|XVIII. The Rise of Industrial America, 1865 – 1900
As we view the achievements of aggregated capital, we discover existence of trusts, combinations and monopolies, while the citizen is struggling far in the rear or trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the lqaw and servants of the people, are fast becoming the people’s masters.
President Grover Cleveland, 1888
By 1900, the United States had emerged as the leading industrial power in the world. In manufacturing output exceeded that of its three largest rivals, Great Britain, France and Germany. The rapid growth of the U.S. economy, averaging 4 percent a year, was the result of a combination of factors:
→ The country was a treasure – house of natural resources, including raw materials essential to industrialization—coal, iron ore, copper, lead, timber and oil.
→ An abundant labor supply was, between 1865 and 1900, supplemented yearly by the arrival of hundreds of thousands of immigrants.
→ A growing population, combined with an advanced transportation network, made the United States the largest market in the world for industrial goods.
→ Capital was plentiful, as Europeans with surplus wealth recognized a good investment and joined well–to–do Americans in funding the economic expansion.
→ The development of laborsaving technologies increased productivity. Over 440,000 new patents were granted by the federal government from 1860 and 1890.
→ Businesses benefited from friendly government policies that protected private property, sub-sidized railroads with land grants and loans, supported U.S. manufactures with protective tariffs, and refrained from either regulating business operations or heavily taxing corporate profits.
→ Talented entrepreneurs emerged during this era who were able to build and manage vast individual and commercial enterprises.
A. The Business of Railroads The dynamic combination of business, leadership, capital, technology, markets, labor, and government support is especially evident in the develop-ment of the nation’s first big business—railroads. After the Civil War railroad mileage increased more than fivefold in a 35 year period (from 35,000 in 1865 to 193,000 in 1900).
More than any other technology innovation or industrial achievement of the 19th century, the development of a nationwide railroad network had the greatest impact on American life. Railroads created a market for goods that was on a national scale, and by so doing encouraged mass production, mass consumption, and economic specialization. The re-sources used in railroad–building promoted the growth of other industries, specifically coal and steel. Railroad also affected the routines of daily life. Soon after the American Railroad Association divided the country into four time zones in 1883, railroad time became standard time for all Americans. Finally the most important innovations of the railroads may be have been in the creation of the modern stockholder corporation and the development of complex structures in finance, business management, and the regulation of competition.
1. Eastern Trunk Lines In the early decades of railroads (1830 – 1860), the building of dozens of separate local lines had resulted in different gauges (distance between tracks) and incompatible equipment. These inefficiencies were reduced after the Civil War through the consolidation of competing railroads into integrated trunk lines. (A trunk line was a major route between large cities; smaller branch lines connected the trunk line with outlying towns.) “Commodore” Cornelius Vanderbilt used his millions earned from a steamboat business to merge local railroads into the New York Central Railroad (1867), which ran from New York to Chicago and operated more than 4,500 miles of track. Other trunk lines, such as the Baltimore and Ohio Railroad and the Pennsylvania Railroad, connected eastern seaports with Chicago and other Midwestern cities and set standards of excellence for the rest of the industry.
2. Western Railroads The great age of railroad –building coincided with the settlement of the last frontier. In fact, railroads themselves played a critical role in the trans – Mississippi West by (1) promoting settlement on the Great Plains and (2) linking the west with the East and thereby creating one great national market.
a. Federal land grants Recognizing the western railroads would lead the way to set-tlement, the federal government provided railroad companies with huge subsidies in the form of loans and land grants. Some 80 railroad companies received more than 170 million acres of public land, more than three times the acres given away under the Homestead Act. The land was given in alternate mile – square sections in a checkerboard pattern along the proposed route of the railroad. The govern-ment expected that the railroad would make every effort to sell the land to new settlers to finance construction. Furthermore, it was hoped that the completed rail-road would both increase the value of government lands and people preferred rates for carrying the mails and transporting troops.
