Chapter 16: Capital and Labor

I. Introduction

The Great Railroad Strike of 1877 marked a new era of labor conflict in the United States, triggered by wage cuts amidst a struggling economy following the railroad financial bubble burst in 1873.
Workers from Baltimore to St. Louis went on strike, disrupting the nation's economic lifeblood.
Business leaders and political officials responded swiftly, using local police and state militias to suppress the strikes and restore rail service.
Strikers retaliated by destroying rail property.
In Baltimore, the state militia fired into a crowd of striking workers, resulting in eleven deaths and numerous injuries.
Strikes and unrest spread to towns and cities across Pennsylvania.
Thomas Andrew Scott, head of the Pennsylvania Railroad, advocated for a violent suppression of the strikes.
Law enforcement in Pittsburgh initially refused to suppress the protests, leading to the state militia killing twenty strikers.
Strikers responded by setting fire to the city, destroying buildings, engines, and cars.
In Reading, a confrontation between strikers and the militia resulted in ten fatalities.
A general strike erupted in St. Louis, with strikers seizing rail depots and advocating for an eight-hour day and the abolition of child labor.
Federal troops and vigilantes intervened, resulting in eighteen deaths and the breaking of the strike.
Rail lines were shut down in Illinois, where coal miners went on strike in sympathy, leading to protests and twenty deaths in Chicago.
Federal troops were ultimately deployed to suppress the strikes across northern rail lines after state militias failed.
The strike was crushed after six weeks, with nearly 100 Americans dead and approximately $40 million$ worth of property destroyed.
The strike highlighted the need for institutionalized unions among laborers, the importance of political influence and government aid for businesses and foreshadowed a half-century of labor conflict in the United States.

II. The March of Capital

Growing labor unrest accompanied industrialization, particularly in the railroad industry due to its concentration of capital, government support, and bureaucratic management.
Workers felt increasingly powerless in the industrial order as skills became less important, and individual significance diminished with the growth of companies and managerial wealth.
Long hours, dangerous working conditions, and meager wages compelled workers to organize and fight against the power of capital.
The post-Civil War era witnessed revolutions in American industry due to technological innovation and national investments, which reduced production and distribution costs.
New administrative frameworks sustained large firms, and national credit agencies facilitated capital movement.
Decreasing transportation and communication costs led to the rise of national media and advertising agencies, which nationalized products.
Corporate leaders embraced scientific management, or Taylorism, to increase efficiency by subdividing tasks.
Taylorism increased manufacturing scale and scope, leading to mass production.
American firms advanced mass production techniques, exemplified by Singer sewing machines, Chicago meatpackers' disassembly lines, McCormick grain reapers, and Duke cigarette rollers.
McCormick's company transformed its production system in 1880 by introducing new machinery and interchangeable parts, significantly increasing production.
The introduction of interchangeable parts allowed McCormick to increase output from 21,000 machines in 1880 to over 100,000 by 1889.
By 1900, the United States had become the world's leading manufacturing nation, surpassing Britain, Germany, and France.
By 1913, the United States produced one third of the world's industrial output.
Firms like McCormick's achieved economies of scale, where additional production resulted in relatively low production costs.
Retailers and advertisers sustained the markets needed for mass production, while corporate bureaucracies managed giant firms.
A new class of managers, the "visible hand," operated between workers and owners to ensure efficient operations.
Legal creations, such as corporations, protected investors and sustained the power of massed capital.
Corporations became a legal mechanism for enterprises to marshal vast capital while limiting shareholder liability.
A competitive marketplace threatened investments due to cutthroat competition, which kept costs low and reduced profit margins.
Economies of scale were a double-edged sword, as high fixed costs meant even modest losses were preferable to not selling at all.
American industrial firms attempted to avoid competition through pools, trusts, price-fixing agreements, and mergers.
Between 1895 and 1904, a wave of mergers consolidated firms, with nearly 20 percent of the American economy being folded into rival firms.
Newly consolidated firms, such as General Electric and DuPont, dominated their markets, with forty-one separate consolidations controlling over 70 percent of their respective industries.
In 1901, J. P. Morgan formed United States Steel, the world's first billion-dollar company, which controlled the steel market.

