APUSH Ch. 24
Inventions of the Gilded Age
-American inventions increased- 440,000 patents -Business operations now used cash registers, the stock ticker, typewriter; attracted women to industry -Urbanization increased due to the refrigerator car, electric dynamo, electric railway, displaced animal-drawn cars -Among the best inventions the telephone by Alexander Graham Bell in 1876- "number please" women attracted to this field -Most versatile inventor Thomas Alva Edison- phonograph, mimeograph, dictaphone, moving picture, light bulb in 1879 -Light bulb made people sleep less- 9 to 7 hours
United States Steel Corporation
-Andrew Carnegie leader in steel- came to US from Scotland -Worked hard, make connections with influential people -Entered the steel business in Pittsburgh- succeeded by getting high-class associates, eliminating middlemen -However, he wasn't a monopolist, disliked monopolistic trusts -He had partnerships with 40 "Pittsburgh millionaires" -By 1900 produces ¼ of the US's Bessemer steel -J. Pierpont Morgan was renowned in Wall Street banking by financing the reorganization of rails, insurance companies, banks -Had integrity, didn't think "money power" was dangerous, except when it was in dangerous hands- not his -By 1900 Carnegie wanted to sell his holdings and Morgan had went into the steel pipe tubing business -Carnegie threatened to invade the same business, ruining Morgan, if he did not receive his price -Morgan agreed to buy out Carnegie for over $400 mil -Fearing disgracement, turned to philanthropy to give $ -Morgan, wanting to expand his empire, launched the United States Steel Corporation in 1901- first billion dollar corp. in the US
Effects of the Railways
-By connecting America, the rails created a huge domestic market for US raw materials and manufactured goods -Attracted foreign and domestic investors -Rail spurred post-war industrialization- opened up new markets for manufactured goods, sped raw materials to factories -Rails also the largest source of orders for the steel industry -Stimulated mining and agriculture, esp in the W- transported farmers to land, carried goods to market, brought in manuf goods -Farm settlements paralleled the railroads like rivers -Railways also led to growth of cities and urbanization- could carry food to concentrations of people and provide materials and markets -Railroads also stimulated stream of immigration- looking for people to sell their land grants to, they advertised in Europe -Settlers changed the landscape of the land- in IO, IL, KS, NB there were cornfields, in the Dakotas and MT there were cattle -Pine forests of MI, WI, MN turned into lumber that went to farmers -Until the 1880s every town had its own "local time"- to keep railroad schedules and avoid wrecks, in 1883 the major rail lines said the continent would be divided into four "time zones" -Rails made millionaires- replaced S aristocrats; rails popular in Wall Street, wealth amassed by stock speculators and rail people
Tycoons limit competition
-Competition scared most business leaders- tycoons like steel king Carnegie, oil king Rockefeller, banker Pierpont Morgan, tried to avoid competition -Carnegie integrated every phase of steel-making process; "vertical integration"- combining into one organization all phases of manufacturing from mining to marketing -Goal to improve efficiency by making supplies more reliable, controlling quality, eliminating middlemen fees -Less justifiable was "horizontal integration"- allying with competitors to monopolize a given market; Rockefeller a master -Used the "trust" to control annoying rivals- stockholders in smaller oil companies assigned their stock to the board of directors of his Standard Oil Company formed in 1870 -Standard Oil soon had almost the entire petroleum market -The depression of the 1890s drove many to Morgan, hurt by competition- planned to consolidate rival enterprises and ensure future harmony by placing officers from his own company on their various boards of directors- "interlocking directorates"
Corruption in Railroads
-Corruption occurred in railroad construction companies like Credit Mobilier- methods became more refined, tricked the public -Jay Gould the best of these tricksters- boomed and busted the stocks of the Erie, KS Pacific, Union Pacific, and the TX and Pacific through speculation -Among the best manipulating devices was "stock watering"- rail stock promoters inflated their claims about a line's assets and profitability, sold stocks and bonds in excess of the rail's real value -Rail managers forced to charge high rates and wage battles in order to pay off the exaggerated financial obligations -Public interest disregarded in the battles between rail titans -At the same time, rail titans bribed judges and legislators, employed lobbyists, elected their own people into office -Gave many journalists and politicians free passes -Railroad kings for a time led industrialization - more control over the lives of more people than the president -Ignored competition, began to cooperate with each other to rule the railroad game- pressed to show some returns on the investments, entered alliances to protect profits -Earliest form of alliance the "pool"- an agreement to divide the business in a given area and share the profits -Other rail titans gave secret rebates to powerful shippers in return for steady and assured traffic -Often slashed rates on competing lines, made up the difference on non-competing ones
