Chapter 17 Notes

I Sources of Industrial Growth

a) Industrial Technologies

Revolutionizing of iron and steel production perhaps the most important

technological development

Henry Bessemer & William Kelly: Developed, almost simultaneously

a process for converting iron into the much more durable and versatile

steel

Process consisted of blowing air through molten iron to burn out

impurities (Bessemer Process)

Steel industry emerged in PA and OH while iron industry existed

New transportation systems emerged to serve the steel industry

Freighters for Great Lakes and railroads used steel to grow and

transport it

Oil industry also emerged because of lubrication needs

b) The Airplane and Automobile

Development of automobile dependent upon on growth of two technologies:

Gasoline (petrol) — Result of an extraction process developed in late

19th century.

1870’s European development of “internal combustion engine”

By 1910 the car industry played a major role in the economy

First gas-car built in the Duryea brothers in 1903 and Henry Ford began

production

Search for flight by Wright Brothers led to the famous 1903 flight

US Government created National Advisory Committee on Aeronautics

in 1915 to match European research

c) Research and Development

New industrial technologies led companies to sponsor own research

General Electric established in 1900 and marked decentralized of

government-sponsored research

Connection began between University research & the needs of the

industrial economy – partnership between academic & commercial

d) The Science of Production

Principles of “scientific management” began to be employed

Frederick Taylor- Argued that employers should subdivide tasks to

decrease the need for highly skilled workers & increase efficiency by

doing simple tasks with machines (“Taylorism”)

Emphasis on industrial research led to corporate labs (i.e. Edison’s Menlo

Park)

Most important change: Mass production and the assembly line

First used by Henry Ford in automobile plant in 1914

Cut production time and prices

e) Railroad Expansion

Industrial development because of railroad expansion

Gave industrialists access to new markets and raw materials

Spent large sums on construction and equipment

Achievements and excesses by Cornelius Vanderbilt, James J. Hill, Collis P.

Huntington, and others (tycoons) became symbols to much of nation of great

economic power concentrated in individual hands.

f) The Corporation

Emerged after the Civil war

Businesses sold stock which was appealing because of “limited liability”

Lost only amount of investment and was not liable for debts

Began in the railroad industry but spread to others (steel industry)

Organizations development new management techniques

Division of responsibilities, control hierarchy, cost-accounting

procedures, and “middle manager” between owners and labor

introduced

g) Consolidating Corporate America

Occurred through “horizontal integration”

Forming competing firms into a single corporation

John D. Rockfeller’s Standard Oil – most famous corporation empire

Consolidation used to cope with “cutthroat competition”

h) The Trust and Holding Company

Failure of pools led to less cooperation and more centralized control

“trust” emerged

JF 1889 // States changed laws to allow companies to buy other companies,

trust unnecessary

“holding companies” emerged as corporate body to buy stock and

establish formal ownership or corporations in trust

End of 1th century // 1% of corps controlled 33% of manufacturing

Power in the hands of a few men

Ex. JP Morgan in NY

II Capitalism and Its Critics

a) The “Self-Made Man”

