Chapter 17 Notes

Sources of Industrial Growth

a) Industrial Technologies
Revolutionizing of iron and steel production perhaps the most important
technological development
Henry Bessemer & William Kelly: Developed, almost simultaneously
a process for converting iron into the much more durable and versatile

steel
Process consisted of blowing air through molten iron to burn out

impurities (Bessemer Process)

Steel industry emerged in PA and OH while iron industry existed
New transportation systems emerged to serve the steel industry
Freighters for Great Lakes and railroads used steel to grow and
transport it
Oil industry also emerged because of lubrication needs
b) The Airplane and Automobile
Development of automobile dependent upon on growth of two technologies:
Gasoline (petrol) Result of an extraction process developed in late
19th century.
1870s European development of internal combustion engine
By 1910 the car industry played a major role in the economy
First gas-car built in the Duryea brothers in 1903 and Henry Ford began
production
Search for flight by Wright Brothers led to the famous 1903 flight
US Government created National Advisory Committee on Aeronautics
in 1915 to match European research
c) Research and Development
New industrial technologies led companies to sponsor own research
General Electric established in 1900 and marked decentralized of

government-sponsored research
Connection began between University research & the needs of the

industrial economy partnership between academic & commercial

d) The Science of Production
Principles of scientific management began to be employed
Frederick Taylor- Argued that employers should subdivide tasks to
decrease the need for highly skilled workers & increase efficiency by
doing simple tasks with machines (Taylorism)

 Emphasis on industrial research led to corporate labs (i.e. Edisons Menlo

Park)
Most important change: Mass production and the assembly line
First used by Henry Ford in automobile plant in 1914
Cut production time and prices
e) Railroad Expansion
Industrial development because of railroad expansion
Gave industrialists access to new markets and raw materials
Spent large sums on construction and equipment
Achievements and excesses by Cornelius Vanderbilt, James J. Hill, Collis P.
Huntington, and others (tycoons) became symbols to much of nation of great
economic power concentrated in individual hands.
f) The Corporation
Emerged after the Civil war
Businesses sold stock which was appealing because of limited liability
Lost only amount of investment and was not liable for debts
Began in the railroad industry but spread to others (steel industry)
Organizations development new management techniques
Division of responsibilities, control hierarchy, cost-accounting
procedures, and middle manager between owners and labor
introduced
g) Consolidating Corporate America
Occurred through horizontal integration
Forming competing firms into a single corporation
John D. Rockfellers Standard Oil most famous corporation empire
Consolidation used to cope with cutthroat competition
h) The Trust and Holding Company
Failure of pools led to less cooperation and more centralized control
trust emerged
JF 1889 // States changed laws to allow companies to buy other companies,
trust unnecessary
holding companies emerged as corporate body to buy stock and
establish formal ownership or corporations in trust
End of 1th century // 1% of corps controlled 33% of manufacturing
Power in the hands of a few men
Ex. JP Morgan in NY
II Capitalism and Its Critics
a) The Self-Made Man

 Defenders argued capitalist economy expanding opportunities for individual

advancement and some tycoons were self-made men
Most came to be wealthy as result of ruthlessness, arrogance, and
corruption
Many industrialists were entrepreneurs trying to carve role for business in an
unstable economy and highly competitive industries
b) Survival of the Fittest
Assumptions that wealth earned through hard work and that those who failed
earned failure became the basis of Social Darwinism
Survival of the fittest
Only the best individuals survived and flourished in the marketplace
Herbert Spencer championed theory in England
William Graham Sumner promoted ideas of absolute freedom to
struggle, compete, succeed, and fail
Appealed to business because it justified their tactics efforts to raise wages
by labor through unions or regulation would fail
Tycoons themselves tried to eliminate competition through monopolies
c) The Gospel of Wealth
1901 // Gospel of Wealth by Andrew Carnegie
Advocated idea that with great wealth came great responsibility to use
riches to advance social progress
Horatio Alger promoted stories of individual success
Anybody could become rich through hard work, perseverance, and
luck
d) Alternative Visions
Groups emerged challenging corporate and capitalistic ethos
1883 // Dynamic Sociology by Lester Ward
Natural selection didnt shape society
Active government in positive planning was best for society
1870s // Socialist Labor Party founded by Daniel De Leon
1879 // Progress and Poverty by Henry George
Both argued poverty due to wealth of monopolists and their high land values
1888 // Looking Backward by Edward Ballemy spoke of fraternal
cooperation and of future society where the government distributed wealth
equally
e) The Problems of Monopoly