There were also negative consequences to the subsidies. The land grants and cash loans (1) promoted hastily and poor construction and (2) led to widespread cor-rupttion in all levels of government. Insiders used construction companies, like the notorious Crédit Mobilier, to pocket huge profits, while bribing government offi-cials and legislators. Protests against the land grants mounted in the 1880s when citizens discovered that the railroads controlled half of the land in some western states.
b. Transcontinental railroads During the Civil War, Congress authorized land grants and loans for the building of the first transcontinental railroad to tie Califor-nia to the rest of the Union. The task was divided between two newly incorporated railroad companies. The Union Pacific was to build westward across the Great Plains, starting from Omaha, Nebraska while the Central Pacific took the formid-able task of pushing eastward from Sacramento, California General Greenville Dodge directed construction of the Union Pacific using thousands of war veterans and Irish immigrants. Charles Crocker recruited 6,000 Chinese immigrants, who at enourmous risk, blasted tunnels through the Sierras for the Central Pacific. Completing one of the great engineering feats of the 1800s, the two railroads came together on May 10, 1869, at Promontory Point, Utah, where a golden spike was ceremoniously driven into the ground to mark the linking of the Atlantic and the Pacific states.
Before 1900, four other transcontinental railroads were constructed across different sections of the West. Three of them were competed in the same year, 1883: the Southern Pacific, which tied new Orleans to Los Angeles; the Atchison, Topeka, and Santa Fe, which carried passengers and freight between Kansas City and Los Angeles; and the Northern Pacific, which connected Duluth, Minnesota, with Seattle, Washington. A fourth transcontinental railroad also connecting St. Paul, Minnesota, and Seattle was completed in 1893. James Hill’s well–planned Great Northern was the only transcontinental railroad to be built without federal subsidies.
3. Competition and Consolidation New technologies and industries tend to be over-built. Certainly this was the case with the railroads built in the 1870s and 1880s, many of which were unprofitable. In addition to overbuilding, the railroads frequent-ly suffered from mismanagement and outright fraud. Speculators like Jay Gould went into the railroad business for quick profits and made their millions by selling off as-sets and watering stock ( inflating the value of a corporation’s assets and profits be-fore selling its stock to the public). Ina ruthless scramble to survive, railroads com-peted by offering rebates (discounts) and kickbacks to favored shippers while char-ging exorbitant freight rates to smaller customers such as farmers. They also attempt-ed to increase profits by forming pools, in which competing companies agreed secret-ly and informally to fix rates and share traffic.
A financial panic in 1893 forced a quarter of all railroads into bankruptcy. J. Pierpont Morgan and other bankers quickly moved in to take control of the bankrupt railroads and consolidate them. With competition eliminated, they could stabilize rates and re-duce debts. By 1900, seven giant systems controlled nearly two–thirds of the nation’s railroads. A positive re3sult was a more efficient rail system. On the negative side, however, the system was controlled by a few powerful men like Morgan, who domi-nated the boards of competing railroad corporations through interlocking directions (the same directions ran competing companies). In effect, they created regional rail-road monopolies.
Railroads captured the imagination of late–19th century America, as the public, local communities, states, and the federal government invested in their development. At the same time, however, customers and small investors often felt that they were the victims of slick financial schemes and ruthless practices. Railroad moguls seemed to affirm this ruthlessness. William Vanderbilt, who had inherited his father Cornelius Vanderbilt’s transportation empire, reportedly responded to critics, “the public be damned.” Early attempts to regulate the railroads by law did little good. The Gran-ger laws passed by Midwestern states in the 1870s were overturned by the courts, and the federal Interstate Commerce Act of 1886 was at first ineffective. It was not until the progressive era in the early 20th century that the interstate Commerce Commis-sion was given expanded powers to protect the public interest.
B. Industrial Empires The late 19th century witnessed a major shift in the nature of in-dustrial production. Early factories had concentrated on producing textiles, clothing, and leather goods. After the Civil War, in what some scholars have termed a “second Industrial Revolution,” the growth was in heavy industry and the production of steel, petroleum, electric power, and the industrial machinery to produce other goods.
