Discussion #9: How has the automobile impacted American society?

Chapter 19: The New Industrial Order 1870 to 1900

U.S. A NARRATIVE HISTORY, EIGHTH EDITION

DAVIDSON • DELAY • HEYRMAN• LYTLE • STOFF

The New Industrial Order 1870 to1900

• “What set the new industrial economy apart from that older America was the scale and efficiency of using resources. New technologies made it possible to employ natural riches in ways undreamed of only decades earlier.”

What’s to Come

The Development of Industrial Systems

Railroads: America’s First Big Business

The Growth of Big Business

The Workers’ World

The Systems of Labor

The Development of Industrial Systems (1)

Natural Resources and Industrial Technology

• New scale and efficiency in using resources
  • Bessemer process
• Industrial technology made some resources more valuable
  • Petroleum industry
  • Environmental price soon became evident

Systematic Invention

• Dramatic increase in number of patents granted
• “Invention factories” replaced small-scale inventors
  • Thomas Alva Edison; George Eastman

Steel Production, 1880 and 1914

While steel production jumped in western industrial nations from 1880 to 1914, it skyrocketed in the United States because of rich resources, cheap labor, and aggressive management. Image: ©Everett Collection/SuperStock

The Development of Industrial Systems (2)

Transportation and Communication

• Efficient methods were needed to span the country’s huge distances and tie it into an emerging international system
  • Value of American exports tripled
• Rail and water transportation systems fused
• Telegraph provided nearly instantaneous communication (1844)
• Telephone improved on the telegraph (1876)

The Development of Industrial Systems (3)

A young Alexander Graham Bell with an early version of his “speaking telegraph.” ©The Granger Collection, New York

The Development of Industrial Systems (4)

Finance Capital

• wealth grew, there was more to save and invest
• Complex network of financial institutions developed
  • New York Stock Exchange

The Corporation

• Numerous advantages:
  • Could raise large sums of money
  • Would outlive its owners
  • Had limited liability
  • Separated owners from day-to-day management

The Development of Industrial Systems (5)

An International Pool of Labor

• 1900, there were about 20 million industrial workers in the U.S.
  • Relied in part on a vast global labor network
• Immigrants relied on migration chains of friends and family, and on labor contractors
• Domestic sources included rural Americans
• African Americans faced continued discrimination

OCCUPATIONAL DISTRIBUTION, 1880 AND 1920

Between 1880 and 1920, management and industrial work—employing white-and blue-collar workers—grew at the expense of farm work.

Railroads: America’s First Big Business (1)

A Managerial Revolution

• New systems of management devised by trunk lines
  • Four great trunk lines under a single management
  • New managerial elite, beneath owners but with wide authority over operations
  • First table of organization drawn up for the New York and Erie in the 1950s

Time zones created

Railroads: America’s First Big Business (2)

Competition and Consolidation

• Competition produced rate wars and secret “rebates”
  • 65 lines had declared bankruptcy
• Consolidation worked better
  • Regional federations set prices—but ultimately failed

The Challenge of Finance

• New ways of raising money
  • New York Stock Exchange
  • Investment bankers advising companies about their business affairs
• New regularity of travel allowed for planning

MAP 19.1: RAILROADS, 1870 to 1890

By 1890 the railroad network stretched from one end of the country to the other, with more miles of track than in all of Europe combined. New York City and Chicago, linked by the New York Central trunk line, became the new commercial axis.

The Growth of Big Business (1)

Strategies of Growth

• Salt producers drew together in the nation’s first pool
  • Industries specializing in consumer goods had low start-up costs and were plagued with competition
• With horizontal combination, competing businesses joined loosely together
• With a vertical-growth strategy, a company gained control of two or more stages of a business operation
  • Moved producers closer to the marketplace

John D. Rockefeller

The Growth of Big Business (2)

Carnegie Integrates Steel

• After seeing the Bessemer process in England, Andrew Carnegie built the biggest steel mill in the world
  • Over 25 years, added mills and moved from railroad-building to city-building
• Carnegie succeeded by taking advantage of the boom-and-bust cycle
  • Employed skilled managers
  • Knew how to compete
  • Expanded both horizontally and vertically

The Growth of Big Business (3)

Rockefeller and the Great Standard Oil Trust

• Vertical expansion—oil pipelines, warehouses, and barrel factories
• “Drawbacks” from the railroads
• Development of the trust

The Mergers of J. Pierpont Morgan

• Beginning of the “holding company”
  • Held stock in other companies
• Wave of mergers swept through American businesses

The Growth of Big Business (4)

Corporate Defenders

• Carnegie preached a “gospel of wealth”
  • Rich act as stewards for the poor
• Ordinary workers who failed to succeed were unfit
  • Herbert Spencer’s “Social Darwinism”

“‘Such ‘social Darwinism’ found strong support among turn-of-the-century business leaders. The philosophy certified their success even as they worked to destroy the very competitiveness it celebrated.”

