-The industrial developments of the last three decades of the 19th century were huge – transformation of the national economy Sources of Industrial Growth Industrial Technologies -Henry Bessemer and William Kelly developed a process for converting iron into more the more durable steel – took Bessemer’s name-made mass production of steel possible -The steel industry emerged first in western Pennsylvania and eastern Ohio – iron ore was there in abundance and there was already a flourishing iron industry there -Pittsburgh became center of the steel world because anthracite or hard coal was plentiful -The oil industry rose because the steel industry needed lubrication for its machines -Pennsylvania businessman George Bissell showed that the petroleum in western Pennsylvania could be used for many different products – oil mining grew The Airplane and the Automobile -the creation of gasoline or petrol was critical for the development of the automobile -Charles and Frank Duryea built the first gasoline-driven motor vehicle in America -Henry Ford produced the first of the famous cars that would bear his name -Wilbur and Orville Wright used an internal-combustion engine to construct a glider that successfully traveled 120 feet in 12 seconds under its own power – in Kitty Hawk, N.C. Research and Development -General Electric created one of the first corporate laboratories in 1900 -Emergence of corporate research laboratories came with a decline in government support for research – helped corporations to attract skilled researchers who once worked for government agencies -In the late 19th and 20th centuries, American universities transformed themselves in growing numbers – one product was a growing connection between university-based research and the needs of the industrial economy -Partnership developed between academic world and commercial world The Science of Production -Many industrialists turned to the new principles of “scientific management” or “Taylorism” – Frederick Winslow Taylor urged employers to subdivide tasks – would speed up production and make workers interchangeable – would reduce need for highly trained skilled workers – however, would also make working people less independent -Most important change in production technology was introduction of mass production and the moving assembly line, invented by Henry Ford – used in automobile plants Railroad Expansion -Railroads helped found “standard time” in the United States -Every decade in the late 19th century, railroad trackage increased dramatically The Corporation -Under laws of incorporation passed in the 1830s and 1840s, organizations could raise money by selling stock to members of the public – many Americans considered it a good investment because they only had “limited liability” – risked only the amount they invested, not liable for any debts the corporation might accumulate after that -Ability to sell stock to public made it possible for businesses to get capital for projects -First to adopt the new corporate form of organization was the railroad industry, among them the Pennsylvania Railroad -The central figure in the steel industry was Andrew Carnegie, a Scottish immigrant who opened his own steel business in Pittsburgh – dominated the industry -Many corporate organizations developed a new approach to management – corporate leaders introduced a set of managerial techniques – relied on division of responsibilities, a hierarchy of control, modern cost-accounting procedures, and the “middle manager”, who formed layer of command between workers and owners Consolidating Corporate America -“Horizontal integration” – combining of a number of firms engaged in the same enterprise into a single corporation – ex. Consolidation of many railroad lines -“Vertical integration” – taking over of all the different businesses on which a company relied for its primary function – ex. Case of Carnegie Steel -Most celebrated corporate empire was John D. Rockefeller’s Standard Oil – created through both horizontal and vertical integration – controlled access to 90% of refined oil in U.S. -As movement toward combination accelerated, new techniques emerged – pool arrangements were informal agreements among companies to stabilize rates and divide markets – did not work well The Trust and the Holding Company -Failure of pools led to new techniques – one of the most successful was creation of the “trust” – pioneered by Standard Oil and perfected by J. P. Morgan – under a trust agreement, stockholders in corporations transferred their stocks to a small group of trustees in exchange for shares in the trust itself -a “holding company” – a central corporate body that would buy up the stock of various members of the Standard Oil trust and establish direct, formal ownership of the corporations in the trust -The consolidation of corporations grew in the 19th century Capitalism and its Critics -People criticized the corporate power centers as a threat to republican society and pointed to the corruption that the industrial titans seemed to produce The “Self-Made Man” -Defenders of the new industrial economy argued that it provided every individual with a chance to succeed -Many millionaires claimed to be “self-made men”, but most had begun tycoons wealthy -Their rise to power had not always been hard work, also from corruption Survival of the Fittest -Social Darwinism was the belief that only the fittest individuals in human society survived and flourished in the marketplace -Herbert Spencer was the first to argue this theory – said society benefited from the elimination of the unfit -Social Darwinism appealed to businessmen – confirmed their success and virtues – justified their tactics The Gospel of Wealth -Some businessmen used another idea, the “gospel of wealth” to temper the harsh philosophy of Social Darwinism -Argued that wealthy people had not only great power but great responsibilities – it was their duty to use their riches to advance social progress – Andrew Carnegie reinforced it -Another popular idea was that wealth was available to all – Russell H. Conwell, a