Industrialization 1865-1901 Chapter 14 Section 1: The Rise of Industry • American industry grew rapidly after the Civil War, bringing revolutionary changes to American society. The United States Industrializes (pages 436-437) • With the end of the Civil War, American industry expanded and millions of people left their farms to work in mines and factories. • By the early 1900s, the U.S. had become the world’s largest leading industrial nation. By 1914 the GNP, was eight times greater than at the end of the Civil War. • What was responsible for this growth? • -3 Factors That Led to the Industrial Boom: • A wealth of natural resources. • A growing urban population that provided both cheap labor and markets for new products. • Government support for business. 1st Factor Natural Resources: abundance of raw materials; vast natural resources that industry depended on; water, timber, coal, iron, and copper. • These resources were here in America! Less import of resources now because America had them! • Most of these resources were located in the mountains of the West. The settlement of the West helped accelerate industrialization, as did the transcontinental railroad by bringing settlers and miners to the West and moving resources back to the factories in the East. • *Edwin L. Drake- drilled the first oil well near Titusville, PA in 1859; oil production increased. Edwin L. Drake • Drilled a well in Titusville, PA and struck oil • Harvested kerosene: threw away the gasoline 2nd Factor Large Workforce: • Between 1860 and 1910, the population of the U.S. tripled. This provided a large workforce and a greater demand for consumer goods. • Why the population growth? Large families and a flood of immigrants. 3rd Factor Government Support for business: • Laissez-faire economics, popular idea in the late 1800s; government should not interfere with the economy. Supply and demand needed to regulate prices and wages. • Profit motive = entrepreneurs increase; attracted to manufacturing and transportation fields. Result=hundreds of factories and thousands of miles of railroad built. • Foreign investments helped fund the nation’s industrial buildup. • Laissez-faire = government low taxes and low spending; no regulations on industry = all policies to help industry. • High tariff controversy? Is the U.S. ready to compete by the early 1800s freely with other nations or do we still nee a protective tariff? New Inventions Promote Change: New inventions increased America’s productivity, which in turned produced wealth and job opportunities. • Samuel Morse: 1844 telegraph to send messages; before telegraph horse and rider • Elias Howe: 1846 sewing machine • Elisha Otis: 1852 safety elevator kept elevator cars from suddenly falling • George Pullman: 1864 rail sleeping car • Thaddeus Lowe: 1865 ice machine • Gustavus Swift: invented refrigerated rail cars for transporting food • Alexander Graham Bell:1876 invented telephone • Thomas Alva Edison: 1879 light bulb; electric generator, motion picture The Power of Electricity • *Thomas Alva Edison- 1876 established the world's first research lab in New Jersey. There he perfected the incandescent light bulb, which was patented in 1880. He later invented an entire system for producing and distributing electrical power. • -The harnessing of electricity completely changed the nature of business in America. Inventions Change Lifestyles • *Alexander Graham Bell and *Thomas Watson- 1876 invented the telephone, which opened the way for a worldwide communications network. • -Both the typewriter and the telephone created new jobs for women. • -In 1870 women made up 5% of the workforce -- by 1910 they counted for nearly 40% of the clerical workforce. Section 2: The Age of the Railroads • After the Civil War, the rapid construction of railroads accelerated the nation’s industrialization and linked the country together. I. Linking the Nation • A. After the Civil War, railroad construction dramatically expanded. In 1862 President Abraham Lincoln signed the Pacific Railway Act, which provided for the construction of a transcontinental railroad by the Union Pacific and Central Pacific railroad companies. To encourage rapid construction, the government offered each company land along its right of way. B. In 1865 the Union Pacific, under engineer Grenville Dodge, pushed westward from Omaha, Nebraska. Weather, labor, money, and engineering problems hampered the project. The workers included Civil War veterans, Irish immigrants, farmers, miners, cooks, and ex-convicts. Camp life was dangerous. C. Four merchants known as the “Big Four” invested in the Central Pacific Railroad. They each bought stock in the railroad and eventually made a fortune. One of them, Leland Stanford, became Governor of CA, founded Stanford University, and later became a U.S. Senator. • *Transcontinental Railroad- in May 1869 the Central Pacific and the Union Pacific met in Utah to nail the Golden Spike that marked the nation's first cross-country railroad. II. Railroads Spur Growth • Railroads encouraged