American History Unit 3 Industrialization Unit 3 1

American History Unit 3 Industrialization

Unit 3. 1 • Rise of Industry

Pre-Industrialization Agrarian Society Markets had to be near water Transportation was slow 1 st industrial revolution started simple factories • Steam engines on boats made up-river travel possible • •

Industrialization • The rise of big business, and use of factories to mass produce goods for consumption

Six Factors Facillitated industrialization 1. 2. 3. 4. 5. 6. Natural resources Inventions Labor Supply Surplus Capital Urbanization Transportation Revolution

Natural resources • P. 411 • Timber – Wisconsin, minnesota – MS, AL, GA, SC, FL, SC, NC, VA, MD, DE, NJ • Petroleum – PA • Coal – IL, PA, WV, KY • Copper – AZ, NM • Iron – MN, WI (Mesabi Range) • Land • Used to produce steel

Inventions • Alexander graham bell – 1876 - invented the telephone – Drastically transformed communication • Thomas Alva Edison – 1879 – invented the light bulb – Made the possibility of a longer work day possible • Transatlantic telegraph cable – Cyrus field came up with a way to communicate with Europe from the U. S. other than mail via ships • Refrigeration – allowed for longer life of food products • Refrigerated rail cars – allowed for the transport of fresh food products over longer distances (increased markets) • Skyscrapers (Louis Sullivan), elevator, trolley car – made urbanization possible • Bessemer process – made steel production cheaper and more efficient • Typewriter, cash register, electric trolley cars • P. 412

Thomas Alva Edison “Wizard of Menlo Park”

Alexander Graham Bell Telephone (1876)

U. S. Patents Granted

Labor Supply • Labor - workers • Immigration (push/pull factors p. 443 of book) – Many Europeans came to America because there was no room in Europe, nor was there much employment • Old immigrants – Northern European – Protestants • New Immigrants – Italian, Eastern European, Irish – – Catholic, Orthodox, Jewish 1880 immigrants in the U. S. from southeastern Europe -19% 1900 immigrants in the U. S. from southeastern Europe – 60% New Immigrants were willing to work for lower wages (cheap labor supply)

Anti-Immigrant sentiments • Nativism – anti-immigration movement that favored those who descended from old immigrants – blamed immigrants for the degradation of the urban government – Trade unionists hated them for their willingness to work for super-low wages and for bringing in dangerous doctrines like socialism and communism into the U. S • Anti-catholic • American Protective Association (APA) • Anti-asian • Chinese Exclusion act • Ironically in this anti-immigratnt climate, the Statue of Liberty arrived from France—a gift from the French to America in 1886.

Surplus Capital • Capital = Money available for spending • Discovery of precious metals – Gold – Silver • availability of capital increased investment

Urbanization • The process of people moving to largely populated cities – 1820 approx. 5% of the U. S. population lived in towns or cities – 1900 approx. 20% (1 in 5) of the U. S. lived in cities with a population of 100, 000 or greater • • Provided for a concentrated supply of labor Provided a concentrated market for sales Ethnic distribution (settlement patterns p. 445) Cities naturally segregated by class and ethnicity

Transportation Revolution • After the Civil War, railroad production grew enormously, from 35, 000 mi of track laid in 1865 to a whopping 192, 556 mi. of track laid in 1900. • Transcontinental Railroad • Pacific Railway Act – congress authorized a transcontinental railroad • Union Pacific (Greenville Dodge) – Started east and went west Mostly Irish workers Easier job because of flat land Dangerous job because fo Indian Attacks • Central Pacific (Leland Stanford) – Started west and went east Mostly Chinese workers Tougher job because of mountains • The Two met in Promontory, Utah in 1869

Growth caused by railroads • Railroads gave land their value; towns where railroads ran became sprawling cities while those skipped by railroads sank into ghost towns, so, obviously, towns wanted railroads in them. Cornelius Vanderbilt -owner of the New York Central Railroad financed western railroads • 1883 time zones developed by ARA

Railroads cont. • Effects on farmers • Shipped goods • Short haul vs. long haul rates – The railroad practice to charge higher rates on lines where there was no competition than
on routes where several lines were operating. – This often meant that the cost of shipping
goods a short distance was greater than over a long distance.

