Ch.

17 Industrial Supremacy 1

Sources of Industrial Growth

Lots of raw materials, huge labor supply, increase in technological innovation,
entrepreneurs, & an eager fed gov helped the growth of the American industry
Industrial Technologies
Revolutionizing of iron and steel production was a HUGE tech advancement
Henry Bessemer (Englishmen) & William Kelly (American) developed at the
same time a process to convert iron into steel
The process consisted of blowing air through molten iron to burn out
impurities
Took the name of the Bessemer Process & it relied heavily on Robert
Mushets ingredients that were needed to convert iron to steel
1868 Abram S. Hewitt introduced another way to make steel
Steel was used in locomotives, steel rails, and girders for the construction of
tall buildings
Steel industry emerged in W Pennsylvania and E Ohio (bc iron was found
there in abundance and there was already a flourishing iron industry)
New forms of steel created a demand for new fuel, spec. anthracite coal,
which was found in Pennsylvania
Pittsburgh became steel center of the world but this soon spread
Steel industry needed to lubricate their machines and called for oil
Petroleum reserves in W Pennsylvania were known & in the 1850s George
Bissel showed that it could be burned in lamps & yield paraffin, naphtha, and
lubricating oi
1859 Edwin L. Drake established the 1st oil well near Titusville, PA
The Airplane and the Automobile
Internal Combustion Engines (ICE) used the expanding power of burning gas
to drive pistons
Nicolaus August Otto (German) created a gas-powered engine in the mid
1860s
Gottfried Daimler (Ottos former employee) perfected an engine that could
be used in automobiles
Charles and Frank Duryea built the first gasoline-driven motor vehicle in
America in 1893
Henry Ford produced the 1st of his brand in 1896
1910 automobiles were a major part of the economy.
Only 4 automobiles on highways in 1895 but in 1917 there were nearly 5
million
Human flight was a dream until the early 19th century
Engineers, scientists, and tinkerers in the US & Europe began to
experiment w/ a wide range of aeronautic devices
Wilbur and Orville Write from Ohio began to construct a glider that could be
propelled through the air w/ an ICE and in 1903 near Kitty Hawk, NC their
plane took off on its own and traveled 120 ft in 12 seconds before landing
1904 they were able to fly over 23 miles

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Ch. 17 Industrial Supremacy 2

Aviation tech grew slowly in the USA but in France it took more progress bc of
funding & research
National Advisory Committee on Aeronautics formed in 1915 in the USA & in
1920 Charles Lindbergh took a solo flight from NY to Paris
Research and Development (R&D)
Rapid dev of new industrial tech had business ppl sponsoring their own
research to keep on top
General Electric, scared of tech competition, created 1 st corporate laboratory
in 1900 & by 1913, Bell Telephone, Du Pont, Eastman Kodak, etc had lots of $
going to research
Gov started to support research less so corporations were able to attract
good researchers who used to work for the gov
Engineers became tied w/ R&D for corporations & worked hard to be a
practical use of the new economy BUT scientists disagreed w/ it bc it was
commercialized
Some still joined engineers in their R&D labs who also did basic research
over time
Late 19th century and early 20th century dev growing connections w/
university based research & the needs of the industrial economy.
Corporations soon started funding university labs & a relationship grew for
the 21st century
The Science of Production
Scientific Management aka Taylorism were made after Frederick Winslow
Taylor
Urged employers to reorganize production process by subdividing tasks to
speed up production & make workers interchangeable
Reduces the need for higher skilled employees
Makes human labor compatible w/ the demands of the machine age & also
increases the employers control of the workplace
Moving Assembly Line was introduced by Henry Ford in his automobile plants
in 1914.
Assembling a chassis went from 12.5-1.5 hrs & enabled Ford to raise
wages & reduce hours of workers while cutting the base price of his Model
T
Railroad Expansion
RR are nations main way of transportation
Helped determine the path agricultural and industrial economies dev.
Everything adjusted to how RRs were built
When they ran through low pop. areas, new farms & economic activity
sprung up; when they reached forests, lumberjacks cut them down & took
the wood to cities to sale; when they reached the great plains of the W
they brought buffalo hunters; and it made Chicago the slaughterhouse of
the nation

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Ch. 17 Industrial Supremacy 3

