THE INDUSTRIALIZATION OF AMERICA THE INDUSTRIALIZATION OF AMERICA

THE INDUSTRIALIZATION OF AMERICA

THE INDUSTRIALIZATION OF AMERICA n n n 25 years after Lincoln’s death, America had become, in the quantity and value of her products, the first mfg nation of the world. What England had accomplished in a hundred years, the USA had achieved in half the time – so wrote historians Charles and Mary Beard in the 1920 s. But America’s rise to industrial supremacy was not as sudden as some observers and historians have suggested.

THE INDUSTRIALIZATION OF AMERICA n n n The nation had been building a mfg economy since early in the 19 th century, and industry was established before the Civil War. But the accomplishments of the 19 th century overshadowed all that came earlier. Those years witnessed nothing less than the transformation of the national economy.

THE INDUSTRIALIZATION OF AMERICA n The remarkable growth did much to increase the wealth and improve the lives of many Americans. n Gross National Product the total value of all goods and services that a country produces during a given year

SOURCES OF INDUSTRIAL GROWTH

SOURCES OF INDUSTRIAL GROWTH n Many factors contributed to the growth of American industry: n n n ABUNDANT RAW MATERIALS A LARGE AND GROWING LABOR FORCE A SURGE IN TECHNOLOGICAL INNOVATION THE EMERGENCE OF THE ENTREPRENEURS LASSIEZ-FAIRE ECONOMICS/HIGH TARIFFS A GREAT AND EXPANDING DOMESTIC MARKET FOR PRODUCTS OF MFG, .

THE INDUSTRIAL ECONOMY n n 1913: The US produced 1/3 of the world’s industrial output – more than the total of GB, FR, and Germany combined. Small-scale craft production still flourished in many trades, and armies of urban workers, male and female, toiled in their homes or in the households of others as outworkers or domestics. n n n Half of all industrial workers labored in plants with over 250 employees. On the eve of the Civil War, the first industrial revolution, centered on the textile industry, had transformed N. E. , into a center of mfg. But, otherwise, the US was still primarily an agricultural nation.

THE INDUSTRIAL ECONOMY n n By 1880: For the first time, the Census Bureau found a majority of the workforce engaged in non-farming jobs. By 1890: 2/3 of Americans worked for wages, rather than owning a farm, business, or craft shop. n n Drawn to factories by the promise of employment, a new working class emerged in these years. 1870 -1920: Almost 11 million American moved from the farm to the city, and another 25 million immigrants arrived from overseas.

THE INDUSTRIAL ECONOMY n n Most mfg now took place in industrial cities (F. R. /N. B. ) NYC: With its new skyscrapers and hundreds of thousands of workers in all sorts of mfg establishments, symbolized dynamic growth. Its population exceeded 3. 4 million. The city financed industrialization and westward expansion, its banks and stock exchange funneling capital to railroads, mines, and factories.

THE INDUSTRIAL ECONOMY n n But the heartland of the second industrial revolution was the region around the Great Lakes, with its factories producing iron and steel, machinery, chemicals, and packages food. Pittsburg: Had become the world’s center of iron and steel mfg. Chicago: By 1900 the nation’s second-largest city, with 1. 7 million people, was home to factories producing steel and farm machinery, and giant stockyards where cattle were processed into meat products for shipment in refrigerated cars. Smaller industrial cities proliferated, often concentrating on a single industry – cast-iron stoves in Troy, NY, silk in Paterson, NJ, and furniture in Grand Rapids, Michigan.

NEW TECHNOLOGIES AND NEW INDUSTRIES n n The rapid emergence of new technologies and the discovery of new materials and productive processes were prerequisites to late 19 th century industrial growth. In the entire history of the USA up to 1860, the govt. , had granted only 36, 000 patents. 1860 -1890: The figure was 440, 000. Americans also benefited from comparable technological advances in Europe.

NEW TECHNOLOGIES AND NEW INDUSTRIES n n n Some of the most important innovations were in communications. 1866: Cyrus W. Field laid a transatlantic telegraph to Europe. During the next decade, Alexander Graham Bell developed the first commercially useful telephone.

NEW TECHNOLOGIES AND NEW INDUSTRIES n n By the 1890 s, American Telephone and Telegraph Company, which handled Bell’s interests, had installed nearly half a million telephones in American cities. There were other inventions that speeded the pace of business organization.

