APUSH Porter POWERPOINT CHAPTER 24 Industry Comes of

APUSH Porter POWERPOINT CHAPTER 24 Industry Comes of Age 1865 -1900

Keys to the Chapter • • Growth of Railroads The Grange Movement Massive Immigration Rise of the “Robber Barons” { Industry Giants} • Shift to wage dependence from land dependence • Unions struggle for a foot hold

Railroads • 1865 – 1900 Government gave railroad subsides in land to help offset the risk (both state and federal governments did this) & land used as collateral for loans to build the railroads • Railroads used land as collateral for loans or sold it for money (average of $3 per acre)

• Justifying the giveaway of the land – Government got lower rates for postal services and military traffic – Cheap way to subsidize railroads, without passing new taxes or cash – R. R. increased value of government’s land – Railroads brought civilization to the West

• Two Major R. R. build transcontinental R. R. – Union Pacific starts in Nebraska with mostly Irish immigrants doing the work & goes West – Central Pacific starts in California and used mostly Chinese immigrants to do the work – They meet on 5/10/1869 at Promontory Point, Utah and the Golden Spike is put in the ground

Promontory Point, Utah May 10, 1869

• Organizing the railroad lines – Vanderbilt organized and expanded the New York Central line which is very profitable – Distance between the 2 tracks (gauge) standardized – Westinghouse air brake and Pullman Palace cars – Safety devices: • Telegraph for communication • Double-tracking (so railroads weren’t going opposite directions on same tracks) • Block signal ( prevent 2 trains going opposite directions from being on same track at same time) • Standardized time zones (1883 - 4 zones)

• Railroads bring the following: – Unity between the states – Industrialization and huge demand for steel – Boom in mining and agriculture – Increased population in West – Increased immigration from Europe and Asia – -----------------------------– But also bring destruction to land Indian way of life and the end of the “open range” – Also bring stock speculation, “rip off artists”, and land speculators

• Stock watering: Jay Gould – Selling stock far beyond what it was worth – R. R. forced to charge high rates and fight competitive battles with rival railroads to make railroad worth high stock price – Fierce Competition would require lower prices thus preventing actual profit from occurring – Bribery of politicians and journalists

• Railroads began working together rather than competing to reward investors at the expense of railroad users – Pools • Agreement to divide the business of a certain area and share the profits – Rebates or kickbacks • Given to large shippers to gain steady traffic • Lower profit made up by charging higher prices for short hauls or on small shippers

History Repeats Itself – Middle Ages and Today

• Farmers in Midwest hurt by railroad abuses – Depression in 1870 s finally moved farmers to protest railroad abuses – Farmers (led by organized farmers’ groups like the Grange) worked at state level to regulate railroads – BUT most Americans believed in Lazzie-Faire which requires government to stay out of business issues

• Farmers use state legislatures to pass laws regulating railroad abuses. • Railroads turn to FED court for help • 1886 – Wabash v. Illinois – Supreme Court ruled that states could not regulate interstate (between states) commerce – Only federal government could regulate interstate commerce so pressure put on Feds

• 1887 – Interstate Commerce Act (ICC) passed – Prohibited rebates and pools – Stopped unfair discrimination against shippers – Require same for short hauls & long hauls – (ICC) set up to enforce the law This helped RR’s because now avoid costly wars and instead begin to control regulatory process First large-scale attempt by federal government to regulate business in interests of society

Post Civil War Industrialization • Liquid Capital ($) becomes available (Europe) • Natural Resources are plentiful (coal, oil, iron) • Immigration provides supply of cheap labor • Inventions enable mass production • Urbanization speeded by refrigerator car, electricity and electric railway

• The telephone – Invented by Alexander Graham Bell in 1876 – Brought nationwide communication to U. S. – Brought women to work on switchboard Electricity developed by Thomas Edison – Invented many things like phonograph, moving picture, and (most famously) the light bulb

• Vertical integration – Combining into 1 organization all phases of manufacturing and production thus being able to control quality, quantity and costs – Best exemplified by Andrew Carnegie’s steel corporation, in which every part of making steel was integrated into 1 company

Vertical Integration as developed by Andrew Carnegie in steel manufacturing

• Horizontal integration – Uniting with competitors to monopolize – Rockefeller trusts are an example of this • Stockholders in smaller oil companies gave control of their stock to the board of Standard Oil Company • The board then controlled all “competing” companies in the industry • Smaller companies left out of the trust eliminated with ruthless competition – Businesses in other industries begin to copy this approach

Horizontal Integration made famous by Rockefeller and oil trusts

• Interlocking directorate – Devised by J. P. Morgan during depression in 1890 s to control financial institutions – Hurting companies were bought out by Morgan’s banks who then put officers from his banks on boards of various “competing” companies to eliminate “wasteful” competition – He will use his vast sums of $ to buyout Andrew Carnegie and create US Steel

Steel Production 1880– 1914 Reduces importance of Europe

– Bessemer process • Cold air on very hot iron ignited carbon in the ore and burned out the impurities • Made cheap production of high-quality steel – America had important natural resources close together • Coal (for fuel), iron ore, other important ingredients

Andrew Carnegie was king of steel: Scottish immigrant who rose from poverty to wealth and then gave almost all away

• 1900 Morgan buys out Carnegie and Carnegie believes he will die “disgraced” if he dies with all his wealth – Spends rest of his life giving away $350 million ($50 m left) • Money given to libraries and universities to help people improve themselves • The leader of the “Gospel of Wealth” theory

