THE AGE OF INDUSTRY
AMERICA
1865-1914
PART I : THE DEVELOPMENT OF INDUSTRY
The Industrial Revolution begins in Britain
·
Describe the factors that made it possible for the industrial
revolution to first take place in Britain.
·
What relationship did advancements in agriculture have to the
industrial revolution?
·
Explain the contribution that the textile industry made to Britain’s industrial revolution.
·
Identify why the perfection of the steam engine was the most important
development of the industrial revolution.
·
What new philosophies did the Dissenters bring to the industrial
revolution?
The term industrial
revolution refers to a change in which goods began to be made in large
quantities by machines rather than one at a time by hand. In addition, manufacturing began to be done
in factories rather than in the home.
The first country to undergo a widespread industrial
revolution was Great Britain
in the latter part of the eighteenth century. Britain
had a number of advantages that enabled it to develop mass production prior to
any other country. Among these
advantages was the presence of abundant natural resources such as coal, iron
ore, and clay. The compact size of the
island, where no point is more than 70 miles from the sea, made the transportation
of these resources relatively simple. Britain’s
profitable colonial empire also had created a class of wealthy merchants who
had the money to invest in new enterprises.
In addition to these other advantages, Britain
also enjoyed a degree of political stability and freedom that had evaded other
European countries. Britain
had not been successfully invaded for seven centuries while wars ravaged the
rest of Europe.
Unlike the absolute monarchies of continental Europe,
British citizens could also be relatively assured that if they were to
accumulate private property, it would be safe from government
confiscation. British political
philosopher John Locke even described the very purpose of government as being
“the preservation of property.”
Political liberty created a climate in which private businesses could
flourish.
Any advancement in manufacturing had to be preceded by
advancements in agriculture. As long as
the vast majority of the population needed to be employed in food production,
there was no surplus labor to be devoted to industry. In 1720, 85% of Britain’s
population was rural and employed principally in farming. Agricultural improvements began in the
seventeenth century. New crops such as
turnips and carrots provided a food source that could be harvested in the
winter. New farming techniques such as
crop rotation, planting crops in straight rows (made possible by Jethro Tull’s development of the
seed drill) to facilitate easier weeding and harvesting, and the enclosure of
fields not only increased food production but also decreased the need for farm
labor.
Britain’s
industrial revolution began with developments in the textile (cloth) industry.
Prior to the mid-eighteenth century, cotton and wool had been spun into
thread by hand and then woven into cloth on hand looms. This process was usually done in small quantities
by farm laborers in their cottages at times when they could not work in the
fields. In the 1730s John Kay developed
the Flying Shuttle that allowed cloth to be weaved much faster and in larger
quantities. Kay’s invention triggered an
angry reaction from English weavers who saw it as a threat to their jobs. Despite the sometimes violent protesters, the
Flying Shuttle was widely in use throughout England
by 1760. It was, however, limited in
value unless enough thread could be produced to keep up with the demands of
faster weaving. The British government
offered a prize to anyone who could solve this problem. It took only four years for James Hargreaves to develop the Spinning Jenny, which was capable
of forming eight threads of cloth at the same time. Five years later, Richard Arkwright’s
Water Frame totally mechanized the spinning of thread. Arkwright
eventually developed a factory in Manchester, England
that employed over 300 men in the production of cloth. By 1787 Edmund Cartwright’s power loom had
totally mechanized the weaving process and made it possible to produce mass
quantities of woven cloth. Within only
thirty years, the production of textiles had gone from a slow process done by
hand to a totally mechanized operation.
With the potential to create large factories came the
problem of developing a reliable power source.
Early factories had to be located high in the hills, far away from urban
centers, in order to take advantage of the only available source of power, the
waterwheel. The perfection of the steam
engine by James Watt in 1769, which
consumed only a third of the energy of the earlier Newcomen
Engine, proved to be the key development that allowed industrialization to
accelerate. Combined with the earlier development
by Abraham Darby of a way to produce
coke (purified coal), which was a cheap and abundant source of energy, the
steam engine made it possible to locate industries virtually anywhere. A 100 horsepower steam engine was capable of
doing the work of 880 men. It could run
50,000 spindles, employ 750 workers, and produce 226 times more thread than
before steam power.
By the late
eighteenth century a change was coming over Britain
that was unprecedented (had not occurred before) in the history of the
world. Numerous factories were being created,
a network of canals was being dug to facilitate (make easier) the
transportation of resources to factories and products to markets, and a
national system of banking was being developed to provide loans and other forms
of financing to businessmen. Cities were
rapidly expanding, filled with former agricultural laborers who were either no
longer needed on the farm or who were attracted by the opportunity of
employment in the growing factories. An entire new class of wealth was being
created to rival the traditional forms of wealth from landholdings or shipping.
A large
portion of this new wealth was in the hands of what the British called Dissenters. Dissenters were Protestants such as
Presbyterians, Quakers and Unitarians who did not belong to the Church of
England (The Church of England was an established
church, maintained by the government with the monarch as its head.). These Dissenters were usually excluded from
government, classical universities, and the nobility. With little other opportunity for
advancement, they focused their attention on trade and industry. Their religious doctrines (beliefs)
emphasized hard work in which material success was a sign of God’s
blessing. Excluded from the leading
universities, they set up their own schools where they rejected the classical
emphasis on Greek and Latin and instead focused on subjects such as
mathematics, science, and business organization. Following their example, soon almost all
education was quickly harnessed to the needs of an industrial society. As a standard teaching text, William Bagley’s
Classroom Management, later stated:
“One who studies educational theory aright can see in the mechanical routine of
the classroom the educative forces that are slowly transforming the child from
a little savage into a creature of law and order, fit for the life of civilized
society.” The Dissenter’s belief that
wealth was good, hard work produced success, and that education should be
practical and economically profitable was perfectly suited to the demand of the
new industrial age, and the leading developers of American industry also later
adopted these ideas.
Early American Industrial Development
·
Why did conflict with Britain
accelerate the development of American industry?
·
What role did Alexander Hamilton
play in early American industrial development?
·
What is a tariff? Why was it important in early American
history?
·
Why was most early industry
located in the Northeast?
·
What was the first U.S.
industry to adopt the factory system?
·
Describe the contributions of
Samuel Slater and Francis Cabot Lowell to the development of American industry.
