Michael Chiu

AP US History
Period 2
12/23/09

Outline of Chapter 17: Industrial Supremacy

-The industrial developments of the last three decades of the 19th century were huge –
transformation of the national economy
Sources of Industrial Growth
Industrial Technologies
-Henry Bessemer and William Kelly developed a process for converting iron into more
the more durable steel – took Bessemer’s name-made mass production of steel possible
-The steel industry emerged first in western Pennsylvania and eastern Ohio – iron ore was
there in abundance and there was already a flourishing iron industry there
-Pittsburgh became center of the steel world because anthracite or hard coal was plentiful
-The oil industry rose because the steel industry needed lubrication for its machines
-Pennsylvania businessman George Bissell showed that the petroleum in western
Pennsylvania could be used for many different products – oil mining grew
The Airplane and the Automobile
-the creation of gasoline or petrol was critical for the development of the automobile
-Charles and Frank Duryea built the first gasoline-driven motor vehicle in America
-Henry Ford produced the first of the famous cars that would bear his name
-Wilbur and Orville Wright used an internal-combustion engine to construct a glider that
successfully traveled 120 feet in 12 seconds under its own power – in Kitty Hawk, N.C.
Research and Development
-General Electric created one of the first corporate laboratories in 1900
-Emergence of corporate research laboratories came with a decline in government
support for research – helped corporations to attract skilled researchers who once worked
for government agencies
-In the late 19th and 20th centuries, American universities transformed themselves in
growing numbers – one product was a growing connection between university-based
research and the needs of the industrial economy
-Partnership developed between academic world and commercial world
The Science of Production
-Many industrialists turned to the new principles of “scientific management” or
“Taylorism” – Frederick Winslow Taylor urged employers to subdivide tasks – would
speed up production and make workers interchangeable – would reduce need for highly
trained skilled workers – however, would also make working people less independent
-Most important change in production technology was introduction of mass production
and the moving assembly line, invented by Henry Ford – used in automobile plants
Railroad Expansion
-Railroads helped found “standard time” in the United States
-Every decade in the late 19th century, railroad trackage increased dramatically
The Corporation
-Under laws of incorporation passed in the 1830s and 1840s, organizations could raise
money by selling stock to members of the public – many Americans considered it a good
investment because they only had “limited liability” – risked only the amount they
invested, not liable for any debts the corporation might accumulate after that
-Ability to sell stock to public made it possible for businesses to get capital for projects
-First to adopt the new corporate form of organization was the railroad industry, among
them the Pennsylvania Railroad
-The central figure in the steel industry was Andrew Carnegie, a Scottish immigrant who
opened his own steel business in Pittsburgh – dominated the industry
-Many corporate organizations developed a new approach to management – corporate
leaders introduced a set of managerial techniques – relied on division of responsibilities,
a hierarchy of control, modern cost-accounting procedures, and the “middle manager”,
who formed layer of command between workers and owners
Consolidating Corporate America
-“Horizontal integration” – combining of a number of firms engaged in the same
enterprise into a single corporation – ex. Consolidation of many railroad lines
-“Vertical integration” – taking over of all the different businesses on which a company
relied for its primary function – ex. Case of Carnegie Steel
-Most celebrated corporate empire was John D. Rockefeller’s Standard Oil – created
through both horizontal and vertical integration – controlled access to 90% of refined oil
in U.S.
-As movement toward combination accelerated, new techniques emerged – pool
arrangements were informal agreements among companies to stabilize rates and divide
markets – did not work well
The Trust and the Holding Company
-Failure of pools led to new techniques – one of the most successful was creation of the
“trust” – pioneered by Standard Oil and perfected by J. P. Morgan – under a trust
agreement, stockholders in corporations transferred their stocks to a small group of
trustees in exchange for shares in the trust itself
-a “holding company” – 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
-The consolidation of corporations grew in the 19th century
Capitalism and its Critics
-People criticized the corporate power centers as a threat to republican society and
pointed to the corruption that the industrial titans seemed to produce
The “Self-Made Man”
-Defenders of the new industrial economy argued that it provided every individual with a
chance to succeed
-Many millionaires claimed to be “self-made men”, but most had begun tycoons wealthy
-Their rise to power had not always been hard work, also from corruption
Survival of the Fittest
-Social Darwinism was the belief that only the fittest individuals in human society
survived and flourished in the marketplace
-Herbert Spencer was the first to argue this theory – said society benefited from the
elimination of the unfit
-Social Darwinism appealed to businessmen – confirmed their success and virtues –
justified their tactics
The Gospel of Wealth
-Some businessmen used another idea, the “gospel of wealth” to temper the harsh
philosophy of Social Darwinism
-Argued that wealthy people had not only great power but great responsibilities – it was
their duty to use their riches to advance social progress – Andrew Carnegie reinforced it
-Another popular idea was that wealth was available to all – Russell H. Conwell, a
