Chapter 24 Notes: Industry Come of Age

The Iron Colt Becomes an Iron Horse

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After
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the Civil War, railroad production grew enormously

35,000 miles of track laid in 1865
192,556 miles of track laid in 1900
Congress gave a total of 155,504,994 acres
The companies had to figure out what part of the lands to use
for building
So during that time the land was not able to be used by
others
They were allowed alternate mile-square sections in
checkerboard fashion
Grover Cleveland stopped this in 1887
o Railroads gave land value
Towns connected to them could become prosperous cities
Those that were skipped by the trains turned into ghost towns

Spanning the Continent with Rails

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The fight about where to put the transcontinental railroad was broken by the
South seceding
o 1862 Congress commissioned the Union Pacific Railroad to begin from
Nebraska-Cali
Company received huge amount of money and land for tracks
Corruption plagued the company
The insiders of the Credit Mobilier reaped $23 million in
profits
o Many Irishmen laid the tracks
Sometimes ten miles a day
Indians attacked to try to save their land
Irish seized their rifles and Indians and workers died
The Central Pacific Railroad was in charge of railroad eastward in California
o It was backed by the Big Four
Including Leland Stanford, the ex-governor of Cali
And Collis P. Huntington, an adept lobbyist
o Central Pacific used Chinese workers
They received the same treatment as the Irish in Union Pacific
Had to drill through the hard rocks of the Sierra Nevada
1869 the transcontinental railroad was completed at Promontory Point in
Utah
o Union Pacific had built 1,086 miles of track
o Central Pacific had built 689 miles

Binding the Country with Railroad Ties

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Before 1900, four more transcontinental railroads were built

o The Northern Pacific Railroad (1883)

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Many
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Lake Superior to the Puget Sound

The Atchison, Topeka, and Santa Fe (1884)
Through the Southwest deserts
The Southern Pacific (1884)
Went from New Orleans to San Francisco
The Great Northern
Ran from Duluth to Seattle
Was the creation of James J. Hill
pioneers over-invested on the land
Banks that supported them often failed and went bankrupt

Railroad Consolidation and Mechanization

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Older eastern railroads often helped finance the successful western railroads
o Like New York Central, headed by Cornelius Vanderbilt
There were more advancements in the railroads
o Steel rail, Westinghouse air brake, Pullman Palace Cares (luxury cars),
signals, telegraphs, double racking
o Train accidents were common as well as death

Revolution by Railways
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Railroads stitched the nation together

o Generated a huge market and lots of jobs, helped industrialize America
and stimulated mining and agriculture
Brought people and supplies to and from the areas they worked
o Helped people settle in the Great Plains
o The creation of the four national time zones occurred on Nov. 18, 1883
Before each city had its own time zone
o Railroads were the makers of millionaires and the millionaire class

Wrongdoing in Railroading
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The Railroads were not without corruption

o Jay Gould made millions embezzling stocks from the railroad
companies
o stock watering was a method of cheap moneymaking
Companies grossly over-inflated the worth of their stock and sold
them at huge profits
o Railroad owners abused the public, bribed judges and legislatures,
employed lobbyists, elected their own to political office, gave rebates
Railroad giants entered into defensive alliances to show profits
o Began the firsts trusts (at the time called pools)
A group of supposed competitors who agree to work together ,
usually to set prices

Government Bridles the Iron Horse

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People were aware of the injustice but were slow to do anything about it
The Grange was formed by farmers to fight the corruption
o Many state efforts occurred to stop the railroad monopoly

The Supreme Court ruled in the Wabash case

Ruled states could not regulate interstate commerce
The Interstate Commerce Act (1887)
o Banned rebates and pools
o Required the railroads to publish rates openly
o Forbad unfair discrimination against shippers
o Banned charged more for a short hall than for a long one
o Set up the Interstate Commerce Commission (ICC) to enforce this
o It was not a victory against corporate wealth
People like Richard Olney (corporate lawyer) noted that they
could use act to their advantage
But it represented Congresss attempt to regulate businesses for
societys interest