Unit 3. 2 • The Rise of Big Business

Economic Terms • Capitalism – Economic system in which the means of production (how to make stuff) are privately owned • Laissez-Faire – “hands off” policy in which the government is not involved in the economy at all – Adam Smith • Free Market Capitalism (Free enterprise) – A form of capitalism in which there is no government involvement and price is dictated strictly through supply and demand – Also known as a market economy • Entrepreneur – A business owner who takes on financial risk to start a company • Mixed Market Capitalism – A form of capitalism in which there is some government involvement and some market economy

Tariffs • Tariff – A tax imposed on imported goods and services. – Tariffs are used to protect domestic producers, as they increase the price of imported goods and services, making them more expensive to consumers. • Morrill Tariff – adopted on March 2, 1861 – raised rates to protect and encourage industry and the high wages of industrial workers. – First in a series of high tariffs intended to protect American Business • Mc. Kinley Tariff (1890) – It increased the duties on wool, woolen manufactures, on tin plate, barley and some other agricultural products and remitted the duty on raw sugar. – Intended to help farmers – Actually hurt farmers – Contributed to the causes of the “panic of 1893”

Types of Business • Sole Proprietorship – One person owns and usually manages the business • Partnership – Two or more people own and manage the business • Corporation – Ownership is shared by stock holders – Stock – shares of ownership in a corporation – Managers of the corporation are hired

Consolidating Wealth • During industrialization, a few people rose to control most of the nation’s wealth • By 1909: – 1% of companies controlled 44% of all of the Nation’s wealth

Consolidating Wealth • Vertical Integration – Controlling all aspects of a product from raw material to consumer – Reduces cost by eliminating middlemen – Increases profit by reducing cost • Horizontal Integration • Combining firms in the same business into one corporation – Pools – temporary agreements to manipulate prices – Trusts – companies in the same industry team up to drive smaller companies out of business – Monopolies – control of a single industry by a single company

The Rise of Billionaires • Andrew Carnegie ( V. I. ) – Started off poor, worked hard, assumed responsibility, he worked his way up to wealth. – He started in the Pittsburgh area, but he was not a man who liked trusts; still, by 1900, he was producing 1/4 of the nation’s Bessemer steel, and getting $25 million a year. • John D. Rockefeller (H. I. ) – ruthless and merciless, organized the Standard Oil Company of Ohio in 1882 (five years earlier, he had already controlled 95% of all the oil refineries in the country). – Rockefeller crushed weaker competitors—part of the natural process according to him—but his company did produce superior oil at a cheaper price. • He used this method to form Standard Oil and control the oil industry by forcing weaker competitors to go bankrupt. • J. P. Morgan (Trusts) – J. Pierpont Morgan, having already made a fortune in the banking industry and in Wall Street, was ready to step into the steel tubing industry, but Carnegie threatened to ruin him, so after some tense negotiation, Morgan bought Carnegie’s entire business at $400 million (this was before income tax)

Robber Barons/Captains of Industry • Robber Barons – the nickname for greedy industry giants who used any means necessary to gain wealth, even at the expense of others • Jay Gould made millions embezzling stocks from the Erie, Kansas Pacific, the Union Pacific, and the Texas and Pacific railroad companies. • One method of cheap moneymaking was called “stock watering, ” in which railroad companies grossly over-inflated the worth of their stock and sold them at huge profits. • Railroad owners abused the public, bribed judges and legislatures, employed arm-twisting lobbyists, elected their own to political office, gave rebates (which helped the wealthy but not the poor), and used free passes to gain favor in the press.

Robber Barons Cont. • Credit Mobilier Scandal – 1872 -1873 – Major stockholders in the Union Pacific Railroad formed a company, the Crédit Mobilier of America – gave it contracts to build the railroad. – They sold or gave shares in this construction to influential congressmen. – congressmen helped themselves by approving federal subsidies for the cost of railroad construction without paying much attention to expenses, enabling railroad builders to make huge profits – The scandal also showed how corruption tainted Gilded Age politics, and the lengths railroads and other economic interests would go to assure and increase profits.

Selling Products • Consumer - a person who purchases goods and services for personal use. • Advertising Industry -national branding of goods and the development of advertising agencies began in the 1880 s • Department Store – stores like Macy’s (in New York) and Marshall Field’s (in Chicago) provided urban working-class jobs and also attracted urban middle-class shoppers • Mail Order Catalogs – stores like Sears and Montgomery Ward, which made things cheap and easy to buy, expanded the market to rural cutomers.

