Chapter 17: Capital and Labor in the Age of Enterprise

Industrial Capitalism Triumphant

I. Economic historians speak of the late 19th century as the age of the Great Deflation. Prices fell steadily
worldwide.
A. Normally, falling prices signal economic stagnation: there is not enough demand for the available
goods and services. In the US, industrial expansion went into high gear during the Great Deflation.
B. Because of increased manufacturing efficiencies, American firms could cut prices yet earn profits
for financing better equipment. And this achievement in turn meant a sustained upward trend in
average real income.
Growth of the Industrial Base
I. By the 1870s manufacturing was long established in America. But the early factories had been
appendages of the agricultural economy. What they produced—textiles, boots, and shoes, paper and
furniture—were consumer goods, which used familiar materials and mostly replaced things made at
home or by individual artisans.
A. Gradually, however, a different kind of demand developed. They began to produce capital goods,
goods that themselves added to the productive capacity of the economy.
B. Although consumer goods remained important, it was the manufacture of capital goods that
became the core of America’s industrial economy.
From Iron to Steel
I. Central to the development of the capital-goods sector was a new technology for manufacturing steel.
A. In 1856 the British inventor Henry Bessemer designed a furnace—the Bessemer convertor—that
required little labor and refined raw iron into an essentially new product, steel.
B. Others adopted Bessemer’s invention, but it was Andrew Carnegie who demonstrated its
revolutionary importance.
II. In 1872 Carnegie erected a massive steel mill outside Pittsburgh, designed to take maximum advantage
of Bessemer’s process.
A. Named the Edgar Thomson Works, the mill brought together all the stages of production—
smelting, refining, and rolling—into a single coordinated operation.
B. The Edgar Thomson Works became a model for the modern steel industry. Large, integrated steel
plants swiftly replaced the small iron mills that had once dotted western Pennsylvania.
Minerals and Energy
I. The technological breakthrough in steel spurred the intensive exploitation of the country’s material
resources. Major discoveries of iron ore deposits occurred in the 1850s onward.
A. The Mesabi ore, shipped down the Great Lakes, gave the lakeshore sites, such as South Chicago
and Gary Indiana a competitive advantage over Pittsburgh and contributed to the westward shift of
the industry.
II. Coal mining, a minor enterprise before 1850, grew rapidly, first in the anthracite region of eastern PA
and then in the bituminous fields of western PA and Ohio. The production of bituminous coal, the
primary industrial fuel, doubled every decade between 1870 and 1910.
III. As steam engines became the nation’s primary energy source, railroads and factories began to consume
enormous amounts of coal.
A. Industries previously dependent on water power converted rapidly to steam-driven machinery.
B. The steam turbine, introduced in the 1880s, provided still more power and efficiency by utilizing
continuous rotation rather than the back-and-forth motion of conventional engines.
C. With the coupling of the steam turbine to the electric generator, the nation’s energy revolution was
completed, and after 1900 factories began a massive conversion to electric power.
 IV. Thus, in the decades after the Civil War, the modern steel industry was established, the nation’s mineral
resources came under intensive exploitation, and energy was harnessed to the manufacturing system.
The Railroads
I. Before the Civil War, most goods moved quite efficiently by water. But from the first appearance of
primitive locomotives on iron tracks in the 1830s, Americans fell in love with railroads. They were
impatient for the year-round, on-time service that canal barges and riverboats couldn’t provide.
A. By 1860, w/a network of tracks already covering the states east of the MI, the railroad clearly was
on the way to being industrial America’s mode of transportation.
Constructing the Railroads
I. Railroads could be state enterprises, as most of the canals built before the Civil War had been. Or,
alternatively, they could be financed by investors trying to make money.
A. The US left railroad building to private enterprise. Even so, government played a big role. Many
states provided financial aid, mostly by buying railroad bonds but also offering state-owned land
to railroad companies.
B. Land grants were the principal means by which the federal government encouraged interregional
railroads; huge tracts went to the transcontinental railroads b/c of the national interest in tying the
Far West to the rest of the country.
II. The most important boost the government gave the railroads wasn’t money or land but a legal form of
organization—the corporation—that enabled them to raise private capital in prodigious amounts.
A. Investors who bought stock in the railroads and thus became their legal owners employed limited
liability: they risked only the money they had invested and were not personally liable for the
corporation’s debts.
B. A corporation could also borrow money by issuing interest-bearing bonds, which was how the
railroads raised most of the money they needed.