1. The Steel Industry The technological breakthrough that launched the rise of heavy industry was the discovery of a new process for making large quantities of steel (a more durable metal than iron). In the 1850s, both henry Bessemer in England and William Kelly in the United States discovered that blasting air through molten iron produced high–quality steel. The Great lakes region, with its abundant coal reserves and access to the iron ore of Minnesota’s Mesabi Range, soon emerged as the leading steel producer.
a. Andrew Carnegie Leadership of the fast–growing steel industry surpassed to a shrewd business genius, Andrew Carnegie, who in the 1850s had worked his way up from being poor Scottish immigrant to becoming the superintendent of a Penn-sylvania railroad. In the 1870s, he started manufacturing steel in Pittsburg and soon outdistanced his competitors by a combination of salesmanship and the use of the latest technology. Carnegie employed a business strategy know as vertical in-tegration, by which a company would control every stage of the industrial process, from raw material to transporting the finished product. By 1900, Carnegie Steel had climbed to the top of the steel industry. In employed 20,000 workers and produced more steel than all the steel mills in Britain.
b. U.S. Steel Corporation Deciding to retire from business to devote his self to phil-anthropy, Carnegie sold his company in 1900 for over $400 million to a new steel combination headed by J.P. Morgan. The new corporation, United States Steel, was the first billion – dollar company and also the largest enterprise in the world, employing 168,000 people and controlling over three – fifths of the nation’s steel business.
2. The Oil Industry The first U.S. oil well was drilled by Edwin Drake in 1859 in Pennsylvania. Only four yeatrs later, in 1863, a youthful businessman, John D. Rock-efeller, founded a company that would come to control most of the nation’s oil refin-eries by eliminating its competition.
a. Rockefeller and the Standard Oil Trust Rockefeller took charge of the chaotic oil refinery business by applying the latest technologies and efficient practices. At the same time, as his company grew, he was able to exhort rebates from railroad com-panies and temporarily cut prices for Standard Oil kerosene to force rival compan-ies to sell out. By 1881 his company—now known as the Standard Oil Trust—controlled 90 percent of the oil refinery business. The trust that Rockefeller put together consisted of farious companies that he had acquired, all managed by a board of trustees that Rockefeller and Standard Oil controlled. Such a combination represented a horizontal integration of an industry, in which former competitors were brought under a single corporate umbrella. By controlling the supply and prices of oil products. Standard Oil’s profits soared and so did Rockefeller’s for-tune, which at the time of his retirement amounted to $900 million. By eliminating waste in the production of kerosene, the Standard Oil monopoly was also able to keep prices low for consumers. Emulating Rockefeller’s success, dominant companies in other industries (sugar, tobacco, leather, meat) also organized trusts.
3. Antitrust Movement The trusts came under widespread scrutiny and attack in the 1880s. Middleclass citizens feared the trusts’ unchecked power, and urban elites (old wealth) resented the increasing influence of the new rich. After failing to curb trusts on he state level, reformers finally moved Congress to pass the Sherman Antitrust Act in 1890, which prohibited any “contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade and commerce.”
Although a federal law against monopolies was now on the books, it was too vague-ly worded to stop the development of trusts in the 1890s. Furthermore, the Supreme Court in United States v. E.C. Knight Co. (1895) ruled that the Sherman Antitrust Act could be applied to commerce, not to manufacturing. As a result, the U.S. De-parment of Justice secured few convictions until the law was strengthened during the Progressive era.
C. Laissez – Faire Capitalism The idea of government regulation of business was alien to the prevailing economic, scientific, and religious beliefs of the late 19th century. The economic expression of these beliefs can be summed up in the phrase “laissez–faire.”
1. Conservative Economic Theories As early as 1776, the economist Adam Smith had argued in The Wealth of Nations that business should be regulated, not by the “invis-ible hand” (impersonal economic forces) of the law of supply and demand. This was the origin of the concept of laissez–faire. If government kept hands off, so the theory went, business would be motivated by their own self–interest to offer improved goods and services at low prices. In the 19th century, American industrialists applied to laissez–faire theory to justify their methods of doing business—even while they read-ily accepted the protection of hish tariffs and federal subsides. The rise of monopolis-tic trusts in the 1880s seemed to undercut the very competition needed for natural regulation. Even so, among conservatives and business leaders, laissez – faire theory was constantly invoked in legislative halls and lobbies to ward off any threat of government regulation.
a. Social Darwinism Although it offended many, Charles Darwin’s theory of natural selection in biology played a role in bolstering the views of economic conserva-tives. The English social philosopher Herbert Spencer was the most influential of the social Darwinist who thought that Darwin’s ideas of natural selection and sur-vived of the fittest should be applied to the marketplace. Spencer concluded that the future of the human race. An American social Darwinist, Professor William Graham Sumner of Yale University, argued that the laws of nature and would only weaken the evolution of the species by preserving the unfit.
