1. Industrialization and Its Discontents
The Rise of Big Business, Labor and Agriculture

2. The Industrial Revolution
Involved the invention of new machines and new systems.
Goods were produced on a massive scale for domestic and foreign markets.
Industrial growth led to the development of a new type of business, the Corporation.
Industrial Revolution was sparked by technological advances in many fields.

3. US Advantages in Industrialization
Patent Laws: The Constitution gives Congress the power to issue patents to inventors.
Corporate business organizations: sell shares in business to raise capital. Limited Liability shareholders.
Corporations could raise significant amounts of capital needed for investment in industrial projects such as railroads.

4. Railroads Improve Transportation
Transcontinental Railroad had its roots in the Civil War.
Congress of 1862 authorized the construction of the first Transcontinental Railroad connecting the Atlantic and Pacific lines.
Gov’t involvement was crucial because it was too expensive a project for private investors to handle.
Gov’t provided subsidies by the mile in exchange for lower rates. (tens of thousands of dollars per mile)
The Republican Congress also gave land grants to the railroads
Railroad was completed in 1869 in Utah
Built by many Chinese and Irish laborers.

5. Railroads Cheaper, faster, and carried large quantities of goods.
1865 vs 1895 flour = $3.45 vs. $0.68
Poor safety, many train wrecks because of communication problems and poorly design equipment.

6. Communications Revolution
The telegraph
Samuel F. B. Morse
Send messages over wires with electricity
Operators tapped out patterns of long and short messages that stood for letters of the alphabet.
Morse code
After the Civil War, the telegraph grew with the railroads.
Telegraph wires were strung along the tracks, and train stations had telegraph offices in them.
The telephone
Alexander Graham Bell patented his device
By 1900, more than a million telephones had been installed across the nation.
Companies found the telephone to be an essential business tool.
People wanted to have them in their homes as well.

7. Advances in Transportation
Streetcars were horse-drawn vehicles placed on rails on the street to make the ride smoother. Streetcars needed more power than horses could provide, and cable cars were invented in San Francisco to get cars up the steep hills there. The cars latched on to a moving cable underground.
Subways developed as a result of increased traffic from horses and electric streetcars competing for space. Boston built the first subway line in 1897, with New York City following in 1904.

8. The Typewriter
Christopher Latham Sholes developed the first practical typewriter in 1867.
Designing the QWERTY keyboard, still the standard on keyboards today.
The typewriter could produce legible documents very quickly.
Businesses began to hire women as typists to manage company correspondence, opening up new job opportunities for women.

9. Electricity Thomas Edison George Westinghouse
Electricity direct current, light bulb, phonograph, etc etc
George Westinghouse
alternating current

10. Bessemer Process Cheaper and quicker process to produce steel
Lighter, stronger, and more flexible than iron.
Led to mass production of steel
Building of the Brooklyn Bridge

11. Types Of Business Proprietorships and partnerships
Small businesses run by individual proprietors or more than one owner in a partnership. In either case, owners personally responsible for all business debts and obligations.
Corporations
As industries grew, the structure of ownership changed. Businesses owned by stockholders; decisions made by a board of directors with day-to-day operations run by corporate officers. Investment money raised by selling stock, and investors/stock holders bound only by the amount of their investment.
Trusts and Monopolies
Some companies merged and turned their stocks over to a board of trustees who ran the group of companies as a single entity. Sometimes a trust gained a monopoly, having complete control of an industry. With no competition, prices could be inflated or reduced at will.

12. Corporations Setup other forms of businesses to limited competition
Pools: competing companies in one field make an agreement to fix prices and divide business.
Trusts: group of corporations combine under a single board that controls the actions of all member corporations-stockholders have no say in the operations

13. Corporations Continued
Monopoly: company or small group of companies that have complete control over a particular field.
Conglomerate: Corporation that owns a group of unrelated companies - usually through mergers.

14. Economic trends
Formation of corporations: to raise capital.
Develop business practices to eliminate competition
Use pools and trusts to eliminate competition
Mechanization and division of labor hurt the competitiveness of small businesses.
Economies of Scale
Horizontal and vertical integration
“Captains of Industry” or “Robber Barons”?

15. Social Darwinism Inequalities are always part of any natural order.
Charles Darwin believed that members of a species compete for survival in a natural selection process.
Applied to society, stronger people, businesses, and nations would prosper, and weaker ones would be surpassed by “the fittest.”

16. Robber Barons (?) Made their fortunes by stealing from the public.
Were not regulated by government and did whatever they could to make as much money as possible.
Believed in Social Darwinism.
Believed in laissez faire economics: no gov’t regulation of business.
Jay Gould & Jim Fisk

17. Captains of Industry (?)
A more positive view
Seen as making huge contributions to society
Increased the supply of goods
Built new factories
Created new jobs and technology
Raised productivity and economic conditions
Major philanthropy: Contributed to universities, museums, libraries, etc.