Baptist minister was the most prominent spokesman by delivering “Acres of Diamonds”
– speech that had stories of individuals who had found opportunities for wealth
-Horatio Alger wrote novels about common people who rose to great wealth through hard
work
Alternative Visions
-one philosophy emerged through work of Lester Frank Ward – argued that civilization
was not governed by natural selection but by human intelligence – an active government
engaged in positive planning was society’s best hope
-Henry George of California tried to explain why poverty existed amidst the wealth
created by modern industry – increase in value of land was not result of effort by the
owner but by the growth of the society around the land – proposed a “single tax” to
replace all other taxes – would destroy monopolies
-Edward Bellamy also rose in popularity – wrote novel Looking Backward – believed that
eventually, “fraternal cooperation” would replace competition and there should not be
class divisions – Bellamy called philosophy “nationalism”
The Problems of Monopoly
-Monopoly caused the gap between rich and poor to increase
Industrial workers in the New Economy
The Immigrant Work Force
-By the end of the 9th century, the major sources of immigration had shifted from
England, Ireland, and northern Europe to southern and eastern Europeans – in the West,
major sources of immigration were Mexico and Asia
-Arrival of new groups heightened ethnic tensions - competition
Wages and Working Conditions
-Many workers didn’t like how they lost control over the conditions of their work
Women and Children at Work
-Many employers hired women because they didn’t have to pay them as much – mostly
young and white – majority were immigrants – most worked in a few industries where
unskilled and semiskilled machine labor prevailed – textile industry was largest employer
-Female workers made much less than males did, sometimes even half as much
-Many children also worked – led to passing of child labor laws in 38 states in 19th
century – had limited impact
The Struggle to Unionize
-the first attempt to combine various labor organizations was when William H. Sylvis
founded the National Labor Union – eventually disappeared after Panic of 1873
-The National Labor Union excluded female workers
-There was middle-class hostility toward the unions – blamed workers for labor disputes
with employers – particularly alarming to them were the “Molly Maguires”, a militant
labor organization in the anthracite coal region of Pennsylvania
The Great Railroad Strike
-The railroad strike of 1877 began when the eastern railroads announced a 10 percent
wage cut
-Strikers disrupted rail service and destroyed equipment
-President Hayes ordered federal troops to suppress disorder in West Virginia
-Ultimately, over 100 people died before the strike finally collapsed in several weeks
-The great railroad strike was America’s first major, national labor conflict – indicated
the frailty of the labor movement – failure of it weakened railroad unions
The Knights of Labor
-First major effort to create a genuinely national labor organization was the founding of
the Noble Order of the Knights of Labor under the leadership of Uriah S. Stephens –
open to all workers – welcomed female workers – for several years, remained secret
-Under leadership of Terence V. Powderly, it moved into the open
-After 1890, membership shrunk and it ultimately disappeared
The AFL
-The American Federation of Labor represented mainly skilled workers
-Although the male leaders of the AFL were essentially hostile to idea of women
working, they still sought equal pay for those women who did work
-Samuel Gompers, the powerful leader of the AFL, accepted the basic ideas of capitalism
– his goal was to secure for the workers he represented a greater share of capitalism’s
material rewards – supported immediate objectives of most workers (better wages, etc.)
-In Chicago, a strike was in progress at the McCormick Harvester Company when the
general strike begun
-Labor and radical leaders called a protest meeting at Haymarket Square – when ordered
to disperse, someone threw a bomb that killed 7 police officers – police killed 4 people
-Haymarket bombing was alarming symbol of social chaos and radicalism
The Homestead Strike
-The Amalgamated Association of Iron and Steel Workers, affiliated with the American
Federation of Labor, was the most powerful trade union in the country – were in great
demand by employers and thus had power in workplace
-However, by the mid-1880s, the steel industry introduced new production methods that
improved the steelmaking process and reduced companies’ dependence on skilled labor
-In the Carnegie system, the union had a foothold in only the Homestead plant
-Carnegie and his chief lieutenant Henry Clay Frick decided to repeatedly cut wages at
Homestead
-In 1892, the company stopped discussing its decisions with Amalgamated –
Amalgamated called for a strike – However, the Union was defeated by the National
Guard – strikebreakers protected by troops
The Pullman Strike
-the Pullman Palace Car Company manufactured sleeping cars for railroads near Chicago
– built town of Pullman there and rented houses to the employees
-In 1893, the Pullman Company slashed wages by 25% - refused to lower rent of houses
– workers went on strike and persuaded militant American Railway Union led by Eugene
V. Debs to support them by refusing to handle Pullman cars and equipment – opposing
them was the General Mangers’ Association, composed of 24 railway companies –
paralyzed transportation from Chicago to the Pacific – strike eventually collapsed
Sources of Labor Weakness
-Many immigrant workers intended to come to America, earn some money, and then
return home – eroded their willingness to organize
-Other workers were in constant motion – not in one place long enough to exert power
-Above all, workers did not make significant gains in the lat 19th century because of
corporate strength – faced corporate organizations of vast wealth and power –
corporations were determined to crush efforts by workers to challenge them