Chapter 17, Industrial Supremacy
Sources of Industrial Growth (474-483)
An abundance of raw materials, a large labor supply, a surge in technology, ambitious business leaders, and an expanding domestic
market were all factors in the growth of American industry.
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III.
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Industrial Technologies
Iron and steel industries grew in the 1870s and 1880s because iron was used for railroads and steel was the most used metalof the days.
New Steel Production Techniques Henry Bessemer and William Kelly developed a new process for steel production fromiron; Robert Mushet added new ingredients to steel; Abram S. Hewitt continued to improve the Bessemer process
The new steel production methods made it a more available alloy, especially for railroads
Pittsburgh steel industry boomed in Ohio and western PA because they already had iron and fuel like coal; Pittsburgh
became the capital; UP, Michigan, Birmingham AL and other areas were also large steel producers
Made new massive furnaces 75 feet tall
New oil-carrying vessels and bigger ships were built
Intimate contracts between steel and railroad companies; PA Railroad spawns PA Steel Company
Rise of the Petroleum Industry 1850s, George Bissell showed that the oil reserves in PA had commercial value in lamps,
paraffin, and naphtha. Advanced to 4th most important export
The Airplane and the Automobile
Creation of gasoline caused European engineers like Nicolaus August Otto to develop the eternal combustion engine;
Gottfried Daimler improved on it
Henry Ford improving on Charles and Frank Duryeas design, Ford created cars and mass produced them: 5 million by1917; caused a change in the American landscapeAs long as humans were on earth, they had been futilely trying to fly; engineers in around the turn of the century began tohave success
The Wright Brothers Wilbur and Orville Wright developed a glider powered with an internal combustion engine in theirbicycle shop in OH, flew it in Kitty Hawk, NC 120 feet and improved it to over 23 miles with passengers
With a slow foothold in America, French engineers helped develop airplanes; American jets became important in WWI andCharles Lindbergh s solo flight from NY to Paris made it an obsession
Research and Development
Government cut funding for their research projects, private corporations began to hire engineers who were scientists
working for a practical cause
Private scientists continued to work on basic research without and immediate monetary value
Universities expanded and began to research for private investing companies
Historians believe that the university partnership for research was a result of the market s success
The Science of Production
Frederick Winslow Taylor developed Taylorism, stating scientific management was a way to manage human labor andmake it compatible with the demands of the machine age; also a way to limit workers independence and increase theowners control
Taylorism subdivide tasks to hire less skilled workers for more efficiency, no reliance on just one
Inspired by Thomas Edison, corporations funded laboratories
1914 Henry Ford developed the assembly line, application of Taylorism, created mass production; raised pay, reduced
hours; lowered price of products
Railroad Expansion
Because they added so much to industry (transporting goods and distant raw materials), railroads were the cornerstone ofAmerican Industry; investors put a lot into them
Rapid expansion of railroads, from 30,000 miles to 193,000 in 40 years
Railroad tycoons Cornelius Vanderbilt, James J. Hill, Collis P. Huntington
The Corporation
After the civil war, stock investment became popular because of the limited liability of the investment, that is, you are
only liable for what you invest
Andrew Carnegie after working his way up from modest beginnings, he invested in steel, striking deals with railroads,
cutting prices, and buying out competition; finally he sold his empire to J. Pierpont Morgan who consolidated it, TheUnited States Steel Corporation
Gustavus Swift developed a national meat packing company; Isaac Singer had a manufacturing company
New managerial techniques beginning with the rail corporations, companies developed middle management and thesubdivision of tasks with a hierarchy of business (CEO, CIO, CFO, etc.)
Consolidating Corporate America
Horizontal Integration taking control of all firms in the same enterprise (own all railroads)
Vertical Integration control all businesses the company relies on
Rockefeller s Standard Oil John D. Rockefeller s Standard Oil combined both tactics; after buying out mid-Atlanticrailroads, Rockefeller bought railroads, freights, etc. Owned 90% of petroleum in the US
Afraid of cutthroat competition, capitalists believed real success was buying out competitors
Pool Arrangements agreements to stabilize rates, failed
The Trust and the Holding Company
The Trust Agreement by Rockefeller and Morgan, stockholders invested in trusts, getting a small share of profits of atrustee; basically, 10 people bought substocks (trust certificates) to pay for one share of a trustee; they got the profits, thetrustee got business control