·
Describe the growth of U.S.
industry between 1840-1860.
Prior to the Civil War American industry had developed
primarily as a result of conflict with Britain. In colonial times there was very little
American manufacturing, as manufactured goods were primarily imported from Britain. Even with the high cost of trans-Atlantic
shipping, goods made in Britain
were both of higher quality and lesser price than those made in America. The economic boycotts of British goods that
preceded the Revolutionary War and the war itself, however, cut off America
from its primary source of manufactured goods.
In response, small American enterprises developed to produce products
such as cloth, shoes, and guns.
When the Revolutionary War ended Britain
was determined to win back the American markets for its goods that had been
closed to its manufacturers and merchants for over ten years. The young American industries were in no
position to compete with the older, more established British companies, and the
progress made toward developing American industry during the revolution was
virtually destroyed in the first five years of the peace. This collapse of American industry was one of
the contributing factors that led the United
States to abandon its first form of
government, the extremely weak Articles of Confederation, in favor of the much
stronger constitution written in 1787.
One of the key features of the new constitution was the ability of the
national government to impose tariffs,
or taxes on foreign goods. The purpose
of a tariff is to benefit domestic industry by making competing foreign imports
more expensive. The national tariff was
a key part of President Washington’s Secretary of the Treasury Alexander Hamilton’s plans to develop American industry. Hamilton
had been the country’s primary advocate of domestic industry. In 1791 he delivered his famous Report on Manufactures to Congress,
pointing out that the development of industry was crucial to the nation’s
independence:
A constant and increasing necessity … for the
commodities of Europe, and only a partial and occasional demand for their own,
in return, could not but expose [the American people] to a state of
impoverishment, compared with the opulence to which their political and natural
advantages authorize them to aspire….
Not only the wealth, but the independence and security of a country
appear to be materially connected with the prosperity of manufactures…. … it is the interest of the United
States, generally, to encourage
manufactures….
Although the tariff encouraged the development of some
industry, mostly in the northeastern part of the country where soil conditions
and weather made farming less profitable; it was the importation of textile
technology from England as well as another conflict with Britain, culminating
(climaxing) in the War of 1812, that provided an opportunity for American
manufacturing to establish itself once and for all. Again denied foreign imports, Americans were
encouraged to provide for themselves.
Before the War of 1812 most U.S.
manufacturing took place within households or in small, individually operated
workshops. Most goods were produced by
hand and sold in local markets.
Gradually, however, improved technology and increased opportunities for commerce
(trade) stimulated the beginnings of change.
This change came first in the New England textile
industry.
In 1789 a 22-year-old man landed in New
York City.
Inside his head he carried the secrets that would furnish the beginnings
of the industrial revolution in the United
States.
Samuel Slater had grown up in
the shadow of one of Richard Arkwright’s textile
mills in Derbyshire, England. Apprenticed to work in a mill owned by a
friend of his father, Jedediah Strutt,
the young Slater had been quickly fascinated by its technology. In his seven years of apprenticeship and an
additional year as a machinery supervisor, he became knowledgeable in every
facet of the cotton-spinning industry.
Eager to strike out on his own but lacking the money to start his own
factory, Slater learned of the huge rewards being offered in the United States
to anyone who could develop textile machinery that would allow the Americans to
compete with the British. Britain,
of course, closely guarded its technological advantage. Skilled machinists, such as Slater, were
prohibited from leaving the country and the penalty for attempting to take
textile machinery or plans for it out of England
was as high as twelve years imprisonment.
Slater was not deterred.
Disguised as a poor farmer, he journeyed to America where he wrote to a
rich merchant, Moses Brown, who had advertised for a manager of a
cotton-spinning mill he intended to start in Rhode Island: “I flatter myself
that I can give the greatest satisfaction, in making machinery, making good
yarn … as I have had opportunity, and an oversight of Sir Richard Arkwright’s works, and in Mr. Strutt’s
mill upward of eight years.”
Slater and Brown (along with Brown’s son-in-law, William Almy) soon became partners.
By December of 1790, Almy, Brown & Slater
were producing yarn from machines that Slater had reconstructed from
memory. In its first ten months of
operation, their Pawtucket mill
produced 8,000 yards of cotton yarn.
Within two years, Slater had already earned $5,000 from his partnership
at a time when the yearly wages of a skilled worker were less than $400 per year. Eli Whitney’s development of the cotton gin
in 1792, a machine that cleaned and removed the seeds from cotton, insured an
almost unlimited supply of cotton for the spinning factories. Although workers in the mills earned only ten
to twenty-five cents per day, this was seen as a huge improvement over the
difficult life of the New England farmer. An entire family working in one of the mills
could earn over $600 a year, three times the income of a small farmer.
This factory system, as it was to be called, spread
rapidly in the 1810s. The first census
(counting) of manufacturing in 1810 revealed 269 cotton and 24 woolen mills in
the country. An embargo (refusal
to trade) of all British and French goods begun in 1807 and the War of 1812
soon spurred a tremendous expansion.
Between 1807 and 1815 the total number of cotton spindles increased
dramatically, from 8,000 to 130,000.
Until 1814 the textile factories produced only yarn and thread; the
weaving of cloth was left to families operating handlooms at home. Then Boston
entrepreneur (business developer and
owner) Francis Cabot Lowell
developed a power loom better than its English counterpart. In 1813 Lowell
organized the Boston Manufacturing Company and, at Waltham,
Massachusetts, founded the first mill in America
to carry on the processes of spinning and weaving under a single roof. Lowell's
company was an important step in revolutionizing American manufacturing. Within twenty years his company had expanded
to the point that it employed 7,000 workers.
Young women who left their farm families to work for several years in
the mills supplied much of this labor.
In what became known as the Lowell
System, these young women (usually 15-30 years old) lived in strictly
supervised dormitories and earned $6-$10 per week to send to their farm
families or save for marriage.
In the shoe industry as well, mass production through the
specialization of tasks was expanding.
By the 1830s most of the work in shoe factories continued to be done by
hand, but manufacturing in the newer establishments was increasingly divided
among men and women who, in a careful division
of labor, specialized in one or another of the various tasks involved in
production. Private cobblers producing
shoes for individual customers remained the largest source of shoe
manufacturing, but the future of the industry was more clearly suggested by
factories producing large numbers of identical shoe parts in ungraded sizes and
without distinction as to rights and lefts.