III. The actual responsibility for railroad building was handed over to a construction company, which,
despite the name, was really another part of the elaborate financing system.
A. B/c the promoters of the railroad and the owners of the construction company were one and the
same, the opportunities for plunder were enormous. The most notorious of the construction
companies, the Union Pacific’s Credit Mobilier, siphoned into the pockets of the promoters ½ of
the money it paid out.
IV. Railroad promotion was not for the faint of heart. The most successful were promoters with the best
access to capital—their own or others’.
V. Railroad development in the US was often sordid, fiercely competitive, and subject to boom and bust.
But vast sums of capital were raised and a network was built whose track mileage exceeded that of the
rest of the world combined.
The Railway System
I. The railroads became increasingly efficient. Built by local competing local companies, the early
system was a jumble of discontinuous segments.
A. Each railroad company reserved its track exclusively for its own equipment.
II. During the Civil War years, however, pressure increased for the physical integration of the railroads.
Track was hastily laid through Philadelphia, Richmond, and other cities to speed the shipment of
troops and equipment.
A. The postwar economy, as it grew more complex and interdependent, demanded a better-organized
rail system.
B. Much railroad integration resulted from the expansion of great truck lines connecting different
regions of the country.
C. In 1883 the railroads rebelled against the confusion of local times that made scheduling a
nightmare and, acting on their own, divided the country into 4 standard time zones.
 III. At the same time, railroad technology was advancing.
IV. The railroads brilliantly met the transportation needs of the maturing industrial economy. For investors,
however, the costs of freewheeling competition and unrestrained growth were painfully high.
A. On many routes there were too many railroads, and competitors fought for the available traffic
by cutting rates to the bone.
B. Many railroads were saddled w/the huge debt from bonds issued during the extravagant
construction years. So, when the economy turned bad, there were wholesale bankruptcies. A
third of the industry went into receivership after the Panic of 1893.
V. Out of the rubble, however, came a major railroad reorganization. This was primarily the work of Wall
Street investment banks, whose main role had been to market railroad stocks and bonds.
A. When railroads fell into bankruptcy, the investment bankers stepped in to pick up the pieces. They
persuaded investors to help out by accepting lower interest rates or by putting up more money.
And they eased the competitive pressures on the railroads by consolidating rivals.
The Managerial Revolution
I. Railroads were the most complex form of 19th century enterprise. They had to raise huge amounts of
capital, and their properties stretched over ever-greater distances. Unlike the leisurely traffic on canals,
trains had to be precisely scheduled and closely coordinated.
II. Step by step, the early trunk lines pioneered the main elements of modern business administration.
They separated overall management from day-to-day operations and created departments along
functional lines. Then they carefully defined the lines of communication from the operating divisions
upward to the central office.
III. As industrial enterprises became comparably complex, they confronted the same kind of managerial
problems.
A. Manufacturers benefited from the experience of the railroads.
B. Large companies moved toward a modern management structure and solved the problems of
administering far-flung business enterprises.
Mass Markets and Large-Scale Enterprise
I. The railroads sparked a revolution in marketing as well as management.
A. Until well into the industrial age, all but a few manufacturers operated on a small scale, producing
goods mainly for nearby markets. They left the marketing to wholesale merchants and commission
agents.
II. After the Civil War, the scale of economic activity began to grow dramatically.
III. The key to large-scale enterprise lay in the American market.
A. Immigration and a high birth rate swelled the population b/w 1870 and 1890.
B. People flocked to the cities. The railroads brought these dense consuming markets within the reach
of distant producers.
C. The telegraph created instant communication across the country.
D. The American market was unified; no political frontiers impeded the flow of goods across the
continent. Meanwhile, high tariffs protected American industry from foreign competition.
Gustavus Swift and Vertical Integration
I. Before the Civil War, Cincinnati and Chicago had become great processors of preserved products such
as salt pork and smoked beef. But fresh meat remained the province of local butchers, whose practices
had scarcely changed since the preindustrial era.
II. The coming of the railroads brought big changes to the fresh-meat business. Cattle raising shifted to
the grazing ranges of the Great Plains.
A. w/ the opening of the Union Stock Yards in 1865, Chicago became the main cattle market for the
country. Livestock coming in from the Great Plains by rail was auctioned off at the Chicago
stockyards and then shipped to eastern cities.
 B. Such an arrangement—w/distribution nationalized but processing still local—adequately met the
demand of an exploding urban population indefinitely.