Union Pacific Railroad
-Deadlock in the 1850s over the rail broken with secession- in 1862, Congress made a provision for the rail -One argument for action was to bolster the Union by binding the Pacific Coast (esp CA) to the Union -Union Pacific Railroad commissioned to start in Omaha, NB -For each mi of track, 20 sq miles given as well as a federal loan from $16-48,000 -Construction began 1865- with such loans and lands, "groundhog" promoters wanted to move quickly -Insiders of the Credit Mobilier company prospered- got $73 mil for $50 mil worth of construction, using some to bribe Congressmen -Many construction workers Irish from the Civil War- worked fast -Rail laying in CA led by the Central Pacific Railroad- went E from Sacramento, through the Sierra Nevada -The Big Four were the main financial backers- operated through 2 construction companies, did not bribe, but got $ -Central Pacific got the same subsidies, save incentive of haste -10,000 Chinese workers were cheap, efficient, expendable -Big Four annoyed by lack of progress in the Sierra NV -The two rails met near Ogden, UT in 1869; Union built more Rail better bonded the West Coast to the Union, trade with Asia -Paved way for growth of the Great West
American Federation of Labor
-Elitist American Federation of Labor made in 1886 by Samuel Gompers- a Jewish cigar maker from England -Elected president of the Federation from '86-1924 but 1 yr -The federation was an association of self-governing national unions, each with their own independence -Gompers disliked socialism, shunned politics for economic strategies and goals, but didn't dislike capitalism -Demanded a fairer share of labor; better wages, hours, working conditions -Major goal was the "trade agreement" authorizing the "closed shop"- all-union labor -Although it tried to represent all workers, it didn't work -Willing to leave unskilled workers (women/blacks) alone -The Federation was basically nonpolitical, but it did attempt to persuade members to reward friends and punish foes at the polls -The Federation survived the panic of 1893 pretty well and by 1900 had ~500,000 members; critics called it "the labor trust" -Labor disorders continued; ~23,000 strikes from 1881-1900 Cost employers and employees $450 mil -Lost about half the strikes, won or compromised the others -Greatest weakness was it had only 3% of workers by 1900 -By 1900 the public began to realize the rights of workers to organize, to bargain, and to strike -Labor Day made a legal holiday in 1894 -Many employers continued to fight organized labor
Four more Transcontinental Railroads
-Four other transcontinental lines completed before 1900, none secured fed loans unlike the Union Pacific and Central Pacific -All but the Great Northern received land grants -N Pacific Railroad (from Lake Superior to Puget Sound) finished in 1883; the Atchison, Topeka, and Santa Fe (SW to CA) finished '84 -S Pacific went from New Orleans to San Fran, finished 1884 too -Last of the five finished finished in 1893- The Great Northern from Duluth to Seattle north of the N Pacific -Creation of Canadian-American James J. Hill; best builder -Thought the prosperity of the rail depended on the prosperity of the area it served- "Hill Country," gave bulls -Pioneer builders guilty of overoptimism- sought land, but where they built there was nothing to support the rail- many bankrupt
Railroad Growth
-Govt-business connects helped industrial development- growth of railroad construction important -In 1865 there were ~35000 mi, mostly E of the MS; by 1900 there were 192556 mi, much west of the MS -Transcontinental railroad building was $- needed govt subsidies -Extension of rails into low population areas was unprofitable until the areas could be built up -Private promoters unwilling to take this initial loss -Congress subsidized two cross-continent companies in 1862 after arguments saying rails were needed for military and postal needs -Also gave them ~200 mil acres of land around the tracks -Until railroads picked the best land from the land given to them, they allowed no one to settle on the land -Cleveland ended this in 1887, open land-grant areas to all -Some criticism of the subsidization, but the govt received reduced rates for postal service and military traffic -Granting land also a cheap way to subsidize the system- avoids tax -They could then sell this land or use it for loans -Critics didn't realize the value the rail gave the land -Frontier villages became cities, bypassed ones became ghost towns -Towns wanting to house the rail tried persuading builders
