Chapter 24

RR building exploded after the Civil War.

US government subsidized the first two transcontinental RR

How land-grants worked Why subsidies were necessary. In all RR got over 200 Mill acres from

Feds and states—area larger than the state of Texas.

US benefited from giving land to RR. How?• RRs promoted immigration • promoted of westward

migration.• RR gave the government a

break on mail and military transport.

Free land a cheap way to subsidize. • Why?

After secession, Congress Commissioned a transcontinental RR.

Union Pacific and Central Pacific.. Building began in earnest in 1865

after the Civil War. Credit Mobiler scandal

On both lines mostly poor immigrants did the work. • Irish were predominant

on the UP line• Chinese on the Central

Pacific line. Often beset by Indians.

Moving tent cities Hundreds of labors

died. Significance of

transcontinental RR

Four other Transcontinental lines were built. None received cash grants, but three received land grants.

Many other RR went bankrupt and fleeced investors.

Towns competed with bribes to RR promoters to get the RR to come to their town. Many of these RR took the money and ran.

Cornelius Vanderbilt welded together and expanding older eastern Network.

Had made a huge fortune in steamboats and used this wealth to fund RRs.

He was coarse, ill educated, ungrammatical and ruthless, but knew how to make money.

Significant Improvements to RR facilitated growth of railroads:• Steel rail• Standard gauge track:• Westinghouse brake• Pullman sleeping cars: made travel more

comfortable for passengers—1860s. Trains still dangerous.

Transcontinental RR caused many changes:• Stimulated American economy • Stimulated manufacturing and industrialization • Westward expansion of agriculture • Stimulated immigration • Bigger cities • Settlement of the unsettled areas • Time zones • Created Millionaires • Changed Western ecology

The railroads were rife with corruption

Jay Gould Stock Watering Bribery Trusts and Pooling

Agreements Rebates

Farmers resented the RR • Why?

Generally, the country was slow to respond to abuses of RR. • Laissez faire

Depression of 1870 spurred the government into action.

Grange put pressure on many Midwestern legislatures to regulate the RR monopoly.

State laws held unconstitutional in the famous Wabash case. Why?

Interstate Commerce Act in 1887.• Prohibited rebates and pools• Required RR to publish their rates openly• Outlawed discrimination against shippers• outlawed charging more for short hauls than for

long ones• Set up the Interstate Commerce

Commission to administer and enforce Was not a revolutionary victory; simply

modest regulation Did provide an orderly forum. water-shed in establishing the power of

government to regulate business

1865-1895 saw a huge industrial boom. Reasons:

• Much more liquid capital • natural resources started to be exploited • Massive immigration provided cheap

unskilled labor • American inventions made businesses and

factories more efficient. telegraph, mass production, cash register, stock ticker .

• Telephone (1876) and expanded telegraph; communications revolution.

• Edison and Electric Light

“Wizard of Menlo Park” “Wizard of Menlo Park”

Businesses, left alone, hate competition.

Ways to avoid competition.• Vertical Integration--Andrew Carnegie’s

Steel operations.• Horizontal Integration—Rockefeller and

Standard Oil • Trusts—Rockefeller• Interlocking Directorates—J.P. Morgan

Steel became King after the Civil War.

Foundation for much of the industrial expansion

Bessemer process. America biggest Steel producer by

1900. Produced 1/3 of the world’s steel.

Why America dominant.

Andrew Carnegie—US Steel

King of American Steel• Produced ¼

Carnegie cleared 25 Mil. a year. Huge fortune

Sold out to J.P. Morgan for 400 Million.

Spent the rest of his life giving money away

Oil industry emerges after the Civil War.

Rockefeller and Standard Oil.

ruthless. Big believer in commercial

Darwinism. By 1877 controlled 95% of

all the old refineries in the country.

Benefits.

Social obligations of new super-rich?

Charles Graham Sumner• Get richer; none to poor

Social Darwinism• Rich deserve to be rich;

poor deserve to be poor• Contempt for poor who had

“earned” their own poverty Russell Conwell Charles Graham Charles Graham

SumnerSumner

Inequality is inevitable and good.

Wealthy should act as “trustees” for their “poorer brethren.”

Wealthy had to prove they deserved their wealth.

Give back to the community as a whole, not to individuals

Carnegie gave away millions

Sherman Anti Trust Act of 1890. Forbids combinations in restraint of trade.

• Did not prove very effective because went after bigness and not badness.

• Not very effective because penalties weak and loopholes

• Biggest effect was unintended--Was used against unions.

Importance of the law was not its immediate effect but the shift in thinking that it represented.

South did not benefit much Produced smaller % of Manufacturing

goods than pre-Civil War James Duke—Cigarettes Barriers to Southern development

• Railroad rate discrimination Textile Mills

• Pros and Cons

Increased wealth of nation Standard of living rose sharply Workers enjoyed many more physical

comforts Urban centers mushroomed Jeffersonian Ideal of nation of small

farmers died Concept of time changed. Many more women in the workforce Delayed marriages and smaller families New class system Workers becoming more dependent and

more vulnerable.

Surplus of unskilled labor. Individual workers were powerless to

bargain Early Unions had little power, as well.

• strike-breakers, lawyers and thugs (“Oh my!”) Courts issued injunctions against strikes

based on Anti-Trust laws. Yellow-dog contracts Black-lists Company stores Middle-class was largely unsympathetic.

Unions strengthened after the Civil War.

National Labor Union organized in 1866 and did well, • 600,000 members, both skilled and

unskilled• Did not recruit women or blacks• Goals: arbitration of industrial disputes, 8-

hour day• damaged by the depression in the 1870s.

Knights of LaborKnights of Labor

Terence V. Terence V. PowderlyPowderly

An injury to one is the concern of An injury to one is the concern of all!all!

Knights of Labor took over where the National Labor Union had left off. • Sought to include all labor in

one big Union. • They stayed out of politics, but

campaigned hard for economic and social reform.

• Their biggest issue was the 8-hour work day.

• Won that fight from a number of industries and their ranks swelled.

Knights of Labor riding for a fall Problems:

• The Haymarket Square incident in Chicago in 1886

• Fusion of both skilled and unskilled labor. Skilled workers abandoned the

Knights for the American Federation of Labor.

This dealt the Knights a death blow, and the union slowly withered.

Haymarket Riot (1886)

Haymarket Riot (1886)

McCormick Harvesting Machine Co.McCormick Harvesting Machine Co.

AF of L --1886 Brain child of Samuel

Gompers. President of the union every

year for 38 years but one. Confederation of self-

governing independent unions for skilled laborers.

Gompers political strategy. Major goal was closed shop. Weapons were walk-outs and

boycotts.

Let unskilled workers, blacks and woman fend for themselves.

500,000 members by 1900.

1881-1900 over 23,000 strikes

By 1900, increased but fragile support

1894—Labor Day holiday.

Most employers still fought labor aggressively.

Management vs. Labor

Management vs. Labor

““Tools” of Tools” of ManagementManagement

““Tools” of Tools” of LaborLabor

““scabs”scabs”

P. R. campaignP. R. campaign

PinkertonsPinkertons

lockoutlockout

blacklistingblacklisting

yellow-dog yellow-dog contractscontracts

court injunctionscourt injunctions

open shopopen shop

boycottsboycotts

sympathy sympathy demonstrationdemonstrationss

informational informational picketingpicketing

closed shopsclosed shops

organized organized strikesstrikes

““wildcat” wildcat” strikesstrikes