III. Gustavus Swift saw the future differently. He recognized that livestock in cattle cars deteriorated en
route to the east, and that small, local slaughterhouses could not utilize waste byproducts and cut their
labor costs.
A. If dressed beef could be kept fresh in transit, he could concentrate processing in Chicago and reap
the benefits of large-scale operation.
B. After his engineers figured out an effective system of air circulation in 1877, Swift built a fleet of
refrigerator cars and constructed an immense beef-processing plant at the Chicago stockyards.
IV. No refrigerated warehouses existed in the cities to which he shipped chilled beef, so he built his own
network of branch houses. Next, he established a fleet of wagons to distribute his products to retail
butcher shops.
A. Swift constructed additional facilities to process the fertilizer, chemicals, and other usable
byproducts from his slaughtering operations. He also began to handle other perishable
commodities, including dairy products, so that he could fully utilize his refrigerator cars and
branch houses.
V. Step by step, Swift created a new kind of enterprise, the vertically integrated firm—that is, a national
company capable of handling within its own structure all the functions of an industry.
The Birth of Mass Marketing
I. The refrigerator car had made all this possible in the fresh-meat trade. In most other fields no single
invention was so decisive. But other manufacturers did share Swift’s insight that the essential step was
to indentify a mass market and then develop a national enterprise capable of serving it.
A. Through distribution systems, manufacturers provided technical information, credit, and repair
facilities for their products. These companies became vertically integrated and served a national
market.
II. To gain the benefits of mass distribution, retail business went through comparable changes.
III. American society prepared its citizens to be consumers of the standardized goods produced by national
manufacturers and sold by mass marketers. The high rate of geographic mobility broke down local
loyalties. Social class in America was blurred at the edges.
IV. The American consumer’s receptivity to standardized goods should not be exaggerated. Gustavus Swift
encountered great resistance to his Chicago beef.
A. Cheap prices helped, but advertising mattered more. Modern advertising was born in the late 19 th
century, cluttering the urban landscape with billboards and signs.
B. The active molding of demand for brand-name products became a major function of American
business.
The New South
I. Nostalgia for the Old South, with its leisurely plantation ways, became the chief target of the advocates
of southern economic development. The south, they argued, had always honored warriors and orators
at the expense of businessmen.
II. Catching up w/the north was no easy task. The plantation economy of the old south had strongly
impeded industrial development.
A. The slave states had few cities, a primitive distribution system, and not much manufacturing.
B. The modest infrastructure was quickly restored after the Civil War. In 1877, w/both
Reconstruction and economic depression ended, a railroad boom developed.
III. But the South remained overwhelmingly agricultural. Sharecropping, which required a cash crop,
committed the south to cotton despite soil depletion, low productivity, and unprofitable prices.
Southern Industry
 I. From this low agricultural wage sprang the South’s hopes for industrialization. Capital was raised
locally, subscribed in large amounts and small under a drumbeat of boosterism.
A. Mills recruited workers mostly from the surrounding hill farms, where people struggled to make
ends meet. To attract them, mill wages had to be higher than farm earnings, but not much higher.
II. The labor system that evolved likewise reflected southern agrarian society. To begin with, it involved
hiring whole families.
A. The family system of textile labor developed, in which half or more of the mill operatives were
female and the work force was very young.
B. Employers tended to be highly paternalistic, providing company housing and a variety of services.
The mill workers themselves built close-knit communities.
III. Cheap, abundant labor might have been termed the South’s most valuable natural resource. But the
south was also endowed with other natural resources.
A. From its rich soil came tobacco—after cotton, the region’s largest cash crop.
B. Lumbering, by contrast, was largely racially integrated, with a labor force evenly divided b/w
black and white men. The extensive pine forests of the south were rapidly exploited in the post-
Reconstruction years.
Economic Retardation
I. Despite the South’s high hopes, this burst of industrial development did not lift the region out of
poverty. Industrial output increased more rapidly than in the north but not rapidly enough to make
much headway against the dominant agricultural sector.
A. Most of the industries that did develop produced raw materials or engaged in the low-tech
processing of coarse products.
B. Industry by industry, the key economic statistic—the value added by manufacturing—showed the
South consistently lagging behind the north.
II. Southerners tended to blame the north: the south was a “colonial” economy controlled by NY and
Chicago.
A. Much of the capital did come from the north. And the integrating processes of the economy did
subordinate regional to national interests.