Shoes were then “put out” to individual cobblers for the final
sewing. As with textiles, the new shoe
factories emerged first in Eastern Massachusetts. New England’s abundant
hills and streams provided the fast moving water necessary for the waterwheels
that powered the new factories. The development
of a sewing machine capable of sewing uppers into the soles allowed the entire
shoemaking process to be mechanized by the 1850s.
By the 1830s factory production was spreading from
textiles and shoes into other industries as well; and manufacturing was moving
beyond Massachusetts and New
England to become an important force throughout the American
Northeast. Between 1840 and 1860,
American industry experienced a steady and, in some areas, spectacular
growth. In 1840 the total value of
manufactured goods produced in the United States
stood at $483 million; ten years later the figure had climbed to over $1
billion; and by 1860 it reached close to $2 billion. For the first time, the value of manufactured
goods was approximately equal to that of agricultural products.
The most noticeable change in American life in the 1840s
and 1850s was the rapid development of the industrial economy of the
Northeast. Industrialization, which had
begun slowly in the years immediately following the War of 1812 and had
gathered force in the 1820s and 1830s, now burst forth as a major factor in the
Northern economy. Of the approximately
140,000 manufacturing establishments in the country in 1860, 74,000 were
located in the Northeast. They included,
moreover, most of the larger enterprises.
Although the Northeast had only a little more than half the mills and
factories of the nation, it produced more than two-thirds of the manufactured
goods. Of the 1,311,000 workers in
manufacturing in the United States,
about 938,000 were employed in the mills and factories of New England
and the Middle Atlantic states.
Industry and Social Change
·
Describe how the growth of industry affected the Northeast.
·
Describe the two main sources of the growth in urban population.
·
What were the main sources of immigration to the U.S. prior to the Civil War?
·
How did industrialization accentuate the differences between the North
and the South?
·
Describe working conditions in the early factories.
·
How did U.S. unions differ from European ones?
What factors made it so difficult for unions to organize workers?
One of the most profound changes in the nature of
Northeastern society in the antebellum (pre-Civil War) period was the
growing size of its cities. Between 1840
and 1860 the population of New York,
for example, rose from 312,000 to 805,000 (1.2 million if Brooklyn,
which was then a separate municipality, is included.). Philadelphia's
population grew over the same twenty-year period from 220,000 to 565,000, and Boston's
from 93,000 to 177,000. By 1860, 26% of
the population of the free states
was living in towns or cities, up from 14% in 1840. The percentage was even higher in the most
highly industrialized states of the Northeast.
In the South, by contrast, the increase of urban residents was only from
6% in 1840 to 10% in 1860.
The enlarged urban population was in part simply a
reflection of the growth of the national population as a whole, which rose by
more than a third from 23 million to over 31 million in the decade of the 1850s
alone. It was also, however, the result
of the flow of people into the cities from two different sources. The first, and for a time larger source, was
farming families of the Northeast who were being forced off their lands by
competition from farmers west of the Appalachian Mountains. The second source was immigration from Europe. Between 1830 and 1840 only a relatively small
number of foreigners had moved to the United
States, about 500,000 in all. Beginning in 1840, however, the floodgates
opened. The number of immigrants
arriving in 1840 (84,000) was the highest for any one year so far in the
century. In the ensuing years even that
number would come to seem insignificant.
Between 1840 and 1850 more than 1.5 million Europeans moved to America. In the last years of the decade the average
number arriving annually was almost 300,000.
Of the 23 million people in the United
States in 1850, approximately 10% were
foreign-born. Still greater numbers
arrived in the 1850s. Almost half the
population of New York City in the
1850s consisted of recent immigrants. In
St. Louis, Chicago,
and Milwaukee, the foreign-born
outnumbered those of native birth. Few
immigrants settled in the South due to the lack of demand for unskilled labor
and high land prices. Only 500,000
foreign-born residents lived in the slave states in 1860, and a third of these
were concentrated in Missouri.
The newcomers came from many different countries and
regions: England,
France, Italy,
Scandinavia, Poland,
and Holland, but the overwhelming
majority of these immigrants came from Ireland
and Germany. In 1850 the Irish constituted approximately
45% and the Germans over 20% of the foreign-born in America. By 1860 there were more than 1.5 million
Irish-born and approximately one million German-born people in the United
States.
Several factors accounted for the prevalence of immigrants from Ireland
and Germany:
widespread poverty caused by the economic dislocations of the industrial revolution
in Europe, famines resulting from the failure of the
potato and other crops, dislike of English rule by the Irish, and the collapse
of the liberal revolution of 1848 in Germany.
As urban centers now grew rapidly in the northeastern part
of the country, class divisions became more visible and pronounced. New industrial capitalists and financiers
accumulated fortunes only rarely seen in earlier times. A growing urban middle class of managers became an ever more important factor in
American society, and a rapidly expanding industrial labor force created a
distinct working class. The growing size of the factories, as well as
emerging class distinctions, changed forever the relationship between employers
and laborers. It had been common in the
early years for mill owners to treat their workers with a paternal
(fatherly) concern that at times softened the conditions of living and working
in the new and foreign environment of the factory. With the expansion of industry such niceties
were quickly forgotten. No longer did
workers live in neat boardinghouses or dormitories carefully maintained and
supervised by their employers. Instead,
they were generally left to their own devices to find whatever accommodations
they could in the squalid (unclean) factory towns that were rapidly
growing up. No longer were the
conditions of factory labor monitored so as to reduce the hardship of the workers. Instead, factories were becoming large,
noisy, unsanitary, and often dangerous places to work. The average workday was extending to twelve,
often fourteen hours; and wages declined, so that even skilled male workers
could hope to earn only from $4 to $10 per week, while unskilled laborers were
likely to earn only about $1 to $6 per week.
Industrialization greatly widened the gap between the rich and the
poor. In Cincinnati,
a rapidly industrializing center in the Midwest, the
richest 10% of the population had held about one third of the wealth in
1790. In 1860 they held more than
two-thirds. The poorest half of the
population held about one-eighth of the wealth in 1790 but only one-fortieth in
1860. Women and children, whatever their skills,
also earned less than men. Of the
country’s six million workers in 1850, half a million were women. Most women were employed as domestics (such
as cooks and maids), but almost 200,000 worked in factories, usually in the
textile industry. Conditions were still
not as bad as in most factory towns in Britain
and Europe but neither were American factories the models
of cleanliness, efficiency, and human concern that many people had once
believed them to be.
