Industry Comes of Age, 1865-1900

The Iron Colt Becomes an Iron Horse Railroad promoters asked for government subsidies because it was too risky, too costly and too unprofitable without help. Most of the railroads were built with government assistance during the Gilded Age. The national government helped to finance the transcontinental railroad with land grants.

continued Land grants were federally owned acreage granted to the railroad companies in order to encourage the building of rail lines.

Spanning the Continent with Rails The original transcontinental railroad that was commissioned by Congress in 1862 was to build a transcontinental railroad in the North. The Union Pacific Railroad Company which started in Omaha, Nebraska and moved West. Union Pacific used Irish immigrants as workers. The Central Pacific Railroad started in California and moved East. Central Pacific used Chinese immigrants as workers.

Railroads joined together near Ogden, Utah

Transcontinental Railroad

continued The railroads most significantly stimulated American industrialization by creating a single national market for raw materials and consumer goods. Railroad Companies and Barons Great Northern – James J. Hill New York Central – Cornelius Vanderbilt Central Pacific – Leland Stanford Union Pacific – Dr. Thomas C. Durant

Binding the Country with Railroad Ties The only transcontinental railroad built without government aid was the Great Northern. The most efficient and public-minded was James J. Hill. He helped farmers in the northern areas that were served by his lines.

Great Northern Railroad Map

Railroad Construction and Mechanization “Commodore” Cornelius Vanderbilt was an aggressive eastern railroad builder and consolidator who did not like the law and saw it as an obstacle to his enterprise. He gave $1 million to the founding of Vanderbilt University.

Revolution by Railways The railroads helped to move people into the cities. The railroad network is the greatest single factor in helping spur the industrialization in the post-Civil War years. The U.S. changed to standard time zones when major rail lines decreed the division of the continent into four time zones so they could keep schedules and avoid wrecks.

Wrongdoing in Railroading “stock watering” – dishonest device by which railroad promoters artificially inflated the price of their stocks and bonds. Pools – an agreement to divide a given market in order to avoid competition. Many of the railroad companies agreed to divide the business in a given area and share the profits.

Government Bridles the Iron Horse The state legislatures were the first to make an effort to regulate the monopolizing practices of the railroad corporations. The Wabash Case (1886) – case that prevented states from regulating railroads or other forms of interstate commerce. The Interstate Commerce Act was the first attempt by the government to regulate business.

continued The Interstate Commerce Commission was a federal agency that was originally intended to regulate railroads and it was often used to stabilize the industry and prevent competition. The commission was set up because of the corrupt financial dealings and political manipulations by the railroads. One of the most significant aspects of the Interstate Commerce Act was that it represented the first large-scale attempt by the federal government to regulate business.

Miracles of Mechanization The plentiful supple of unskilled labor in the United States helped to build the nation into an industrial giant. Alexander Graham Bell (who was deaf) invented the telephone in 1876. The telephone revolutionized communication and created a large new industry that relied heavily on female workers.

continued Thomas Edison was an inventive genius of industrialization who worked on devices such as the electric light, the phonograph, and the motion picture camera Edison said, “Genius is one percent inspiration and ninety-nine percent perspiration.”

The Trust Titan Emerges One of the methods by which post-Civil War business leaders increased their profits was to eliminate the competition as much as possible. Trust – a combination of corporations, usually in the same industry, in which stockholders trade their stock to a central board in exchange for trust certificates.

Continued Standard Oil Company was the first of the great industrial trusts that organized through a principle of “horizontal integration” that ruthlessly incorporated or destroyed competitors.

The Supremacy of Steel The steel industry owed much to the inventive genius of Henry Bessemer. Bessemer Process – produce steel faster (Henry Bessemer and William Kelly)

Carnegie and Other Sultans of Steel Andrew Carnegie was Scottish immigrant who organized a vast new industry on the principle of “vertical integration.” By 1900, his company was producing one-fourth of the nation’s Bessemer steel and he was making a profit of $25 million a year.

