Hello students, this is Professor Lerma here to give you a lecture on industrial America. And to get us started, I want us to take a look at this political cartoon from 1889 titled The Bosses of the Senate. And I want you to pause for a moment, so feel free to pause the video and consider these items as you look at this political cartoon. What is the major argument or point being made by this cartoon.
Who is the intended audience? What context do you need to know in order to understand what's going on in this cartoon? What conclusions can you draw from this cartoon?
And how does this cartoon relate to you? Events going on today is there a common element or theme. That may be used in society today that relates to this political cartoon. So, just kind of think about that for a moment, and then we'll go ahead and get started. So, the 1st thing that I want to do is introduced to you are essential questions.
These 3 questions. are what you should be able to answer by the end of the lecture. What were the causes and effects of industrialization during the Gilded Age? Who were the theories or how were theories such as social Darwinism used to justify the growing maldistribution of wealth in the Gilded Age?
What led to the rise of organized labor movement and what were their goals? So you should be able to answer those three by the end of the lecture. Jumping right into it, I want to first talk about the rise of American industry. By 1900, the United States was the leading industrial power in the world. The reasons for this are listed here.
First, the United States had an abundance of raw materials, including coal, iron ore, copper, lead, timber, and oil. Secondly, we had the largest labor supply. A lot of this was due to immigration that was happening at this time and immigration policies that were encouraging people to come to the United States. Three, we had expanded labor markets due to population booms and transportation networks, especially railroads.
Fourth, we had capital, i.e. we had money available to us from both the government as well as European investors. Fifth, we had technological advancement. From 1860 to 1890, 440 patents were submitted. We also had an efficient production as a result of the new technology. Sixth, we had a pro-business government, a government that supported business through tariffs, protective tariffs, through protecting private property, subsidizing railroads.
There were very few regulations put on businesses at this time and taxes were kept very low on businesses. And lastly, we had the rise of an entrepreneurial class and a management class. In the late 1800s, the government is going to subsidize the building of many new universities and for the first time people are going to college to study business. to become managers, to learn business practices. Instead of just going for the liberal arts and studying things like philosophy and history, they are now going and they are learning skills that they can then transfer into the workplace.
So let's get a little bit into one of the specifics, which is railroads, which really does make America an industrial nation. Railroads expanded from 35,000 miles of track in 1865 to 193,000 miles in 1900. The effects of this expansion were that we had more national markets, we had an encouragement for mass production because now we could move those products, we had mass consumption, and businesses could specialize because they could then move products. and get resources that they need to build those products from all over the nation.
In 1883, the American Railroad Association created time zones. So if you ever wonder why we're in the central time zone and why we have the Pacific time zone, it is because of railroads. And investment, particularly government investment in railroad companies, led to the modern stockholder corporation and high finance. So if you want to know how stockholders really started, it is because of the railroads. Now there were a few major lines.
The major routes between The large cities in the east were led by Vanderbilt. You can see in that picture on the left. He controlled the New York Central Railroad in 1867 that connected New York City to Chicago.
We also had the very famous B&O Railroad and the Pennsylvania Railroad. For anyone here who is a monopoly buff, those railroads should sound very familiar. Those were all part of the eastern trunk lines.
And in the west, we are going to see less railroads, but a lot more government involvement, particularly through federal land grants. They gave away 170 million acres to around 80 railroad companies, and the government is going to ask legislation to create the transcontinental railroad in 1862. And it was built from 1862 until 1869 when it was completed. There were two companies, one that started in Omaha, and that was the Union Pacific Railroad that went west. And you had the Central Pacific Railroad that started in Sacramento using about 6,000 Chinese employees that went east and went through the mountain regions. And they met up Cemetery Point.
in Utah in 1869. The funny story is they actually passed each other and the government said, no, you're not going to keep going. You guys have to backtrack and meet up. This is supposed to be a transcontinental across the continent, not multiple rail lines. As a result, over time, railroads formed what we call pools and they used rate fixing schemes to build their wealth.
and manage bankruptcy and eventually they consolidated under J.P. Morgan's regional monopolies. By 1900, there were seven giant companies that controlled two-thirds of all the railroads in the United States.
And of course, this led to criticism and we're going to get new legislation like the Interstate Commerce Act passed in 1866, which is still, the ICC is still in existence today. to monitor and regulate these types of pools and rate fixing. All right, in the post-Civil War, what we have is a new industrial or the second industrial revolution and new industries like steel, petroleum, i.e. oil, electricity, and industrial machinery are going to form.
