Railroads and the Industrialization of America in the Gilded Age

Causes of Rapid Industrialization Steam Revolution of the 1830s-1850s. The Railroad fueled the growing US economy:  First big business in the US.  A magnet for financial investment.  The key to opening the West.  Aided the development of other industries. Steam Revolution of the 1830s-1850s. The Railroad fueled the growing US economy:  First big business in the US.  A magnet for financial investment.  The key to opening the West.  Aided the development of other industries.

Unskilled & semi-skilled labor in abundance. Abundant financial capital ($$$). New, talented group of businessmen [entrepreneurs] and advisors. Market growing as US population increased. Government willing to help at all levels to stimulate economic growth. Abundant natural resources. Unskilled & semi-skilled labor in abundance. Abundant financial capital ($$$). New, talented group of businessmen [entrepreneurs] and advisors. Market growing as US population increased. Government willing to help at all levels to stimulate economic growth. Abundant natural resources. Causes of Rapid Industrialization

Technological innovations.  Bessemer and open hearth process  Refrigerated cars  Edison o “Wizard of Menlo Park” o light bulb, phonograph, motion pictures. Technological innovations.  Bessemer and open hearth process  Refrigerated cars  Edison o “Wizard of Menlo Park” o light bulb, phonograph, motion pictures.

Thomas Alva Edison “Wizard of Menlo Park”

The light bulb The Phonograph (1877) Moving Pictures Stuff Edison Invented

Alexander Graham Bell Telephone (1876) First words on the phone: “Yes, I have Dr. Pepper in a can. Why?!”

Model T Automobile Henry Ford I want to pay my workers so that they can afford my product! Henry Ford I want to pay my workers so that they can afford my product!

“Model T” Prices & Sales

New Business Culture Laissez Faire  the ideology of the Industrial Age.  Individual as a moral and economic ideal.  Individuals should compete freely in the marketplace.  The market was not man-made or invented.  No room for government in the market!  Individual as a moral and economic ideal.  Individuals should compete freely in the marketplace.  The market was not man-made or invented.  No room for government in the market!

The Building of the Railroads Paid by the government with land grants; several square miles per mile of track laid

The Building of the Railroads Use of immigrant labor Irish in the Midwest Chinese in California

The Building of the Railroads Impact upon American economy: Steel production

The Building of the Railroads Impact upon American economy: Communications

The Building of the Railroads Impact upon American economy: transportation of people/goods

The Building of the Railroads Impact upon American economy: Related industries mining lumber manufacturing

The Building of the Railroads The emergence of the Railroad Barons: “The Commodore” Cornelius Vanderbilt William Vanderbilt Leland Stanford James J. Hill Jay Gould

Cornelius [“Commodore”] Vanderbilt Can’t I do what I want with my money? The Power of the Railroads

William Vanderbilt $ The public be d****d! $ What do I care about the law? H’aint I got the power? $ The public be d****d! $ What do I care about the law? H’aint I got the power? The Power of the Railroads More powerful than the government

The Power of the Railroads Economic Exploitation of America: the “pool”: the division of railroad traffic among various “competitors” Led to higher rates for farmers and lower wages for workers

The Transcontinental Railroad Obstacles: Dangerous conditions, Indian attacks, mountain ranges, labor troubles, weather

The Trans-Continental Railroad May, 10, 1869: meeting of the Union and Central Pacific RRs.

THE ROBBER BARONS!

The ‘Robber Barons’ of the Past

John D. Rockefeller America’s first billionaire: Creator of Standard Oil Trust, controlled 95% of oil refining by 1885; drove or bought out competitors

The Trust (“Horizontal Integration”) Holding company that owns majority stock in all the businesses in a particular industry

The Standard Oil Trust “Horizontal Integration” Standard Oil Board of Trustees Standard Oil of Ohio Standard Oil of New Jersey Standard Oil of California

Standard Oil Co.