B. Nor did northern interests hesitate to use their muscle to maintain the interregional status quo.
III. Yet in the end the South’s economic backwardness was mostly of its own making. The great advantage
of the south—its cheap labor—actually kept it from becoming a more technologically advanced
economy.
A. First, low wages discouraged employers from replacing workers w/machinery. Second, low wages
attracted labor-intensive industry, such as textiles. Third, a cheap labor market inhibited
investment in education b/c of the likelihood that better-educated workers would flee to higher-
wage markets and the investment in them would be lost.
IV. What distinguished the southern labor market was that it was insulated from the rest of the country.
A. Northern workers and immigrants avoided the south b/c the wages were too low and attractive
jobs were too scarce.
B. Few southern workers left for the north b/c the south was a place apart, w/its own social and racial
mores that discouraged all but its most resourceful inhabitants from seeking economic opportunity
elsewhere. The result was that a normal flow of workers back and forth did not occur, and wage
differentials did not narrow.
C. So long as this condition persisted, the south would remain a tributary economy, a supplier on
unequal terms to the advanced industrial heartland of the North.
The World at Work
 I. In a free-enterprise system, profit drives the entrepreneur. But the industrial order is not populated only
by profit-makers. What is done for profit always affects those who work for wages, but never so
profoundly as in the late 19th century.
Labor Recruits
I. Whenever industrialization took hold, it set people in motion. Farm folk migrated to cities, artisans
moved to factories. An industrialized labor force emerged.
II. The demand for labor was enormous. Rural Americans were highly mobile in the late 19thc, and half
of those who moved ended up in cities.
A. The desirable factory jobs required industrial skills not held by rural Americans. Except in the
South, native-born whites no longer wanted factory work.
B. City-bound white Americans found their opportunities in the multiplying white-collar jobs in
offices and retail stores.
III. Modest numbers of blacks began to migrate northward and westward. Most of them settled in cities,
where the men were restricted to casual labor and janitorial work, the women domestic service.
Immigrant Workers
I. The great migration from the Old World started in the 1840s. in the following years, as European
agriculture became increasingly commercialized, expanding peasant populations outstripped the
available land.
A. The peasant economy failed first in Germany and Scandinavia and later across Austria-Hungary,
Russia, Italy, and the Balkans. In the industrial districts of Europe, the forces of economic change
also cut loose many workers in the declining artisan trades and in obsolete occupations such as
hand-look weaving.
II. Ethnic origin largely determined the kind of work that immigrants found in their new country. Skilled
artisans generally sought the types of jobs they had held in the Old World.
III. As technology advanced, American employers had less need for European craft skills, while the
demand for unskilled labor skyrocketed.
A. The sources of immigration began to shift during the 1880s, and by the early 20th century arrivals
from eastern and southern Europe far outstripped immigration from northern Europe.
IV. Not only skill determined where immigrants ended up in American industry. The newcomers, though
generally traveling on their own, moved within well-defined networks, following relatives or villagers
already in America.
A. A high degree of ethnic clustering resulted.
B. Immigrants also had different job preferences.
V. Immigrants entered a modern industrial order, but they saw their surroundings through peasant eyes.
The peasant immigrants, mostly young and male, never intended to stay permanently.
Working Women
I. B/w 1870 and 1900 the number of wage-earning women grew by almost 2/3. Women made up ¼ of the
labor force in 1900 and were essential to America’s economy.
A. Their gender shaped their role as workers. Contemporary beliefs about womanhood determined
which women entered the work force and how they were treated once they became wage earners.
II. Since women were held to be inherently different from men, it followed that they would not be
permitted to do the same work. Nor could they be paid a man’s wage.
III. At the turn of the century women workers fell into 3 categories. 1/3 worked as maids or other types of
domestic servants. Another 1/3 held “female” white collar jobs teaching, nursing, and in sales and
office work. The remaining 1/3 worked in industry, heavily concentrated in the garment trades and
textile mills but present also in many other industries as inspectors, packers, and assemblers.
IV. The sex-typing of work was legitimized by the sentimental view of women as the weaker sex, but
powerful interests also played a role.
 A. Craft workers protected their male domain, and employers profited from cut-rate work.
V. As w/male workers, ethnicity and race also played a big part in the distribution of women’s jobs among
particular groups.
The Family Economy
I. Disapproval of wives working outside the home, although expressed in sentimental and moral terms,
was based on solid necessity for working-class families.