18. Andrew Carnegie
Built steel mills in Pennsylvania that used the new Bessemer process.
Built his company into an empire using vertical integration.
Integrated his production process by buying out all of the companies – coal, iron ore and so on needed to produce, transport, and sell the steel.
Preached Gospel of Wealth: make as much money as possible and then contribute to charities libraries and supported artistic and research institutes.

20. List all the objects, words, or people you see in the cartoon.
Which of the objects on your list are symbols? What do you think each symbol means?
Which words or phrases in the cartoon appear to be the most significant? Why do you think so?
Explain the message of the cartoon.
What special interest groups would agree/disagree with the cartoon's message? Why?

21. John D. Rockefeller Standard Oil Company in 1870
10 years later refined 90% of all the oil in the US.
1882 Standard Oil Trust: Samuel Dodd
His aim was to control the market and ruin his competitors by the following methods.
Rebates from the railroads; used to lower prices
Always offered to buy out competitors
Avoided shipping costs by building pipelines: used both vertical and horizontal integration

22. “Genius is 1 percent inspiration, 99 percent perspiration.”
Thomas Edison
Obsessed with progress
In 1886, he opened his own research laboratory in Menlo Park, N.J.
Hard work
Wizard of Menlo Park.
Over his lifetime, Edison earned over 1,000 U.S. patents.
Electric lighting
Developed practical electric lighting.
Incandescent bulb the need for widely available electricity.
Produced all of the parts necessary for an electricity network.
Electric power plants spread across the country.
“Genius is 1 percent inspiration, 99 percent perspiration.”

24. Henry Ford Interchangeable parts and the assembly line.
Paid high wages
Electrical engineer
Created a whole community in Detroit for his car company

25. J. P. (Pierpont) Morgan Banker loans to growing businesses.
Purchased Carnegie Steel and created US Steel.
Also took control of bankrupt railroads and reorganized them.
Involved in insurance, electrical, and shipping companies.

26. Effects of Railroad Development & Regulation
Rise of business cycle: boom and bust
Panic of 1893: 500 banks and 15,000 businesses went bankrupt; caused by overproduction and speculation in the railroads and in silver production.
4 year depression – deepest in US history
Overproduction of goods led to lower prices, lower (or no) profits, laying off of workers and/or lowing of wages.

28. Important Supreme Court Decision
1886: Wabash, St. Louis & Pacific Railway Company v. Illinois
(commonly known as Wabash v. Illinois)
Constitutional Principles:
National power v. state power
Property rights
Interstate commerce
federalism
Why Decision is important:
Invalidated Illinois state law that set railroad rates
Declared it a federal power to regulate rates
Strengthened Congress’ Commerce Clause power
Led to the creation of the ICC

29. Government Regulation
Interstate Commerce Act (1887) and the Interstate Commerce Commission (ICC)
ICC set up to end abuses such as railroad rebates to special customers, pools and trusts.
Railroad rates had to be fair and just
Pools were illegal
Rebates to favored customers were illegal
Could not charge more for a short haul than a large one
Sherman Antitrust Act (1890): designed to increase competition and end monopolies and other business practices that restrain trade and/or competition.

30. Work Force Shift in work force 9 million Americans move to the cities
14 million immigrate to the US – nativist reaction:
Chinese Exclusion Act (1882)
Alien Contract Labor Act (1885)

32. Working Families Family affair Children often left school at 12 or 13
Girls worked so that boys could stay in school
Women entered the workforce
Children as young as 6 or 7
70+ hour work weeks
Poor working conditions

34. Government help or lack of help
Americans believed that the government shouldn’t help – laissez faire (“hands off”) ECONOMICS and GOV’T POLICY
No unemployment insurance
No health insurance
No sick days
Social Darwinism & laissez faire were the rule
Only private and religious charities

35. Factory Work 12 hour days System of piecework
Favors young and strong workers
Increasing Efficiency: Frederick Winslow Taylor: Time and Motion studies.
Division of labor: separate tasks
Impersonal: hands or operatives
“Fine or fire”
Boring, noise was deafening, lighting, ventilation
675 killed weekly
Deadly fires
By 1900, one in six children between the ages of 10 and 15 held factory jobs.

37. Unions
Collective Bargaining: union members representing workers negotiate labor issues with management.
If collective bargaining failed, labor unions often used strikes/work stoppages.

38. Knights of Labor National Trade Union first nationwide union.
Most died out during the panic and depression of 1837.
Philadelphia in 1869: The Noble Order of the Knights of Labor.
Open membership
Goals and methods: arbitration
Formed cooperatives
Sudden rise and sudden fall

39. American Federation of Labor
A F of L
Limited membership
Samuel Gompers organized a federation of craft unions that kept their independence.
The leadership set overall policy for achieving common objectives.
Goals: higher wages, shorter hours, and better working conditions; if necessary – strikes
1900: ½ million workers
Clashes with state and federal troops in the Great Railway Strike (1877) and the Pullman Strike (1894)

40. Labor Conflicts
Haymarket Riot (1886): bomb blast by anarchist kills many people including 7 police officers in Chicago.
Homestead Strike (1892): pay cut at Carnegie Steel’s Homestead plant. Plant hired guards - violence broke out and 16 people were killed. The National Guard was called in. Only 25% got jobs back.
Pullman Strike (1894): railway car makers. President Grover Cleveland sent in federal troops.
Sets off a constitutional debate over Cleveland’s actions.
1895: In Re Debs case

41. Supreme Court Case In Re Debs 1895
Constitutional Principle: National Power and the commerce clause.
Why decision is important: ruled that the federal government under the commerce clause of the Constitution had the right to halt the strike.
Said strike hurt the general welfare of nation by disrupting commerce and mail delivery.