Continued J. Pierpont Morgan was in the banking business. Morgan made a business of financing other businesses. He bought Carnegie’s steel mill for over $400 million dollars. Morgan then formed the first billion-dollar corporation – United States Steel

Rockefeller Grows an American Beauty Rose 1859 the first well in Pennsylvania – Drake’s Folly – poured out liquid “black gold.” Kerosene was the first major product of the oil industry. (derived from petroleum) The oil industry became a huge business with the invention of the internal combustion engine.

continued John D. Rockefeller became dominate in the oil industry. He organized Standard Oil Company of Ohio By 1877 he controlled 95 percent of all the oil refineries in the country.

continued Rockefeller used all of the following tactics to achieve success in the oil industry: employing spies, extorting rebates from railroads, and pursuing a policy of rule or ruin. He formed the Standard Oil Trust. Trusts – a combination of corporations, usually in the same industry, in which stockholders trade their stock to a central board in exchange for trust certificates. Other trusts were the sugar trust, the tobacco trust, the meat trust, the steel beam trust, copper trust, etc.

The Gospel of Wealth The gospel of wealth, which associated godliness with wealth, discouraged efforts to help the poor. To help corporations, the courts ingeniously interpreted the Fourteenth Amendment, which was designed to protect the rights of ex-slaves, so as to avoid corporate regulations by the states. The corporations used the Fourteenth Amendment when defending themselves against regulations by state governments.

Government Tackles the Trust Evil The Sherman Antitrust Act (1890) – prohibited monopolies by declaring any business combination “in restraint of trade” illegal. To get around the act, corporations formed holding companies. The courts failed to enforce the act. The act was primarily used to curb the power of labor unions.

The South in the Age of Industry During the age of industrialization, the South remained overwhelmingly rural and agricultural. The South’s major attraction for potential investors was cheap labor. In the late nineteenth century, tax benefits and cheap, nonunion labor attracted textile manufacturing to the “new South.” Many Southerners saw employment in the textile mills as salvation, since the jobs and wages were steady.

The Impact of the New Industrial Revolution on America One of the greatest changes that industrialization brought about in the lives of workers was the need for them to adjust their lives to the time clock. Women were the group most effected by the new industrial age. Reformers wanted to introduce job protection, wage protection, and temporary unemployment compensation in order to provide workers with job security.

continued The image of the “Gibson Girl” represented an independent and athletic “new woman.” Most women worked for economic necessity.

In Unions There is Strength Many companies turned to using yellow dog contracts, lockouts, or blacklists to get employees to do as they wished.

Labor Limps Along The National Labor Union – won an eight-hour day for government workers. The National Labor Union was a social-reform union killed by the depression of the 1870s.

continued The Knights of Labor were the “one big union” that championed producer cooperatives and industrial arbitration. The Knights of Labor barred Chinese from membership.

The Knights of Labor They believed that conflict between capital and labor would disappear when labor would own and operate businesses and industries. They believed that republican traditions and institutions could be preserved from corrupt monopolists with the economic and political independence of the workers. One of the reasons they failed was lack of class consciousness. Generally, the Supreme Court in the late nineteenth century interpreted the Constitution in such a way as to favor corporations.

The AF of L to the Fore American Federation of Labor was an association of unions pursuing higher wages, shorter working hours, and better working conditions. It was the most effective and enduring labor union of the post-Civil War period.

continued By 1900, American attitudes toward labor began to change as the public came to recognize the right of workers to bargain collectively and strike. Nevertheless, the vast majority of employers continued to fight organized labor. Organized labor in America had begun to develop a positive image with the public.

continued Some people who found fault with the captains of industry argued that these men diminished the workers’ quality of life. Historians critical of the captains of industry and capitalism concede that class-based protest has never been a powerful force in the U.S. because America has greater social mobility than Europe has.