III. The Rise of Inequality

Industrial capitalism led to significant advances in efficiency and productivity, creating enormous profits and fortunes.
However, it also created millions of low-paid, unskilled jobs with long hours and dangerous working conditions.
The era became known as the Gilded Age due to the contrast between extreme wealth and social inequities.
The wealth of industrial and financial leaders alongside the poverty of the urban and rural poor shocked Americans.
Economist Henry George highlighted the association of poverty with progress as a major issue of the time.
Robber barons, such as Cornelius Vanderbilt, J. D. Rockefeller, Andrew Carnegie, and J. P. Morgan, accumulated vast fortunes.
In 1890, the wealthiest 1 percent of Americans owned one fourth of the nation's assets, and the top 10 percent owned over 70 percent.
By 1900, the richest 10 percent controlled about 90 percent of the nation's wealth.
New ideas, like Social Darwinism, emerged to bestow moral legitimacy upon the vast fortunes accumulated.
Herbert Spencer applied Darwin's theories to society and popularized the phrase "survival of the fittest."
Spencer argued that economic success demonstrated superiority, while state welfare and private charity would lead to social degeneration.
H. L. Mencken wrote in 1907 about the need for complete surrender to natural selection and the importance of the strong growing stronger.
Social Darwinism identified a natural order where inequality signified progress.
Gilded Age industrial elites, such as Andrew Carnegie, Thomas Edison, and John D. Rockefeller, were followers of Spencer.
William Graham Sumner echoed these ideas, stating that a man has no more right to life than a rattlesnake.
The Republican Party, initially an antislavery faction, became a supporter of American business.
Abraham Lincoln had been a corporate lawyer defending railroads.
During the Civil War, the Republican national government pushed through a pro-business agenda.
Republicans provided millions of acres and dollars to railroad companies.
The Republican Party dominated American politics during the Gilded Age and maintained a high protective tariff.
Social Darwinism provided moral justification for policies that minimized government interference in the economy, except for the protection of business.

IV. The Labor Movement

American workers toiled in difficult jobs for long hours and little pay, with mechanization and mass production leading to deskilling.
Industrial work was unstable, with typical laborers experiencing unemployment for one month per year.
Workers labored sixty hours a week but still earned incomes below the poverty line, forcing wives and children into the labor market.
Crowded cities failed to accommodate growing populations, leading to families being trapped in crowded slums.
Strikes disrupted American industry in the late nineteenth and early twentieth centuries.
The failure of the Great Railroad Strike of 1877 highlighted the need for workers to organize.
Union memberships began to increase, with the Knights of Labor enjoying success in the early 1880s.
The Knights of Labor united skilled and unskilled workers and welcomed women (excluding lawyers, bankers, and liquor dealers).
By 1886, the Knights had over seven hundred thousand members and envisioned a cooperative producer-centered society.
In 1886, a Knights of Labor member was fired for attending a union meeting, leading to a strike that spread across multiple states.
Jay Gould hired strikebreakers and the Pinkerton Detective Agency to suppress the strikes, with political leaders and state militias supporting Gould's companies.
Workers destroyed property in response, leading to negative headlines and justification for using strikebreakers and militiamen.
The strike broke, briefly undermining the Knights of Labor, which then focused on a national campaign for the eight-hour day.
The campaign for an eight-hour day culminated in a national strike on May 1, 1886, with between three hundred thousand and five hundred thousand workers participating.
In Chicago, police killed several workers while breaking up protesters at the McCormick reaper works, leading to a protest at Haymarket Square.
A bomb exploded at Haymarket Square, killing seven policemen, and police fired into the crowd, killing four.
The Haymarket Riot associated unionism with radicalism, leading to the arrest of eight Chicago anarchists, who were found guilty of conspiracy and sentenced to death.
Membership in the Knights of Labor declined after Haymarket, and the national movement for an eight-hour day collapsed.
The American Federation of Labor (AFL) emerged as a conservative alternative to the Knights of Labor, focusing on practical gains through a conservative approach.
In 1892, the Amalgamated Association of Iron and Steel Workers struck at a Carnegie steel mill in Homestead, Pennsylvania, leading to a battle between workers and Pinkerton detectives.
The Pennsylvania governor called the state militia, broke the strike, and destroyed the union.
In 1894, workers in George Pullman's Pullman car factories struck when wages were cut, but rents and utilities remained constant.
The American Railway Union (ARU), led by Eugene Debs, launched a sympathy strike, halting national railroad traffic.
President Grover Cleveland dispatched American soldiers to break the strike, and a federal court issued an injunction against Debs and the union's leadership.
Debs was arrested and imprisoned, radicalizing him and leading him to believe political and judicial leaders were tools for capital.
The final two decades of the nineteenth century saw over twenty thousand strikes and lockouts in the United States.
American farmers also protested against the inequalities of the Gilded Age and political corruption.