RR altered time. Until 1880s there was no way standard version of time and
this created huge troubles for RRs bc they were always running late and the
schedules were always a hassle
On Nov 18, 1883 the RR companies created 4 time zones across the
continent, each an hour apart from the closest neighbor and in 1918 the fed
gov made it standard for all purposes
Many RR combinations were ran by individuals (Cornelius Vanderbilt, James J.
Hill, etc) BUT it helped more in becoming the *first modern corporation*
The Corporation
Modern corp emerged after the civil war when RR magnates realized no
single person/group of partners could finance their great ventures on their
own
In 1830s and 1840s business organizations raised $ by selling stock to the
public
Appealing bc investors had limited liability and they only risked the
amount of their og investments
Allowed entrepreneurs to gain lots of $ before going on w/ big projects
Andrew Carnegie (STEEL) cut costs & prices by striking deals w/ RRs and then
buying out rivals who couldnt compete w/ him
Him and Henry Clay Frick bought up coal mines & leased part of them,
operated a fleet of ore ships on the Great Lakes, & acquired railroads
Financed himself w/ profits AND sale of stock
1901 Carnegie sold out for $450 million to J. Pierpont Morgan who then
merged all Carnegie interests w/ others to create the United States Steel
Corporation which controlled 2/3 of nations steel production
Gustavas Swift dev relatively small meatpacking company into a big national
corp through selling to the military in the Civil War
Isaac Singer patented a sewing machine in 1851 and created I.M. Singer and
Company, one of the 1st modern manufacturing corps
New Managerial Techniques relied on division of responsibilities, hierarchy of
control, modern cost-accounting procedures & the middle manager who
formed a layer of command between workers and owners.
Consolidating Corporate America
Horizontal Integration is the combining of a number of firms engaged in the
same enterprise into a single corporation
Vertical Integration is the taking over of all the different businesses on which
a company relied for its primary function
John D. Rockefellers Standard Oil used both horizontal & vertical integration
Launched a refining company in Cleveland and then tried to eliminate all
competition. He allied with other wealthy capitalists & bought out
competing refineries
In 1870 he formed the Standard Oil Company of Ohio and within a few
years it grew insanely. He built his own barrel factories, terminal
warehouses, and pipelines

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Ch. 17 Industrial Supremacy 4

1880s Rockefeller established such dominance within the petroleum

industry that he was a monopoly. He controlled 90% of US access to
refined oil in USA
Cartels are informal agreements among various companies to stabilize rates
and divide markets (sourced from pool arrangements)
Total failures bc if a few didnt wanna cooperate, the pool collapsed
The Trust and the Holding Company
A trust became a term for any great economic combination but was also a
kind of organization. Under a trust agreement, stockholders in individual
corps transferred their stocks to small groups of trustees in exchange for
shares in the trust itself
Had no direct control over decisions of trustees
Pioneered by Standard Oil in early 1880s and perfected by J. P. Morgan
1889 New Jersey helped produce a 3rd form of consolidation by changing laws
to let companies buy up other companies
A holding company is 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
Put power in the hands of few men who changed the economic game
entirely

Capitalism and its Critics

Farmers saw a threat to the republican society where wealth & power were
widley distributed. Middle class ppl saw that a lot of corruption was coming into
play
The Self-Made Man
Modern capitalism relies on individualism. It is meant to expand individual
advancement for EVERY individual.
Partially true. By 1892 there were >4000 millionares in America, most
claiming to me self-made men.
EX: Andrew Carnegie working @ Pittsburgh cotton mill, John D.
Rockefeller being a clerk @ Cleveland commission house, E. H.
Harriman began as a brokers office boy
Rise to power was a result of ruthlessness, arrogance, & often corruption
Cornelius Vanderbilt and his son, William, had no care for the law and they
thought that the public be damned
Industrialists made big financial contributions to politicians, political
parties, & gov officials for assistance & support
PLENTY of entrepreneurs with failing efforts. Lots of industries are fragmented
w/ small companies struggling to stabilize
Survival of the Fittest
Social Darwinism is the application of Darwins laws of evolution and natural
selection among species to human society. So, just as only the fittest survived
evolution, only the fittest flourished in the marketplace

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Ch. 17 Industrial Supremacy 5