the growth of American industry. They linked the nation and increased the size of markets. The railroad industry stimulated the economy by spending large amounts of money on steel, coal, and timber (natural resources ) • Cornelius Vanderbilt: famous railroad consolidator • 1883 American Railway Association divided the country into __4__ time zones, or regions. where the same time was kept = safety and more reliability = Eastern, Central, Mountain, and Pacific. • Large integrated railroad systems provided increased efficiency, a decrease in time spent in long distance travel, and it united Americans from different regions. III. The Land Grant System • Land Grants were given to railroad companies by the federal government to encourage railroad construction. • Railroad companies like the Union Pacific and Central Pacific were able to cover all their building costs by selling land to settlers, real estate agencies, and other businesses. IV. Robber Barons-The growth and consolidation of railroads benefited the nation, but also led to corruptness and required government regulation. • The wealth of railroad entrepreneurs led to accusations that they had acquired their wealth through illegal means. One of the entrepreneurs with the worst reputation was Jay Gould, who used information he obtained as a railroad owner to manipulate stock prices to his benefit. • Railroad investors realized they could make more money through land grants than by running a railroad, so many investors bribed members of Congress to vote for more land grants. • Robber baron is a pejorative term used for a powerful 19th century United States businessman and banker. The term may now relate to any businessman or banker who used questionable business practices to become powerful or wealthy. • Andrew Carnegie (steel)—Pittsburgh and New York • J. P. Morgan (banking, finance, industrial consolidation)—New York City • Jay Gould (railroads)--New YorkCornelius Vanderbilt (railroads)--New York John D. Rockefeller (oil), Standard Oil--New York Cornelius Vanderbilt (railroads)--New York • The wealth of railroad entrepreneurs led to accusations that they had acquired their wealth through illegal means. One of the entrepreneurs with the worst reputation was Jay Gould, who used information he obtained as a railroad owner to manipulate stock prices to his benefit. • Railroad investors realized they could make more money through land grants than by running a railroad, so many investors bribed members of Congress to vote for more land grants. • In 1872 corruption in the railroad system became public with the Credit Mobilier scandal. Several stockholders of the Union Pacific set up the Credit Mobilier, a construction company. The investors signed contracts with themselves. The company greatly overcharged Union Pacific, and the railroad agreed to pay the inflated bills. • When the railroad was completed, the investors had made a fortune, but the railroad was almost bankrupt. Congress agreed to give additional grants to the railroad after several members of Congress were given shares in Union Pacific at a price well below market value. An investigation implicated several members of Congress, including James Garfield, who later became president Union Pacific had taken up to $23 million in stocks, bonds, and cash. Chapter 14, Section 3 Guided Reading Notes: Big Business • The Rise of Big Business: By 1900, big businesses dominated the economy. – The Role of Corporations – Big business would not have been possible without the corporation. – Corporation: an organization owned by many people but treated by law as though it were a single person. – Stockholders/Stocks – Economies of Scale: – Money from stock = investment of in new technologies, hiring a large workforce, and purchase of machines that increase efficiency – Economies of scale: corporations making goods cheaply because they produce so much so quickly using large manufacturing facilities. – Criticisms of corporations: using wealth to drive small companies out of business. The Consolidation of Industry: To stop prices from falling (cut in their profits), many companies formed pools, or agreements to maintain prices at a certain level. Criticism: interfered with competition and private property rights. Companies that formed pools had no legal protection and could not enforce their agreements in court. Pools generally did not last long. Sooner or later competition resumed. John Rockefeller • “Robber Baron” • Rich from Oil Industry • Founded Standard Oil Company in 1870 Andrew Carnegie • Business tycoon • Scottish immigrant: Rags to riches • Steel industry – Andrew Carnegie and Steel: – Built first American steel mills to use the Bessemer Process: make high quality steel efficiently and cheaply. – Vertical Integration: (steel industry) company owns all of the different businesses on which it depends for its operation. – Horizontal Integration: (oil) combining many firms engaged in the same type of businesses into one large corporation. = monopolies; Rockefeller Standard