V. The Populist Movement

Populist leader Mary Elizabeth Lease claimed that Wall Street controlled the country and that the government was no longer for the people.
Farmers were significantly affected by industrialization, with expanding markets and technological improvements decreasing commodity prices.
Commercialization of agriculture placed farmers in debt to bankers, railroads, and economic intermediaries, leading to land loss and industrial workforce entry.
The rise of industrial giants reshaped the American countryside, linking rural Americans to financial centers and global markets.
Improved farm machinery, easy credit, and consumer goods flooded the countryside, but they came at a price.
Farmers depended on a national economic system subject to price swings, speculation, and limited regulation.
Farmers organized through the Farmers' Alliance and later the People's (or Populist) Party to challenge the established political economy.
Mass production and business consolidation led to giant corporations monopolizing sectors of the U.S. economy.
The Farmers' Alliance was first organized in 1877 in Lampasas, Texas, to restore economic power to farmers.
The alliance spread across the former Confederacy, the Midwest, and the Great Plains, promoting a vision of a cooperative commonwealth.
At its peak, the Farmers' Alliance had 1,500,000 members in 40,000 local sub-alliances.
The alliance's most innovative programs were farmers' cooperatives that enabled farmers to negotiate higher prices.
These cooperatives spread across the South between 1886 and 1892 and claimed over a million members.
Alliance-backed Democratic candidates won governorships and congressional seats in 1890.
Alliance members organized the People's Party, or the Populists, to address flaws in the political economy.
The Populists attracted supporters by appealing to those convinced of deep flaws that political parties refused to address.
The Populists nominated James B. Weaver as their presidential candidate at the party's first national convention in Omaha, Nebraska, on July 4, 1892.
The Omaha Platform sought to counter monopolistic capitalism with a strong federal government, advocating nationalizing railroads and telegraph systems, establishing postal savings banks and subtreasuries, monetizing silver, direct election of senators, a secret ballot, and a graduated income tax.
In the 1892 election, Weaver received over one million votes and twenty-two electoral votes.
The Panic of 1893 increased the Populist movement's credibility and support.
Populist speakers blamed business elites and corrupt politicians for America's widening inequality.
In the 1894 elections, Populists elected six senators and seven representatives to Congress.
The Populist movement faced obstacles, especially in the South, where Democrats used electoral fraud and racial demagoguery to limit Populist gains.
The Colored Farmers' Alliance, with as many as 250,000 members, declined due to violent white repression.
Racial mistrust and division remained prevalent, even among Populists.
By the mid-1890s, Populism had exploded in popularity, but divided leadership and institutionalized parties hindered its progress.

VI. William Jennings Bryan and the Politics of Gold

William Jennings Bryan was a skilled orator, Nebraska congressman, three-time presidential candidate, U.S. secretary of state, and lawyer who supported prohibition and opposed Darwinism.
Bryan gained national renown for his attack on the gold standard and promotion of free silver.
Bryan was born in Salem, Illinois, in 1860 and developed a strong passion for law, politics, and public speaking.
He moved to Nebraska after his marriage and became known as an extraordinary orator.
When economic depressions struck the Midwest in the late 1880s, Bryan worked within the Democratic Party to support farmers.
Bryan won election to the House of Representatives and later aimed for the presidency to defend farmers and laborers against big business.
In 1895–1896, Bryan promoted the free coinage of silver, believing bimetallism could alleviate farmers' debts.
The Democratic Party's national convention in 1896 nominated Bryan after his stirring speech against the gold standard.
Bryan declared that the gold standard would not crucify mankind upon a cross of gold.
The Republicans ran William McKinley, who championed business interests and the gold standard.
Bryan campaigned across the country, but McKinley won the election.
In early 1900, Congress passed the Gold Standard Act, effectively ending the debate over monetary policy.
Bryan sought the presidency again in 1900 and 1908 but was defeated both times.
Bryan's condemnation of northeastern financial interests and calls for free silver co-opted popular Populist issues.
The Democrats siphoned off a large proportion of the Populists' political support, fracturing the Populist movement.
The Populist energy shifted to the more moderate Democratic Party.
The Populist Party proved to be the most significant third-party movement in American history, laying the groundwork for the progressive movement.

VII. The Socialists

American socialists carried on the Populists' radical tradition by uniting farmers and workers in a sustained political struggle.
Socialists argued that wealth and power were consolidated in the hands of too few individuals and that workers suffered from low pay and unsafe conditions.
Karl Marx described the industrial economy as a class struggle between the bourgeoisie and the proletariat.
Eugene Debs stated that socialists sought the overthrow of the capitalist system and the emancipation of the working class.
Under a socialist cooperative commonwealth, the means of production would be owned collectively, ensuring fair wages.
Socialist organizer Oscar Ameringer wanted government ownership of trusts and the people's ownership of the government.
The socialist movement drew from a diverse constituency, including prominent Americans like Helen Keller, Upton Sinclair, and Jack London, as well as factory workers, miners, and farmers.
Many united with William D. "Big Bill" Haywood to form the Industrial Workers of the World (IWW), a radical union that welcomed all workers.
The Socialist Party of America (SPA), founded in 1901, carried on the American third-party political tradition.
Socialist mayors were elected in thirty-three cities and towns, and two socialists won congressional seats.
By 1913, there were 150,000 members of the Socialist Party.
In 1912, Eugene V. Debs received almost one million votes for president, or $6$ percent of the total.
Government oppression and censorship during World War I contributed to the party's decline, but socialists tapped into a deep well of discontent.

VIII. Conclusion

The march of capital transformed patterns of American life, creating wealth and poverty.
A growing industrial working class struggled to earn sufficient wages.
All Americans, whether winners or losers, reckoned in some way with their new industrial world.