Defenders argued capitalist economy expanding opportunities for individual

advancement and some tycoons were self-made men

Most came to be wealthy as result of ruthlessness, arrogance, and

corruption

Many industrialists were entrepreneurs trying to carve role for business in an

unstable economy and highly competitive industries

b) Survival of the Fittest

Assumptions that wealth earned through hard work and that those who failed

earned failure became the basis of Social Darwinism

Survival of the fittest

Only the best individuals survived and flourished in the marketplace

Herbert Spencer – championed theory in England

William Graham Sumner – promoted ideas of absolute freedom to

struggle, compete, succeed, and fail

Appealed to business because it justified their tactics – efforts to raise wages

by labor through unions or regulation would fail

Tycoons themselves tried to eliminate competition through monopolies

c) The Gospel of Wealth

1901 // Gospel of Wealth by Andrew Carnegie

Advocated idea that with great wealth came great responsibility to use

riches to advance social progress

Horatio Alger promoted stories of individual success

Anybody could become rich through hard work, perseverance, and

luck

d) Alternative Visions

Groups emerged challenging corporate and capitalistic ethos

1883 // Dynamic Sociology by Lester Ward

Natural selection didn’t shape society

Active government in positive planning was best for society

1870’s // Socialist Labor Party founded by Daniel De Leon

1879 // Progress and Poverty by Henry George

Both argued poverty due to wealth of monopolists and their high land values

1888 // Looking Backward by Edward Ballemy spoke of “fraternal

cooperation” and of future society where the government distributed wealth

equally

e) The Problems of Monopoly

Few opposed capitalism itself but movement grew in opposition to

monopolies and economic concentrations

Creating artificially high prices, unstable economy

Economy fluctuated erratically with severe recessions creating havoc every 5-

6 years

Resentment increased because of new class of wealthy people living opulent

lifestyles

Flagrant wealth in face of 4/5 who lived in modestly

Standard of living was rising for everyone and the gap between rich and poor

was growing

III Industrial Workers in the New Economy

a) The Immigrant work Force

Late 19th century // Industrial work force grew because of migration to

industrial cities from both rural areas and foreign immigrantion

Most immigrants from England, Ireland, North Europe, and by the end

had shifted towards Southern and Eastern Europeans

Immigrants came to escape poverty, lured by opportunity and advertisements

by companies

Ethnics tensions increased because of job displacement and

competition

b) Wages and Working Conditions

Average standard of living rose but wages were low

Little job security because of the boom-bust cycle

Monotonous tasks that required little skill

Long hours in unsafe conditions

Loss of control over work conditions seen a worst part of factory labor

Corporate efficiency and managers centralized workplace

c) Women and Children at Work

Decreasing need for skilled labor led to increase use of women and children

Paid less than men

Most women were young immigrants

Concentrated in textile industry and domestic service

Children employed in agriculture and factories with little regulation

DANGEROUS!!!

d) The Struggle to Unionize

Labor attempted to fight conditions by creating large unions but was largely

unsuccessful. First attempt to federate separate unions was in 1866 with

National Labor Union

e) The Great Railroad Strike

1877 // Strike began after 10% wage cut was announced

Strikers disrupted rail service, state militia mobilized and in July,

President Hayes ordered federal troops to go

Strike collapsed eventually after many deaths

Showed disputes could no longer be localized in the national economy

f) The Knights of Labor

1869 // Noble Order of the Knights of Labor made an effort under Uriah

Stephens but lacked strong central direction but local “assemblies”

championed the 8-hour workday, end to child labor, but also interested in a

long-range reform of the economy

Women were allowed to join

g) The AFL

1880’s // American Federation of Labor created

Became most important and enduring national labor group

Collection of autonomous craft unions of skilled workers

Led by Samuel Gompers whose goal was to secure a greater share of

capitalism’s material rewards to workers

May 1, 1886 // National strike in Chicago but violence broke out between

strikers and police after deaths in Haymarket Square bombing

“anarchism” became widely feared by middle class & they associated

it with radical labor

h) The Homestead Strike

Amalgamated Associated of Iron and steel Workers – affiliated with the

American Federation of Labor and was the most powerful trade union in the

country

Members were skilled workers and in great demand by employers

Employers sometimes resented the substantial control over working

conditions that skilled laborers had

Mid 1880’s // Steel industry introduced new production methods and new

patterns of organization

Carnegie System – Union had foothold in only one of the corporation’s three

major factories (Homestead plant near Pittsburgh)

Henry Clay Frick – Carnegie’s chief lieutenant. Both began to cut wages at

Homestead plant in Pittsburgh to break the union

1892 // Strike called after company stopped consulting the Amalgamated,

Pinkerton Detective Agency security guards brought in as strikebreakers

1900 // Amalgamated had lost nearly every major steel plant

i) The Pullman Strike

1894 // Strike at Pullman Palace Car Company after Pull cut wages

Workers began to strike with the American Railway Union of Eugene

V. Debs

General Manager’s Association asked pres. Grover Cleveland to send in

federal troops when thousands of railway workers struck and transportation

nationwide froze

Pres. Sent 2,000 troops to protect strikebreakers

j) Sources of Labor Weakness

Late 19th century // Labor suffered many losses, wages rose slowly, and

whatever progress that was made was not enforced

Reasons for failure:

Leading labor organizations represented only small percentage of

industrial work force

Ethnic tensions; many immigrant workers planned to stay in country

for short while and moved very often

Believed not part of permanent working class – couldn’t match efforts

of powerful and wealthy corporations