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

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Presentation on theme: "Industrialization and Its Discontents The Rise of Big Business, Labor and Agriculture."— Presentation transcript:

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 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 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 –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.

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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 years later refined 90% of all the oil in the US 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 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.”

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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.

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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)

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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 hour work weeks Poor working conditions

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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.

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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 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 Business Leaders Oppose unions 1877 starts era of Violent Strikes: Great Railway, Haymarket, Homestead, Pullman Gov’t sides with Business leaders Sometimes using Troops to put down strikes

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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 (16 th Amendment) Passed 1913 Popular election Of Senators (17 th Amendment) Passed 1913 Populist party dies out after election of 1896 Farm Prices Rise Third parties even when they fail to get Elected frequently address issues avoided by the Major parties

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 1882 Chinese Exclusion Act 1882 Pauper, Convicts, & mentally defective 1891 Prostitutes, polygamists & Diseased persons 1917 Literacy Test 1921 First quota law Limited to 3% of the # arriving In New Quota law 1.No Asians 2.No more than 150, % of the number arriving in 1890


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