A. From the standpoint of the labor market, the basic economic unit consisted of the individual
employee. For workers, however, the family was the economic unit, and the wife’s contribution
was crucial.
II. Only among highly skilled workers was it possible for the husband to be the only working member of a
family.
III. By the 1890s all the northern industrial states had passed laws prohibiting child labor and regulating
work hours for teenagers. Most of these states also required children under 14 to attend school for a
certain number of weeks each year.
A. Working-class families continued to need more than one income, but this money came
increasingly from the wives.
Autonomous Labor
I. Autonomous laborers abided by the stint, a limit placed by themselves on the amount they would
produce each day. This informal system of limiting output infuriated efficiency-minded engineers.
II. Underlying this sensibility of independence was a keen sense of the craft group, each with its own
history and customs.
III. Women found much of the same kind of social meaning in their jobs. The most important fact about
wage earning women, however, was their youth.
A. The first job freed many of them from family discipline. It was an opportunity to be independent,
to form friendships with other young women, and to have fun.
B. Young male workers underwent a process of job socialization presided over by seasoned, older co-
workers.
IV. To some degree, youthful preoccupations made it easier for working women to overlook or accept the
miserable terms under which many of them labored. But this did not mean that they lacked a sense of
solidarity or self-respect.
A. Rebellious youth culture sometimes united with job grievances to produce astonishing strike
movements in the early 20th century.
V. Rarely, however, did women workers wield the kind of authority that the male craft worker commonly
enjoyed.
A. In many factories, he hired his own helpers, supervised their work, and paid them from his
earnings.
B. In the late 19thc, when the scale of production was expanding, craft workers relieved their
employers of the mounting burden of shop-floor management. Many factory workers deliberately
shifted this responsibility to their employees.
VI. Dispersal of authority was thus characteristic of 19thc industry. The aristocracy of the workers—the
craftsmen, inside contractors, and foremen—had a high degree of autonomy. However, their
subordinates often paid dearly for that independence.
Systems of Control
I. As technology advanced and modern management emerged, controls over the work process intensified.
Despite fierce resistance, workers increasingly lost the proud independence that had characterized
19thc craft work.
II. One major source of the de-skilling process was a new system of production—Henry Ford called it
mass production—that turned out standardized, high-volume products.
Frederick W. Taylor and Scientific Management
I. Employers were attracted to dedicated machinery and conveyor belts b/c these innovations increased
output; the impact on workers was not uppermost in their minds. Employers recognized that
mechanization made it easier to discipline workers, but that was only an incidental benefit of
efficiencies coming from the machinery itself. Gradually, however, the idea took hold that managing
workers might itself be a way to reduce the cost of production.
II. The pioneer in this field was Frederick W. Taylor. To get the maximum work from each individual
worker, Taylor suggested 2 basic reforms. The first would eliminate the brain work from manual labor.
The 2nd reform would deprive workers of the authority they had been exercised on the shop floor.
III. Once managers had the knowledge and power, they would put labor on a “scientific” basis. This meant
subjecting each task to a time and motion study by an engineer who would analyze and time each job
with a stopwatch.
A. A personnel office would hire and train the right person for each job.
B. Taylor claimed that his techniques would guarantee the optimum level of worker efficiency. His
assumption was that only money mattered to workers and that they would automatically respond
to the lure of higher earnings.
IV. Scientific management, in practice, was not a roaring success. Implementing it called for a total
restructuring of factory administration. No company ever adapted to Taylor’s entire system.
A. His method of job analysis, which was widely used, met stubborn resistance from workers.
B. Yet Taylor achieved something of fundamental importance. His teaching spread throughout
American industry and his disciples created the new professions of personnel administration and
industrial psychology, which purported to know how to extract more and better labor from
workers.
V. With each advance, the quest for efficiency cut deeper into worker’s autonomy. Mechanization,
scientific management, and the growing scale of industrial activity diminished workers and cut them
down to fit the production system. Increasing numbers of workers found themselves in an environment
that crushed any sense of mastery or understanding.
The Labor Movement
I. Wherever industrialization has taken hold, workers have organized and responded collectively. In the
US, workers were uncertain about the path they wanted to take. Only in the late 1880s did the
American labor movement settle into a fixed course.