NEW TECHNOLOGIES AND NEW INDUSTRIES n 1868: Christopher L. Sholes invented the typewriter.

NEW TECHNOLOGIES AND NEW INDUSTRIES n 1879: James Ritty invented the cash register.

NEW TECHNOLOGIES AND NEW INDUSTRIES n 1891: William S. Burroughs invented the calculating or adding machine.

NEW TECHNOLOGIES AND NEW INDUSTRIES n n Among the most revolutionary innovations in the 1870 s was electricity as a source of light and power. Two pioneers of electrical lightening were Charles F. Brush and Thomas A. Edison.

NEW TECHNOLOGIES AND NEW INDUSTRIES n Charles F. Brush devised the arc lamp for street illumination.

NEW TECHNOLOGIES AND NEW INDUSTRIES n Thomas A. Edison invented the incandescent lamp (or light bulb) which could be used for both street and home lighting.

NEW TECHNOLOGIES AND NEW INDUSTRIES n n Edison and others designed improved generators and built large power plants to furnish electricity to whole cities. By the turn of the century, electric power was becoming commonplace in street railway systems, in elevators of urban skyscrapers, in factories, and increasingly in offices and homes.

THE RAILROAD AND THE NATIONAL MARKET

THE RAILROAD AND THE NATIONAL MARKET n n The railroad made possible the second industrial revolution. 1860 -1880: The number of railroad track tripled and tripled again in 1920 creating a truly national market for mfg goods. 1869: The first continental railroad completed at Promontory Point, UT. 1890 s: 5 transcontinental lines transported the products of western mines, farms, ranches, and forests to eastern markets and carried mfg goods to the west.

THE RAILROAD AND THE NATIONAL MARKET

THE RAILROAD AND THE NATIONAL MARKET n n The rail lines connected every state in the Union ands opened up an immense new national market. Most important, railroad companies pioneered crucial aspects of largescale corporate enterprise.

THE RAILROAD AND THE NATIONAL MARKET n These included the issuance of stock to meet their huge capital needs, the separation of ownership from management, the creation of national distribution and marketing systems, and the formation of new organizational and management structures. n Railroad entrepreneurs such as Collis Huntington of the Central Pacific RR, Jay Gould of the Union Pacific RR, and James Hill of the Northern Pacific RR faced enormous financial and organizational problems.

THE RAILROAD AND THE NATIONAL MARKET n To raise the staggering sums necessary for laying track, building engines, and buying out competitors, railroads at first appealed for generous land loan subsidies from federal, state, and local governments. n n Even so, larger lines had to borrow heavily by selling stocks and bonds to the public. 1883: The railroads independently of the federal government corrected scheduling problems by dividing the country into 4 time zones – still in use today.

THE AUTOMOBILE

THE AUTOMOBILE n n 1903: Charles and Frank Duryea built the first gasoline-driven motor vehicle in America. 1906: Henry Ford produced the first of the famous cars that would bear his name.

THE AUTOMOBILE n n 1910: The industry had become a major force in the economy. The automobile had begun to reshape the American landscape. 1895; There had been only four automobiles on the American highways. 1917: There were nearly 5 million.

THE SCIENCE OF PRODUCTION

THE SCIENCE OF PRODUCTION n n n Central to the growth of the automobile and other industries were changes in the techniques of production. By the turn of the century, many industrialists were turning to the new principles of “scientific management. ” Those principles were often known as “Taylorism” after their leading theoretician Frederick Taylor.

THE SCIENCE OF PRODUCTION n n Taylor’s ideas were controversial during his lifetime and have remained controversial. Taylor argued that scientific management was a way to manage human labor to make it compatible with the demands of the machine age. n n But scientific management was also a way to increase the employer’s control of the workplace, to make working people less independent. He urged employers to reorganize the production process by subdividing tasks.

THE SCIENCE OF PRODUCTION n n n This would speed up production. It would make workers more interchangeable and thus diminish a manager’s dependence on any particular employee. And it would reduce the need for highly trained skilled workers.

THE SCIENCE OF PRODUCTION n If properly managed by trained experts, Taylor claimed, workers using modern machines could perform simple tasks at much greater speed, significantly increasing productive efficiency.