Miracles of Mechanization
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1860: the U.S. was the 4th largest manufacturer in the world but in 1894 it
was #1
o Now-abundant liquid capital
o Fully exploited natural resources
coal, oil, iron
o massive immigration made labor cheap
o American ingenuity was important
Inventions like mass productions were being perfected
Cash register, stock ticker, typewriter, refrigerator car,
electric dynamo, electric railways
1876: Alexander Graham Bell invented the telephone
Thomas Edison was a creative inventor
o Electric light bulb

The Trust Titan Emerges

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Industry giants used diff ways to eliminate competition and maximize profits
o Andrew Carnegie used a method called vertical integration
He bought out and controlled all aspects of an industry
He owned mining iron, transported it, refined it and turned it to
steel
o John D. Rockefeller
Method called horizontal integration
Allied with or bought out competitors to monopolize a
market
Used the method to form Standard Oil and control oil industry
These men became known for their trusts, giant, and monopolistic
corporations
o J.P. Morgan placed his own men on the boards of directors
With other rival competitors to gain influence and reduce
competition
Called interlocking directorates

The Supremacy of Steel

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Where steel used to be expensive and scare, 1900 U.S. produced more that
England and Germany combined
o Because of an invention that made making steel cheaper and effective
Bessemer process named after an English inventor
Cold air blown on red-hot iron burned carbon and purified
it
America one of the few nations that had all the essential ingredients for steel
making

Carnegie and Other Sultans of Steel

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Andrew Carnegie
o Started off as a poor boy with a bad job
o He worked his way to wealth through responsibility, influence and hard
work
o Started in the Pittsburgh area but didnt like trusts
1900 was producing of the nations Bessemer steel
Getting $25 million a year
J. Pierpont Morgan
o He had already made a fortune in the banking industry and Wall Street
He wanted to go into the steel tubing industry but Carnegie
threatened him
After negotiating, Morgan bought Carnegies entire
business
o At $400 million
o Morgan launched the United States Steel Corp. in
1901
Became worlds 1st billion-dollar corporation
Carnegie was afraid of being ridiculed for having so much
money
o During life donated $350 million to charity,
pensions and libraries

Rockefeller Grows an American Beauty Rose

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1859 a man named Drake first used oil to get money

o By 1870s kerosene was used to light lamps all over the nation
1885 250, 000 of Edisons electric light bulbs were in use
o The electric industry would render kerosene obsolete
Oil was just beginning with the gasoline-burning internal combustion engine
o Rockefeller organized the Standard Oil Company of Ohio in 1882
5 years earlier he controlled 95% of all oil refineries in country
He crushed all the weaker competitors
Company produced superior oil at a cheaper price
Other trusts emerged that made better products at cheaper prices
o Meat industry of Gustavus F. Swift and Philip Armour

The Gospel of Wealth

Many of the newly rich had worked from poverty to wealth

o Caused a sense that some people were destined to be rich and help
society
Came to be called the Gospel of Wealth
Social Darwinism was an application of Charles Darwins survival-of-fittest
o Applied to business
o Carnegie was at top of the steel industry because he was most fit for it
The Reverend Russell Conwell of Philadelphia
o He became rich by delivering his lecture Acres of Diamonds
thousands of times
Preached that the poor made themselves poor and rich made
themselves rich
Everything because of ones actions
Corporate lawyers used 14th Amendment to defend trusts
o The judges tended to agree with them
o Corporations were legal people and were entitled to their property
Plutocracy ruled

Government Tackles the Trust Evil

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1890: Sherman Anti-Trust Act was signed into law

o Forbade combinations in restraint of trade
Trusts, pools, holding companies, etc.
o Didnt define good and bad trusts
o Was ineffective because it was not able to be enforced
It wouldnt be enforced until 1914