Reformers and Unionists
Labor Reform and the Knights of Labor
I. Founded in 1869 as a secret society of Philadelphia garment cutters, the Knights of Labor gradually
spread to other cities and in 1878 became a national movement. Led by Grand Master Workman
Terence V. Powederly, the Knights boasted an elaborate ritual and ceremony calculated to appeal to the
fraternal spirit of 19thc workers.
A. From the Knights of Labor they got a sense of belonging very much like that offered by the
Masons or the Odd Fellows.
B. The Knights harnessed fraternalism to labor-reform advocacy.
II. Funds would be raised to set up cooperative factories and shops owned and run by the employees. As
these cooperatives flourished and spread, American society would be transformed into a cooperative
commonwealth. But little was actually done.
A. The Knights focused mainly on education.
Trade Unionism
I. The labor reformers expressed the higher aspirations of American workers. Another kind of
organization—the trade union—tended to their day-to-day needs.
A. Unions had long been central in the lives of craft workers.
 B. Apprenticeship rules regulated entry into a trade, and the closed shop—by reserving all jobs for
union members—kept out lower-wage and incompetent workers.
C. Union rules specified the terms of work, sometimes in minute detail. Above all, trade unionism
defended the craft worker’s traditional skills and rights.
II. The trade union also expressed the social identity of a craft. Craft unions also had an uplifting
character.
III. The earliest unions organized local workers in the same craft, which, especially among German
workers, was sometimes limited to a single ethnic group.
A. As expanding markets broke down the insularity of these unions, they began to form national
organizations.
IV. The practical job interests that trade unions espoused might have seemed a far cry from the reform
idealism of the Knights of Labor, but both kinds of motives arose from a single worker’s culture.
A. At the local level, little separated a trade assembly of the Knights from a local trade union; both
engaged in fraternal and job-oriented activities.
V. Trade unions generally barred women, and so did the Knights until 1881. For many women, the
Knights provided a rare chance to take leadership roles.
A. Similarly, the Knights of Labor expanded the opportunity for black workers to join, because of the
need for solidarity and in deference to the Order’s egalitarian principles.
The Triumph of “Pure and Simple” Unionism
I. In the early 1880s the Knights began to rival the trade unions. Boycott campaigns against the products
of “unfair” employers achieved impressive results.
A. With the economy booming and workers in short supply, the Knights began to win strikes.
Workers flooded to the organization and its membership jumped.
II. The rapid growth of the Knights frightened the national trade unions. They tried to keep their local
branches away from the Knights, but without success.
A. The unions then began to insist on a clear separation of roles, with the Knights confined to the
field of labor reform. This was partly a battle over turf, but it also reflected a deepening divergence
of labor philosophies.
III. Samuel Gompers led the ideological assault on the Knights. He created the philosophical system that
would become known as “pure and simple” unionism.
A. His starting point was that grand theories and schemes such as those cited by the Knights should
be avoided. Unions, he believed, should focus on strictly on concrete gains, and they should
organize workers not as an undifferentiated mass of producers, but by craft and occupation.
B. The battleground should be where workers could mobilize their power, which was where they
worked.
C. Gompers developed these views as general propositions, but they were grounded in hard
experience.
IV. The struggle for the 8 hour workday crystallized the tensions between the rival movements. Both of
them favored a shorter workday, but for different reasons.
A. To the Knights, more leisure was desirable because workers had duties to perform as members of
society—a shorter weekday was a precondition for a healthy republican society.
B. Trade unionists took a more hard-boiled view of the 8 hour day: it would spread available jobs
among more workers, protect them against overwork, and give them a better life.
The Haymarket Square Riot
I. The anarchist sponsors of the rally were arrested and charged w/criminal conspiracy, a legal doctrine
so broad that no direct involvement in the bombing was required to justify s verdict of guilt. There was
no evidence linking them to the bombing.
A. 4 men were executed, one committed suicide, and the others received long prison sentences.
 II. Seizing on the anti-Union hysteria set off by the Haymarket affair, employers took the offensive
against the campaign for an 8 hour day. They broke strikes violently, compiled blacklists of strikers,
and forced others to sign yellow-dog contracts guaranteeing that they would not join a union.
III. In December 1886, having failed to persuade the Knights of Labor to desist from union activity, the
national trade unions formed the American Federation of Labor.
A. The AFL embodied the belief of the national unions that they constituted a distinctive movement.
The federation in effect locked into place the trade-union structure as it had evolved by the 1880s.