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New Jersey allowed mergers so a company can buy another company; Rockefeller moved to NJ, other states followed; hecreated a holding company to buy up stocks of other companies
Rapid Corporate Consolidation economic organization allowed huge power to be vested in few men
Economic giants of the time were creating controversy but also huge economic expansion by cutting costs, developing
infrastructure, and stimulating new markets

Capitalism and its Critics (483-488)
Farmers and workers of the low class as well as the middle-class wanted a justification for the deeds and wealth of the extreme upperclass; the giants of big business tried to convince the public that they the American ideal of individualism and equal opportunity.
I.
The Self-Made Man
A. Defenders of the industrial economy said that it provided everyone with social mobility
B. Myth of the self-made man even though the number of millionaires increased at the turn of the century, most were resultsof positions of privilege and nepotism
C. Usually power and prominence were results of cunning corruption rather than hard work; wealthy businessmen heavily
endowed politicians and parties in exchange for support
D. The Erie War Vanderbilt, Gould, and Fisk battled for control of the Erie railroad in NY legislature, the senators
demanded bribes and accepted $15,000 to $175,000 each
E. Mostly businessmen were more modest entrepreneurs who invested huge amounts of money in high-risk accounts; many
failed stories of rags to riches and riches to rags
II. Survival of the Fittest
A. WASP beliefs were that those who succeeded deserved their money, those who failed were made poor by [their] own
shortcomings
B. Social Darwinism survival of the fittest (from Charles Darwin s evolutionary theory of natural selection)
C. Herbert Spenser and later William Graham Sumner said that society benefited from retaining rich and losing poor
D. Justifying the Status Quo the law of competition controlled success so social Darwinism supported the tactics ofentrepreneurs; Adam Smith s theory (economist): all economics were operated by forces, law of competition market wasregulated by competition and law of supply and demand determined prices, wages, rates, etc.
E. Hypocritical businessmen were supporting competition while trying to buy out all competition; competition was feared
III. The Gospel of Wealth
A. A less harsh version of social Darwinism, the gospel of wealth said that power had responsibility
B. Carnegie advocated philanthropy
C. Russell Conwell a Baptist minister, Conwell argued that great well was available to all ( Acres of Diamonds, sermon
delivered 6,000 times), he argued (inaccurately) that most millionaires started poor
D. Horatio Alger after retiring from preaching in MA because of a sex scandal, he wrote novels in NYC about a poor smalltown boy becoming rich in the city through hard work and luck
E. A folk hero of America, he was gay but kept it secret
IV. Alternative Visions
A. Lester Frank Ward a sociologist, wrote Dynamic Sociology arguing that civilization could shape itself as it liked, believedgovernment could regulate society
B. Daniel De Leon s Socialist Labor Party was another (unsuccessful) rebellion to social Darwinism
C. Henry George CA radical who wrote Progress and Poverty about the haves and have-nots of industrial America
D. He proposed a single tax to regulate classes
E. Looking Backward Edward Bellamy s utopian novel described year 2000 America as an economy with a single great
trust controlled by the gvn t, cooperation replaced competition, nationalism ideal
V. The Problems of Monopoly
A. Many people joined the attack on monopoly
B. Monopolies could charge inflated prices without competition because customers had no choice but to pay, recessions
sprang up cyclically and in 1893 the system was near total collapse
C. 1% of America controlled 88% of American assets; extreme upper class was hated
D. Although Carnegie donated large sums of money others squandered them
E. Vanderbilt had dozens of mansions (NYC, Asheville, RI)
F. Increasing inequality deprivation became worse than poverty; everyone was getting wealthier but the rich/poor gap wasgetting bigger as well

Industrial Workers in the New Economy (483-488)
The working class experienced a rise in living conditions at the expense of very hard and dangerous labor, losing their independent
control of their own workI.

II.