It was in these conditions that American workers began to
organize themselves into unions for their protection. Early efforts to establish worker’s
organizations to demand better wages and shorter hours were frustrated by court
rulings that outlawed them as “criminal conspiracies.” This began to change in 1842 when the
Massachusetts Supreme Court legalized unions and held that the strike was a
lawful weapon in Commonwealth v. Hunt. Other state courts gradually accepted the
principles of the Massachusetts
decision, but the union movement of the 1840s and 1850s remained generally feeble
(weak) and ineffective. What
organization there was among workers usually occurred among limited groups of
skilled workers. These early unions
often had more in common with pre-industrial guilds (associations of
craft workers, beginning in medieval times, that regulated the standards of
their trade) than with modern labor organizations. Their primary purpose was in most cases to
protect the favored position of their members in the labor force by restricting
admission to the skilled trades. As
early as the 1830s a few local craft
unions (associations made up of workers who specialized in the same particular
skill) had begun to associate with one another to form national organizations. More such associations emerged in the 1850s,
among them the National Typographical Union, founded in 1852, followed by the
Stone Cutters in 1853, the Hat Finishers in 1854, and the Molders and the
Machinists, both in 1859. Virtually all
the early craft unions excluded women, even though female workers were numerous
in almost every industry.
Despite modest efforts at organization and protest, what
was most notable about the American working class in the 1840s and 1850s was
its relative passivity (lack of aggression). In Britain
workers were becoming a powerful, united, and often-violent political
force. They were engaging in widespread
strikes, organizing politically, and demanding widespread social change. In America,
nothing of the sort happened. Many
factors combined to explain this difference.
Among the most important was the flood of immigrant laborers into the
country following 1850. The newcomers
were usually willing to work for lower wages than native workers; and because
they were so numerous, manufacturers had little difficulty replacing
disgruntled or striking workers with eager immigrants. Ethnic divisions and tensions both between
natives and immigrants, and among the various immigrant groups themselves,
often caused working-class resentments to be channeled into internal bickering
rather than complaints against employers.
A second factor in limiting labor militancy was the fact that many
Americans viewed their membership in the laboring class as only temporary. Opportunities for advancement were frequently
available and cheap land, especially on the western frontier, gave disgruntled
workers other alternatives.
Changes in Technology Encourage Industrial Growth
·
What were the main technological
factors that led to the development of American industry prior to 1860? Why was technological innovation so crucial
to the development of American industry?
·
How did industrial development
contribute to the causes of the Civil War?
·
What effect did the development of
railroads, the telegraph, and newspapers have on the U.S.?
From the beginning American industry relied heavily on
technology for its growth. Prior to the
1840s labor was scarce in the United States, at least in comparison to other
industrializing countries, and there was great incentive for entrepreneurs to
improve the efficiency of their productive enterprises by introducing new
laborsaving devices. Machine technology
advanced more rapidly in the United States
in the mid-nineteenth century than in any other country in the world. The government helped encourage innovation by
establishing a strong patent system
to protect the inventors of new technologies and guarantee that they would
profit from their inventions. Technological change was so rapid, in fact,
that manufacturers often built their new machinery exclusively out of wood; by
the time the wood wore out, they reasoned, improved technology would have made
the machine obsolete (out of date).
By the end of the 1830s American technology, particularly in textile
manufacturing, had become so advanced that industrialists in Britain
and Europe were beginning to travel to the United
States to learn new techniques, instead of
the other way around. At the first
World’s Fair, held at London’s Crystal
Palace in 1851, Americans won more
prizes, compared to the number of entries submitted, than any other country.
A major advancement was the ability to manufacture interchangeable parts that could be substituted
for each other in a product. Eli Whitney is usually credited with
the establishment of the first U.S.
factory to employ this new method, producing interchangeable musket parts in
1798, five years after his invention of the cotton gin. The concept of interchangeability was of
particular importance to the U.S.
military in the manufacture of guns. A
defective part on the battlefield could simply be exchanged for a replacement
rather than replacing the entire weapon or crafting an individual replacement. The ability to manufacture interchangeable
parts required precision machinery capable of reproducing a given operation exactly time after time. A gunstock-turning lathe, developed by Thomas
Blanchard in 1819 at the Springfield, Massachusetts
Armory, proved to be the key innovation in this field. This technology soon spread to other
enterprises and became known as “the American
System of Manufactures.”
Interchangeable parts also led to specialization in the work force. A single, often relatively unskilled and
poorly paid, worker could turn out hundreds of identical pieces per day.
The new industrial economy could not have developed
without an adequate transportation system.
New forms of transportation were essential for moving raw materials to the
factories and for moving finished goods out to market. In the 1820s and 1830s canals provided vital
links between various parts of the country.
In the fifteen years following the completion of the Erie Canal in 1825, over three thousand miles of
canals were built. The Erie
Canal allowed goods to be transported from the Atlantic
to the Midwest and encouraged trade between the
northeast and the northwestern parts of the country. After 1840 railroads gradually replaced
canals and all other forms of transport.
Railroads enabled western farmers to ship their products cheaply and
quickly to eastern markets and thus helped to force many eastern farmers out of
business. In 1840 the total railroad
trackage of the country was only 2,818 miles, but by the end of the decade the
figure had risen to 9,021 miles. An even
more dramatic burst of railroad construction occurred in the 1850s with the
amount of trackage tripling between 1850 and 1860. The Northeast developed the most
comprehensive and efficient system, with twice as much trackage per square mile
as the Northwest and four times as much as the South. By 1853 four major railroad lines crossed the
Appalachian Mountains, connecting the Northeast with the
Northwest. Chicago
became the rail center of the West, served by fifteen lines and more than a
hundred daily trains. The railroads were
essential in forging ties between the industrial Northeast and the growing
agricultural regions of the Northwest.
This emerging alliance not only became crucial to the growth of the
American economy, but also to the sectional tensions that would isolate the
agricultural South and eventually lead to civil war.
Facilitating the operation of the railroads was another
important technological innovation: the telegraph. The telegraph had burst into American life in
1844 when Samuel Morse, after
several years of experimentation, succeeded in transmitting from Baltimore
to Washington the news of James
K. Polk's nomination for the presidency.
The Morse telegraph provided the ideal answer to the problem of
long-distance communication. Its lines extended
along the railroad tracks, connecting one station with another and aiding the
scheduling and routing of the trains.