The South in the Age of Industry

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The South remained mainly agricultural despite all the industrial advances
o James Buchanan Duke developed a huge cigarette industry
American Tobacco Company
Made donations to what is not Duke University
o Henry W. Grady urged the South to industrialize
He was the editor of the Atlanta Constitution newspaper
o Many northern companies made sure the South could not gain a
competitive edge
Set high rates
Cheap labor still led to the creation of jobs, despite poor wages
The Impact of the New Industrial Revolution on America
o The standard of living rose
o Immigrants swarmed into the U.S.
o Jeffersonian ideals about the dominance of agriculture fell
o Women found new opportunities
They swarmed to the U.S. and encouraged by recent inventions
The Gibson Girl was created by Charles Dana Gibson
Became the romantic ideal of the time
Young, athletic, attractive and outdoorsy
o Not the typical stay at home mom

Many women never achieved this

Had to work hard to earn money
Wage earners were taking the place of farmers
o The fear of unemployment was never far away
o If the breadwinner in a family got sick it could be disastrous
Strong pressures in foreign trade developed
o The industrial machines threatened to flood the domestic market
o

In Unions There is Strength

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New immigrants were making it hard for workers to improve their conditions
o Immigrants would work for lower wages and poorer environments
o Bosses could just hire new people to take their places
Corporations had many weapons against strikers
o Had the courts order strikers to stop or they would bring in troops
o They could hire strikebreakers
o They could lock them out and practically starve the strikers into
submission
Workers had to sign ironclad oaths which banned them from
joining unions
o Workers could be blacklisted
Put on list and denied privileges elsewhere
The middle-class grew deaf to workers outcry
o Saw it that if they really wanted to be rich like Rockefeller they just
had to work harder

Labor Limps Along

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Civil War put a premium on labor

o Helped labor unions grow
The National Labor Union (1866)
o Attracted 600,000 members and was a stride for workers
o But it only lasted 6 years
o It excluded Chinese and didnt really want blacks or women to join
o Worked for the arbitration of industrial disputes
Also for the 8 hour work day and won it for the gov workers
o Depression of 1873 knocked it out
The Knights of Labor (1869-1881)
o Only barred liquor dealers, professional gamblers, lawyers, bankers
and stockbrokers
o Campaigned for economic and social reform
o Led by Terence V. Powderly
Won a number of strikes for the 8 hour day
o Successful strike against Jay Goulds Wabash Railroad in 1885
Membership went up to a million workers

Unhorsing the Knights of Labor

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There were a number of May Day strikes which sort of failed

In Chicago there were about 80,000 Knights that wanted a violent

overthrow of the gov.
Caused tension had been building
May 4, 1886 Chicago police advanced on a meeting
It was called to protest brutalities by authorities when a
bomb was thrown
Killed several people
Several people rounded up but no one could prove association
But they had preached about so some killed and others
sent to prison
1892 John P. Altgeld pardoned the three survivors
This bombing was called the Haymarket Square Bombing
It from then on was always associated with the Knights of Labor
Lowered popularity and effectiveness
Those who remained fused with other labor unions

The AF of L to the Force

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1886: Samuel Gompers founded American Federation of Labor

o An association of self-governing national unions
Each kept its independence, which was the strategy
o Gompers demanded a fairer share for labor
He wanted better wages, hours and working conditions
The AF of L established itself on solid but narrow foundations
o Tried to speak for all workers but fell short
o Composed of skilled workers so the unskilled had to fend for
themselves
1881-1900: over 23,000 strikes involving 6,610,000 workers
o The money lost to both sides was about $450 million
o Labor unions only embraced about 3% of all workers
1900: public starting to concede the rights of workers
o Giving them some of what they wanted
o 1894: Labor Day was made a legal holiday
A few owners saw that losing money to fight labor strikes was useless
o Many still fought them though
The age of big labor was still some distance over the horizon