APUSH Lecture Ch. 17

APUSH Lecture Ch. 17

1. The$Machine$Age$1877/1920$/$Chapter$17

2. CTQs$for$Ch.$17
Why$did$the$United$States$become$an$industrial$
power$in$the$period$1865$to$1900?$
How$does$the$concept$of$liberty$and/or$freedom$
connect$with$the$growth$of$capitalism$at$the$end$of$
the$19$c.$?$$How$did$it$conKlict?$$
How$did$proponents$justify$the$extremes$of$wealth$
and$poverty$in$the$United$States$in$the$late$19th$and$
early$20th$centuries?$

3. Causes$of$Rapid$Industrialization
1.$Abundant$supply$of$raw$materials$
2.$Abundant$labor$supply$
3.$New$Technologies$(US$patents$prior$to$1860$=$36k;$440k$from$1860/1900)$$
4.$Abundant$Capital$
5.$Talented$Businessmen$
6.$New$Types$of$Business$Organization$
7.$Growing$Markets$(cities$and$the$West)$
8.$Business/friendly$governments$(laissez/faire,$subsidies$and$tariffs)$
9.$The$beneKits$of$the$Steam$Revolution$of$1830s/50s$(railroads)

4. Science$of$Production
The Science of Production
•Principles of “scientific management” or “Taylorism” was employed-
developed by Frederick Taylor who argued employers subdivide tasks to
decrease need for highly skilled workers, increase efficiency by doing simple
tasks w/ machines. Taylor’s theory was influenced by availability of cheap,
unskilled labor.
•Emphasis on industrial research. (Bessemer process, Edison and Tesla) For
corporations, maximizing efficiency meant higher profit margins. Corporate
investment increased over 300%
•Henry Ford and the moving assembly line. First used by Henry Ford in
automobile plant 1914- dramatically cut production time from 12.5 hrs to
1.5 hrs. Average Model T price dropped to $290 in 1929 (from $950 in
1914)

5. Expansion$of$Railroads
•Railroad Expansion
•First major industry in the U.S.
•RR growth led to growth of other industries; Key to opening the West$
•new$markets$+$raw$materials,$in$particular$to$the$West$
•Liquid$capital$of$Cornelius$Vanderbilt,$Jay$Gould,$James$Hill,$Collis$Huntington$
post$Civil$War,$plus$effective$legislation$encouraged$growth$westward.$
•The$Homestead*Act*of*1862$/$gave$settlers$160$acres$of$free$land$
•600,000$families$settled$in$the$west$as$a$result$
•The$Paci4ic*Railway*Act*of*1862*$/$$was$a$land$grant$system$designed$to$
encourage$Kinancial$investment$from$the$railroads$
•From$1870$to$1900$/$400$million$acres$of$land$was$settled

6. Cornelius Vanderbilt’s Net Worth
1845250,000
18503,500,000
18551,500,000
187575,000,000
1877105,000,000

7. Myth$of$the$Self/Made$Man
The “Self-Made Man”
•Defenders argued capitalist economy expanding
opportunities for individual advancement, and that
“robber barons” were self-made men.
•Horatio Alger - self-made man or “rags to riches” stories
appealed to the industrial worker and fit into an age based
on social darwinism
Russell Conwell - “Acres of Diamonds” - wealth was
abundant
Significant immigrant population in the 1870s through 1920s
•Self-made man myth become synonymous with America
as the land of opportunity.
•Ingenuity, business savvy and corporate management
were encouraged
!

8. Social$Darwinism
•“Survival*of*the*Fittest”*A*concept$developed$by$Herbert$Spencer*
•Assumptions that wealth was earned from hard work and thrift and that those who failed
earned their failure (Protestant work ethic) Darwinism theory was essentially applied as
theory for a free market/self-regulating system. That the market will shape to those who
earn it
•“The growth of a large business is merely the survival of the fittest” - John D.
Rockefeller
•William*Graham*Sumner$$
•Appealed$to$businessmen$/$justiKied$brutish$tactics$and$further$expanded$the$idea$of$
the$“invisible$hand”$of$market$economics$against$gov’t$or$union$sponsored$versions.$$
•Ironically,$many$business$tycoons$attempted$to$eliminate$market$competition$by$
consolidating$industries$
•Carnegie$/$vertical$and$horizontal$business$strategies.$

9. Vertical$and$Horizontal$Integration

10. 2. STEEL& Carnegie
?Andrew Carnegie
?mass production
?economies of scale
?“vertical integration”
Coke fields
Iron ore deposits
Ships
Railroads
purchased
by Carnegie
purchased
by Carnegie
purchased
by Carnegie
purchased
by Carnegie
Steel mills
purchased
by Carnegie
Labor?
Rise to Industrial Supremacy
Percent of World Industrial Output
International
Steel
Production,
1880 & 1914