Its development was a key to the nation's political and economic
development. It permitted instant
communication between distant cities, tying the nation together as never
before. And yet, ironically, it also
helped reinforce the growing division between the North and the South. As with railroads, telegraph lines were far
more extensive in the North than in the South; and they too helped to link the
Northeast to the Northwest (and thus to separate them further from the
South). By 1860 more than 50,000 miles
of wire connected most parts of the country; and a year later, the Pacific
telegraph, with 3,595 miles of wire, was opened between New
York and San Francisco. By then, nearly all of the independent lines
had been absorbed into one organization, the Western Union Telegraph Company.
New forms of journalism also served to draw communities
together into a common communications system, as well as to reveal more clearly
to different regions their differences from one another. In 1846 Richard Hoe invented the steam
cylinder rotary press, making it possible to print newspapers rapidly and
cheaply. The introduction of the rotary
press, together with the development of the telegraph, made possible much
speedier collection and distribution of news than ever before. Also in 1846 the Associated Press was organized for the purpose of cooperative
newsgathering by wire. Major metropolitan
newspapers began to appear in the larger cities of the Northeast. Horace Greeley's Tribune, James Gordon Bennett's Herald,
and Henry J. Raymond's Times were all
published in New York, and gave
serious attention to national and even international events. As a result, they had substantial circulations
beyond the city.
The Post Civil War Business Boom
·
In what ways did industrialization contribute to the causes of the
Civil War?
·
How did the Civil War accelerate industrial development?
·
What were the six main factors that fueled the industrial growth
following the Civil War?
In many ways the industrial growth of the Northeast and
its increased economic ties to the Northwest, encouraged by the rapid
improvement of transportation and communications, were more significant causes
of the Civil War than the issue of slavery.
Northern business leaders believed that they were held back by the
control that representatives of the agricultural South held in Congress. The tariff had been a bitter issue between
North and South from the moment that it had been proposed by Hamilton
during Washington’s
presidency. Northerners viewed the
tariff as a vital protection for their growing industries while the South,
having no incentive to develop significant industries because of the enormous
profits in cotton farming, viewed it as increasing the cost of every manufactured
item that they sought to buy. Further
angering the South was the belief that the proceeds of the tariff went mainly
to finance the development of the railroads that mainly benefited northern
business concerns. Even more
importantly, because the South had little industry, it failed to attract many
immigrants. As a result, the population
of the North soon greatly outnumbered that of the South. By the 1850s southern leaders were feeling
totally isolated and were fearful that the North would completely dominate them
politically. The election of Abraham
Lincoln in the 1860 confirmed southern fears, as Lincoln
won the presidency despite almost no support in the South.
The ensuing Civil War did not, as many people once
believed, transform the North from an agricultural to an industrial
society. Industrialization was already
far advanced when the war began. In 1820
six times as many men and women had been involved in agriculture as in
manufacturing. By 1860 this ratio had
dropped to less than four to one. The
war served to only further advance the northern industrial economy. Government contracts for war supplies
expanded business. Coal production
increased by nearly 20% during the war.
Railroad facilities improved, mainly through the adoption of a standard
gauge (track width). The loss of farm
labor to the military forced many farmers to increase the mechanization of
agriculture. The political power of the
South, held before the war by Democrats opposed to the interests of industry,
was crushed and the party of the industrial North, the Republicans, would enjoy
a decade of unchallenged rule.
Not all the effects of the war were so positive, even in
the North. Industrial workers experienced
a substantial loss of purchasing power, as their wages failed to rise fast
enough to keep pace with the substantial wartime inflation. Prices in the North rose by more than 70%
during the war, while wages rose only about 40%. The liberalization of immigration laws began
to introduce additional competition into the labor market and helped keep wages
low. The increasing mechanization of
production threatened many skilled workers with the loss of their jobs. One result was a substantial increase in
union membership in many industries and the creation of a group of national
unions for coal miners, railroad engineers, and other workers.
Virtually all the forces that contributed to American
economic growth in the years 1865-1900 existed in some form before the Civil
War, but there had been other forces at work in those years to inhibit economic
development. Perhaps most important,
conservative southern planters, exercising great political power, had served as
an obstacle to governmental policies favoring northern business interests. The years of war and Reconstruction (the ten years following the war) removed that
obstacle and, in the 1870s and 1880s, the interests of northern businesses came
to dominate the government.
Between the Civil War and the start of the twentieth
century, the number of Americans engaged in manufacturing tripled and the United
States passed Britain
as the world’s leading industrial power.
Many factors contributed to this dramatic industrial growth. The United States
had an abundance of basic raw materials and energy sources, especially coal,
iron, timber, petroleum, and waterpower.
For example, the mining of coal increased from 14 million tons in 1860
to 100 million tons in 1884. There was
also a large and growing supply of labor, the result of two great
migrations—the movement of American farmers into the cities and the movement of
European peasants across the ocean to the nation's industrial centers. American industry benefited as well from a
remarkable technological inventiveness widely heralded as “Yankee ingenuity”
which created the necessary machinery and new industries for industrial growth.
A talented, ambitious, and often ruthless group of
entrepreneurs, known to some as “captains of industry” and by others as “robber
barons,” developed new financial and administrative structures capable of
organizing large-scale production and distributing manufactured goods to a
national market. The market for goods
itself was growing as a result of the new railroad network, the rapidly
expanding population and greater wealth, as well as a host of new marketing techniques. Finally, the federal government actively
worked to support industrial growth.
Although it resisted most pressures to interfere with the prerogatives
(privileges) of business owners, it worked to promote corporate growth. It made public resources available to private
businesses on generous terms, erected protective tariff barriers against
foreign competition, established a new banking and currency system, and
provided direct subsidies (grants of assistance) of land and money,
especially to the railroads.
The remarkable growth that resulted from these six factors
did much to increase the wealth and improve the lives of many Americans. These benefits, however, were far from
equally shared. While the captains of
industry and the growing middle class were enjoying a prosperity without
precedent in the nation's history; workers, farmers, and others were
experiencing an often painful ordeal that slowly edged the United States toward
a great economic, social, and political crisis by the end of the century as the
gap between the rich and the poor continued to grow.