Andrew Carnegie Owned largest steel producer in US by 1890 Creator of “vertical integration”: ownership of all the steps involved in an industrial process, from raw materials to delivery of finished product

Vertical Integration Carnegie Steel Unions/Labor/Company Towns Delivery of Finished Products Manufacture Shipping Raw Materials

J.P. Morgan Owned largest bank; acted as unofficial Bank of US controlled banking in America able to create new industries with massive financial capital ($$$) “Financier of America”

Wall Street – 1867 & 1900

Morgan and the “Interlocking Directorate” Member of Morgan’s bank on the Board of Trustees of the major industries in America Goal: to eliminate wasteful competition from the marketplace Coordinated activities of the various industries Acted as an arbitrator between industries

The Interlocking Directorate JP Morgan and Company Oil TrustBeef TrustSteel Trust

The Protectors of Our Industries

Social Darwinism × British economist. × Advocate of laissez- faire. × Adapted Darwin’s ideas from the “Origin of Species” to humans. × Notion of “Survival of the Fittest.” × British economist. × Advocate of laissez- faire. × Adapted Darwin’s ideas from the “Origin of Species” to humans. × Notion of “Survival of the Fittest.” Herbert Spencer

Social Darwinism in America William Graham Sumner Folkways (1906) $Individuals must have absolute freedom to struggle, succeed or fail. $Therefore, state intervention to reward society and the economy is futile! $Individuals must have absolute freedom to struggle, succeed or fail. $Therefore, state intervention to reward society and the economy is futile!

New Business Culture: “The American Dream?” Protestant (Puritan) “Work Ethic”  Horatio Alger [100+ novels] Protestant (Puritan) “Work Ethic”  Horatio Alger [100+ novels]

“On Wealth” Andrew Carnegie $ The Anglo-Saxon race is superior. $ “Gospel of Wealth” (1889). $ Inequality is inevitable and good. $ Wealthy should act as “trustees” for their “poorer brethren.” $ The Anglo-Saxon race is superior. $ “Gospel of Wealth” (1889). $ Inequality is inevitable and good. $ Wealthy should act as “trustees” for their “poorer brethren.”

The Gospel of Wealth : Religion in the Era of Industrialization Russell H. Conwell $ Wealth no longer looked upon as bad. $ Viewed as a sign of God’s approval. $ Christian duty to accumulate wealth. $ Should not help the poor directly. Should provide means for self- improvement. $ Wealth no longer looked upon as bad. $ Viewed as a sign of God’s approval. $ Christian duty to accumulate wealth. $ Should not help the poor directly. Should provide means for self- improvement.

Unions Conditions of the Working Class: low pay, averaged $1 per day dangerous work conditions, no safety standards 70+ hours weekly, 6 to 7 days a week no unemployment, disability, sick leave

Difficulty in Organizing Unlimited immigration Skilled vs. unskilled Government opposition American opposition to unions; foreign element and nativist reactions

Difficulty in Organizing Children and women in labor force

Difficulty in Organizing “company towns” town owned by company from housing to stores Homestead, PA Pullman, Illinois

Government Opposition to Unions Injunctions: court orders banning strikes “yellow-dog contracts” Open immigration Strike-breakers/use of military

First Labor Unions The National Labor Union: First labor union to cross industries Problems: skilled vs. unskilled difficulty in organizing Panic of 1873 Fell apart after 1878 William Sylvis and Isaac Myers

The Knights of Labor Largest labor union; crossed industrial and racial lines Became powerful force in early 1880s

Haymarket Square May, 1886 – a riot during a rally results in several deaths, including police Knight leaders blamed

Haymarket Square Charges never proven; four executed, four jailed later pardoned Knights destroyed Unions tainted

American Federation of Labor Founded by Samuel Gompers (1890) Formed along industrial lines, not trade (occupation) lines No radicals or anarchists allowed Use of boycotts rather than strikes

AF of L Steel Workers RR Workers Beef Workers Similar to Morgan’s interlocking Directorate format Based on Industrial lines, not trade (or occupation) lines

Regulating the Trusts 1877  Munn. v. IL 1886  Wabash, St. Louis & Pacific Railroad Company v. IL 1890  Sherman Antitrust Act  in “restraint of trade”  “rule of reason” loophole 1895  US v. E. C. Knight Co  Munn. v. IL 1886  Wabash, St. Louis & Pacific Railroad Company v. IL 1890  Sherman Antitrust Act  in “restraint of trade”  “rule of reason” loophole 1895  US v. E. C. Knight Co.