Herbert Spencer (English) argued that society benefited from elimination of

the unfit and continued with this in his novels and teachings among
American students
William Graham Sumner had similar views and supported this in his book
Folkways (1906). He didnt agree 100% w/ Spencer but he thought
individuals must have freedom to struggle, compete, succeed, or fail
Industrialists like Rockefeller used it to justify their own power, saying The
growth of a large business is merely survival of the fittest and that it is not
an evil tendency in business and instead is merely the working out of the
law of nature
Businessmen liked this bc it placed their activities within context of traditional
American ideas of freedom and individualism. It justified their tactics.
The Gospel of Wealth
The Gospel of Wealth says that people of great wealth had not only great
power but responsibilities as well. They had to use their riches in order to
advance social progress
Andrew Carnegie elaborated on this in his book, The Gospel of Wealth
(1901) where he wrote that the rich should consider all revenues in excess
of their own needs and they need to provide for the community
Russel H. Conwell, a Baptist minister, promoted wealth being available to all
w/ his Acres of Diamonds speech
Horatio Alger was the most famous promoter of the success story. He
wrote novels about poor boys who rise from rags to riches
Alternative Visions
Lester Frank Ward was a Darwinist but rejected applying it to human society.
In his novel Dynamic Sociology (1883), among others, he argues that
civilization was governed not by natural selection but human intelligence.
Thought an active gov engaged in positive planning was societys best
hope
Socialist Labor Party, formed in the 1870s, was led by Daniel De Leon but it
failed & later a faction of it broke away in 1901 to form the American Socialist
Party
Henry George wrote Progress and Poverty in 1879 where he explained why
poverty existed within the wealth created by modern industry. He blamed
social probs on monopolies & proposed a single tax to destroy monopolies
Edward Bellamy wrote Looking Backward (1888) which was a utopian novel
about how industry was good for the people in the far future AND his work
inspired 160 Nationalist Clubs to endorse his ideas
The Problems of Monopoly
Monopoly is the control of the market by large corporate combinations
Created artificially high prices and produced a highly unstable economy
Threatened the ideal of wage-earning husband bc combinations reduced
opportunities to succeed
1% of American families controlled nearly 88% of nations assets

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Ch. 17 Industrial Supremacy 6

Standard of living increased for everyone but the gap between rich and poor
was increasing.

Industrial Workers in the New Economy

The Immigrant Workforce
The Second Wave of Immigrants included ppl from S & E Europe (Italy Poland,
Russia, Greece, Slovakia, etc)
Came to escape poverty & oppression in homelands and also for new
opportunities (often false promises)
Labor Contract Law (repealed in 1885) allowed Industrial employers to pay
for the passage of workers in advance and deduct the amount later from
their wages
Wages and Working Conditions
American Industrial Workers received $400-500 annually, opposed to the
$600 min
Workers had little job security
Workers who used to produce quality and take pride in their work are now
focused on repetitive tasks that seem demeaning. They worked 10-12 hrs a
day, 6 days a week. Many worked in unsafe/unhealthy factories
Many workers lost control over the conditions of their labor
Centralized control of the workplace in the hands of managers
Ensured workers had NO authority/control that could disrupt the flow of
production
Women and Children at Work
In 1900, women made up 17% of industrial workforce and 20% of women
were wage earners
Most women industrial workers were mainly white and 75% of them under
the age of 25
Women worked for wages of $6-8/week, $314/year annually (compared to the
mans $597/year)
Minimum of 1.7 mil kids <16 yrs old worked in factories and fields in 1900
(over 2x the # 30 yrs ago)
10% of all girls 10-15 and 20% of all boys held jobs
38 state legislatures passed child labor laws in the late 19 th century but had
little affect bc 60% of kids worked in agriculture which was exempt from a lot
of laws
Most factories ignored the child labor laws which required the kid to be at
least 12 and not work for more than 10 hrs/day
The Struggle to Unionize
Labor leaders tried to fight vs poor conditions in the workplace by adopting
some tactics their employers had used. Creating large combos/unions
The National Labor Union was founded by William H. Sylvis in 1866, a union
with 640,000 members that included a variety of reform groups w/ little
relationship with labor
Disintegrated and disappeared after the Panic of 1873

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Ch. 17 Industrial Supremacy 7

Excluded women workers bc male workers argued that women were used
to drive down their wages and that woman was created to be mans
companion
Molly Maguires is a militant labor organization in the anthracite coal region of
PA
Operated w/ in the Ancient Order of Hibernians (Irish fraternal society)
Attempted to intimidate coal operators w/ violence and murder
In 1870s when unemployment was bad, middle-class were hostile to unions
bc they blamed the workers, not the employers
The Great Railroad Strike
Began in 1877 when the E Railroads announced 10% wage cut
Strikers disrupted rail service from Baltimore to St. Louis
Destroyed equipment
Rioted in the streets of Pittsburgh
State militias called upon & in July, President Hayes ordered fed troops to
suppress disorders in W Virginia
Over 100 ppl died before strike collapsed several weeks after it began
1st national labor conflict
Illustrated that disputes between workers & employers cannot be localized
in the increasingly national economy
Illustrated the depth of resentment among many American workers and
their employers
Indicated how fragile the labor movement is
The Knights of Labor
Noble Order of the Knights Labor was the first genuine national labor
organization
Founded by Uriah S. Stephens in 1869
Open to all except lawyers, bankers, liquor dealers, and prof. gamblers
Welcomed women members, just not female factory workers
Leonora Barry, Irish immigrant, ran the Womans Bureau of the
Knights. Enlisted over 50,000 women members (of all colors) & created
over 100 all-female locals
Disorganized, not much central direction. Members met in assemblies
which had many different forms.
In the 1870s, Terence V. Powderly took leadership
By 1886 it had a total of 700k members, difficult to control
In 1885, striking railway workers forced the MO Pacific to restore wage
cuts and recognize their union
They failed, this worked to discredit the organization
By 1890, membership shrunk to 100k ppl and a few years later, the
organization disappeared
The AFL
In 1881, representatives of diff craft unions formed the Federation of
Organized Trade and Labor Unions of the United States and Canada, changed
its name to the American Federation of Labor (AFL) & soon became the most
important labor group in USA