Innovation and Industrial Growth
·
What contribution did the following make to industrial development: Bell, Edison, Sholes, Ritty, Burroughs, Bessemer, Drake, Swift, Borden, Duke, Marconi, and
Ford?
·
Why did Pittsburgh become the center of the U.S. steel industry?
No single factor can be called the most important prerequisite
(requirement) of industrial growth.
Indeed, industrialization depends above all on the working together of
many forces at once. One of the most
important of such forces was the emergence of new technologies and the
discovery of new materials and productive processes. In the last decades of the nineteenth
century, inventions appeared at a dizzying pace. In the entire history of the United
States up to 1860 only 36,000 patents had
been granted. For the period from 1860
to 1890, the figure was 440,000.
Comparable technological advances were occurring in Europe
in these same years, and Americans benefited from those as well.
Many of the postwar inventions and discoveries were in the
field of communication. In 1866 Cyrus W.
Field succeeded in laying a transatlantic telegraph cable to Europe. During the next decade, Alexander Graham Bell developed the first commercially useful
telephone; and by the 1890s, the American Telephone and Telegraph Company had installed
nearly half a million phones in American cities. Other inventions that speeded the pace of
business organization were the typewriter (by Christopher L. Sholes in 1868), the cash register (by James Ritty in 1879), and the calculating or adding machine (by
William S. Burroughs in 1891).
Another important technological breakthrough was the
development of steel. An Englishman, Henry Bessemer, developed a process by
which iron could be transformed into steel, a much more durable and versatile
material, in the 1850s. The Bessemer
process consisted of blowing air through molten iron to burn out the impurities
and allowed mills to manufacture the same amount of steel in fifteen minutes
that had been previously taken them a full day to produce. This technique made possible the production
of steel in great quantities and in large dimensions, thus facilitating use of
the metal for the production of locomotives, steel rails, and ultimately, heavy
girders for the construction of tall buildings.
The steel industry emerged first, unsurprisingly, where
its key resources already existed, in Western Pennsylvania
and Eastern Ohio, a region where iron ore and coal were
abundant. Pittsburgh
quickly became the center of the steel industry. The rapid growth of the steel soon stimulated
the development of new sources of iron ore in other areas. The mines of the Upper Peninsula of Michigan
were furnishing more than half the country’s supply of iron ore by the
1870s. Beginning in the 1890s the
extensive Mesabi Range in Minnesota
developed into the greatest ore-producing region in the world. Another rich source was discovered around Birmingham,
Alabama.
Eventually centers of production were developed closer to the new
sources of ore and coal in Cleveland;
Detroit, Chicago,
and Birmingham.
The petroleum industry also emerged in the late nineteenth
century. Many Americans had been aware
for some time of the existence of petroleum reserves in western Pennsylvania
where oil often seeped to the surface of streams and springs. At first, however, no one was quite sure what
it was or what to do with it. In 1855,
however, Pennsylvania businessman
George H. Bissell sent a sample of oil to Professor Benjamin Silliman of Yale
for analysis. Silliman told him that the
substance could be used for lighting purposes as an alternative to expensive
whale oil. Convinced now that oil had
commercial possibilities, Bissell sent Edwin
L. Drake to establish the first oil well near Titusville
in western Pennsylvania. Skeptics called the well “Drake's folly,” but
demand for petroleum grew quickly enough to create an oil rush. Promoters began to develop other fields in Pennsylvania,
Ohio, and West
Virginia.
Strong competition kept prices low, increasing the attractiveness of oil
as an alternative to other illuminants.
By the 1870s nearly 40 million barrels of petroleum had been produced,
oil had advanced to fourth place among the nation's exports; and annual
production was approaching 20 million barrels.
The technological innovation that probably had the most
revolutionary effect on industry and on the lives of the growing urban
population was the introduction in the 1870s of electricity as a source of
light and power. Among the several men
who pioneered this development were Charles F. Brush, who devised the arc lamp
for street illumination, and Thomas A.
Edison, who invented, among many other electrical devices, the incandescent
lamp (or light bulb), which could be used for both street and home
lighting. Edison and others designed
improved generators and built large power plants to furnish electricity to
whole cities. By the turn of the
century, 2,774 power stations were in operation, and some 2 million electric
lights were in use in the country.
Electric power was, by 1900, becoming commonplace in street railway
systems, in the elevators of urban skyscrapers, and in factories.
New technologies and materials similarly transformed other
industries. The refrigerated freight car
made possible the expansion of the great meatpacking organizations of Gustavus Swift, Philip Armour, and others.
New methods of canning foods and condensing milk helped establish the
prepared-foods industry under the leadership of Gail Borden and others. James Duke, utilizing a machine that
could roll, paste, and cut tubes of tobacco into 100,000 cigarettes a day,
formed the American Tobacco Company in 1890, making cigarettes the most popular
form of tobacco consumption. By the
beginning of the twentieth century new technology was leading to even greater
advances. There were early experiments
in communication by radio conducted by the Italian inventor Guglielmo Marconi in the 1890s. There
was also the beginning of the development of air travel with the famous flight
by the Wright Brothers at Kitty
Hawk, North Carolina, in
1903.
Of more immediate importance was the development of the
automobile. In the 1870s designers in France,
Germany, and Austria
were already beginning to develop engines that could drive independently controlled
vehicles. They achieved early successes
with an “internal combustion engine,” which used the expanding power of burning
an oil byproduct, gasoline, to drive pistons.
With this new engine they created the first automobiles, which were
essentially traditional carriages fitted with their own source of power, to
replace the horse. Meanwhile, in the United
States, inventors such as Charles and Frank
Duryea, Elwood Haynes, Ransom Olds, and Henry
Ford were designing their own automobiles.
The Duryeas built and operated the first
gasoline-driven motor vehicle in America
in 1903. Three years later, Ford
produced the first of the famous cars that would bear his name. In 1898 the first automobile advertisement
appeared in Scientific American,
under the headline: “Dispense With a Horse.”
By 1900 automobile companies were turning out more than 4,000 cars a
year. Within twenty years, when
manufacturers such as Ford were finally able to develop mass production
techniques such as the assembly line to bring the cost down, and American roads
began to be improved to make extensive automobile traffic possible, the
industry became the driving force of the economy. As a result, the automobile was beginning to
reshape American social and cultural life.