COMPETITION AND CONSOLIDATION

COMPETITION AND CONSOLIDATION n n The economic growth during the post-Civil War years was dramatic and highly volatile. The combination of a market flooded with goods and federal monetary policies that removed money from the national economy led to a relentless fall in prices. The world economy suffered prolonged downturns in the 1870 s and 1890 s. Indeed, before the 1930 s, the years 18731897 were known as the Great Depression.

COMPETITION AND CONSOLIDATION n n n Businesses engaged in ruthless competition. Railroads and other companies tried various means of bringing order to a chaotic marketplace. They formed “pools” that divided up markets between supposedly competing firms and fixed prices. n n n They established “trusts” which were legal devices whereby the affairs of several rival companies were managed by a single director. They employed the use of “interlocking directorates” which were a means by which the CEOs of companies sat on the boards of other companies. They also used “holding companies” which was a central corporate body that would buy up stocks if various member companies and establish direct, formal ownership of the corporations in the trust.

COMPETITION AND CONSOLIDATION n n To avoid cutthroat competition, more and more corporations battled to control entire industries. 1897 -1904: Some 4, 000 firms vanished into larger corporations that served national markets and exercised an unprecedented degree of control over the marketplace. n By the time the wave or mergers had been completed, giant corporations like U. S. Steel, Standard Oil, and International Harvester dominated major parts of the economy.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS”

CAPTAINS OF INDUSTRY OR “ROBBER BARRONS” n n In an era of no personal or corporate taxes, some business leaders accumulated enormous fortunes and economic power. Men, like Jay Gould and Collis Huntington, who reorganized and expanded the railroad and other industries in the 1870 s and 1880 s were often depicted by their contemporaries as villains and “robber barons” who manipulated stock markets and company policies to line their own pockets. n n Some used brutal and ruthless means to accumulate their wealth and power. But recent historians have pointed out that the great industrialists were a diverse group. Although some were ironfisted pirates who engaged in fraudulent practices, others were upstanding businessmen who managed their companies with sophistication and innovation. Some of their ideas were startling in their originality and inventiveness.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n Andrew Carnegie: q q Industrial giant Born in Scotland immigrated to US in 1848 Ambitious and hardworking, he took a job at $1. 20 a week as a bobbin boy in a Pittsburgh textile mill Although he worked a 60 hour week, he enrolled in a night course to learn bookkeeping.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n n He then became a Western Union messenger boy. Because he had to decode the messages for every major business in Pittsburgh, Carnegie gained an insider’s view of their operations. 1852: He was hired as secretary and personal telegraph operator for the PA. Railroad. n n n 1858: He took over as head of the line’s western division. In his six years as division chief, Carnegie more than doubled the line’s mileage and quadrupled its traffic. 1868: Having invested his earnings in the railroads, hew was earning more than $56, 000 a year from his investments, a substantial fortune in that era.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n Early 1870 s: He decided to build his own steel mill. His connections with the railroad industry, the country’s largest purchaser of steel, made this a logical choice. Starting with his first mill, he introduced the Bessemer Process. Combining this new technology with the cost-analysis learned from his railroad experiences, he became the first steelmaker to know the actual production cost of each ton of steel. n n Carnegie’s philosophy: “Watch the costs, and the profits will take care of themselves. ” From the start he priced his rails below the competition. He then, through cost accounting and limiting wage increases to his workers, he lowered his production costs even further. As output climbed, Carnegie discovered the benefits of virtual integration – that is controlling every phase of the business from raw materials to transportation, mfg, and distribution.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n n 1890 s: He dominated the steel industry and had accumulated a fortune worth hundreds of millions of dollars. His complex steel factories in PA, were the most technologically advanced in the world. 1900: Carnegie Steel, employing 20, 000 people, had become the world’s largest corporation. He ran his companies with a dictatorial hand. His factories operated nonstop with two 12 hour shifts every day except the 4 th of July.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n n 1901: J. P. Morgan, who controlled Federal Steel and later finance capitalist, inquired what Carnegie wanted for his share of Carnegie Steel. Carnegie said a half a billion dollars. Morgan agreed to pay it.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n Combining Carnegie’s companies with Federal Steel, Morgan set up the U. S. Steel Corporation, the first business capitalized at more than $1 billion. The corporation, made up of 200 member companies employing 168, 000, marked a new scale in industrial enterprise.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n JOHN ROCKEFELLER q q If any name became a byword for enormous wealth, it was JD Rockefeller. He got his start as a bookkeeper. 1863: He opened his first oil refinery. Like Carnegie, he had a passion for cost cutting and efficiency.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n 1873: He became head of the Standard Oil Company. He scrutinized every aspect of its operation. He drove out rival firms through cutthroat competition, arranging secret deals with railroad companies, and fixing prices and production quotas. n n Rockefeller began with horizontal integration – buying out competing oil refineries. But, like Carnegie, he soon established a vertically integrated monopoly, which controlled the drilling, refining, storage, and distribution of oil.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n n 1880 s: His Standard Oil Company controlled 90% of the nation’s oil industry. Rockefeller, like Carnegie, gave away much of his fortune establishing foundations to promote education and medical research. Also, like Carnegie, he bitterly fought his employees’ efforts to organize unions.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n These and other industrial leaders inspired among ordinary Americans a combination of awe, admiration, and hostility. Depending on one’s point of view, they were “captains of industry” whose energy and vision pushed the economy forward, or “robber barons” who wielded power without any accountability in an unregulated marketplace. n n Most rose from modest backgrounds and seemed examples of how inventive genius and business sense enabled Americans to seize opportunities for success. But their dictatorial attitudes, unscrupulous methods, repressive labor policies, and exercise of power without any democratic control led to fears that they were undermining political and economic freedom.

