Natural resources and new ideas create a boom for industry and railroads. Government

addresses corruption in business, and laborers organize for better working conditions.

Chapter 24 –Industry Comes of Age (1865-1900)

Railroad Production Boom

Railroad production grows enormously after the Civil War

Congress gave land to railroad companies totaling 155 million acres

Construction promised greater unity and economic growth

Towns where railroads ran became sprawling cities

Spanning the Continent with Rails

Older eastern railroads, like the New York Central, headed by Cornelius Vanderbilt, often financed successful western railroads

Congress commissioned the Union Pacific Railroad (1862) to begin westward from Omaha, Nebraska, to gold-rich California The mostly Irish workers (Paddies) lay the tracks

Over in California, the Central Pacific Railroad was in charge of extending the railroad eastward Hundreds of the mostly Chinese workers lost their lives

In 1869, the nation’s first transcontinental railroad was completed at Promontory Point near Ogden, Utah

Cornelius Vanderbilt

Vanderbilt was the 2nd richest American of all time. He amassed a fortune of $100 million (adjusted wealth = $205 billion). He got his start sailing barges across New York Harbor, and gradually expanded into steamships and railroads. One of his favorite business tactics was to undercut the competition so heavily that they would pay him to stay out of a given market.

He was rough around the edges -- swearing, chewing tobacco -- and never really fit in with New York high society.

His heirs did better, building great mansions along New York's Park Avenue and hob-knobbing with the city's elite. But they spent heavily, and by a 1973 family reunion, not one of the 120 Vanderbilt descendants present was a millionaire.

Benefits of the Railroads

Railroads: stitched the nation together generated a huge market and lots of jobs helped the rapid industrialization of America stimulated settlement, mining, and agriculture in the

West were a boom for urban development attracted immigrants to settle their land grants

Due to railroads, the creation of four national time zones occurred on November 18, 1883, instead of each city having its own time zone

Wrongdoing in Railroading

Corruption a problem with the railroadsJay Gould made millions embezzling stocks from railroad

companiesStock watering: railroad companies grossly over-inflated

the worth of their stock and sold them at huge profitsRailroad owners:

abused the public bribed judges and legislatures employed arm-twisting lobbyists gave discounts to the wealthy but not the poor used free passes to gain favor in the press

Railroaders begin to collude with each other to game the system through “pools”

Government Begins to Regulate the Railroads

The American people were aware of the injustices, but were slow to respond…WHY? What brand of purely American economic philosophy kept them from outright rebellion? (HINT: Thomas Jefferson)

States and farmers begin to organize to fight railroad corruption

Interstate Commerce Act (1887) Banned rebates and pools Required railroads to publish their rates openly Banned unfair discrimination against shippers Banned charging more on short hauls than long hauls on same

lineInterstate Commerce Commission set up to enforce

Miracles of Mechanization

Industrial expansion, in part fueled by railroads, skyrocketed due to massive investment

The sheer size of the market encouraged innovation in mass production

Half a million patents issued from 1860-1890…inventions fuel urbanization Cash register Stock ticker Typewriter (aka “literary piano”) Refrigerated car Telephone

Thomas Alva Edison’s invention factory in Menlo Park, NJ Light bulb, phonograph, moving picture http://www.history.com/shows/men-who-built-america/videos/the-rise-of-thomas

-edison Alexander Graham Bell invents the telephone in 1876

The Trust Titan Emerges

Industry giants used various ways to eliminate competition and maximize profits

Steel magnate Andrew Carnegie pioneers: vertical integration: he bought out and controlled all aspects of the industry, from

mining to marketing Standard Oil baron John D. Rockefeller pioneers:

horizontal integration: allied with or bought out competitors to monopolize a given market

Forced weaker competitors to go bankrupt Banking giant JP Morgan pioneers:

Interlocking directorates: placed his own men on the boards of directors of other rival competitors to gain influence there and reduce competition

These Robber Barons (thus named for their ruthless, fortune-making actions) pioneer the: trust: mechanism by which one company grants control over its operations to another

company The trusts eliminated competition by taking control of smaller companies and dominating

a market (aka, monopolies)

The Supremacy of Steel

“Steel is king” = the battle-cry of the industrial ageThe US outdistances all nations in steel production

by 1900Production revolutionized by the Bessemer process:

Named for a Brit, but discovered by American William Kelly Cold air blown on red-hot iron burned carbon deposits and

purified itMorgan buys Carnegie’s business for $400 million;

launched US Steel Corp (the first billion $ biz)Carnegie spent the rest of his life to philanthropy;

gave away millions to charities, libraries, etc.

