Lecture 2 Notes: Industrial Revolution and Gilded Age

Lecture 2: Industrial Revolution and the Gilded Age

Lecture Overview

• This lecture discusses the Second Industrial Revolution and its impact on the United States, contrasting it with the first.
• It also covers the major developments of this revolution and the rise of the Gilded Age, as well as the dark side of this era.
• Emphasizes the importance of following the lecture in order due to references to prior topics.

Primary Themes

• The fourth primary theme to keep in mind throughout the semester is irrational acts driven by ignorance, emotions, or both.
• These acts can be by individuals, armies, governments, or political parties.
• Examples will be shown both in US and international history.

Industrial Revolutions Compared

First Industrial Revolution:

• Occurred ~1820s-1830s.
• Focused on consumer goods (shoes, tools, clothing, furniture).
• Started in Great Britain, then moved to the United States.
• Characterized by local, small, centralized mills.

Second Industrial Revolution:

• Occurred ~1880s and beyond.
• Focused on capital goods (steel, lumber, iron, machinery).
• Started simultaneously in the United States and Europe.
• Characterized by large factories in multiple locations with unprecedented production scale.
• Transformed the U.S. into an economic superpower.

Six Major Developments of the Second Industrial Revolution

1. Steel
2. Railroads
3. Electricity
4. Machine Tools
5. Petroleum
6. Corporate Structures

1. Steel

• Prior to the revolution, iron was the metal of choice, but it was expensive and prone to rust.
• Bessemer Process (1856): Henry Bessemer invented a cheaper, more efficient way to produce steel using hot air to remove impurities from iron.
• Andrew Carnegie: A Scottish immigrant, Carnegie opened the Edgar Thompson Steel Works in Pittsburgh in 1872, utilizing the Bessemer process.
• Carnegie drastically reduced steel production costs, leading to massive profits. For example, the cost to produce a ton of rail steel went from 100 to $15.
• By 1892, Carnegie created the Carnegie Steel Company, the world's largest steel producer, producing nearly 2,000 tons of steel per day.
• In 1901, Carnegie sold his company for nearly 10,000,000,000.

2. Railroads

• By 1900, there were over 95,000 miles of tracks laid across the United States.
• Railroads revolutionized American commerce, enabling nationwide distribution of goods.

Three Major Developments in the Rail Industry:

1. Consolidation: Small local companies were bought up by a few big companies, increasing efficiency.
2. Standardization of Track Size: A uniform track size was agreed upon, allowing trains to travel nationwide without switching tracks.
3. Time Zones: Railroads created time zones to keep track of shipping schedules, which were later adopted by the U.S. government.

• Railroads facilitated a consumer revolution by enabling nationwide advertising and distribution.
• Catalogs allowed rural farmers to purchase goods from across the country, breaking the monopoly of local stores.
• This was the precursor to modern consumerism.

3. Electricity

• Factories prior to electricity shut down at night because operating with kerosene lamps or candles was dangerous.
• George Westinghouse (1886): Produced the first power plant in America using alternating current (AC) in Massachusetts.
• Nikola Tesla: Suggested hydroelectric plants on Niagara Falls and helped Westinghouse produce electricity.
• War of the Currents: Westinghouse (AC) competed with Thomas Edison (direct current or DC).
• Westinghouse's AC system, in which current went both directions, eventually won out.

Impact of Electricity:

• Lighting allowed factories to operate 24/7, leading to night shifts, increased output, and increased money.
• Machinery could run on electricity rather than steam power, freeing factories from needing to be near running water.
• Improved the overall standard of living with electric appliances.
• Helped improve refrigeration techniques.

4. Machine Tools

• Prior to machine tools, factories relied on external companies/blacksmiths, which was slow, expensive, and resulted in non-uniform parts.
• Machine tools are big machines that make the little parts.
• Machine tools enabled factories to produce their own parts, saving money and ensuring uniformity.

5. Petroleum

• The first oil well was drilled in 1859 in Western Pennsylvania, near Titusville.
• Initially, a slow pounding process was used, but it evolved to rotating drill bits.
• Spindle Top (1901): Oil boom began in East Texas, producing 17.5 million barrels of oil per year at its peak.
• Petroleum was used for kerosene and lubricants, replacing animal oils.
• Byproducts: fertilizer, asphalt, artificial rubber, and plastics.

6. Corporate Structures

• Modern corporations emerged in the late 19th century with distinct characteristics.

Four Ways Corporations are Different:

1. Large Size: Consolidation of many companies under one roof.
2. Thousands of Investors: Stock sales allowed the common man to invest, raising revenue.
3. Limited Liability: Investors were shielded from liability, encouraging risk-taking.
4. Power: Corporations became politically active and influential.