The Immigrant Work Force
A. Immigration to cities from rural areas and Europe provided a work force for factories
B. New sources of immigration from non Anglo Europe in the East and Mexico and Asia in the West
C. Immigrants came to escape poverty and were lured by misleading advertisements
D. Labor Contract Law pay for workers to come over and deduct it from wages
E. Heightened ethnic tensions low paid first generations were displacing higher paid late generation Anglo-Americans andblacks
Wages and Working Conditions
A. Standard of living rose but wages were still low, low job security
B. Hard hours of monotony in unsafe working conditions
C. No control over working class, leads to militancy

III.

Women and Children at Work
A. Women worked for low wages (supplement husband s income), men didn t like seeing women work
B. Women were paid far less than men working the same job; some turned to prostitution, no wage laws
C. Ineffective child-labor laws most states made child labor laws setting minimum workday and age (12 yrs), usuallyignored; high rate of accidents
D. Poisoning and common accidents for men, women, and children
IV. The Struggle to Union
A. Little success in attempts for unions
B. National Labor Union a short lived union created by William H. Sylvis, first large one
C. Men argued women shouldn t work, they were lowering their wages; women said they needed to
D. Molly Maguires
1.
Depression and middle class hostility to unions made conditions worse
2.
In PA coal mines, middle-class workers, the Molly Maguires ironically rebelled, making the perception of labor
movements even worse
3.
Many were hired by the bosses, however, to make union suppression more realistic
V. The Great Railroad Strike
A. A 10% wage cut spawned violence and rebellion, stopping railroads from Baltimore to St. LouisB. 100 people died as a result of the nation-wide strike
C. National troops and militias were sent to suppress violence and mow down strikers
D. As the economy became national, disputes between workers and employers became national
E. The labor movement was clearly still frail
VI. The Knights of Labor
A. 1869 founding of the Noble Order of the Knights of Labor under Uriah S. Stephens
B. All who toiled invited (not lawyers, bankers, liquor dealers, professional gamblers)
C. 50,000 women allowed in the Women s Bureau of the Knights, first such group
D. Met locally and in a national general assembly, favored an 8-hour workday and a cooperative system that gave
workers a lot of control over the workplace
E. Dissolution of the Knights of Labor
1.
After becoming publicly known under Terence V. Powderly, the union expanded to 700,000 members
2.
A successful strike on the Gould railroads proved temporary after another one was suppressed
3.
The failure discredited the organization and it disintegrated altogether
VII. The AFL
A. American Federation of Labor (1881), one of the longest enduring labor groups
B. Supported different craft unions
C. Opposition to Female Employment believed that women shouldn t work but if they do, they deserve equal pay
D. Called for an 8 hour work day, strikes on assigned day to get thisE. Haymarket Square during an agitated strike, someone threw a bomb, random 8 sentenced to deathF.
Anarchism was the word for labor movement; Haymarket Square added to the idea of violence and anarchy that scared
America for years
VIII. The Homestead Strike
A. The Amalgamated Association of Iron and Steel Workers were very powerful
B. The Homestead plant near Pittsburgh, run by Carnegie and Henry Clay Frick, decided to eliminate the union there
C. During a strike, hired the Pinkerton Detective Agency, strikebreakers, incited violence, Pinkertons fled, temporary victory
but after an attempt to assassinate Frick, the union lost many members
D. Another failed labor movement
IX. The Pullman Strike
A. Pullman Palace Car Company of Chicago was a train company; cut wages 25%
B. Workers called Eugene Debs and the American Railway Union; they told workers to walk off jobs that involved Pullman
cars
C. Much transportation was paralyzed
D. Illinois governor, John Peter Altgeld, was sympathetic to workers and asked the federal government to respond instead(they were withholding mail)E. Federal troops arrested Debs and others and imprisoned them for ignoring order by a federal judge to stop the strike: itcollapsed and failed
X. Sources of Labor Weakness
A. There were few real improvements except for days were shortened for public works and federal employees
B. Only a few workers were in unions (4%) so they were ineffectual
C. Immigrants did not organize because many planned to come and leaveD. Many workers went from one job to another
E. There was some social mobility, however unskilled, to semiskilled, to skilled jobs
F. Corporate strength limited organization and gains because it was overwhelming and determined to crush challenges
G. Government authorities also resisted strikes
H. Capital was power at this time period

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