42. An era of Strikes, late 1800s Gap between Rich and Poor grows larger
Tensions
Increase
between
Workers &
owners
Workers
Organize
unions
Gov’t sides with
Business leaders
Sometimes using
Troops to put down
strikes
1877 starts era of
Violent
Strikes: Great
Railway,
Haymarket,
Homestead, Pullman
Business
Leaders
Oppose
unions

44. Farmers v. railroads, merchants, and banks
Farm families’ only assets were good cheap land and their own hard labor.
Expenses were high.
Major expense was high railroad rates for storing crops in grain elevators and shipping the crops to the city.
To meet expenses until crops were sold farmers depended on credit from merchants and loans from banks.
Natural disasters and low prices often prevented farmers from paying their debts and losing their farms.
Farmers came to resent railroads, merchants, banks, and buyers who expected lower prices when production increased.

45. The Granger Movement
Founded in 1867 to bring farm families together for social purposes but soon focused on coping with troubling economic issues.
Railroads competed for business over long routes and therefore charged low rates to bigger businesses.
They made up their losses by overcharging farmers who had to ship crops over less competitive short routes.
Also high charges for storing grain in grain elevators

46. Grange Laws
1870s Grangers persuaded state legislatures to pass laws regulating railroad freight rates and elevator storage rates.
Munn v Illinois: the US Supreme Court (SCOTUS) ruled that states could set maximum rates for grain storage but could not regulate freight rates
First major gov’t foray into private industry permitted by SCOTUS

47. The Populist Party
Farm prices fell in the late 1800s (starting with Panic of 1873), farmers joined a movement that became the POPULIST PARTY.
Populist objectives, 1892
Graduated income tax
Government ownership of railroads and telephone and telegraph companies.
8 hour work day
The initiative (voters’ power to propose new ideas for new state laws) and the referendum (voters’ power to approve or reject new laws)
Secret ballot
Popular election of senators instead of state legislatures
Limit terms of president and vice president to one

48. The Populists and Inflated Money
Wanted to inflate currency by printing paper money or coining silver. 16 silver dollars for every gold dollar. Actual exchange rate was 17/1, so created artificial inflation. Populists believed there was a connection between the hording of gold coins and the lower prices they received on their products.
Populists wanted to create inflation

49. Silver Against Gold Election of 1896: William Jennings Bryan
Silver Democrats v Northern and Eastern Democrats who favored gold.
Bryan loses to William McKinley

50. Successes of the Populists Minor parties sometimes have a major impact on politics
Graduated
Income Tax
(16th Amendment)
Passed 1913
Popular election
Of Senators
(17th Amendment)
Passed 1913
Third parties even
when they fail to get
Elected frequently
address issues
avoided by the
Major parties
Populist party dies
out after election
of 1896
Farm Prices Rise

51. Changes In Immigration
Immigration Before the Civil War
Colonial Times British, French, Germans, Dutch, Swedes, African slaves.
After the Revolution: British, Germans (including a large number of Jews), Irish
Latin Americans1848 after the Mexican War.

52. New Immigration
Italy, Greece, Russia, Austria-Hungary and other southern and eastern European citizens.
Assimilation issue: new immigrants not trusted by Americans.
Protestants vs Roman Catholics and Eastern Orthodox
Did not speak English

53. Reasons for Immigration
Population pressures
Recruitment campaigns
Economic conditions
Political Opposition
Enter the Immigrants from Asia
300,000 Chinese
150,000 Japanese

54. Contributions Built railroads Turned prairies and forests into farms
Made NYC a garment industry center
Opened Macys and Marshall Field’s
Manned the factories
Were scientists and inventors

55. Nativist reaction
Nativism: the belief that foreign born persons threatened the majority culture and should be barred from this country.
Know Nothings: 1849 political party favored restricting immigration; especially disliked Catholics.
The Yellow Peril: fear of the Chinese
Chinese Exclusion Act (1882)
Gentlemen’s Agreement (1908): no labor immigration from Japan

56. Immigration Restrictions
1891
Prostitutes,
polygamists
& Diseased
persons
1882
Pauper,
Convicts, &
mentally
defective
1917
Literacy
Test
1882
Chinese
Exclusion
Act
1921
First quota law
Limited to 3% of
the # arriving
In 1910
1924
New Quota law
No Asians
No more than 150,000
2% of the number arriving in
1890