• Large corporations often donated to both sides of political campaigns to hedge their bets.
• These six developments spurred economic growth, leading to political corruption.

Transformation of the U.S. into a World Power

• By 1900, the U.S. was the second most important economic power on the planet, behind Great Britain.
• This wealth and production capacity paved the way for the U.S. to become a superpower in the 20th century.
• This era also created the Gilded Age.

The Gilded Age

• The Gilded Age is a period of mass wealth, The term was coined by writer Mark Twain.
• The wealthy became extremely rich, and the middle class also rose.
• The middle class had started to develop in the early 1800's, but by the second industrial revolution they had become the economic and political powers they are today.

The Super-Rich

• Comparison to modern wealth: Jeff Bezos' wealth is largely tied up in stock; Gilded Age figures had wealth in actual money, real property, real estate, precious metals, etc.

1. Andrew Carnegie: Worth ~$310 billion today. After a disaster, he became benevolent, creating libraries, concert halls, and pension funds. Lived off the interest of the interest of the interest…
2. Henry Ford: Worth ~$200 billion. Revolutionized the auto industry with the assembly line. Paid a $5 wage per day but had strict requirements for his workers to live the "American way". The Model T was invented so the average American can buy an affordable automobile, unlike the other models that were for the super rich.
3. John Jacob Astor IV: Worth ~$121 billion. Heir to the Astor family fortune, invested in real estate. Built the Waldorf Astoria Hotel. Portrayed as a conceited, uncaring millionaire. Died on the Titanic when returning to America from Europe.
4. John Rockefeller: Worth ~$450-$500 billion. The first billionaire in U.S. history. Dominated the oil industry with Standard Oil (controlled 90% of the oil industry). Created the first successful oil pipeline. The oil was valued by a blue barrel, thus the abbreviation BBL which is still used today in the oil industry. In 1911 the government broke up standard oil into smaller companies which included: ExxonMobil, Chevron, Marathon Oil, and ConocoPhillips. Rockefeller became richer after the breakup because he still owned the 43 companies.

The Dark Side of the Gilded Age

The South

• The Old South (Deep South) did not develop like the rest of the country.
• State governments and wealthy individuals resisted industrialization, remaining primarily agricultural.
• From the end of the Civil War until World War II, the South lagged behind in poverty, healthcare, literacy, and child labor.
• A historian named W.J. Cash criticized Southern society for violence, intolerance, and clinging to the past.

Child Labor

• From 1870 to 1920, the number of children working in factories rose dramatically; by 1900, almost 2 million children were in factories.
• Factories employed children because they could be paid low wages and were able to operate machinery in difficult to reach places.
• Children as young as five worked in dangerous conditions, suffering from heat exhaustion and injuries.
• Child labor remained until the 1930s.

Triangle Shirtwaist Factory Fire (1911)

• A fire in Manhattan killed 146 workers, mostly young immigrant women and children, because doors were locked to prevent breaks.
• Started the call to worker safety regulations.

Labor Unions and Strikes

• Workers understood the dangerous of their working environment, but they needed the money; so unions and labor groups began to develop.
• Labor Unions were NOT favored by the government in the early days like today.
• The unions struggle to get what they want from these factories.

Homestead Strike (1892)

• At Andrew Carnegie's steel plant, workers struck for better wages and conditions.
• Carnegie left the country, leaving Henry Frick in charge.
• Frick locked out the workers and hired the Pinkerton Detective Agency (basically thugs for hire).
• Gunfight broke out between the Pinkerton agents and workers.
• The governor of Pennsylvania sent in the National Guard to shut down the union.

Pullman Strike

• The Pullman company made railroad cars, and all his workers were required to live in the town which they rented from the company, Pullman.
• Pullman cut everyone's wages and raised the rent.
• The railroad workers at Pullman went on strike and were helped by the National Railway Union.
• Nearly 300,000 workers nationwide went on strike.
• President Grover Cleveland sent in the army.
• These two strikes showed the average American worker that government was on the side of big business.

The Johnstown Flood

• The Johnstown flood occurred because a group of wealthy investors, including Andrew Carnegie and Henry Frick, owned a lake and a dam that held the lake together.
• The dam was in poor condition and the engineer warned the town, but the wealthy investors did nothing.
• The dam broke after heavy rains on May 31, sending millions of gallons of water into the countryside, killing thousands of people
• No one was held accountable because, at the time, there were no laws.

Ethical Considerations

• The Johnstown flood represents the disparity between the rich and the poor at the time.
• The rich literally sat on their hands, were negligent, caused a disaster and got away with it.

Conclusion

• The Gilded Age caused many Americans to say something has got to change, government has got to safe.
• Events like the Johnstown flood, the triangle shirtwaist factory fire, and child labor conditions led to the Progressive Era.
• Next lecture: immigration and the creation of the immigration system in America.