And I want to talk to you about two of them, the steel industry and the oil industry. Now, the steel industry really came to light under Andrew Carnegie. You can see him in the top right-hand corner. He is going to bring over the Bessemer-Kelly process from England. In fact, he steals it.
He sends his agents over to secretly draw and find the technology. steal the, what's the word I'm looking for, the maps of the technology, the schemes, right? And then they brought them back to the United States, and then he was able to use that technology. That's called corporate espionage.
It's highly illegal, but he did it and created his own steel process. So they're going to turn iron ore into steel using this Bessemer process. By 1900, he controls three-fifths of all the steel that is being made in the United States, employing 20,000 workers, and produces more steel at this time than Great Britain, who previously had been the steel mogul of the world.
The following year, in 1901, Carnegie sold his steel empire to J.P. Morgan for over $400 million. dollars.
Just to let you know, $400 million today is about $14 trillion is what he sold it for. And Morgan will rename it the U.S. Steel Corporation, and it becomes the first billion-dollar company in the United States.
Now, another industry is the oil industry. And the thing about it is that oil at this time is refined for kerosene use in gas lights. It's not for automobile use.
It's refined to become kerosene. The first— oil well drill was in Pennsylvania in 1859 by Edwin Drake. But shortly thereafter, we see a new star rise, and that's John D. Rockefeller. And he creates the Standard Oil Company.
And he is going to use what we call horizontal integration, meaning that he is going to buy out or force out all of his competition by 1881. So nobody could get their oil refined into the kerosene. Without going through 1 of his factories, Carnegie is going to use vertical integration, meaning that he is going to own all the steps that it takes to produce the seal the steel. So he owns the land, the mines, the railroads, the steel factories, every step that it takes from being just a raw material to a final product.
So, going up, whereas. Rockefeller owns one horizontally. All this is going to, of course, lead to the building up of companies into what we call trusts.
And trusts are just corporations that run a variety of companies, including their competitors, under a board of trustees. Some of the companies today that are being looked at as... Trusts and being regulated are things like Google, Apple, Amazon, because they own multiple companies.
And we have legislation now that targets that. And that first legislation came out in 1890. It was the Sherman Antitrust Act that prohibited, quote, contract combination in the form of trust or otherwise or conspiracy and restraint of trade. or commerce.
So what I mean by that is you couldn't form trust and you couldn't conspire to restrain trade or commerce. But because that language was so vague, it was often not used for businesses. It was used against workers who were trying to strike because it was seen that they were restraining trade or commerce by not working.
There was a famous court case in 1895, the United States versus EC Knight Company, that they clarified the Sherman Act. And they said that it only applied to commerce and not to manufacturing. So only if you were planning on selling the product across lines, state lines, and not so much on whether you were going to make it. You can, it didn't apply to companies.
as they made products, which further weakened the law. Now, all of this is happening amidst what we call a period of laissez-faire capitalism. And laissez-faire is just the weak enforcement of government intervention. Most of these companies opposed government regulation, except They wanted government regulation in the form of tariffs, and they wanted government regulation in the form of subsidies, money given to them to continue to grow their businesses. So they definitely did want some government involvement.
They wanted the money, and they wanted them to protect them from foreign businesses. But otherwise, they did not want their involvement. And a lot of this is built out of this idea called social Darwinism. Now we've all heard of Darwinism.
It is the origin of the species, the survival of the fittest on how biological specimens basically evolve over time. Well Herbert Spencer, who was an English writer and philosopher, he wrote about the survival of the fittest as it applied to wealth and business, coining the term social Darwinism. And basically he said, businesses that are strong survive, businesses that are weak die off.
And a man named William Graham Sumner, who was a Yale professor, wrote a book called Folkways. And in it, he argues that helping the poor is against the laws of nature, that you're helping the weak to continue on and not naturally letting them die off. And so this became kind of a mantra among businesses at the time.
Now, in addition to all of this, we have new philosophies about wealth and the wealthy. Much of it is under the idea of what we call the. gospel and gospel is the word of right so the word of wealth and it was first formed by Andrew Carnegie when he talks about the three stages of life he said that people should be educated and from that education will come wealth and once they have their wealth it is then their duty to get involved in philanthropy which is donation you And of that, well, 2 things like libraries, universities and cultural outlets.