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Ch. 17 Industrial Supremacy 8

Represented mainly skilled workers and was in association of autonomous

craft unions
Male leaders were hostile to the idea of women entering the paid workforce
bc they were weak, easy to take advantage of, etc.
Made wages drive down for everyone
Still wanted = pay for women who DID work
Samuel Gompers, leader of AFL, wanted to secure for his workers a greater
share of money
supported getting better wages and working conditions
AFL wanted a national 8-hour day and would strike if it wasnt done by May 1,
1886
In Chicago, the Haymarket Square Riot was already happening at the
McCormick Harvester Company
A bomb was thrown that killed 7 officers and injured 67 other ppl
The police then killed 4 ppl (and killed 4 ppl the day before)
7/8 ppl sentenced to death for inciting the bomb thrower
AFL now had to jump over the hurdles or anarchism which were now
prominent
The Homestead Strike
The Amalgamated Association of Iron and Steel was affiliated w/ AFL and was
SUPER powerful
Members were majorly skilled workers w/ lots of power in the workplace
Had rulebook of 56 pages which limited the power of employers
In the mid-1880s the steel industry had new production methods & new
organization patterns
The Union only had skilled workers w/ influence at 1/3 of Carnegies
monopoly.
In 1890, Carnegie and Henry Clay Frick said that the Amalgamated had to
go, even @ Homestead
Made union but they couldnt do a strike so they were stuck bc no
power
In 1892 the company stopped even discussion decisions w/ the Amalgamated
& denying the unions right to negotiate
Union called for a strike but Frick shut down the plant & called in 300
guards from Pinkerton Detective Agency to enable the company to hire
nonunion workers (they were well known for breaking strikes)
On July 6, 1892 the strikers prepared for The Pinkertons by pouring oil
on the water of the river & setting it on fire
Met guards @ docks w/ guns and dynamite
3 guards and 10 strikers were killed, Pinkertons surrendered
Governor of PA sent the states entire National Guard contingent (8k troops)
to Homestead. Public got mad at strikers when someone wanted to kill Frick.
By 1900 no one worked w/ the Amalgamated
The Pullman Strike
The Pullman Palace Car Company built and repaired a plant near Chicago

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Ch. 17 Industrial Supremacy 9

Build a 600 acre town, named Pullman, rented trim & orderly houses to
employees of George M. Pullman
*Company Town* is a town build FOR the benefit of a company
Winter of 1893-1894, wages were slashed 25% and Pullman refused to lower
the cost of rents in his town (20-25% higher than surrounding areas)
Workers went on strike & got the militant American Railway Union, led by
Eugene B Debs to support them by refusing to handle Pullman cars &
equipment
Convinced other companies to follow suit
Governor of IL, John Peter Altgeld, refused to call out the militia to
protect employers
Railroad operators asked fed gov to send army troops to IL bc the
strike was preventing movement of mail on the trains
President Grover Cleveland and Attorney General Richard Olney
complied
2000 troops sent to Chicago in July 1894 and the fed court sued
union for the strike, quickly collapsing the strike
Sources of Labor Weaknesses
In a rapidly expanding industrial economy, wages for workers hardly rose &
didnt keep up w/ cost of living
Few legislative victories occurred
The abolition of Contract Labor Law in 1885
Establishment of 8 hour days on public work projects in 1868
8 hour day for gov employees in 1892
State laws govern hours of labor and safety standards but not enforced
Workers failed to meet big gains bc principal labor organizations represented
a small percentage of industrial workforce
4% belonged to unions in 1900
The AFL excluded unskilled workers, women, black ppl, and immigrants
Women responded in 1903 w/ the Womens Trade Union League
(WTUL) but soon turned attention to securing protective legislation for
women workers, not mobilization of labor
Shifting nature of workforce
Immigrants wanting to spend little time in USA made them not want to
unionize
Many natives and immigrants were constantly changing jobs, rarely in one
place long enough to establish institutional ties
False hope in moving social mobility bc although rare, some did move to
becoming managers & it inspired others to think they werent a part of the
working class
Corporate Strength
Faced power of corporations w/ lots of $$ and power
Had access to fed troops to preserve order and crush labor uprisings
Workers in the late 19th century failed to make successful organizations to
protect their interests. Almost all of the advantages lied w/ capital

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Ch. 17 Industrial Supremacy 10

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