Chapter 16: Capital and Labor
I. Introduction
The Great Railroad Strike of 1877 marked the beginning of a new era of labor conflict in the United States.
Context: The strike occurred during a stagnant economy following the financial bubble burst of 1873.
Rail lines began to cut workers’ wages despite receiving substantial government subsidies and paying shareholders large stock dividends.
Affected areas: Workers from Baltimore to St. Louis participated in the strike, shutting down railroad traffic, which was crucial for the nation’s economy.
Response: Business leaders, along with political officials, reacted swiftly to suppress the strikes.
Local police forces were unable to quell the unrest, leading governors to deploy state militias to restore rail service.
Escalation: As strikes intensified, many strikers resorted to destructive actions against rail property to prevent the reopening of services.
Specific incidents:
In Baltimore, the state militia killed eleven workers while dispersing a crowd.
In Pennsylvania, Thomas Andrew Scott suggested starving strikers— a statement reflecting the disconnect between business leaders and workers.
Prominent incidents in Pittsburgh led police and militia to kill twenty strikers with bayonets and rifle fire, leading to widespread chaos.
St. Louis saw a general strike with workers demanding an eight-hour workday and abolition of child labor; federal troop intervention resulted in fatalities among strikers.
The strike turned violent, with federal troops stepping in to suppress unrest across multiple states.
Consequences: The strike resulted in approximately 100 deaths and $40 million in property damage.
Broader impact: It galvanized laborers towards the realization of the need for institutionalized unions and marked a long-term struggle between labor and capital.
II. The March of Capital
Industrialization was directly linked to increased labor unrest.
The railroad industry was the first major sector to experience significant strikes due to its effective mobilization of capital, political support, and bureaucracy.
Declining power of individual workers: Skilled labor was diminished in value in a mass-production economy, leading to feelings of powerlessness among workers.
Work conditions: Long hours, dangerous environments, and insufficient pay compelled workers to organize against capital.
Technological and financial revolutions: Post-Civil War innovations reduced production costs and increased distribution efficiency, propelling the United States’ economic stature.
Introduction of Taylorism (scientific management):
Advocated by Frederick Taylor, his work urged companies to subdivide tasks for greater efficiency.
Resulted in faster production times and made workers interchangeable, thus reinforcing corporate power.
Expansion of corporate leaders' wealth and influence due to increased efficiency models.
Notable Examples:
Companies achieved unprecedented production rates with the help of Taylor’s principles: Singer sewing machines, McCormick grain reapers, and Ford’s automobile assembly line.
Corporations became vital for fundraising through limited liability laws, enabling risky ventures without jeopardizing individual investors.
Competitive landscape led to mergers and formations of consolidated entities to escape destructive competition, known as “the great merger movement.”
J.P. Morgan formed United States Steel, the first billion-dollar company and a representation of monopoly power in the new economy.
III. The Rise of Inequality
Industrial capitalism resulted in remarkable productivity gains but also high levels of poverty.
Economic stratification: The wealth created led to stark inequalities and the emergence of a significant impoverished class.
Statistics:
In 1890, the wealthiest 1% owned a quarter of national assets; by 1900 the richest 10% commanded 90%.
Emergence of social Darwinism:
Charles Darwin's theories were co-opted by social thinkers (notably Herbert Spencer) to justify inequality.
This philosophy posited that economic success indicated superiority, while welfare supported weakness.
The political landscape: Republican policies favored industrialists and maintained a pro-business government structure through legislation.
Consequence: Heightened inequality fueled worker discontent and laid the groundwork for future labor movements.
IV. The Labor Movement
The labor landscape experienced significant unrest during the Gilded Age.
Economic struggles of workers included mechanization leading to job insecurity and unemployment.
The emergence of organized labor:
The Knights of Labor sought to unite workers of all kinds, reaching over 700,000 members by 1886.
Failure of the Great Railroad Strike of 1877 solidified the need for organized labor and prompted union membership growth.
Historical events detailed include the Homestead Riot and the Pullman Strike, emphasizing the struggle against wage cuts and for better working conditions.
Formation of more pragmatic unions: The American Federation of Labor (AFL) emerged as a conservative alternative to the Knights of Labor, focusing on concrete gains over radical objectives.
The period saw back-and-forth between labor and capital, punctuated by violent confrontations and governmental suppression of strikes.
V. The Populist Movement
Discontent among farmers led to the mobilization of the Populist movement.
Mary Elizabeth Lease’s quote encapsulated the sentiment: government serving the interests of Wall Street over the populace.
The Farmers' Alliance laid groundwork for political action with cooperative endeavors and local organizations.
Creation of the People's Party in response to the failures of traditional parties to address farmer needs; galvanized support across various disenfranchised groups.
The Omaha Platform articulated their demands: nationalization of railways, a progressive income tax, and other reforms aimed at returning control to the beleaguered farming class.
Populist successes in elections and credibility rose during economic downturns, leading to significant nominations such as Weaver in 1892.
Tensions with racial issues limited effectiveness, especially in the South where electoral suppression tactics undermined progress.
VI. William Jennings Bryan and the Politics of Gold
Bryan emerged as a pivotal figure in late 19th-century American politics advocating against the gold standard, pushing for free silver instead.
His oratory skills garnered him significant attention and support, framing the economic struggles of the common person against monetary elite interests.
The 1896 Democratic Convention: Bryan delivered an influential speech condemning the gold standard, championing for labor rights and economic reform.
Although Bryan was unable to secure the presidency, his political methods had lasting implications for future movements and policies.
VII. The Socialists
Socialists continued the Populist tradition by proposing radical economic reforms.
Critique of capitalism centered on the concentration of wealth and power, leading to calls for collective ownership of production.
The Socialist Party of America, founded in 1901, mobilized a diverse membership and made significant electoral advances in the early 20th century.
Key figures: Eugene Debs was paramount in advocating for workers and socialist principles, envisioning an equitable society through collective control over the economy.
VIII. Conclusion
The transformation driven by capital had profound socio-economic impacts—while some thrived, many faced dire conditions.
All Americans were affected by the evolving industrial landscape, highlighting a complex and often painful relationship with their economic reality.
IX. Primary Sources
Key texts and speeches reflecting the time's labor and economic discourse, including:
William Graham Sumner on Social Darwinism, Progress and Poverty by Henry George, Andrew Carnegie’s Gospel of Wealth, the Omaha Platform, and more.
X. Reference Material
A comprehensive list of recommended readings on labor history, economic changes during the Gilded Age, and political movements including works by Beckert, Fink, Goodwyn, and more.