lasting electric lightbulb in 1879.   - Total patents: A record-setting $1,093$.   - Major contributions: Storage battery, Dictaphone, mimeograph copier, electric motor, motion picture camera/projector, and a large-scale electrical transmission system.   - Social impact: The lightbulb allowed societies to function regardless of daylight, effectively making the distinction between night and day disappear.

George Westinghouse and the Power Struggle

• The Direct Current (DC) Limitation: Thomas Edison’s original lighting system used direct current, which only had a radius of about $2$ miles.

• The Alternating Current (AC) Solution: George Westinghouse developed an AC system in 1886 that could be transmitted at high voltage over long distances and stepped down by transformers.

• Nikola Tesla: A Croatian immigrant who invented the alternating-current motor in New York in 1887. He sold this invention to Westinghouse.

• Battle of the Currents: Despite Edison's resistance, the Westinghouse AC system proved superior, forcing Edison's companies to switch from DC to AC.

• Industrial Impact of Dynamos: The creation of electric motors (dynamos) allowed factories to be located anywhere, as they were no longer tethered to coal deposits or waterfalls for power.