11. The Gospel of Wealth - Worship of the Elites
Gospel of Wealth (1901) by Andrew Carnegie advocated idea that w/ great wealth
came great responsibility to use riches to advance social progress
•“guardians$of$society”$/$the$wealthy$elite$as$heroes$of$society
Criticisms of Industrial Capitalism
Lester Ward in Dynamic Sociology (1883) argued natural selection could not apply
to human society and that it was the role of gov’t to intervene on behalf of those
less fortunate. Beginnings of socialist movement in America coincides with peak of
industrial power.
Socialist Labor Party founded 1870s by Daniel De Leon
Edward Bellamy and his Looking Backward (1888) spoke of “fraternal
cooperation” and of future society where govt distributed wealth equally.
Henry George, Progress and Poverty. Argued the value of the land should be
shared equally by the public, not owned by individuals.

12. Growing$Unrest
•Few$Americans$questioned$the$merits$and$values$of$capitalism.$Yet$increasingly$the$wealth$
gap$grew$to$unsustainable$levels.$$
•Monopolies$were$challenged$by$a$growth$of$unions$formed$by$laborers,$farmers,$
consumers$and$manufacturers,$among$others.$$
•Monopolies$were$also$blamed$for$artiKicially$high$prices,$which$slowed$consumption$and$$
led$to$market$Kluctuations$every$several$years$including$in$1893.$$
•The$extravagance$of$the$new$wealthy$class$was$reminiscence$of$an$American$feudal$class$
•1%$of$American$families$controlled$nearly$88%$of$the$wealth$
•4/5ths$lived$modestly$and$10$million$lived$at$the$poverty$line.$
•Wages$averaged$in$the$$400/$500$range;$$600$considered$comfortable$$
•Women$averaged$$314$to$$597$for$men$and$1.7$million$children$worked$by$1900$
•The$standard$of$living$had$improved$for$all$and$yet,$the$increasing$wealth$gap$frustrated$
those$barely$surviving.$

14. Industrial$Workers$in$the$New$Economy
•Workers$look$to$the$courts$for$legal$assistance$in$improving$their$status,$
conditions,$and$wages.$
•Work$in$general$had$been$devalued$as$machines$made$most$factory$work$
unskilled$and$a$labor$surplus$tilted$the$advantage$in$favor$of$companies/
tycoons$
•Supreme$court$in$general$ruled$vaguely$and$in$favor$of$the$tycoons$
•Lochner)v.)New)York)1905)and)Muller)v.)Oregon)1908)<)ultimately$hurt$
women’s$ability$in$the$work$place$to$Kind$and$maintain$work.$
•1890$Sherman$Anti/Trust$/$while$a$pro/labor/anti/trust$ruling$was$too$
vague$and$generally$unenforced$by$the$executive$cabinet$
•Furthermore,$labor$unions$were$hurt$by$violent$tactics$/$Molly$Maguires$
used$violence$and$terrorism$to$intimidate$corporate$ownership.$Added$to$
the$perception$of$unions$as$vehicles$of$anarchy$and$chaos.$

15. Key*Strikes*
**ConKlicts:$1880/1900$close$to$25,000$strikes$
involving$~$6$million$workers,$1⁄2$ended$in$
failure**$$
1.*Railroad*Strike,*1877**
•B$&$O$RR,$wage$cut,$President*Hayes*sent$in$
troops$to$stop$$
2.*Haymarket*Strike,*1886*Chicago**
•Mass$meeting$organized$by$anarchists$to$
protest$police$tactics$against$strikers$at$
McCormick*Harvester*Co.*$
•Police$tried$to$disperse$crowd,$bomb$thrown$
at$police$$
•8$anarchists$charged,$4$executed$$
•Knights*of*Labor*blamed$and$disbanded$

3.*Homestead*Strike,*1892*
•Protesting$a$reduction$in$wages$but$not$in$
rent$or$company$store$$
•Frick*wanted$to$destroy$union,$hired$
Pinkerton*Detectives$to$protect$strike$
breakers$$
•Strikers$Kired$&$killed$Pinkertons$$
•State$Militia$called$in,$strike$called$off$$
4.*Pullman*Strike,*1894:$Panic*of*1893*&*
Depression**
•Reduction$of$wages,$let$go$workers$of$
Pullman$workers$$
•American*Railway*Union*tried$to$help$
strikers$by$refusing$to$handle$Pullman$cars$
(boycott)$$
•Railroad*Managers*Association*got$Fed.$
court$injunction$under$Sherman$Anti/Trust$
Act$to$prevent$strikes$from$interfering$with$
carrying$US$mail$and$interstate$commerce$$
•Pres.*Cleveland*sent$in$troops$$
•Eugene*V*Debs*(pres.*of*ARU)*held*in*
contempt*and*sentenced*to*jail*