Industrial Expansion
-Industrial expansion, partly due to the railroads, grew rapidly- went from 4th among manuf nations in 1860 to 1st in 1894 -Due to liquid capital which was now becoming abundant- Civil War, partly to profiteering, created huge fortunes -This $ could be combined w/ loans from foreign capitalists -Natural resources of US about to be exploited- iron, coal, oil -MN-Lake Superior region had iron from the Mesabi Range -Immigration helped make unskilled labor cheap and plentiful- steel, the main industry, based off of low-priced immigrant labor -American ingenuity important in the industrial rev- techniques of mass production were being perfected
American Tobacco Company
-Industrial revolution in the N did little in the S- plantation system had turned into a pattern of absentee land ownership -White and black sharecroppers became tenants for their landlords who controlled the credit and supplies -Southern agriculture received a boost in the 1880s when machine-made cigarettes replaced the roll-your-own variety; tobacco consumption shot up -James Buchanan Duke took advantage of this to mass-produce "coffin nails"- in 1890 he absorbed main competitors into the American Tobacco Company -Showed generosity to Trinity College, name became Duke
Industrialization in the South
-Industrialists tried to get the S to industrialize; didn't really work- among these were Henry W. Grady, wrote the Atlanta Constitution -Wanted to make "Georgia Yankees," outperform the N -A barrier of S industrialization was regional rate-setting systems imposed by the N-dominated railroad interest -Rails gave preferential rates to manuf goods moving S, discriminated against S raw materials; wanted keep S in servitude to the North East, just supplying materials -An example of discrimination was the "Pittsburgh plug" pricing system in the steel industry- deposits of coal and iron found near Birmingham, AL worked by low-wage S labor should have given steel manuf there a competitive edge, esp in S markets -Steel lords in PA brought pressure- Birmingham steel, no matter where it was delivered, was charged a fee -S better in cotton textile manufacturing- S didn't want to ship cotton to NE; beginning ~1880, N capital made mills in the S -Partly due to tax benefits, cheap and un-unionized labor -Cheap labor in the S attracted investors, but keeping labor cheap took a toll- dominated the communities they were in -Rural S (not blacks) went to the mill towns, entire families- paid half of what N were paid, often just company credit -However, many saw this as their first steady job and wage- only way for farm-fugitive families to stay together
The Haymarket Square Bombing
-Knights involved in many May Day strikes in 1886, half failed -Chicago had ~80000 Knights, some anarchists (many foreign) advocating to overthrow the US govt -Tensions built up to the Haymarket Square episode- in May 1886, Chicago police advancing; bomb thrown, people died -Nobody proved they had anything to do with the bomb, but the court ruled the anarchists should be guilty, ⅝ killed -In 1892, John P. Altgeld (a liberal German Dem) was elected governor of IL- after studying Haymarket, he pardoned the ⅜ -Conservatives protested, defeated for reelection -Haymarket Square bomb helped the demise of the Knights- falsely associated with anarchists, 8 hour movement suffered, little success -Another problem with the Knights was they included skilled and unskilled workers- unskilled labor could be easily replaced -Skilled workers finally left the unskilled and formed the American Federation of Labor; killed the Knights
National Labor Union
-Labor unions weak before 1861, gained strength by the Civil War; drained human resources, put a premium on labor -By 1872 there were 32 national unions -The National Labor Union, organized in 1866, lasted 6 years and got 600,000 members, but excluded Chinese, some women/blacks -Argued for the arbitration of industrial disputes and the eight-hour workday- got the second one for govt workers -Depression in the 1870s caused its demise, not death
Sherman Antitrust Act of 1890
-Masses began to mobilize against monopoly- tried to control trusts through state legis like they had with the railroads -Failed; forced to go to Congress- the Sherman Antitrust Act of 1890 finally passed -This law forbade combinations in restraint of trade, no distinction between "good" trusts and "bad" trusts -This law was ineffective- contained legal loopholes -However, it was effective in curbing labor unions or labor combinations that were deemed to be restraining trade -Early prosecutions of the trusts under this was were unsuccessful- more new trusts formed in the 1890s under McKinley than ever -Until 1914 when the law was enforced, there was question whether the govt would control trusts or vice versa