Oil (buyouts) – Later monopolies would be outlawed by the Sherman Antitrust Act Bessemer Process • Injecting Air into molten iron to create STEEL • Made Carnegie wealthy! Monopoly • Owning the majority of a group of companies in the same business Selling the Product: – Advertising Industry Rose: Woolworth’s; Sears, Roebuck – Mail-order catalogs, chain stores Chapter 14, Section 4 Guided Reading Notes: Unions (the other side of the spectrum) • Working the United States: – Life for workers in industrial America was difficult. – Machines replaced skilled labor; work became monotonous. = little pride in one’s work. – Working conditions were unhealthy and dangerous. Workers breathed in dust, lint, and toxic fumes. High number of injuries. – Real wages rose Standard of living rose – Uh-oh – Deflation: workers felt like they were being paid less money for the same amount of work. = many workers decided to organize. WORKING CONDITIONS -low wages -long hours -dangerous conditions -company towns -child labor Sweatshops • Illegal factories where workers work for less than legal wages Craft Unions • Union limited to those who participate in that type of work – Ex. All carpenters Trade Unions • Used Collective Bargaining: negotiating with the strength of numbers • All workers for an employer Early Unions: – Trade Unions: unions limited to people with specific skills. Largest and most successful in 1873: Iron Molders’ International Union. – Employers were often forced to recognize and negotiate with trade unions because they represented workers whose skills they needed. – However, employers generally regarded labor unions as conspiracies that interfered with their property rights. They particurlaly opposed industrial unions: united all craft workers (special skills and training) and common laborers (few skills and received low wages). Techniques used to stop labor unions: » Oaths and sign contracts promising not to join an union; hired detectives to go undercover and identify union organizers; blacklist: a list of “troublemakers”; lockout: locked workers out of the property and refused to pay them; hired strikebreakers. Collective Bargaining • Negotiation between labor unions and employers Arbitration • Resolution of disputes outside of court Yellow Dog Contract • Workers agree NOT to join a union while employed – Political and Social Opposition » Workers wanting to join a union faced several major problems: • No laws allowing workers the right to organize. • Owners were not required to negotiate with workers. • Courts frequently rules against them, referring to them as conspiracies. • Perception that they threatened American industries. • Marxism: basic force shaping capitalist society was the class struggle between workers and owners; workers would eventually revolt, seize control of the factories, and overthrow the gov’t; then gov’t would seize all private property and create a socialist society where all property would be evenly divided; leading to a Communist society. • Many labor supporters agreed with Marx, and a few even supported anarchism. • All of these ideas were driving forces in Euorpoean unions = immigrants = nativism = attempts at suppression of unions. The Struggle to Organize –The Great Railroad Strike: Circle Map – The Knights of Labor: Circle Map – The Haymarket Riot: Circle Map – The Pullman Strike: Circle Map The great Railway Strike of 1877 • Response to wages being cut • Lasted for 45 days • Ended by federal troops Knights of Labor • The Knights grouped workers by industry, regardless of trade or skill • First to organize women Haymarket Riot • A bomb was exploded during a Union Labor Rally in the Haymarket Square, in Chicago. • 1886 • 7 policemen were killed Pullman Strike • Wages were cut but rents remained the same • Pres. Cleveland: strike disrupts the mail • Troops were sent in to break it up The American Federation of Labor – AFL: first leader Samuel Gompers: his approach helped unions become accepted in American society. – He believed that unions should stay out of politic; rejected socialist and communist ideas. – Gompers felt that the AFL should fight for small gains within the American system. Gompers was willing to use the strike method, but preferred negotiations. – AFL’s 3 main goals under Gompers leadership: • Tried to get companies to recognize unions and to agree to collective bargaining. • Pushed for closed shops: companies could only hire union workers. • Promoted an 8-hour workday. American Federation of Labor • Largest group of labor unions • Founded by Samuel Gompers Working Women – After Civil War women wage earners increased. – “women’s work” – teachers, nurses, sales clerks, domestic servants. – Light industrial jobs – Paid less than men; most unions, including the AFL excluded women. – Mary Kenney O’Sullivan and Leonora O’Reilly: decided to establish a separate union for women with the help of Jane Addams and Lillian Ward = WTUL – WTUL: pushed for creation of minimum wage, an end to evening work for women, and abolition of child labor.