The Growth of Big Business (5)

Corporate Critics

• Henry George: large landowners were the source of inequality
  • Proposed a single tax on “unearned” profits
• Bellamy, Looking Backward (1888)
• Socialist Labor Party formed in 1877
  • Socialists attracted more intellectuals than workers
• Sherman Antitrust Act
  • Gave government the power to break up big businesses
  • United States v. E. C. Knight Co. limited its application

The Growth of Big Business (6)

The Costs of Doing Business

• Big businesses increased wealth and tied the country together but also corrupted politics and increased the gap between rich and poor
• Practices contributed to a boom-and-bust cycle
  • Three severe depressions rocked the economy in the last third of the nineteenth century
• Evident environmental costs prompted early studies of climate change
  • British scientist John Tyndall
  • Swedish scientist Svante Arrhenius

BOOM-AND-BUST BUSINESS CYCLE, 1865 to 1900

Between 1865 and 1900, industrialization produced great economic growth but also wild swings of prosperity and depression. During booms, productivity soared, and near-full employment existed. But the rising number of industrial workers meant high unemployment during deep busts.

The Workers’ World (1)

Industrial Work

• Common characteristics
  • Mass production; division of labor into repetitive tasks; dictatorship of the clock
• Industrial accidents killed and injured
  • Workers presumed at fault
• “Taylorism,” developed through time-and-motion studies, prescribed strict work routines
• Workers sought control as citizens of a democracy
  • Many expected money sufficient to support and educate, as well as enough time to stay abreast of current affairs

The Workers’ World (2)

Children, Women, and African Americans at Work

• average, children worked 60 hours a week
• Even more than women, African American men faced discrimination in the workplace

The American Dream of Success

• Most wage earners made some gains in terms of buying power
• Some laborers entered the lower middle class in their lifetime; others climbed in financial status

The Workers’ World (3)

Clerks’ jobs, traditionally held by men, came to be filled by women as growing industrial networks created more managerial jobs for men. Here a factory floor full of neatly dressed female clerks work at their “Type-Writers,” patented first in 1868. ©Bettmann/Getty Images

The Systems of Labor (1)

Early Unions

• National Labor Union (NLU) swelled to more than 600,000 members by the early 1870s
  • Pressed for the eight-hour workday
  • Wilted during the depression of 1873

The Knights of Labor

• Initially small and secretive
• Terence Powderly elected to a leadership role in 1879
• Looked to abolish the wage system and replace it with a cooperative economy

The Systems of Labor (2)

The American Federation of Labor (AFL)

• Organization of highly skilled craftworkers
• Led by Samuel Gompers
  • Preserved the privileges of craftsmen and accepted their prejudices, allowing most affiliates to restrict woman and black membership
• Laboring classes failed to organize themselves as systematically as the barons of industry
  • Separated by different languages and nationalities
  • Divided by race and gender
  • Often regarded collective action as un-American

The Systems of Labor (3)

The Limits of Industrial Systems

• Wave of labor activism brought spontaneous protests and work stoppages
• First nationwide strike, the Great Railroad Strike, took place in 1877
  • Crushed after 12 bloody days
• 1886, tensions exploded in the “Great Upheaval”—a series of strikes, boycotts, and rallies
  • Haymarket Square riot became known as the “Haymarket Massacre”

The Systems of Labor (4)

In this painting by Robert Koehler, The Strike(1886), labor confronts management in a strike that may soon turn bloody. One worker reaches for a stone as an anxious mother and her daughter look on.Source: Library of Congress, Prints and PhotographsDivision

The Systems of Labor (5)

Management Strikes Back

• Union members barred; strikes broken
  • Pullman strike
• Employers fought unions with “yellow dog” contracts, blacklists, and lockouts
  • Injunctions were introduced to prohibit certain actions, such as strikes

“In a matter of only 30 or 40 years, the new industrial order transformed the landscape of America.”