Politics in the Age of Big Business • Civil Service Reform – After 1877 the Republican Party split on the issue of civil service reform – Government jobs were awarded to friends of politicians who won office (spoils system) • Stalwarts (wanted to keep the spoils system) – Reformers wanted a merit based system • Halfbreeds (wanted reform) • Election of 1880 – Civil service reform was major issue – Republicans ran James Garfield (halfbreed) and Chester A. Arthur (Stalwart) • July 2, 1881 – Charles Guiteau – Shot Garfield – Said “I am a stalwart” – Sept. 19, 1881 Garfield died, Arthur became president • Pendleton Civil Service Act 1883 – Established a civil service commission to devise and administer exams – Provided the foundation for today’s modern civil service system

Politics cont. • Regulation – The Interstate Commerce Act, passed in 1887, banned rebates and pools and required the railroads to publish their rates openly (so as not to cheat customers), and also forbade unfair discrimination against shippers and banned charging more for a short haul than for a long one. • It also set up the Interstate Commerce Commission (ICC) to enforce this. • Sherman Antitrust Act – In 1890, the Sherman Anti-Trust Act was signed into law; it forbade combinations (trusts, pools, interlocking directorates, holding companies) in restraint of trade, without any distinction between “good” and “bad” trusts. • It proved ineffective, however, because it couldn’t be enforced. • Not until 1914 was it properly enforced and those prosecuted for violating the law were actually punished.

Unit 3. 3 • The Complications of Industrialization – Problems

Gilded Age • Gilded age – from the 1870 s to about 1900. – The term was coined by writer Mark Twain in The Gilded Age: A Tale of Today, (1873) – satirized an era of serious social problems masked by a thin gold gilding. – The era looked wonderful on the surface, but underneath there were many problems

Urban Problems (city) • In cities, criminals flourished, and impure water, uncollected garbage, unwashed bodies, and droppings made cities smelly and unsanitary. • Worst of all were the slums, which were crammed with people. • “dumbbell tenements” (which gave a bit of fresh air down their airshaft) were the worst since they were dark, cramped, and had little sanitation or ventilation.

Urban Problems Cont. • Political Machines – Political groups that controlled cities by controlling immigrants – The federal government did little to help immigrants assimilate into American society – immigrants were often controlled by powerful “bosses” corrupt political leaders who provided jobs and shelter in return for political support at the polls.

Political Machines – Graft • Used by political machines • occurs when funds intended for public projects are intentionally misdirected in order to maximize the benefits to private businesses – Tammany Hall • Political Machine (group) from the Democratic Party in New York City • Controlled democratic politics from 1790 to the 1960 s • Mostly helped Irish Immigrants

Boss Tweed • William M. Tweed, better known as Boss Tweed • Leader of Tammany Hall in the 1870 s • Tweed was convicted for stealing an amount estimated by an aldermen's committee in 1877 at between $25 million and $45 million from New York City Tax payers

Urban Problems Cont. • Social Darwinism (why nobody cared) – applied Charles Darwin’s survival-of-the-fittest theories to business. It said the reason a Carnegie was at the top of the steel industry was that he was most fit to run such a business. – Horatio Alger (individualism) • Author of novels about individuals who rose from rags to riches

• Social Gospel (why people started caring) – Church movement to improve conditions affecting society – insisting that churches tackle the burning social issues of the day. – Salvation Army – YMCA/YWCA – Jane Addams (someone who cared) • founded Hull House in 1889 to teach children and adults the skills and knowledge that they would need to survive and succeed in America.

Rural Problems (farmers) • Five Problems of Farmers with Big Business 1. Loss of Prestige • Prior to industrialization, farming was a noble occupation • After industrialization, farming was less noble that business 2. Middleman • Cut into profits for farmers and caused problems economically 3. Railroads a) b) c) Rates – charged more for short hauls than long hauls Rebates – reduction in the rates of large companies shipping in exchange for a promise of all of their business (made it difficult for farmers to compete with large agribusiness) Routes - not all farms were near rail lines

Farm Problems cont. 4. Debt - farmers were often in debt • Inflation – decrease in the value of money by raising the price of goods in general • Deflation – decrease in the general price level of goods • Greenbacks - paper money not backed by gold or silver (cause inflation) 5. Fluctuating Prices - never knew the value of their crops

Rural Problems (farmers) cont. • Farmers Formed Groups to solve problems – Greenback Party • Wanted more greenbacks to cause inflation • Did not last long – Grange • Originally formed as a social group • Combatted corruption in railroads • Fell apart after railroads could be regulated