• Emergence of the oil industry – 1859 – first oil well in Pennsylvania drilled – Kerosene became first important derivative of oil ; better than whale oil – Late 1800 s – invention of light bulb by Edison made burning kerosene obsolete • Mid 1890 s – automobile invented, burning gasoline for power – Internal combustion engine gave oil industry a huge, profitable boost

John D. Rockefeller Organizes Standard Oil Company to dominate the oil industry

• Positives of Rockefeller’s Standard Oil – Produced superior product at lower price – Achieved economies of scale because his business was so big • Producing a lot of oil by 1 company much more efficient than using many smaller companies (think Microsoft) Negatives of Rockefeller’s approach was that business became more powerful than the government

What a Puny Little Government

• Domination of trusts begins: – sugar, tobacco, leather, harvester, meat – New rich eclipsing old rich who had inherited their money – Old rich were the leaders of the groups who attacked the new industrialists out of fear of being replaced

The Gospel of Wealth argues Darwinism. . . Survival of the fittest • Blame the poor justification – New rich had become rich through hard work – Poor are lazy and can only blame themselves – Law also used (Constitutional arguments) to prevent break-up of Corporations because would be unlawful “taking of property” without compensation {14 th protects corps)

Who is “strong” and who is “weak”?

• Public starts to oppose trusts and newspapers rally against trusts – Federal regulation then passed to regulate and control trusts – Sherman Anti-Trust Act of 1890

• Sherman Anti-Trust Act of 1890 – Forbade combinations in restraint of trade – No distinction made between “good” and “bad” trusts – At first was ineffective • Little power given to government • Most cases decided in favor of corporations • Used to control unions (labor combinations) • Eventually strengthened in 1914 to stop trusts

• South lacks growth of industry: – Sharecropping and tenant system controlled by absentee landlords • 1880 s – rise of pre-rolled cigarettes and in 1890 American Tobacco Company formed – 1880 s – North put more cotton mills in South • Lower taxes and cheap labor in South • Mills located in poorest regions because labor was cheapest (same today for car companies)

• Women Join Workforce – Worked as secretaries, telephone operators, and in factories with men – Middle class women put off marriage and had smaller families – Poor women worked out of economic necessity – Women’s wages stayed lower than men’s

• Foreign trade is expanded – US manufacturers trade with foreign countries when US could not absorb enough of their products – US military used to protect US business abroad, and to build a US empire – Wage earners did not share profits proportionately with business owners – 1900 – 1/10 of the people owned 9/10 of the wealth in the US

• Workers begin to organize together to fight for basic rights : – Found many obstacles to a successful fight against employers • Oversupply of labor drives down wages • New Machines increase productivity which means less workers needed • Employment is no longer personal (small shops) but instead is large and impersonal

• Corporations import strike-breakers (“scabs”) and pay thugs to beat up strike organizers • Corporations get conservative judges to issue injunctions against strikes (forcing them to stop) – If workers did not end strike, state or federal troops could be called out to forcibly put down the strike

• Corporations use “lockouts” (lock factory doors against workers) to starve them into submission • Corporations force workers to sign “ironclad oaths” or “yellow-dog contracts” which were agreements not to join a union • Corporations put agitators’ names on “black list”, & give lists to other employers so that these people could not find work

• Some corporations used “company town” where company owned housing, stores and provided credit to workers, putting them in continuous debt • Middle class had little sympathy for workers – Low wages were still highest in the world – Believed poor could work hard to improve their condition, as others had done before – Strike seen as socialistic, un-American import from Europe – God would take care of poor and weak with charities

• National Labor Union – Organized in 1866; lasted 6 years – Represented 600, 000 workers at peak (skilled, unskilled, farmers) – Did not accept Chinese, women, or blacks – Destroyed by depression in early 1870 s • Knights of Labor – – Organized in 1869 Began as a secret society to prevent retaliation Represented 750, 000 workers at peak Called for organizing all workers • Skilled, unskilled, women, blacks, – Called for producers’ cooperatives, codes for safety and health of workers, 8 -hour day

Haymarket Square: – May 4, 1886 – police attacked a peaceful meeting protesting police brutalities • Dynamite bomb thrown, killing several dozen people (including some police) • 8 people (the Chicago 8) rounded up – No proof they had anything to do with the bombing – Judge ruled that since they had made speeches that incited violence, they were responsible for the bomb – 5 sentenced to death, 3 given long prison terms – Later those still alive are pardoned by Governor

• Haymarket Square destroyed the Knights – Became associated with anarchists and violence • Knights’ other fatal weakness was bringing together unskilled and skilled workers – Unskilled workers easily replaced, nullifying effectiveness of strikes – Skilled workers got tired of being held back by unskilled workers so left Knights

• American Federation of Labor (AFL) formed 1886 • Led by Samuel Gompers, skilled cigar maker – Association of self-governing national unions – Each union kept its independence, while AFL made overall strategy • Gained 500, 000 skilled members • In reality, only represented skilled workers • Used walkouts and boycotts to combat business abuses

• Gompers: – Hated socialism, rejected politics in favor of concrete economic goals for workers • Better wages, fewer hours, better conditions • Unlike Knights of Labor, concerned with more practical (and realistic) goals – “trade agreement” authorizing the “closed shop” • Gompers got some businesses to only hire union members – AFL was non-political except for supporting friends of the union and voting against enemies

• Public attitudes toward workers began to change in the late 1880 s and 1890 s: – Public acknowledged workers right to join unions and strike – Businesses work with unions to avoid strikes – Most businesses were still opposed to unions • 30 years of strikes and violence would be needed before labor finally gained recognition and power to stand up to business in the 1930 s