So, in a way, they're talking about businesses being the ones that are going to build up communities through philanthropy. And this is all well, and good, and it will kind of spur into another idea, which we call welfare capitalism. But all of this is going to come crumbling down when these companies.
across the United States fall apart during the late 20s and 1930s during the Great Depression. And that's when we will kind of shift away from this ideology. In addition to Carnegie, we have Rockefeller, who was a pious man who believed in a Puritan work ethic.
And he said, God gave me my riches and I am dutiful to God by helping out communities. And this is going to be spread even further by people like Russell Conwell, who was not a businessman. He was actually a Baptist minister who is going to, for the first time, really preach that it is a Christian duty to be wealthy, to be rich, which moves very far away from a lot of previous biblical teachings that, blessed are you who are poor, for yours is the kingdom of God.
God. So he's moving away from older biblical teachings and moving more into this idea that wealth is good, wealth is American, and that's going to develop heavily during this time period of the late 19th and early 20th century. So as I said, a lot of the reason that we have growth in industrial America is because of the technology and the innovations. So I want to talk to you. for a second about some of these technologies.
You know, we have the expansion of the telegraph, particularly Cyrus Fields'transatlantic cable in 1866 that connected the United States to Britain. By 1900, we have cable lines that are going across the Atlantic Ocean to, and the Pacific Ocean, to all the continents. So now communication is happening faster, which means business can happen faster.
In 1876, we have the first typewriter. In 1876, same year, we have Alexander Graham Bell's first telephone. And just think of how quick you can now communicate with other businesses.
So instead of having to send a runner to go and send a message, now you can just pick up the telephone and you see the telephone, first telephones in the bottom left-hand corner. In 1879... we have the first flash register.
That is the picture on the bottom right. I know it looks like a clock, but it's a cash register. Don't ask me how it works.
I have no idea. In 1887 and 88, we have the first calculators and adding machines. So now we can add sums very quickly.
We have our first camera, the Kodak camera in 1888. So now we can have pictures of products. We have our first fountain pen, the Waterman fountain pen in 1884. So now we're no longer dipping our quills or our pens in ink. Now it's within one unit so we can write faster. We have in 1876 the phonograph that's created by Thomas Edison.
He also improves the light bulb and creates the first mimograph machine. or being able to copy sound, as well as the first motion picture camera. And we always talk about Edison, but we forget about George Westinghouse, because it's great to have an electric light bulb and to understand electricity, but if that electricity can't be harnessed correctly, what use is it?
What would happen if you turned on your hair dryer and you got 10,000 volts of electricity? You know, that hair dryer would blow up. We need to be able to conform and transform that electricity into units that can be used.
And that's what we have the first transformer for high voltage AC current, which made possible the lighting of cities, streetcars, and subways by George Westinghouse. Now, I would also like to note that this is when we're seeing new marketing of goods. We have our first department stores, Macy's in New York and Marshall Fields in Chicago during this late 19th century period.
We have our first chain stores, Woolworth's 5 and 10 cent store. We also have our first mail order catalogs, Sears and Roadbooks and Montgomery Ward. Those catalogs were kind of like the predecessors to Amazon today.
So let's talk about the effects because the effects of industrialization really led to what we would call a maldistribution of wealth, meaning that we had 10% of the richest people in the United States owning 90% of the wealth. A lot of this is spurred on by people like Horatio Alders, who you can see in the bottom left, he's writing these books about the self made man. and the theme of rags to riches. And this is all a myth.
This is all a myth because the reality is the wealthy were almost exclusively white Protestant males who had been born in upper-class families with fathers or grandfathers in business or banking. So the average American, the average immigrant. definitely the average woman.
We're not these rags to riches stories. That just wasn't happening. So we don't see people getting rich, but we do see an expanding middle class. We start to see white collar managerial clerks and accountants and sales assistants, all of which are earning wages, which meant that they were making money that allowed them to have more leisure time and purchasing power to buy these goods that are being created by these manufacturers.
So by 1900, two-thirds of Americans worked for wages, but these wages were very low, and because of that, you didn't usually have a single income house unless you were management or above, which meant that women and children were working in larger numbers. By 1890, 11 million out of the 12.5 million families made less than $380 per year, which if you're wondering what that equates to, it's about $13,000 a year today. And just to make a comparison, today, an individual who makes less than $15,000 is considered in the extreme portion of poverty in the United States. You're very much under that poverty line. And for a family of four, that poverty line is about 30,000, just under 30,000.