b. Gospel of wealth A number of American found religion more convincing than social Darwinism in justifying the wealth of successful industrialists and bankers. Because he diligently applied Protestant work ethic (tat hard work and material success as signs of God’s favor) to both his business and personal life, John D. Rockefeller concluded that “God gave me my riches.” In a popular lecture, “Acres of Diamonds,” the Reverend Russell Conwell preached that everyone had a duty to become rich. Andrew Carnegie’s article “Wealth” argued that the wealthy had a God – given responsibility to carry out projects of civic philanthropy for the benefit of society. Practicing what he preached, Carnegie distributed over $350 million of his fortune to support the building of libraries, universities, and various public institutions.
D. Technology and innovation Vital to industrial progress were the innovations that led to greater productivity in the work place and a larger variety of mass – produced goods in the home.
1. Inventions The first radical change in the speed of communications was the invent-tion of a workable telegraph by Samuel F. B. Morse, fist successfully demonstrated in 1844. By the time the Civil War, electronic communications by telegraph and rapid transportation by railroad were already becoming standard parts of modern living, es-picially in the northern states. After the war, Cyrus W. Field’s invention of an im-proveed transatlantic cable in 1866 suddenly made it possible to send messages across the seas in an instant’s time. By 1900, cables linked all continents of the world in an electronic network of instantaneous, global communication. Another huge leap in communications technology was the invention of the telephone by Alexander Graham Bell in 1876.
Topping the list of hundreds of noteworthy inventions of the late 19th century were the typewriter (1867), the cash register (1879), the calculating machine (1887), and the adding machine (1888). Products for the consumer that were in widespread use by the end of the century were George Eastman’s Kodak camera (1888), Lewis E. Waterman’s fountain pen (1884) and King Gillette’s safety razor and blade (1895).
2. Edison and Westinghouse Possibly the greatest inventor of the 19th century, Thomas Edison started out as young telegraph operator and patented his first inven-tion (a machine for recording votes) in 1869. The success of his early inventions gave Edison the resources to establish in 1876 a laboratory in Menlo Park, New Jersey, for the purpose of inventing new technologies. This was the world’s first modern research laboratory. It may also have been Edison’s single most important contribution to science and industry, because it introduced the concept of mechanics and engineers working on a project as a team rather than as lone inventors. Out of Edison’s lab came more than a thousand patented inventions, including the phono-graph, the incandescent lamp the first practical electric light bulb), the dynamo for generating electric power, the mimeograph machine, and the motion picture camera.
Another remarkable inventor, George Westinghouse, held more than 400 patents and was responsible for developing an air brake fro railroads (1869) and a transformer for producing high – voltage alternating current (1885). The latter invention made pos-sible the lighting of cities and the operation of electric streetcars, subways, and elec-trically powered machinery and appliances.
3. Marketing Consumer Goods The increased output of U.S. factories as well as the invention of new consumer products created a need for businesses to find ways of selling their merchandise to a large public. R.H. Macy in new York and Marshall Field in Chicago made the large department store in place to shop in urban centers, while Frank Woolworth’s Five and Ten Cent Store brought nationwide chain stores to the towns and urban neighborhoods. Two large mail – order companies, Sears, Roe-buck and Montgomery Ward, used the improved rail system to ship to rural customers everything from hats to houses ordered from their thick catalogs, which were known to millions of Americans of Americans as the “wish book.”
Packaged foods under such brand names as Kellogg and Post became a common item in the kitchen pantries of American homes. Refrigerated railroad cars, and canned enabled Gustavus Swift and other packers to change the eating habits of Americans with mass–produced meats and vegetable products. Advertising and new marketing techniques not only promoted a consumer culture I which “going shopping” became a favorite pastime.
E. Impact of Industrialization The growth of American industry raised the standard of liv-ing for most people, but it created sharper economic and class divisions among the rich and middle class, and the poor.