Baptist minister was the most prominent spokesman by delivering “Acres of Diamonds” – speech that had stories of individuals who had found opportunities for wealth -Horatio Alger wrote novels about common people who rose to great wealth through hard work Alternative Visions -one philosophy emerged through work of Lester Frank Ward – argued that civilization was not governed by natural selection but by human intelligence – an active government engaged in positive planning was society’s best hope -Henry George of California tried to explain why poverty existed amidst the wealth created by modern industry – increase in value of land was not result of effort by the owner but by the growth of the society around the land – proposed a “single tax” to replace all other taxes – would destroy monopolies -Edward Bellamy also rose in popularity – wrote novel Looking Backward – believed that eventually, “fraternal cooperation” would replace competition and there should not be class divisions – Bellamy called philosophy “nationalism” The Problems of Monopoly -Monopoly caused the gap between rich and poor to increase Industrial workers in the New Economy The Immigrant Work Force -By the end of the 9th century, the major sources of immigration had shifted from England, Ireland, and northern Europe to southern and eastern Europeans – in the West, major sources of immigration were Mexico and Asia -Arrival of new groups heightened ethnic tensions - competition Wages and Working Conditions -Many workers didn’t like how they lost control over the conditions of their work Women and Children at Work -Many employers hired women because they didn’t have to pay them as much – mostly young and white – majority were immigrants – most worked in a few industries where unskilled and semiskilled machine labor prevailed – textile industry was largest employer -Female workers made much less than males did, sometimes even half as much -Many children also worked – led to passing of child labor laws in 38 states in 19th century – had limited impact The Struggle to Unionize -the first attempt to combine various labor organizations was when William H. Sylvis founded the National Labor Union – eventually disappeared after Panic of 1873 -The National Labor Union excluded female workers -There was middle-class hostility toward the unions – blamed workers for labor disputes with employers – particularly alarming to them were the “Molly Maguires”, a militant labor organization in the anthracite coal region of Pennsylvania The Great Railroad Strike -The railroad strike of 1877 began when the eastern railroads announced a 10 percent wage cut -Strikers disrupted rail service and destroyed equipment -President Hayes ordered federal troops to suppress disorder in West Virginia -Ultimately, over 100 people died before the strike finally collapsed in several weeks -The great railroad strike was America’s first major, national labor conflict – indicated the frailty of the labor movement – failure of it weakened railroad unions The Knights of Labor -First major effort to create a genuinely national labor organization was the founding of the Noble Order of the Knights of Labor under the leadership of Uriah S. Stephens – open to all workers – welcomed female workers – for several years, remained secret -Under leadership of Terence V. Powderly, it moved into the open -After 1890, membership shrunk and it ultimately disappeared The AFL -The American Federation of Labor represented mainly skilled workers -Although the male leaders of the AFL were essentially hostile to idea of women working, they still sought equal pay for those women who did work -Samuel Gompers, the powerful leader of the AFL, accepted the basic ideas of capitalism – his goal was to secure for the workers he represented a greater share of capitalism’s material rewards – supported immediate objectives of most workers (better wages, etc.) -In Chicago, a strike was in progress at the McCormick Harvester Company when the general strike begun -Labor and radical leaders called a protest meeting at Haymarket Square – when ordered to disperse, someone threw a bomb that killed 7 police officers – police killed 4 people -Haymarket bombing was alarming symbol of social chaos and radicalism The Homestead Strike -The Amalgamated Association of Iron and Steel Workers, affiliated with the American Federation of Labor, was the most powerful trade union in the country – were in great demand by employers and thus had power in workplace -However, by the mid-1880s, the steel industry introduced new production methods that improved the steelmaking process and reduced companies’ dependence on skilled labor -In the Carnegie system, the union had a foothold in only the Homestead plant -Carnegie and his chief lieutenant Henry Clay Frick decided to repeatedly cut wages at Homestead -In 1892, the company stopped discussing its decisions with Amalgamated – Amalgamated called for a strike – However, the Union was defeated by the National Guard – strikebreakers protected by troops The Pullman Strike -the Pullman Palace Car Company manufactured sleeping cars for railroads near Chicago – built town of Pullman there and rented houses to the employees -In 1893, the Pullman Company slashed wages by 25% - refused to lower rent of houses – workers went on strike and persuaded militant American Railway Union led by Eugene V. Debs to support them by refusing to handle Pullman cars and equipment – opposing them was the General Mangers’ Association, composed of 24 railway companies – paralyzed transportation from Chicago to the Pacific – strike eventually collapsed Sources of Labor Weakness -Many immigrant workers intended to come to America, earn some money, and then return home – eroded their willingness to organize -Other workers were in constant motion – not in one place long enough to exert power -Above all, workers did not make significant gains in the lat 19th century because of corporate strength – faced corporate organizations of vast wealth and power – corporations were determined to crush efforts by workers to challenge them