16. Key*Labor*organizations*
•Knights*of*Labor$founded$1869$
•Wanted$an$8/hour$day,$prohibition,$
inKlation$(silver),$no$child$labor,$
long/range$goals.$$
•Allowed$all$workers$(skilled$or$
unskilled)$
•Did$not$allow$Chinese,$lawyers,$
bankers,$or$gamblers$
•Disbanded$after$1886$Haymarket$
Riot$in$Chicago.$$
•AFL*or*American*Federation*of*Labor$
/$founded$by$Samuel$Gompers.$$
•Focused$less$on$utopian$ideology$and$
more$on$“bread$and$butter$issues”$for$
workers$including:$a$worker’s$bill$of$
rights,$better$wages,$shorter$hours,$
better$work$conditions.$$
•Excluded$minorities,$women$and$most$
recent$immigrants$who$were$
considered$“unskilled”$
•Behind$Steel$strike$of$1892$and$
Pullman$Strike$of$1894$
•IWW*or*Industrial*Workers*of*the*
World$/$focus$more$on$a$globally$
connected$social$movement.$$
•Marxist$ideology$and$members$
formed$the$American$Communist$
Party$
•Accepted$all$workers,$especially$
unskilled.$$
•Too$violent$to$ever$gain$much$traction

17. The$Corporation
•Modern corp. emerged after Civil War when industrialists realized no
person or group of limited partners able to finance great ventures
(reversing the trend of Jackson’s Maysville Road Veto)
•Businesses began to sell stock, which was appealing to investors b/c
“limited liability” meant lost only amt of investment + not liable for
company debts- allowed vast capital to be raised
•Began in RR industry, spread to others- in steel industry Andrew
Carnegie struck deals with RRs, bought out rivals, purchased coal mines
w/ partner Henry Clay Frick controlled steel process from mine to market
(vertical integration)
•Financed undertaking by selling stock. Bought out in 1901 by JP Morgan
who formed United States Steel- controlled 2/3 of nation’s steel
production

18. Consolidating$Corporate$America
•Consolidation$occurred$through:$
•“horizontal$integration”$(merging$competing$companies$
into$a$single$corporation)$$
•“vertical$integration”$(control$production$from$raw$
materials$to$distribution).$$
•pool$arrangements$(agreement$upon$selling$price)$
•Largest$corp$empire$John$D$Rockefeller’s$Standard$Oil/$through$
horizontal$&$vertical$integration$came$to$control$90%$of$
reKined$oil$in$US$at$its$peak.$
•Consolidation$was$used$to$cope$w/$“cutthroat$competition”/$
feared$too$much$competition$lead$to$instability$and$
overproduction;$best$was$to$eliminate/absorb$competition

19. The$Trust$and$the$Holding$Company
•Failure$of$pools$(informal$agreements$to$stabilize$rates,$divide$markets)$led$to$
less$cooperation$and$more$centralized$control/$“trusts”$emerged$(stock$
transferred$to$group$of$trustees$who$made$all$decisions$but$shared$proKits)$
•Beginning$w/$NJ$1889$states$changed$laws$to$allow$companies$to$buy$other$
companies,$making$trusts$unnecessary—(a$trust$would$at$least$allow$
companies$to$share$proKits;$this$no$longer$occurs)$
•“holding$companies”$emerged$as$a$corporate$body$that$bought$up$stock$to$
establish$formal$ownership$of$a$company$(that$way$you$could$avoid$being$
labelled$a$‘monopoly’$
•By$the$end$of$19th$c.$1%$of$corps$controlled$33%$of$manufacturing$and$wealth.$
It$created$a$system$where$power$was$in$the$hands$of$a$few$men/$NY$bankers$(JP$
Morgan),$industrialists$(Rockefeller),$etc.$$
•Despite$a$loss$in$competition,$substantial$economic$growth$came$from$this$
arrangement/$costs$were$cut,$industrial$infrastructure$formed,$new$markets$
stimulated,$new$unskilled$jobs

24. Inventions$change$
lifestyles
•1879$Edison$invents$the$light$bulb$and$later$a$system$to$distribute$
electrical$power.$$
•Electricity$allowed$factories$to$operate$without$having$to$be$
located$on$a$river$bank$or$other$natural$source$of$power.$
•Factories$also$run$all$night$increasing$per$factory$productivity.$$
•1876$/$Graham$Bell$invents$the$telephone$
•Other$inventions$of$the$age$included:$the$phonograph,$the$motion$
picture$camera,$the$Ediphone,$and$the$Model$T

25. Railroads$Link$the$
Country
•1869$/$transcontinental$
railroad$was$completed$
linking$the$East$and$
West$coasts$of$the$U.S.
•To$make$sure$all$railroads$ran$on$time$the$concept$
of$“time$zones”$was$adopted$worldwide$in$1884