So these families were living in abject poverty for the most part. Again, that's 11 million out of the 12.5 million families were living in poverty. And for women, one in five or 20% of women worked out of the home by 1900, usually in textile, garment, and food processing industries.
Eventually, they work their way into becoming secretaries, bookmakers, typists, and phone operators in the 20th century. So as a result, we have people who are working very long hours for very low wages in dangerous conditions. And that is, of course, going to lead to labor discontent.
You have discontent, upset labor, what are they going to do? They're going to try and change that. And that leads to the rise of organized labor. So, unions are going to use political action and confrontation to try and get some rights at the end of the 19th century and the beginning of the 20th century.
They use strikes, picketing, boycotts, and even just working slow. to bring the business owners to the table and try collective bargaining. And if you don't know what collective bargaining is, it's where you have representatives that go and meet with the owners and they negotiate contracts that then apply to all the workers. Some of the labor unions I want to highlight are the National Labor Union that was founded in 1866. It was to organize all workers. They had about 640,000 members by 1868, so just two years later.
They, however, will lose a lot of support after the Panic of 1873 and failed strikes of 1877. One of the biggest labor unions is going to be the Knights of Labor that was founded in 1869. Their goals were for worker cooperatives. They wanted to end child labor, and they wanted to have antitrust and anti-monopoly legislation. They peak in 1866 at about 730,000 members.
But that year, they are blamed for the Haymarket Riot, and afterwards, they lose a lot of support. And you can see their emblem, which is... that star in the top left-hand corner. Another union is the AFL or the American Federation of Labor. They are focusing on craftsmen, and they are found in 1886 as a craft union by Samuel Gompers.
It's the gentleman on the bottom left. And they focus on wages and working conditions. Also, they were a big advocate of that collective bargain. They were the largest union with about a million members by 1901. So what did these laborers do?
Well, like I said, they used strikes and picketing and boycotts, but the businesses definitely reacted and they had their own union busting tactics, including at scabs, and a scab is a replacement worker, lockouts, not letting people into the buildings, blacklists, putting people's name on lists so that they couldn't get jobs, using military force like state militias or private agencies like the Pinkertons, and finally going to the courts and having the courts give injunctions preventing people from striking. A couple of very famous union actions were the Great Railroad Strike of 1877. B&O Railroad had cut wages, and so a strike spread out to 11 states with about 500,000 workers partaking. President Hayes at the time used federal troops to crush the strike, and at least 100 people were killed. In 1886, there was a protest in Chicago by the McCormick harvest workers. The police attempted to break up this protest and a bomb went off that killed seven police officers.
So there was a big investigation. They found seven people who they labeled anarchists and those seven were tried, found guilty and sentenced to death. The Knights of Labor got the blame though because of their promotion and participation. I highly encourage if you've ever seen the show Drunk History, there's a great episode about the Haymarket riots, one of my favorites. I highly encourage you go watch it.
Another famous strike was the Pullman Strike. The Pullman Company was a railroad company. They did specialized luxury sleeper cars where people could sleep on long train rides.
And there was the American Railway Union that was led by this gentleman. uh eugene debs and um he led the strike in a town near chicago president cleveland at the time in 1894 sent the army and enforced the federal court injunction and so he was arrested um there was a case called henry debs that went to the supreme court about um this court injunction and the Supreme Court sided with the businesses allowing the injunction against strikes to continue. So as a result, Debs, who was so disenchanted by this, he is going to found the first American Socialist Party in 1900. But because of the fact that the courts and the government pretty much universally sided with the business owners, by 1900, only about 3% of workers were union members.
So what we can conclude, and this comes from your text, the Yob, is I think that industrial capitalism brought wealth, but it also brought poverty. It created owners and investors, and it created... employees. And I want you to understand that this really wasn't the way that social units had been in place prior to this.
We didn't have owners and employees. That was a very new social development of the 18th and 19th centuries in both Europe and the United States. Before that, You know, you had families that were units that worked individually, even if they were working within their homes to as part of the industrial unit to create items, piecemeal items. Now, all of a sudden people are outside of the home.
They're working outside the home. They're not watching their children grow up. So this is going to lead to the need for schools and other social institutions.
But whether they were winners or they were losers in this new economy. All Americans had to reckon with this new industrialized world, the industrialized world that you and I continue to live in. So with that, I'll end this lecture.
I hope you guys have a great day and I'll see you next time.