Plutocracy rules!: The Divine Right of the Wealthy

Gospel of Wealth: the belief by some of the rich of a moral responsibility to improve society

Social Darwinism: the belief that the rich got there based on survival of the fittest through their natural talents Some applied this to explain why some nations are meant to dominate

others, often defined by race

Reverend Russell Conwell’s lecture, “Acres of Diamonds” “There is not a poor person in the US who was not made poor by his

own shortcomings These attitudes were a roadblock to social reform

Corporate lawyers used the 14th Amendment to defend trusts; the judges agreed, saying that corporations were “legal people” and thus entitled to their property Plutocracy: a government ruled by the wealthy

Social Darwinism

Bill O'Reilly on the Poor

Obama on Modern Social Darwinism

Government Tackles the Trust Evil

Sherman Anti-Trust Act (1890): forbade combinations in restraint of trade Outlawed trusts, pools, interlocking directorates Ineffective…no enforcement Ironically, it was used to curb labor unions that were

deemed to be restricting trade!Despite its ineffectiveness, monopolies were

finally being threatenedSet a legal principle that private greed should

be subordinated to public need

The South in the Age of Industry

James Buchanan Duke uses horizontal integration to form American Tobacco Company Pioneers machine-made cigarettes Founds Trinity College…name changed to Duke University

Newly built textile factories give whites (only) jobs, though lower paying then similar jobs in the North

The South remains overwhelmingly rural, howeverThe North conspires to keep the South from

industrializing Railroads gave preferential rates to cargo moving southward

The Impact of the New Industrial Revolution on America

Standard of living roseImmigrants swarmed to the U.S. Jeffersonian ideals about the dominance of agriculture fellUrban centers growThe concept of time no longer ruled by nature, but now by

the factory whistleWomen propelled into industry by inventions (typewriter,

telephone switchboard), but still earn lessClass divisions heightened: the rich flaunting extravagance

caused bitternessEmployment increases; but so does the fear of unemployment The push for foreign trade increases; “the flag follows trade,

and empire follows the flag”

The Deck Stacked Against Unions

Workers threatened by cheap immigrant labor, machines

Corporations hold the power Hiring “scabs” Lockouts against rebellious workers Court orders to end strikes Use of troops, thugs to break strikes Yellow-dog contracts: oaths not to join a union Blacklists Company towns

Middle-class, annoyed by strikes, deaf to workers’ cries Belief that the rich had worked hard, why couldn’t they do the

same to improve their lot

Rise of National Labor Unions

The Civil War put a premium on labor, which helped labor unions grow

The National Labor Union, formed in 1866, attracted an impressive 600,000 members, but lasted only six years Excluded Chinese; doesn’t seek out Blacks and women Temporarily won an 8-hour workday, but Panic of 1873 ends it

The Knights of Labor exists in secrecy from 1869-1881 Sought to include all workers (skilled and unskilled, men and

women, white and black) Campaigned for social and economic reform Led by Terence V. Powderly, successfully wage battles for 8-hr

workday

Decline of the Knights

Chicago home to a number of anarchists who advocate violent overthrow of the government

Haymarket Square bombing Labor protests led by anarchists provokes police attention Someone throws a bomb in the crowd, killing some policemen 8 anarchists arrested, despite a lack of evidence proving a

connection to the bombing 5 sentenced to death

The Haymarket bombing tainted the Knights; associated them with anarchists

Knights’ membership declines, and it withers away

Haymarket Square Bombing

"If these men are to be tried...for advocating doctrines opposed to our ideas of propriety, there is no use for me to argue the case. Let the Sheriff go and erect a scaffold; let him bring eight ropes with dangling nooses at the ends; let him pass them around the necks of these eight men; and let us stop this farce now."

--Defense Attorney William Foster (closing argument)

American Federation of Labor

In 1886, Samuel Gompers founded the American Federation of Labor (AFL)

An association of self-governing national unions Gompers took a more conservative approach

Simply wants a fairer share for labor through better wages, hours, condition Major goal is the closed shop: all-union labor Tactics = walkouts and boycotts

Composed only of skilled workers; let unskilled, women, and Blacks fend for themselves

From 1881 to 1900, 23,000 strikes involving 6 million; loss to employers and employees of $450 million

Greatest weakness = embraced only 3% of workers The public beginning to concede the right of workers to organize and

strike The majority of businesses continue to fight labor; the age of Big Labor

was decades away