CAPTAINS OF INDUSTRY OR “ROBBER BARONS” n n 1894: Henry Demarest Lloyd, in Wealth Against Commonwealth, an expose of how JDR’s Standard Oil Company made a mockery of economic competition and political democracy by manipulating the market and bribing legislators, declared concentrated wealth degraded the political process. “Liberty and monopoly cannot live together. ”

THE PROBLEMS OF INDUSTRIALIZATION

THE PROBLEMS OF INDUSTRIALIZATION n n As the US matured into an industrial economy, American struggled to make sense of the new social order. Debates over political economy engaged the attention of millions of Americans, reaching far beyond the academic world into the public sphere. n This broad discussion produced thousands of books, pamphlets, and articles on such technical issues as land taxation and currency reform, as well as widespread debate over the social and ethical implications of economic change.

THE PROBLEMS OF INDUSTRIALIZATION n Many Americans sensed that something had gone wrong in the nation’s social development. n Talks of “better classes, ” “respectable classes, ” and “dangerous classes, ” dominated public discussions, and bitter strife seemed to have become the rule.

THE PROBLEMS OF INDUSTRIALIZATION: THE WORKERS n n Striking as it was, the country’s economic growth distributed its benefits unevenly. For most workers, economic insecurity remained a basic fact of life. During the depressions of the 1870 s and 1890 s, millions of workers lost their jobs or were forced to accept reductions of pay. The “tramp” became a familiar figure on the social landscape as thousands of men took to the roads in search of work.

THE PROBLEMS OF INDUSTRIALIZATION: THE WORKERS n n n Many industrial workers labored 60 hour weeks with no pensions, compensation for injuries, or protections against unemployment. Although American workers received higher wages than their counterparts in Europe, they also experienced more dangerous working conditions. 1880 -1890: An average of 35, 000 workers perished each year in factory and mine accidents, the highest rate in industrial world.

THE PROBLEMS OF INDUSTRIALIZATON: THE WORKERS n n Most strikes for higher wages failed, as employers found it easy to call on the unemployed to take the strikers jobs and bring in public and private forces to intimidate workers. Much of the working class remained desperately poor and to survive needed income from all family members.

THE PROBLEMS OF INDUSTRIALIZATION: THE WORKERS n n 1888: The Chicago Tribune published a series of articles by reporter Nell Cusack under the title “City Slave Girls, ” exposing wretched conditions among the growing number of women working for wages in the city’s homes, factories, and sweatshops. The articles unleashed a flood of letters to the editor from women workers. n One women singled out domestic service – still the largest employment for women – as “a slave’s life, ” with “long hours, late and early, seven days in the week, bossed and ordered about as before the war. ”