1. The Concentration of Wealth By the 1890s, the richest 10 percent of the U.S. popu-lation controlled nine – tenths of the nation’s wealth. Industrialization created new class of millionaires, most of whom flaunted their wealth by living in ostentatious mansions, sailing enormous yachts, and throwing lavish parties. The Vanderbilts graced the waterfront of Newport, Rhode Island, with summer homes that rivaled the villas of European royalty. Guests at one of their dinner parties were invited to hunt for their party favors by using small silver shovels to seek out the precious gems hidden in sand on long silver trays.
a. Horatio Alger Myth At first, Americans tended to ignore the widening gap be-tween the rich and the poor by finding comfort in the highly publicized examples of “self – made men” in business (Andrew Carnegie, Thomas Edison, and others). They also thought there might be some truth in the popular novels by Horatio Alger, Jr., which sold more than a million copies. Every Alger novel portrayed a young man of modest means who became rich and successful through honesty, hard work, and a little luch. In reality, opportunities for upward mobility did exist, but the rags–to–riches career of an Andrew Carnegie was unusal. Statistical stud-ies demonstrate that the typical wealthy businessperson of the day was a white, Anglo–Saxon, Protestant male who came from an upper–or middle–class back-round and whose father was in business or banking.
2. The Expanding Middle Class The growth of large corporations introduced the need for thousands of white–collar workers (salaried workers whose jobs generally do not involve manual labor) to fill the highly organized administrative structures. Middle class management was needed to coordinate the operations be-tween the chief executives and the factories. In addition, industrialization helped to expand the mid-dle class by creating jobs for accountants, clerical workers, and sales-persons. In turn, these middle–class workers: professionals (doctors and lawyers), public employees and storekeepers. The increase in the number of good–paying occupa-tions after the Civil War significantly increased the income of the middle class.
3. Wage Earners By 1900, two – thirds of all working Americans worked for wages, usually at jobs that required them to work ten hours a day, six days a week. Wages were determined by the laws of supply and demand, and because there was usually a large supply of immigrants competing for factory jobs, wages were barely above the level needed for base subsistence. Low wages were justified by David Ricardo (1772 –1823), whose famous “iron law of wages” argued that raising wages arbitrarily would only increase the working population, and the availability of more workers would in turn cause wages to fall, thus creating a cycle of misery and starvation. Real wages (income adjusted for inflation) rose steadily in the late 19th century, but even so most wage workers could not support a family decently on one income. Therefore, working – class families depended on the additional income of women and children. In 1900, 11 million of the 12.5 million in the United States averaged less than $380 a year in income.
4. Working Women One adult woman out of every five in 1900 was in the labor force working for wages. Most were young and single, since only 5 percent of all married women worked outside the home. In 1900, men and women alike believed that, if it was economically feasible, a woman’s proper role was in the home raising children. Factory work for women was often restricted to industries that were perceived as an extension of the home: the textile, garment, and food–processing industries, for exam-ple. As the demand for clerical workers increased, women moved into formerly male occupations as secretaries, bookkeepers, typists, and telephone operators. Occupa-tions or professions that became feminized (women becoming the majority) usually lost status and received lower wages and salaries.
5. Labor Discontent Before the Industrial Revolution, workers had enjoyed a personal and relaxed workplace that valued an artisans skills. They often had a sense of ac-complishment in creating a product from start to finish. Factory work was radically different, since it was highly structured and regulated to increase productivity. Indus-trial workers were assigned just one step in the manufacturing of a product, perform-ing semiskilled tasks that were repetitive and monotonous. Both immigrant from abroad and migrants from rural America had to learn to work under the tyranny of the clock. In many industries, such as railroads and mining, working conditions were dangerous. Many workers were exposed to chemicals and pollutants that only later were discovered to cause chronic illness and early death.
The workplace was also unstable and highly mobile. Industrial workers changed jobs on the average of every three years. Absenteeism and quitting, not strikes and labor unions, were the most common forms of protest against intolerable working condi-tions. An estimated 20 percent of those who worked in factories for a period of time eventually dropped out of the industrial workplace rather than continuing. This was a far higher percentage than those who protested by joining labor unions.
F. The Struggle of Organized Labor The late 19th century witnessed the most violent labor conflicts in the nation’s history. So common were the reports of striking workers battling police and state militia that many feared the country was heading toward open class warfare between capital and labor.