In 1895 there had been only four automobiles on the American highways. By 1917 there were nearly 5 million.
The Urban Work Force
·
What were the two main sources of urban labor? How did this contribute to industrialization?
·
How were the “new immigrants” different from earlier immigrants? What factors led to tensions between the
various ethnic groups?
Another major factor in the expansion of U.S.
industry was the availability of abundant and inexpensive labor. The dramatic expansion in the industrial work
force, which was both a cause and a result of economic growth, arose out of a
massive migration of labor into industrial cities. As before the Civil War, this migration came
from two separate sources. The first
source of urban labor was the continuing flow of rural Americans into factory
towns and cities; people disillusioned with or bankrupted by life on the farm
and eager for new economic and social opportunities. As in Britain
earlier, technological advancements in farming created a surplus of farm
labor. Whereas it had taken three hours
to harvest a bushel of wheat by hand prior to the Civil War, Cyrus McCormick’s mechanical reaper
made it possible to complete the same task in ten minutes. John
Deere’s development of the steel plow also made it possible to easily
cultivate land that had been impossible or unprofitable before. The second source was the great wave of
immigration from abroad (primarily from Europe, but also
from Asia, Canada,
and other areas) in the decades following the Civil War, an influx that all but
overshadowed the previous periods of immigration. The 25 million immigrants who arrived in the United
States between 1865 and 1915 were more than
four times the number who had arrived in the fifty years before. The greatest wave of new arrivals came after
1890, and by the end of the first decade of the new century, immigrants were
entering America
at the rate of more than one million per year.
Until 1880 most of the immigrants came from the nation's
traditional sources: England,
Ireland, and Northwestern
Europe. Skilled artisans
(craftsmen) continued to emigrate from Great
Britain to take advantage of the expanding
opportunities in America. Economic troubles in European industry in the
1880s also induced factory workers from Sweden,
Germany, and England
to move to the United States. The declining agricultural economy of Northern
Europe (and of Ireland,
in particular) pressured still others to journey to America. By the end of the century, however, the major
sources of immigrants had shifted, with large numbers of Southern and Eastern
Europeans (Italians, Poles, Russians, Greeks, Slavs, and others) pouring into
the country and into the industrial work force.
On the West Coast, Chinese laborers were brought in to work for low
wages building the railroads. By 1880
one-tenth of California’s
population was Chinese.
Americans of old stock, as well as ethnic groups who had
arrived a decade or so before, often looked on these new immigrants with fear and hostility. The strange customs, languages, and religions
of the new arrivals elicited strong prejudice, and often violence. In Wyoming,
white miners massacred 28 Chinese miners in 1885. In the Northeast, Catholics and Jews met
faced strong religious prejudice from predominately Protestant old-stock
Americans. To the industrialists,
however, immigration provided an abundant source of inexpensive labor. Industries that had traditionally been
dominated by one national group now began to replace them with members of
others, who could be hired at lower wages than the earlier workers. This only added to the tensions between the
various ethnic groups. Poles, Greeks,
and French Canadians began to displace the British and Irish workers in the
textile factories of New England. Italians, Slavs, and Poles began to emerge as
a major source of labor for the mining industry, which had traditionally been
the province of native workers or Northern European immigrants. Within industries, moreover, workers tended
to cluster in particular occupations (and thus, often, at particular income
levels) by ethnic group just as urban neighborhoods were often strictly
segregated by country of origin. The
popular image of the “melting pot” of Americans of different ethnic backgrounds
melding together into one common culture was more myth than reality as various
ethnic groups isolated themselves in competition for the same jobs. Ethnic tensions also made it difficult for
workers to organize to demand greater rights as ethnic hostility often
outweighed any sense of worker solidarity.
The Revolution in Business Practices
·
What is a corporation?
·
How did the development of railroads assist the growth of industry?
·
What were combinations?
·
How did Andrew Carnegie and John D. Rockefeller develop huge
monopolies?
·
What is the difference between a horizontal monopoly and a vertical
monopoly?
·
What is the difference between a trust and a holding company?
·
What were the positive and negative effects of the development of
monopolies?
·
What contribution did Frederick Winslow Taylor make to the development
of industry?
·
What business practice did Thomas Edison inspire?
·
What benefits were generated by Ford’s use of mass production in the
automobile industry?
The principal agent of industrial development in the late
nineteenth century was the continued expansion of the nation’s railroads. Railroads promoted economic growth in many
ways. As the principal method of
transportation, they made possible the expansion of genuinely national commerce
by giving industrialists quick and relatively inexpensive access to distant
markets and distant sources of raw materials.
Also, as the nation's largest businesses, the railroads created new
forms of organization that served as models for other industries. As America's
biggest investors, they stimulated economic growth through their own enormous
expenditures on construction and equipment.
Even before the Civil War, railroads had been the most
important single economic interest in the United
States.
Their importance grew still further in the years that followed the war. Every decade the total railroad trackage
increased dramatically. Along with the
extension of lines came improvements in technology that made railroad travel
safer and more efficient—steel rails, heavier locomotives and cars, uniform
track gauge, wider roadbeds, and perhaps most important, new braking systems
(first introduced by George Westinghouse)
that reduced the danger of derailments and pileups. Subsidies (grants of money) and land
grants by the federal government to support the transcontinental lines and by
state and local governments to encourage secondary routes were vital to these
vast undertakings, which required far more capital
(money) than private entrepreneurs could raise by themselves. Between 1850 and 1857 the railroads received
25 million acres of public land, free of charge, and millions of dollars in
loans.
Equally important was the emergence of great railroad
corporations, the first large economic combinations
that brought a vast proportion of the nation's rails under the control of a
very few men. Among the earliest such
combinations was the vast New York Central Empire of Cornelius Vanderbilt (a former steamship owner widely known as “the
Commodore”). Vanderbilt and other
railroad tycoons, among them James J. Hill, Jay Gould, and Leland Stanford,
became symbols to much of the nation of great economic power concentrated in a
few single individuals. But railroad
development was less significant for the individual barons it created than for
its contribution to the growth of a new business institution—the modern corporation.
There had been “corporations” in America
since colonial times. The term was then
used to describe organizations chartered by governments and charged with
running such public facilities as bridges, roads, and banks but the corporation in the modern sense of the word
emerged as a major economic force only after the Civil War. By then railroad tycoons and other
industrialists were realizing that many of the great ventures they envisioned
could not be financed by any single person, no matter how wealthy, nor even by
any single group of partners. Under the
laws of incorporation passed in many states in the 1830s and 1840s business
organizations could raise money by selling stock
(shares of ownership) to members of the public.