THE PROBLEMS OF INDUSTRIALIZATION: THE WORKERS n n 1881: The MA Bureau of Labor Statistics reported that virtually every worker it interviewed in Fall River, the nation’s largest center of textile production, complained of overwork, poor housing, and tyrannical employers. For their part, mfgs claimed their workingmen were “the scum of the English and Irish, ” whose complaints reflected nothing more than a “hereditary feeling of discontent. ”

THE PROBLEMS OF INDUSTRIALIZATION: A CLASS SOCIETY

THE PROBLEMS OF INDUSTRIALIZATION: A CLASS SOCIETY n n n At the other end of the economic spectrum, the era witnessed an unprecedented accumulation of wealth. Class divisions became more and more visible. The rich increasingly resided in their own exclusive neighborhoods and vacationed among their own class at exclusive resorts like Newport, RI.

THE PROBLEMS OF INDUSTRIALIZATION: A CLASS SOCIETY n n The growing urban middle class of professionals, office workers, and small businessmen moved to new urban and suburban neighborhoods linked to central business districts by streetcars and commuter railways. The literature and scholarly works of the time portrayed the era’s class divisions.

THE PROBLEMS OF INDUSTRIALIZATION: A CLASS SOCIETY n n n 1905: The House of Mirth was published by Edith Wharton. She argued that “passion for money” dominated society. Her book traced the difficulties of Lily Bart, a young woman of modest means pressured by her mother and NY high society to “barter” her beauty for marriage to a rich husband in a world where “to be poor … amounted to disgrace. ”

THE PROBLEMS OF INDUSTRIALIZTION: A CLASS SOCIETY n n 1899: Thorstein Veblen, an economist and social historian, published Theory of the Leisure Class. It was a devastating critique of an upper-class culture focused on “conspicuous consumption” – that is, spending money not on needed or even desired goods, but simply to demonstrate the possession of wealth.

THE PROBLEMS OF INDUSTRIALIZTION: A CLASS SOCIETY n n 1886: Matthew Smith’s best-seller Sunshine and Shadow in New York, was published. It opened with an engraving that contrasted department store magnate Alexander T. Stewart’s two-million dollar mansion with housing in the city’s slums.

THE PROBLEMS OF INDUSTRIALIZATION: A CLASS SOCIETY n n 1890: Jacob Riis’ published How the Other Half Lives. It offered a shocking account of living conditions among the urban poor, complete with photographs of apartments in dark, airless, over-crowded tenement houses.

SOCIAL DARWINISM IN AMERICA

SOCIAL DARWINISM IN AMERICA n n The idea of the natural superiority of some groups to others, which before the Civil War had been invoked to justify slavery in an otherwise free society, now reemerged in the vocabulary of modern science to explain success and failure of individuals and social classes. Most tycoons liked to claim that they had attained their wealth and power through hard work, acquisitiveness, and thrift. Those who succeeded, they argued, deserved their success. Those who failed had earned their failure – through their own laziness, stupidity, or carlessness.

SOCIAL DARWINISM IN AMERICA n n “God gave me my money, ” explained JDR, expressing the assumption that riches were a reward for worthiness. “Let us remember, ” said a prominent Protestant minister, “that there is not a poor person in the United States, who was not made poor by his own shortcomings. ”

SOCIAL DARWINISM IN AMERICA n n n Such assumptions became the basis of a popular social theory of the late 19 th century: Social Darwinism. In effect it was the application of Charles Darwin’s laws of evolution and natural selection among the species. Just as only the fittest survived in the process of evolution, so in human society only the fittest individuals survived and flourished in the marketplace. n n n In a highly oversimplified form, language borrowed from Darwin, such as “natural selection, ” “the struggle for existence, ” and “survival of the fittest, ” entered public discussion of social problems during the industrial era. According to Social Darwinism, evolution was as natural a process in human society as in nature, and govt must not interfere. Especially misguided, in this view were efforts to uplift those at the bottom of the social order, such as laws regulating conditions of work or public assistance to the poor.

SOCIAL DARWINISM IN AMERICA n n Even the depressions of the 1870 s and 1890 s did not shake the widespread view that the poor were essentially responsible for their own fate. Charity workers and local governments spent much time and energy distinguishing the “deserving poor” (those, like widows and orphans, destitute through no fault of their own) from the “undeserving poor”, a far larger number.

