Industrialization and the Rise of Big Business, 1870-1900

Thomas Edison

Although Thomas Alva Edison is best known for his contributions to the electrical industry, his experimentation went far beyond the light bulb. Edison was quite possibly the greatest inventor of the turn of the century, saying famously that he "hoped to have a minor invention every ten days and a big thing every month or so."

Working-Class Life

An average factory work week was sixty hours, ten hours per day, six days per week, although in steel mills, the workers put in twelve hours a day, seven days a week. Factory owners had little concern for workers' safety. According to one of the few available accurate measures, as late 1913, nearly 25,000 Americans lost their lives on the job, while another 700,000 workers suffered from injuries that resulted in at least one missed month of work.

From Invention to Industrial Growth

As the three tycoons profiled in this section illustrate, the end of the nineteenth century was a period in history that offered tremendous financial rewards to those who had the right combination of skill, ambition, and luck.... It is also critical to note how these different men managed their businesses and ambition. Where Carnegie felt strongly that it was the job of the wealthy to give back in their lifetime to the greater community, his fellow tycoons did not necessarily agree. Although he contributed to many philanthropic efforts, Rockefeller's financial success was built on the backs of ruined and bankrupt companies, and he came to be condemned by progressive reformers who questioned the impact of the working class as well as the dangers of consolidating too much power and wealth into one individual's hands. Morgan sought wealth strictly through the investment in, and subsequent purchase of, others' hard work.

Child Labor

Children were small enough to fit easily among the machines and could be hired for simple work for a a fraction of an adult man's pay. From 1870 through 1900, child labor in factories tripled

Building Industrial America on the Backs of Labor

Factory workers, in particular, suffered from the inequity of their positions. Owners had no legal restrictions on exploiting employees with long hours in dehumanizing and poorly paid work. Poor working conditions, combined with few substantial options for relief, led workers to frustration and sporadic of protest and violence, acts that rarely, if ever, gained them any lasting, positive effects.

Andrew Carnegie and the Gospel of Wealth

He insisted on up-to-date machinery and equipment, and urged the men who worked at and managed his steel mills to constantly think of innovative ways to increase production and reduce cost... He believed that, given the circumstances of their successes, they should serve as benefactors to the less fortunate public

American Federation of Labor

In 1886, twenty different craft unions met to organize a national federation of autonomous craft unions. This group became the American Federation of Labor (AFL), led by Samuel Gompers from its inception until his death in 1924

Inventors of the Age

Inventors in the late nineteenth century flooded the market with new technological advances. Encouraged by Great Britain's Industrial Revolution, and eager for economic development in the wake of the Civil War, business investors sought the latest ideas upon which they could capitalize, both to transform the nation as well as to make a personal profit. These inventions were a key piece of the massive shift towards industrialization that followed. For both families and businesses, these inventions eventually represented a fundamental change in their way of life.

Fredrick Taylor and Scientific Management

Managers embraced Fredrick Taylor's principles of scientific management, also called "stop-watch management," where he used stop-watch studies to divide manufacturing tasks into short, repetitive segments. A mechanical engineer by training, Taylor encouraged factory owners to seek efficiency and profitability over any benefits of personal interaction. Owners adopted this model, effectively making workers cogs in a well-oiled machine.

The Knights of Labor

Much of KOL's strength came from its concept of "One Big Union"--the idea that it welcomed all wage workers, regardless of occupation, with the exception of doctors, lawyers, and bankers. It welcomed women, African Americans, Native Americans, and immigrants, of all trades and skill levels.

Alexander Graham Bell

One of the greatest advancements was the telephone, which Alexander Graham Bell patented in 1876. While he was not the first to invent the concept, Bell was the first one to capitalize on it; after securing the patent, he worked with financiers and businessmen to create the National Bell Telephone Company

John D. Rockefeller and Business Integration Models

Rockefeller was ruthless in his pursuit of total control of the oil refining business. As other entrepreneurs flooded the area seeking a quick fortune, Rockefeller developed a plan to crush his competitors and create a true monopoly in the refining industry. Through his method of growth via mergers an acquisitions of similar companies--known as horizontal integration--Standard Oil grew to include almost all refineries in the area.... In Order to control the variety of interests he now maintained in industry, Rockefeller created a new legal entity, known as a trust. In this arrangement, a small group of trustees possess legal ownership of a business that they operate for the benefit of other investors.

Haymarket Affair

Someone in the crowd threw a bomb at the police, killing one officer and injuring another. The seven anarchists speaking at the protest were arrested and charged with murder. They were sentenced to death, though two were later pardoned and one committed suicide in prison before his execution. The press immediately blamed the KOL as well as Powderly for the Haymarket affair, despite the fact that neither the organization nor Powderly had anything to do with the demonstration

Advertising

The tremendous variety of goods available for sale required businesses to compete for customers in ways they had never before imagined. Suddenly, instead of a single option for clothing or shoes, customers were faced with dozens, whether ordered by mail, found at the local chain store, or lined up in massive rows at department stores. This new level of competition made advertising a vital component of all businesses.

A New American Consumer Culture

These increased options led to a rise in advertising, as businesses competed for customers. Furthermore, the opportunity to buy on credit meant that Americans could have their goods, even without ready cash. The result was a population that had a better standard of living than ever before, even as they went into debt or worked long factory hours to pay for it.

J. Pierpont Morgan

Ultimately, Morgan's most notable investment and greatest consolidation, was in the steel industry, when he bought out Andrew Carnegie in 1901. Initially, Carnegie was reluctant to sell, but after repeated badgering by Morgan, Carnegie named his price: an outrageously inflated sum of $500 million. Morgan agreed without hesitation, and then consolidated Carnegie's holdings with several smaller steel firms to create the U.S. Steel Corporation. U.S. Steel was subsequently capitalized at $1.4 billion. It was the country's first billion-dollar firm.

The Homestead and Pullman Strikes

When no settlement was reached by June 29, Frick ordered a lockout of the workers and hired three hundred Pinkerton detectives to protect company property. On July 6, as the Pinkertons arrived on barges on the river, union workers along the shore engaged them in a gunfight that resulted in the death of three Pinkertons and six workers. One week later, the Pennsylvania militia arrived to escort strike-breakers into the factory to resume production. Although the lockout continued until November, it ended with the union defeated and individual workers asking for their jobs back... George Pullman fired three thousand of the factory's six thousand employees, cut the remaining workers' wages by an average of 25%, and then continued to charge the same high rents and prices in the company homes and store where the workers were required to live and shop... In practicality, almost all of the trains fell into this category, and, therefore, the strike created a nationwide train stoppage, right on the heels of the depression of 1983. Seeking Justification for sending in federal troops, President Clover Cleveland turned to his attorney general, who came up with a solution: Attach a mail car to every train and then send in troops to ensure the delivery of the mail. The government also ordered the strike to end; when Debs refused, he was arrested and imprisoned for his interference with the delivery of U.S. mail