B. Underlying this structure was the conviction that workers had to take the world as it was, not as
they dreamed it might be. At this point, the American movement’s development definitely
diverged from that of its European counterparts, for fundamental to Gomper’s AFL was rejection
of a separate political party for workers.
IV. The Knights of Labor never recovered from the employer counteroffensive after the Haymarket affair.
Industrial War
I. The trade unions were conservative: they accepted the economic order, and all they wanted was a
larger share for the working people. But it was precisely that claim against business profits that made
American employers so opposed to collective bargaining. In the 1890s they unleashed a fierce
counterattack on the trade-union movement.
The Homestead Strike
I. Skilled workers in Homestead, PA thought themselves safe from that threat. They made good wages
and generally owned their own homes. However, their boss, Andrew Carnegie, felt that collective
bargaining had become too expensive, and was confident that his skilled workers could be replaced by
advanced machinery.
II. After a brief pretense of bargaining, his assistant, Henry Flick, announced that the company would no
longer deal with the Amalgamated Association of Iron and Steel Workers. If the employees wanted to
work, they would have to return on an individual basis.
A. The entire community mobilized in defense of the Union.
III. The defeat at Homestead marked the beginning of the end for trade unionism in the iron and steel
industries. Ended too were any lingering allusions about the sanctity of worker’s communities.
A. The Homestead strike ushered in an era of strife in which working people faced not only the
formidable power of corporate industry but the even more formidable power of their own
government.
The Great Pullman Boycott
I. The fullest demonstration of that hard reality came at a place that seemed an even less likely site for
class warfare.
A. Pullman, IL, was a model factory town. When the Panic of 1893 struck, the Pullman Company cut
wages but didn’t cut the rents for company housing. Pullman responded to the complaints of
works unsympathetically.
II. The strike that ensued would have been no more that a footnote but for the fact that Pullman workers
belonged to the American Railway Union, a rapidly growing industrial union of railroad workers.
III. Railroad officials, already frightened by the growing power of the ARU, saw the Pullman boycott as
their chance to break the union. The strike soon spread across the country and threatened to disrupt the
entire economy.
IV. The railroad managers maneuvered to bring the federal government into the dispute. Their hook was
US mail cars, which they attached to every train using Pullman cars.
A. When federal troops failed to get the trains running again, Olney obtained court injunctions
prohibiting ARU leaders from conducting the strike.
American Radicalism in the Making
Eugene Debs and American Socialism
 I. German refugees had brought the ideas of Karl Marx to America after the 1948 failed revolutions in
Europe. Marx’s prescription for revolution through class struggle inspired the most radical movements
in the industrial world.
A. Though little noticed in most parts of American society, Marxist socialism struck deep roots in the
growing American communities of Chicago and NY.
B. In 1877 the Socialist Labor Party was formed, and from that time on Marxist socialism maintained
a continuing presence in American politics.
II. When Eugene Debs appeared in their midst in 1897, the socialists were in a state of crisis. Although
the economic hardship of the Depression had just ended, they had failed to make much headway. Many
blamed the party head, Daniel De Leon—an ideological purist not greatly interested in attracting
voters.
A. Debs joined the revolt against De Leon and helped found the rival Socialist Party of America in
1901, with the aim of building a broad-based political movement.
III. Debs attracted a devoted national following. He talked socialism in an American idiom, making
Marxism understandable and persuasive to many Americans.
A. Under him the new party began to break down ethnic barriers and attract American-born voters.
B. The party was also able to attract women.
Western Radicalism
I. After many years of mostly friendly labor relations, the situation in the western mining camps turned
ugly during the 1890s. Powerful new cooperations were taking over, and they wanted to be rid of
miners’ union, the Western Federation of Miners.
A. Silver and copper prices began to drop in the early 1890s, brining pressure to cut miners’ wages.
When strikes resulted, they took a particularly violent turn.
II. In these western strikes, government intervention was naked and unrestrained. This was partly in
response to the level of violence, but also stemmed from the character of politics in the lightly settled
western states.
III. In 1905 the Western Federation of Miners led the way in creating a new radical labor movement, the
Industrial Workers of the World.
A. Although the IWW initially had ties to the Socialist Party, it soon repudiated political action and
settled its own radical course.
B. Members of the IWW supported Marxist class struggle—but strictly in the industrial field. By
action at the point of production and by an unending struggle against employers—ultimately by
means of a general strike—they believed that the workers themselves would bring about a
revolution.
C. A workers’ society would emerge, run directly by the workers through their industrial unions.