SOCIAL DARWINISM IN AMERICA n n n Failure to advance in society was widely thought to indicate a lack of character, an absence of selfreliance and determination in the face of adversity. 1900 s: Half the nation’s largest cities offered virtually no public relief, except to persons living in poorhouses. To improve their lot, according to the philosophy of Social Darwinism, workers should practice personal economy, keep out of debt, and educate their children in the principles of the marketplace, not to look to the government for aid.

SOCIAL DARWINISM IN AMERICA n n n The English philosopher Herbert Spencer was the first and most important proponent of theory. Society, he argued, benefited from the elimination of the unfit and the survival of the strong and talented. Spencer’s books were popular in America in the 1870 s and 1880 s.

SOCIAL DARWINISM IN AMERICA n n n The leading American proponent of theory was William Graham Sumner a Yale professor. For Sumner, freedom meant “the security given to each man” that he can acquire, enjoy, and dispose of property “exclusively as he chooses, ” without interference from other persons or from government. Freedom thus defined required a frank acceptance of inequality.

SOCIAL DARWINISM IN AMERICA n n n Society, according to Sumner, faced two and only two alternatives: “liberty, inequality, survival of the fittest; not – liberty, equality, survival of the unfittest. ” 1883: Sumner published What Social Classes Owe To Each Other. His answer, essentially, was nothing. n n “In a free state, ” no one was entitled to claim “help from, and cannot be charged to [offer] help to another. Government, Sumner believed, existed to protect “the property of men and honor of women, ” not to upset social arrangements decreed by nature.

SOCIAL DARWINISM IN AMERICA n n n Many industrialists seized on theories of Spencer and Sumner to justify their own power. JDR: “The growth of a large business is merely the survival of the fittest. This is not an evil tendency in business. It is merely the working out of the law of nature and the law of God. ” Carnegie, who became the leading exponent of Social Darwinism among American industrialists, later described his reaction on first reading Spencer” “I remember that light came as in a flood and all was clear. ”

SOCIAL DARWINISM IN AMERICA n n n Social Darwinism appealed to businessmen because it seemed to legitimize their success and confirm their virtues. It appealed to them because it placed their activities within the context of traditional American ideas of freedom and individualism. Above all, it appealed to them because it justified their tactics. n n Social Darwinist insisted that all attempts by labor to raise wages by forming unions and all endeavors by govt. , to regulate economic activities would fail, because economic life was controlled by natural law, the law of competition. And Social Darwinism coincided with another “law” that seemed to justify business practices and business dominance: the law of supply and demand.

SOCIAL DARWINISM IN AMERICA n n The law of supply and demand was defined by Adam Smith and the classical economists. The economic system, they argued, was like a great and delicate machine functioning by natural and automatic rules, by the “invisible hand” of market forces.

SOCIAL DARWINISM IN AMERICA n n n The law of supply and demand was one of these rules. It determined all economic values – prices, wages, rents, interest rates – at a level that was just to all concerned. Supply and demand worked because human beings were essentially economic creatures who understood and pursued their own interests, and because they operated in a free market regulated only by competition.

SOCIAL DARWINISM IN AMERICA n n But Social Darwinism and the ideas of classical economists did not have very much to do with the realities of the corporate economy. At the same time that businessmen were celebrating the virtues of competition and the free market, they were actively seeking to protect themselves from competition and replace the natural workings of the marketplace with control by great combinations/monopolies/ trusts n n n JDR’s Standard Oil monopoly was the clearest example of the effort to free an enterprise from competition. Many businessmen made similar attempts on a smaller scale. Vicious competitive battle – something Spencer and Sumner celebrated and called a source of healthy progress – was in fact the very thing that American businessmen most feared and tried to eliminate.

THE GOSPEL OF WEALTH

THE GOSPEL OF WEALTH n n n Some businessmen attempted to temper the harsh philosophy of Social Darwinism with a more gentle, if in some ways equally selfserving idea: the “gospel of wealth. ” People of great wealth, advocates of this idea argued, had not only great power by great responsibilities. It was their duty to use their reaches to advance social progress.

THE GOSPEL OF WEALTH n n n 1901: Carnegie elaborate on the creed in a book entitled The Gospel of Wealth. He wrote that the wealthy should consider all revenues in excess of their own needs as “trust funds” to be used for the good of the community. The person of wealth, he said, was “the mere trustee and agent for his poorer brethren. ”

THE GOSPEL OF WEALTH n Carnegie was only one of many great industrialists who devoted large parts of their fortunes to philanthropic works – much of it to libraries and schools, institutions be believed would help the poor to help themselves.