Rockefeller's Oil Monopoly
-Rockefeller came to dominate the oil industry- born to a rich family -In 1870 he organized the Standard Oil Company of Ohio, the center of the great trust formed in 1882 -His refineries in Cleveland, wanted to eliminate middlemen and remove competitors -Rockefeller entered an era of free enterprise- business ethics low -Rockefeller pursued a policy of rule or ruin -By 1877 Rockefeller controlled 95% of US oil refineries -Rockefeller was merciless in removing competition- used spies and asked for secret rebates from the railroads, forced the lines to pay him rebates on the freight bills of competitors -However, his monopoly did produce a better, cheap product- important economies at home and abroad through large scale methods of production and distribution; same as other trusts -There needed to be big business for expensive machinery
Darwinism
-Some "new rich" defended the system with the gospel -Most defenders of capitalism relied on the survival-of-the-fittest theories of Charles Darwin -Despite depending class divisions, they provided progress -Many of the rich rose through the ranks- says those who stayed poor must be lazy; roadblock to social reform -Plutocracy resorted to the Constitution- clause that gave Congress sole jurisdiction over interstate commerce helped monopolists -Used it to stop control by state legislatures -Also used the 14th Amendment- interpreted a corporation to be a legal "person" and said it could not be deprived of its property by a state without "due process of law" -As a result industrialists went to "easy states" like NJ where restrictions on big business were mild/non existent -Southern Pacific Railroad incorporated in KT
American Steel Production
-Steel ruled America- its use in railroads showed the dominance of "heavy industry" which concentrated on making "capital goods" as distinct from the production of "consumer goods" as possible -Steel was scarce during Lincoln's time- iron used for rails, steel was expensive so it was used for cutlery -Then in the 1870s Vanderbilt of NY Central began to use steel rails, forced to import them from Britain -Within 20 years the US had passed all competitors in steel -The invention of a method of making cheap steel, the Bessemer Process, helped cause this change -Bessemer British, but KT manufacturer William Kelly found it earlier, but not one believed in his method -US also among the few places where one could find coal, iron, and other ingredients for steel relatively close together -Also had a large labor supply- stage set for production
Cornelius Vanderbilt
-Success of W lines done by joining and expanding older E networks, esp the New York Central- made by Cornelius Vanderbilt -Originally in steamboats, turned to railroads; daring
The Birth of the Oil Industry
-Sudden emergence of the oil industry important- some oil found in streams for medicines, but not until 1859 in PA "Drake's Folly" the first oil well -Kerosene, from petroleum, the first major product; by 1870s it was US's 4th most valuable export -Whaling, the livelihood of ocean-roaming NE was dying -But by 1885, 250,000 Edison bulbs were in use, by 1900 15 mil -New electrical industry rendered kerosene obsolete -Only in rural America was kerosene still popular enough -But oil need increased again in 1900 with the automobile
New Trusts
-Sugar trust, tobacco trust, leather trust, harvester trust, started due to the oil trust; removed 200 competitors -Arrogant class of "new rich"
Innovation with steel rails
-The steel rail a significant improvement to railroads, introduced by Vanderbilt starting in New York Central- safer, more economical -Standard track width helped too, eliminating track changes -Westinghouse airbrake (1870s) also helped- more efficient and safe -Pullman Palace Cars introduced in the 1860s, but still unsafe
The Knights of Labor
-Wage reductions in 1877 reinvigorated the strikes on railroads -Black workers organized the Colored National Labor Union -The Knights of Labor replaced the National Labor Union- began in 1869 as a secret society; secrecy until 1881 help avoid opposition -Wanted to include all workers in "one big union" -Allowed EVERYONE except "non producers" -Refused to enter politics- campaigned for economic and social reform, including producers' cooperatives and codes for safety and health -Ordinary workday 10+ hours, wanted it to be 8 -Led by Irish Terence V. Powderly- won a number of strikes for 8 hours -After winning a strike against Jay Gould's Wabash Railroad in 1885, membership increased to ~¾ mil
Interstate Commerce Act of 1887
A new principle made by the law as well as by the Interstate Commerce Act of 1887- private greed must be below public need