Chapter 24 - Industry Comes of Age

The Iron Colt Becomes an Iron Horse

• U.S.’s railroad network expanded in the late 1800s
• Congress subsidized cost of many railroad construction projects due to high costs and risks associated with building railroads
• Congress gave a lot of unused public land to the railroad companies

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Spanning the Continent with Rails

• Congress chose the Union Pacific Railroad company to build a transcontinental railroad in 1862
  • The transcontinental railroad started in Omaha, Nebraska
• Central Pacific Railroad company was responsible for laying track on the California side of the transcontinental railroad
• Union Pacific Railroad and Central Pacific Railroad both received financial aid from  the government
• ==Transcontinental railroad== ==was finished in 1869 which allowed for trade with Asia to increase and opened up the West for expansion==

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Binding the Continent with Railroad Ties

• Several transcontinental railroads were built: the Northern Pacific Railroad (finished 1883), the Atchison, Topeka, and Santa Fe (finished 1884), the Southern Pacific (finished 1884), and the Great Northern (finished 1893)

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Railroad Consolidation and Mechanization

• Vanderbilt made a lot of money by improving the Eastern railroads
• Vanderbilt’s improvements consisted of the steel rail and a standard gauge of track width which helped the overall development of the railroads

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Revolution by Railways

• ==Railroads== ==stimulated the industrialization of the country in the years after the Civil War== with them creating a large domestic market for American raw materials and manufactured goods all while also stimulated immigration
• Every town in America had its own local time until the 1880s
• Major rail lines proposed dividing America into 4 time zones, to avoid wrecks and to keep schedules with most of the towns accepting the new time method

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Wrongdoing in Railroading

• Some people sold bonds for railroad companies which inflated the claims about the company’s assets and profits with this allowing them to sell stocks and bonds in excess of the railroad’s actual value: this was known as “stock watering”
• Several railroad titans felt that they were above the law with them abusing the public and bribing judges and legislators
  • Railroad Kings were manipulators of a huge natural monopoly
  • Small farmers were often the ones that paid the highest railroad transportation rates while big customers paid low rates

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Government Bridles the Iron Horse

• Farmers protested against the railroaders that had run the farmers into bankruptcy, during the depression of 1870s
• Midwestern legislatures attempted to regulate the railroad monopoly
• Wabash, St. Louis & Pacific Railroad Company vs. Illinois declared that individual states couldn’t regulate interstate commerce
  • Congress passed the Interstate Commerce Act in 1887 with it prohibiting rebates and pools, requiring railroads to publish rates openly, forbidding the unfair discrimination against shippers, and outlawed charging more than a short trip for a long trip over the same line

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Miracles of Mechanization

• ==Alexander Graham Bell== ==created the telephone in 1876==
  • Revolutionized the way Americans communicated
• ==Thomas Edison== ==invented many devices with the most well-known being the light bulb (1879)==

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The Trust Titan Emerges

• ==Carnegie== ==used “vertical integration” to combine all the parts of manufacturing into one organization== with it controlling all aspects of production (mining to marketing)
  • Carnegie’s goal was to improve efficiency
• “Horizontal integration” was allying with competitors to monopolize a given market which basically meant creating trusts as a tactic
  • “Horizontal integration” was used by Rockefeller
• Morgan employed the tactic of interlocking directorates

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The Supremacy of Steel

• Steel was “king” during the industrialization era with almost all of the aspects of society using it
• U.S. was producing ⅓ of the world’s steel supply by the late 1800s
• The ==Bessemer process== ==simplified the steel production process and reduced the price of steel==

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Carnegie and Other Sultans of Steel

• Carnegie wasn’t a monopolist with him disliked monopolistic trusts
  • Carnegie was producing ¼ of the nation’s Bessemer steel by 1900
• ==J.P. Morgan== ==financed the reorganization of railroads, insurance companies, and banks==
• Carnegie wanted to sell his holdings of steel companies by 1900 with him threatening to ruin Morgan’s business if Morgan didn’t buy him out
  • Morgan bought Carnegie out for $400 million and then created the United States Steel Corporation in 1901 which was the U.S.’s first billion dollar corporation
• Carnegie dedicated the remainder of his life to donating his money to charities

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Rockefeller Grows an American Beauty Rose

• ==Kerosene== ==was the first major product of the oil industry==
• ==Gasoline-burning combustion engines== ==became the primary means of automobile propulsion by 1900==
• ==Rockefeller== ==created Standard Oil Company in 1870==
  • Controlled 95% of all oil refineries in the nation by 1877 and expanded his company by eliminating competitors
• There were other trusts in the United States: sugar trust, tobacco trust, leather trust, and harvester trust

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The Gospel of Wealth

• The wealthy used “survival of the fittest” as an explanation as to why they were financially successful and why the poor were poor
• ==Plutocracy== ==was when a government was controlled by the wealthy==

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Government Tackles the Evil Trust

• Congress passed Sherman Anti-Trust Act of 1890 which forbade business activities that the government saw as anti-competitive and required the government to investigate trusts
• The law was ineffective because it had legal loopholes and made all large trusts suffer (not just the bad trusts)

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The South in the Age of Industry

• South still produced fewer goods than it did before the Civil War
  • Southern agriculture received boost in 1880s when machine-made cigarettes replaced hand-made cigarettes which ended up increasing tobacco consumption
• ==Buchanan Duke== ==created the American Tobacco Company in 1890==
• ==Industrialization== ==was slowed by northern-dominated railroad companies charging lower rates on manufactured goods moving south from north compared to manufactured goods moving from south to north==
• “Pittsburgh Plus” pricing system was an economic discrimination against South in the steel industry

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The Impact of the New Industrial Revolution on America

• The standard of living in U.S. was increased by economic developments after Civil War: agricultural industry was replaced by manufacturing industry, women were most affected by the new industrial age with them finding jobs as the number of inventions grew, typewriter and telephone switchboard gave women new economic and social opportunities, and the nation of farmers and independent producers was slowly becoming a nation of wage earners
• Majority of nation’s population earned wages by the beginning of the 1900s

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In Unions There Is Strength

• New machines displaced employees and in the long run, more jobs were created rather than destroyed
• Low wage conditions caused some factory workers to go on strike
  • Strikes became common and the middle class public was starting to get annoyed by them

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Labor Limps Along

• The Civil War boosted labor unions
• ==National Labor Union== ==was organized in the late 1866 with it lasting 6 years and attracting 600,000 members==
  • The purpose of the National Labor Union was to organize workers across different trades and challenge companies for better working conditions
  • National Labor Union died out in 1877 because the Knights of Labor took over
• Knights of Labor were led by Powderly, started as a secret society, sought to include all workers, and campaigned for economic and social reform including codes for health and safety

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Unhorsing the Knights of Labor

• Chicago police tried to break up a protest against alleged police brutalities on May 4, 1886 at Haymarket Square where someone threw a bomb, which killed several people
• Knights of Labor were blamed for the incident at Haymarket Square and as a result, it lost public support
• American Federation of Labor's inclusion of only skilled workers drained the Knights of Labor of its members

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The AF of L to the Fore

• ==American Federation of Labor== ==was founded in 1886==
  • Was an association of self-governing unions with each keeping its own independence
• The American Federation of Labor sought better wages, hours, and working conditions and supported the idea of closed shop
• The idea of closed shop consisted of the idea that an employer could only hire union employees and all employees had to be in a union
• Greatest weakness of organized labor was that it was accepted by a small minority of the working class
• ==Labor Day== ==was created by Congress in 1894==

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