THE GOSPEL OF WEALTH n n The notion of private wealth as a public blessing existed alongside another popular concept: the notion of great wealth as something available to all. Russell Conwell, a Baptist minister, became the most prominent spokesman for the idea by delivering one lecture “Acres of Diamonds” more than 6, 000 times between 1880 and 1900.

THE GOSPEL OF WEALTH n n Conwell told a series of stories, which he claimed were true, of individuals who had found opportunities for extraordinary wealth in their own backyards. One such story involved a modest farmer who discovered a vast diamond mine in his own fields in the course of working his land. n n n “I say to you, ” he told his rapt audiences, “that you have “acres of diamonds” beneath you right here … that the men and women sitting here have within their reach opportunities to get largely wealthy…. I say that you ought to get rich, and that it is your duty to get rich. ” Most of the millionaires in the country, he claimed inaccurately, had begun on the lowest rung of the economic ladder and had worked their way to success. Every industrious individual had a chance to do likewise.

THE GOSPEL OF WEALTH n n n Horatio Alger was the most famous promoter of the success story. Alger was originally a minister in a small town in MA. , but was driven from his pulpit as a result of a sexual scandal. He moved to NY, where he wrote his celebrated novels – more than 100 in all, which sold more than 20 million copies.

THE GOSPEL OF WEALTH n n The titles varied: Andy Grant’s Pluck, Ragged Dick, Tom the Bootblack, Sink or Swim. But the story and message were the same: A poor boy from a small town went to the big city to seek his fortune. By work, perseverance, and luck, he became rich.

ALTERNATIVE AMERICAS

ALTERNATIVE AMERICAS n n n Alongside the celebrations of competition, the justifications for great wealth, and the legitimization of the existing order stood a group of alternative philosophies, challenging the corporate ethos and at times capitalism itself. Alarmed by fear of class warfare and the growing power of concentrated capital, social thinkers offered numerous plans for change. In the last quarter of the century, over 150 utopian or cataclysmic novels appeared, predicting that social conflict would end either in a new harmonious social order or total catastrophe.

ALTERNATIVE AMERICAS n n n One such philosophies emerged in the work of the sociologist Lester Frank Ward was a Darwinist but he rejected the application of Darwinian laws to human society. 1883: He published Dynamic Sociology.

ALTERNATIVE AMERICAS n n n He agued that civilization was not governed by natural selection but by human intelligence, which was capable of shaping society as it wished. He believed that an active government engaged in positive planning was society’s best hope. The people, through their government, could intervene in the economy and adjust it to serve their needs.

ALTERNATIVE AMERICAS n n Another social thinker was Laurence Gronlund. His book The Cooperative Commonwealth was the first to popularize socialist ideas for an American audience. n Socialism – the belief that private control of economic enterprises should be replaced by govt ownership in order to ensure a fairer distribution of the benefits of the wealth produced – became a major political force in Western Europe in the late 19 th century.

ALTERNATIVE AMERICAS n n n In the USA, however, where access to private property was widely considered essential to individual freedom, socialist beliefs were largely confined to immigrants, whose writings, frequently in foreign languages, attracted little attention. Most Americans saw socialism as a European import irrelevant to the New World. Gronlund began the process of its Americanization. n He explained in easy-tounderstand prose such socialist concepts as the labor theory of value, the necessity of class conflict between workers and employers, the benefits of making the public good rather than private profit the aim of economic activity, and the inevitability of the concentration of ownership (wealth) in fewer and fewer hands under capitalism.

ALTERNATIVE AMERICAS n n But while Karl Marx had predicted that socialism would come into being via a working-class revolution, Gronlund portrayed it as an end result of a process of peaceful evolution, not violent upheaval. He thus made socialism seem more acceptable to middle-class Americans who desired an end to class conflict and the restoration of social harmony.

ALTERNATIVE AMERICAS n n 1879: Henry George published Progress and Poverty. Although it had no direct impact on govt. , policy, Progress and Poverty, commanded more public attention than any book on economics in American history. George was an antislavery editor in CA. He had witnessed firsthand the rapid monopolization of land in the state.