1. Industrial Warfare With a surplus of cheap labor, management held most of the power in its struggles with organized labor. Strikes could be replaced by bringing in strikebreakers, or scabs–unemployed persons desperate for jobs. Employers also used all of the following tactics for defeating unions:
the lockout: closing the factory to break a labor movement before it could get organizing
blacklists: names of prounion workers circulated among employers
yellow dog contracts: workers being told, as a condition for employment, that they must sign an agreement not to join a union
calling in private guards and state militia to put down strikes
obtaining court injunctions against strikes
Moreover, management fostered public fears of unions an anarchistic and un–Amer-ican. Before 1900, it won most of its battles with organized because, if violence developed, employers could almost always count on the support of the federal wnd state governments.
Labor itself was often divided on the best methods for fighting management. Some union leaders advocated political action. Others favored direct confrontation: strikes, picketing, boycotts, and slowdowns to achieve union recognition and collective bargaining.
a. Great railroad strike of 1877 One of the worst outbreaks of labor violence in the 19th century erupted in 1877, during an economic depression, when the railroad companies cut wages in order to reduce costs. A strike on the Baltimore and Ohio Railroad quickly spread across 11 states and shut down two–thirds of the coun-try’s rail trackage. Railroad workers were joined by an estimate 500,000 workers from other industries in an escalating strike that was quickly becoming national in scale. For the first time since the 1830s, a president (Rutherford B. Hayes) used federal troops to end labor violence. The strike and the violence finally ended, but not before more than a hundred people had been killed. After the strike, some employers addressed the workers’ grievances by improving wages and working conditions, while others took a hard line by busting workers’ organization.
2. Attempts to organize labor Before the 1860s, unions organized as local associations of craft workers (a craft union of Philadelphia shoemakers, a craft union of New York printers and so on).
a. National Labor Union The first attempt to organize all workers in all states—both skilled and unskilled, both agricultural workers and industrial workers—was the National Labor Union. Founded in 1866, it had some 640,000 members by 1868. Besides championing the goals of higher wages and the eight–hour day, the first na-tional union also had a broad social program: equal rights for women and blacks, monetary, reform, and worker cooperatives. Its chief victory was winning the eight – hour day for workers employed by the federal government. It lost support, how-ever, after a depression began in 1873 and after the unsuccessful strikes of 1877.
b. Knights of Labor A second national labor union, the Knights of Labor, began in 1869 as a secret society in order to avoid detection by employers. Under the lead-ership of Terence V. Powderly, the union went public in 1881, opening its mem-bership to all workers, including African Americans and women. Powderly advo-cated a variety of reforms:
(1) worker cooperatives “to make each man his own employer”
(2) abolition of child labor
(3) abolition of trusts and monopolies
He favored settling labor disputes by meansw of arbitration rather than resorting to strikes. Because the knights were loosely organized, however, he could not control units that decided to strike.
The knights of Labor grew rapidly in the early 1880s and attained a peak member-ship of 730,000 workers in 1886. It declined just as rapidly, however, after the violence of the Haymarket riot in Chicago in 1886 turned public opinion against the union.
c. Haymarket bombing Chicago, with about 80,000 Knights in 1886, was the site of the first May Day labor movement. Also living in Chicago were about 200 anarch-ists who advocated the violent overthrow of all government. In response to the May Day movement calling for a general strike to achieve an eight – hour day, la-bor violence broke out at Chicago’s McCormick Harvester plant. On May 4, workers held a public meeting in Haymarket Square, and as police attempted to break up the meeting, someone threw a bomb, which killed seven police officers. The bomb thrower was never found. Even so, eight anarchist leaders were tried for the crime and seven were sentenced to death. Horrified by the bomb incident, many Americans concluded that the union movement was radical and violent. The Knights of Labor, as the most visible union at the time, lost popularity and membership.
d. American Federation of Labor Unlike the idealistic, reform–minded Knights of Labor, the American Federation of Labor (AF of L) concentrated on attaining practical economic goals. Founded in 1886 as an association of 25 craft unions, the AF of L did not advocate a reform program to remake American society. Sam-uel Gompers, who led the union from 1886 to 1924, went after the basics of higher wages and improved working conditions. He directed his local unions of skilled workers to walk out until the employer agreed to negotiate a new contract through collective bargaining. By 1901, the AF of L was by far the nation’s largest union, with 1 million members. Even this union, however, would not achieve major suc-cesses until the early decades if the 20th century.