 Few opposed capitalism itself but movement grew in opposition to

monopolies and economic concentrations
Creating artificially high prices, unstable economy
Economy fluctuated erratically with severe recessions creating havoc every 56 years
Resentment increased because of new class of wealthy people living opulent
lifestyles
Flagrant wealth in face of 4/5 who lived in modestly
Standard of living was rising for everyone and the gap between rich and poor
was growing
III Industrial Workers in the New Economy
a) The Immigrant work Force
Late 19th century // Industrial work force grew because of migration to
industrial cities from both rural areas and foreign immigrantion
Most immigrants from England, Ireland, North Europe, and by the end
had shifted towards Southern and Eastern Europeans
Immigrants came to escape poverty, lured by opportunity and advertisements
by companies
Ethnics tensions increased because of job displacement and
competition
b) Wages and Working Conditions
Average standard of living rose but wages were low
Little job security because of the boom-bust cycle
Monotonous tasks that required little skill
Long hours in unsafe conditions
Loss of control over work conditions seen a worst part of factory labor
Corporate efficiency and managers centralized workplace
c) Women and Children at Work
Decreasing need for skilled labor led to increase use of women and children
Paid less than men
Most women were young immigrants
Concentrated in textile industry and domestic service
Children employed in agriculture and factories with little regulation
DANGEROUS!!!
d) The Struggle to Unionize
Labor attempted to fight conditions by creating large unions but was largely
unsuccessful. First attempt to federate separate unions was in 1866 with
National Labor Union

e) The Great Railroad Strike

1877 // Strike began after 10% wage cut was announced
Strikers disrupted rail service, state militia mobilized and in July,
President Hayes ordered federal troops to go
Strike collapsed eventually after many deaths
Showed disputes could no longer be localized in the national economy
f) The Knights of Labor
1869 // Noble Order of the Knights of Labor made an effort under Uriah
Stephens but lacked strong central direction but local assemblies
championed the 8-hour workday, end to child labor, but also interested in a
long-range reform of the economy
Women were allowed to join
g) The AFL
1880s // American Federation of Labor created
Became most important and enduring national labor group
Collection of autonomous craft unions of skilled workers
Led by Samuel Gompers whose goal was to secure a greater share of
capitalisms material rewards to workers
May 1, 1886 // National strike in Chicago but violence broke out between
strikers and police after deaths in Haymarket Square bombing
anarchism became widely feared by middle class & they associated
it with radical labor
h) The Homestead Strike
Amalgamated Associated of Iron and steel Workers affiliated with the
American Federation of Labor and was the most powerful trade union in the
country
Members were skilled workers and in great demand by employers
Employers sometimes resented the substantial control over working
conditions that skilled laborers had
Mid 1880s // Steel industry introduced new production methods and new
patterns of organization
Carnegie System Union had foothold in only one of the corporations three
major factories (Homestead plant near Pittsburgh)
Henry Clay Frick Carnegies chief lieutenant. Both began to cut wages at
Homestead plant in Pittsburgh to break the union
1892 // Strike called after company stopped consulting the Amalgamated,
Pinkerton Detective Agency security guards brought in as strikebreakers

 1900 // Amalgamated had lost nearly every major steel plant

i) The Pullman Strike
1894 // Strike at Pullman Palace Car Company after Pull cut wages
Workers began to strike with the American Railway Union of Eugene
V. Debs
General Managers Association asked pres. Grover Cleveland to send in
federal troops when thousands of railway workers struck and transportation
nationwide froze
Pres. Sent 2,000 troops to protect strikebreakers
j) Sources of Labor Weakness
Late 19th century // Labor suffered many losses, wages rose slowly, and
whatever progress that was made was not enforced
Reasons for failure:
Leading labor organizations represented only small percentage of

industrial work force

Ethnic tensions; many immigrant workers planned to stay in country

for short while and moved very often

Believed not part of permanent working class couldnt match efforts
of powerful and wealthy corporations