ALTERNATIVE AMERICAS n n His book began with a famous statement of “the problem” suggested in its title – the growth of “squalor and misery” along with material progress. His solution was a “single tax” which would replace other taxes with a tax on increases in the value of real estate. The single tax would be so high that it would prevent speculation in both urban and rural land. This, he argued, would make land readily available to aspiring businessmen and to urban working men seeking to become farmers.

ALTERNATIVE AMERICAS n n No one knows how many of George’s readers actually believe in this way of solving the nation’s ills. But millions responded to his clear explanation of economic relationships and his stirring account of how the “social distress” long thought to be confined to the Old World had made its appearance in the New World. n n Freedom lay at the heart of George’s analysis. The “proper name” for the political movement spawned by his book, he once wrote, was “freedom men, ” who would “do for the question industrial slavery” what the Republican Party had done for the slavery of blacks.

ALTERNATIVE AMERICAS n n George rejected the traditional equation of liberty with ownership of land – since the single tax, in effect, made land the “common property” of the entire society. But, in other ways, his definition of freedom was thoroughly in keeping with mainstream thought. Despite calling for a single massive public intervention in the economy, George saw govt. , as a “repressive power, ” whose functions in the “cooperative society” of the future would be limited to enhancing the quality of life. His vision rested on the familiar foundation of the sovereign individual.

ALTERNATIVE AMERICAS n n n Not until the early 20 th century would socialism become a significant presence in American life. 1888: Edward Bellamy published Looking Backward. As Gronlund noted, the most important result of his book was to prepare an audience for Bellamy’s book, which promoted socialist ideas while “ignoring that name. ”

ALTERNATIVE AMERICAS n n n But Bellamy wrote of nationalism, not socialism. He lived his entire life in the small industrial city of Chicopee Falls, MA. In Looking Backward, his main character falls asleep in the late 19 th century only to awaken in the year 2000, in a world where cooperation has replaced class strife, “excessive individualism, ” and cutthroat competition.

ALTERNATIVE AMERICAS n n Inequality has been banished and with it then idea of liberty as a condition to be achieved through individual striving free of govt. , restraint. Freedom, Bellamy insisted, was a social condition, resting on interdependence, not autonomy. n n From today’s perspective, Bellamy’s utopia – with citizens obligated to labor for years in an Industrial Army controlled by a single Great Trust – seems a chilling social blueprint. Yet the book inspired the creation of hundreds of nationalists clubs devoted to bringing into existence the world of 2000 and left a profound mark on a generation of reformers and intellectuals.

ALTERNATIVE AMERICAS n n Bellamy held out the hope of retaining the material abundance made possible by industrial capitalism while eliminating inequality. In proposing that the state guarantee economic security to all, he proposed a far-reaching expansion of the idea of freedom.

THE SOCIAL GOSPEL

THE SOCIAL GOSPEL n n By 1888, when Looking Backward appeared, Social Darwinism and the laissez-faire definition of freedom were under attack from the labor movement, middle-class reformers and writers as well as clergymen shocked by the inequities in the emerging industrial order. Most of the era’s Protestant preachers concentrated on attacking individual sins like drinking and Sabbath-breaking and saw noting immoral about the pursuit of riches.

THE SOCIAL GOSPEL n n But the outlines of what came to be called the Social Gospel were taking shape in the writings of Walter Rauschenbusch, a Baptist minister in NYC, and others. They insisted that freedom and spiritual development required an equalization of wealth and power and that unbridled competition mocked the Christian ideal of brotherhood.

THE SOCIAL GOSPEL n n The Social Gospel Movement began as an effort to reform Protestant churches by expanding their appeal in poor neighborhoods and making them more attentive to the era’s social ills. The Movement’s adherents established missions and relief programs in urban areas that attempted to alleviate poverty, combat child labor, and encourage the construction of better working-class housing. They worked with labor unions in demanding health and safety laws in the work place. Some suggested that a more cooperative organization of the economy should replace competitive captialism.

THE SOCIAL GOSPEL n n n Within American Catholicism, as well, a group of priests and bishops emerged who attempted to alter the church’s traditional hostility for social reform and its isolation from contemporary currents of social thought. With most of its parishioners working men and women, they argued, the church should lend its support to the emerging labor movement. These developments suggested the existence of widespread dissatisfaction with the “liberty of contract” understanding of freedom.