3. Strikebreaking in the 1890s Two massive strikes in the last decade of the 19th cen-tury demonstrated both the growing discontent of labor and the continued power of management to prevail in industrial disputes.
1. Homestead strike Henry Clay Frick, the manager of Andrew Car-negie‘s Homestead steel plant near Pittsburg, precipitated a strike in 1892 by cutting wages by nearly 20 percent. Frick used the weapons of lockout, private guards, and strikebreakers to defeat the steelworkers’ walkout after five months. The failure of the Homestead strike set back the union movement in the steel industry until the New Deal in the 1930s.
2. Pullman strike Even more alarming to conservatives was a strike of workers living in George Pullman’s model company town near Chicago. Pullman manufactured the famous railroad sleeping cars that bore his name (Pullman cars). In 1894, he an-nounced a general cut in wages and fired the leaders of the work-er’s delegation that came to bargain with him. The workers at Pullman laid down their tools and appealed for help from the American Railroad Union whose leader, Eugene V. Debs, direc-ted railroad workers not to handle any trains with Pullman cars. The union’s boycott tied up rail transportation across the country.
Railroad owners supported Pullman by linking Pullman cars to mail trains. They then appealed to President Grover Cleveland, persuading him to use army to keep the mail trains running. A federal court issued an injunction forbidding interference with the operation of the mails and ordering railroad workers to aban-don the boycott and strike. For failing to respond to this injunc-tion, Debs and other union leaders were arrested and jailed. The jailing of Debs and others effectively ended the strike. In the case of In re Debs (1895), the Supreme Court approved the use of court injunctions against strikes, which gave employers a very powerful weapon to break up unions. After serving a six–month jail sentence, Debs concluded that more radical solutions were needed to cure labor’s problems. He turned to socialism and the American Socialist party, which he helped to found in 1900.
By 1900, only 3 percent of American workers belonged to unions. Management held the upper hand in labor disputes, with govern-ment generally taking its side. However, some of the public were beginning to recognize the need for a better balance between the demands of employer and employees to avoid the numerous strikes and violence that characterized the late 19th century.
Historical Perspective: Historical statesmen of robber barons?
Middle – class Americans who enjoyed the benefits of increased industrial pro-duction, new consumer goods, and a higher standard of living generally admired the business leaders of the age, viewing them as great industrial statesmen. Uni-versity professors gave intellectual respectability to this view by drawing upon social Darwinism to argue that business leaders’ success was due to their sup-perior intelligence and fitness. Did they not, after all, make the United States the leading economic power in the world?
In the early 20th century, however, a growing number of citizens and historians questioned the methods used by business leaders to build their industrial empires. Charles Beard and other Progressive historians called attention to the oppression of farmers and workers, the corruption of democratic institutions, and the plunder-ing of the nation’s resources. Their critical view of 19th–century business leading received support from historians of the 1930s (the Depression decade). Mathew Josephson, for example, popularized the view that John D. Rockefeller and others like him were robber barons, who took from American workers and small busi-nesses to build their personal fortunes. The robber barons were presented as ruth-less exploiters who used unethical means to destroy competition, creates monop-olies, and corrupt the free enterprise system. Any positive contributions that might have been made were merely unplanned by – products of the industrialists’ ruthlessness and greed.
The prevailing wisdom of the 1930s shifted in the 1950s, as Allan Nevis urged other historians to right the justice done to “our business history and our Indus-trial.” Nevis and other revisionists argued that the mass production that helped win tow world wars and that made the United States an economic superpower far outweighed in significance any self – serving actions by business leaders.
Another approach to the era was taken by historians who analyzed statistical data in an effort to judge the contribution of industrialists and big business. They asked: Were big corporations essential for the economic development of the United States? Did monopolies such as the Standard Oil Trust advance or retard the growth of the U.S. economy? Robert Fogel, for example, used statistical data to the economic growth of the era. Despite these studies, critics of big business and the robber barons maintain that, in the final analysis, the quantity of economic growth was less important than the quality of life for the average American.