Farm groups contintued – People’s Party • Later known as Populists • Omaha Platform – Wanted free coinage of silver (cause inflation) – Wanted more democracy » Secret ballot » Direct election of senators » Initiative and referendum » Graduated income tax » Labor reform

Election of 1896 • Populists combined with the Democratic Party • Main issue was currency – Silver vs. gold • Republicans – William Mc. Kinley – Gold • Democrats – William Jennings Bryan – Silver – Cross of Gold Speech

Populists • The populists fade out after the election of 1896 but…. – They were the 1 st major group to call for more government involvement (end laissez-faire) – Between 1895 and 1920 many of their ideas will become enacted by other parties

Labor Problems (Workers) • 3 concerns of Labor 1. Higher Wages (10 million made less than $600 a year) 2. Less hours (average work week 59 hours) 3. Safer Conditions (frequent injuries and occasional deaths)

Labor Problems (Workers) cont. • To solve three problems of labor, workers began to organize into unions • Labor Unions –workers who team up to argue with owners as a group. (strength in numbers) – Boycotts -Urging consumers to not buy a product in protest to poor treatment of workers – Strikes – Refusing to work. Used by labor unions to protest poor treatment by management. – Lockouts- Refusing to let workers come to work. Used by management to attempt to get labor to give up on an argument. – Marxism – European idea of socialism where workers control the factory instead of private management. (feared by most americans)

Unions • Four problems facing Unions: – Little public support (linked to marxism/unamerican) – Government policy of laissez-faire – Attitude of big business (hated unions) – Small membership (many reluctant to join)

Knights of Labor • Knights of Labor (1869 -1881 secret) – First Major labor union in the U. S. – Led by Terence V. Powderly – the Knights won a number of strikes for the eighthour day – staged a successful strike against Jay Gould’s Wabash Railroad in 1885, membership mushroomed to 3/4 of a million workers.

Labor Problems (Workers) cont. • Haymarket Square Riot (made unions look bad) – – – • Labor Rally in Chicago in 1886 Police tried to disperse the 1, 500 workers Someone threw a bomb at police, who opened fire in retaliation 10 were killed, 100 injured This so-called Haymarket Square Bombing forever associated the Knights of Labor with anarchists and lowered their popularity and effectiveness; membership declined, and those that remained fused with other labor unions. Homestead Strike (inspired other unions) – Steel Workers in a Carnegie Plant – Carnegie’s plant manager locked out Union workers and hired Private detectives to break up strikers – Strikers met the Pinkertons when they arrived and battled – 17 people died – The strike ultimately failed, but… – The Homestead strike inspired many workers, but it also underscored how difficult it was for any union to prevail against the combined power of the corporation and the government.

Labor Problems (Workers) cont. • Pullman Strike 1894 (showed that government was on the side of business) Railway car manufacturing company Company town (workers rented from owner) Pullman lowered wages and kept rent the same American railway union supported workers and refused to operate any train with a Pullman car – Eugene V. Debs leader of the Railway Workers Union – Pullman arranged for a mail car to be on every train with a Pullman car – Government had to intervene in order to get the mail delivered – –

New Labor Union • American Federation of Labor (Af of L) – 1 st long lasting Union in the U. S. – Samuel Gompers – Labor union that was willing to support capitalism – Gained more support and membership – Advocated the “Closed shop” (required union membership to work) – Used strikes to solve the 3 problems facing labor

Racial Problems (African American) • Segregation – Plessy v. Ferguson 1896 • Supreme Court Case that legalized segregation • It stated that if facilities were equal, then they could be separate • It stood as precedent for about 60 years • Ida B. Wells – Fought to end lynching – formed the National Association of Colored Women in 1896.

Booker T. Washington – an ex-slave – He started an industrial school in Tuskegee, Alabama, for teaching the students useful skills and trades. (Tuskegee Institute) – he avoided the issue of social equality; he believed in Blacks helping themselves first before gaining more rights. – Labeled “Accommodationist” – someone who seeks compromise – Disagreed with W. E. B. Du Bois

W. E. B. Du Bois – the first African American to get a Ph. D. from Harvard University – demanded complete equality for Blacks and action now. – Wanted to use legal means to achieve equality – Believed that the educated elite should lead the fight for equal rights – He founded the National Association for the Advancement of Colored People (NAACP) in 1910.

Ladies • Feminists also rallied toward suffrage, forming the National American Woman Suffrage Association in 1890, an organization led by Elizabeth Cady Stanton and Susan B. Anthony. • Carrie Chapman Catt, took over NAWSA after Anthony stepped down