This was not a totally new practice.
The first great industrial enterprise in the country, Lowell’s
Boston Manufacturing Company, had been incorporated in 1813. It raised a staggering sum of $400,000 and
returned dividends (a share of the
profits) of 104.5% to its investors in its first ten years of operation. In the decades after the Civil War, one
industry after another adopted this practice of financing its
undertakings. More importantly, affluent
(wealthy) Americans began to consider the purchase of stock to be a good
investment, even if they were not themselves personally involved in the
business whose stock they were purchasing.
Investors hoped to receive dividends
if the business was profitable and capital
gains if the value of their stock increased. The phenomenon of people investing in
businesses with which they had no direct connection was almost entirely new. What made the practice appealing was that
investors had only “limited liability,” that is investors risked only the
amount of their investments. They were
not liable for any debts the corporation might accumulate beyond that
point. Therefore if a company went
bankrupt, individuals could not lose more than they had invested. Thus, with the creation of corporations, it
was now possible for entrepreneurs to gather vast sums of capital and undertake
great projects.
The new type of corporation quickly spread beyond the
railroad industry to other areas of the economy. In steel, the central figure was Andrew Carnegie, a Scottish immigrant
who had worked his way up in the railroad industry. In 1873 he opened his own steelworks in Pittsburgh;
and in the following decades expanded his company to a place of dominance in
the industry. His methods were much like
those of other rising industrial titans (giants). He capitalized on the advantages of economy of scale, the principle that
the unit cost to produce an item drops with the more items produced. A larger industry such as Carnegie’s had many
advantages. From the railroads, who
could not afford to lose his business, he obtained rebates (return of
part of the price) on his shipments so that he could cut his costs and hence
his prices. He bought out rival concerns
that could not compete with him. He set
up, in collaboration with his able associate Henry Clay Frick, a carefully integrated
system that enabled him to control the processing of steel from mine to
market. His company bought up coalmines
and leased part of the Mesabi Range,
operated a fleet of ore ships on the Great Lakes, and
acquired railroads. Carnegie financed his
undertakings not only out of his own profits but also out of the sale of
stock. Then, in 1901, he sold out to the
banker J. Pierpont Morgan, who
merged the Carnegie interests with others to create the giant United States
Steel Corporation, a $1.4 billion enterprise that controlled almost two-thirds
of the nation's steel production.
Businessmen such as Carnegie created huge monopolies (businesses that
dominated their industry) through two primary methods. The first was “horizontal integration,” the combining of a number of firms engaged
in the same business into a single corporation.
The consolidation of many different railroad lines into one company was
an example of the formation of this type of monopoly. The second method, which became prevalent in the
1890s, was “vertical integration,”
the taking over of the businesses on which a company relied for its primary
function. Carnegie Steel, which came to
not only control steel mills, but also mines, railroads, and other enterprises,
was an example of a vertical monopoly.
It was not simply the domination over their smaller
competitors that characterized the new corporations; it was also a new approach
to management. Large, national business
enterprises needed vastly different management structures than the limited,
local companies of the past. As a
result, corporate leaders introduced a set of managerial techniques that relied
on the division of responsibilities, a carefully designed hierarchy of control,
modern cost-accounting procedures, and perhaps above all a new breed of
business executive: the “middle manager,” who formed a layer of command between
workers and owners. Stockholders elected
a Board of Directors to oversee the
operation of the business, which was entrusted to a Chief Executive Officer (CEO).
Depending on the size of the business, various levels of upper and
middle management oversaw the labor force.
Beginning in the railroad corporations, these new management techniques
moved quickly into virtually every area of large-scale industry. Here again, advancements in technology played
a key role. The modern corporate
structure would have been impossible without telephones, typewriters, adding
machines, and cash registers.
The most celebrated corporate empire of the late
nineteenth century was Standard Oil. The
greatest monopoly builder of the time, John
D. Rockefeller, pieced it together by using both vertical and horizontal
methods. Beginning at the age of
nineteen, when he became a partner in a Cleveland
business that earned great profits during the Civil War, Rockefeller displayed
remarkable business talents. Farsighted
and skilled at organization, he decided that his own economic future lay with
the oil industry. Shortly after the
Civil War he launched a refining company in Cleveland,
Ohio.
From the beginning, he sought to eliminate his competition, especially
the many small-scale companies that he believed were ruining the petroleum industry
by driving down prices through intense competition. Through ruthless cost cutting—made possible
by economy of scale—and manipulation of the railroads, he proceeded methodically
to buy out other refineries. In 1870 he
formed the Standard Oil Company of Ohio,
which in a few years acquired twenty of the twenty-five refineries in Cleveland,
as well as plants in Pittsburgh, Philadelphia,
New York, and Baltimore.
Initially Rockefeller expanded only horizontally but soon
he began expanding vertically as well.
He built his own barrel factories, terminal warehouses, and a network of
pipelines that gave him control over most of the facilities for transporting
petroleum. Standard Oil also owned its
own freight cars and developed its own marketing organization, thus avoiding commissions
(payments for service) to middlemen. By
the 1880s Rockefeller had established such dominance within the petroleum
industry that he became the leading symbol of monopolistic practices.
Rockefeller and other industrialists saw the creation of
monopolies as a way to cope with what many believed was the greatest curse of
the modern economy—cutthroat competition.
Businessmen insisted that they believed fervently in free enterprise and
a competitive marketplace, but such beliefs often lasted only until they
themselves were exposed to competition. Then they realized that the existence of too
many competing firms in a single industry could spell instability and ruin for
all, and that a successful enterprise was one that could eliminate or absorb
its competitors. The most successful
technique for eliminating this competition was the creation of the trust, pioneered by Standard Oil in the
early 1880s. Over time the word “trust”
became a synonym for any large monopoly.
A trust was in fact a particular kind of organization, one that soon
became a common vehicle for consolidating railroads and other industries as
well. Under a trust agreement,
stockholders in individual corporations transferred their stocks to a small
group of trustees (in the case of the Standard Oil Trust, to men chosen and
dominated by Rockefeller) in exchange for shares in the trust itself. Owners of trust certificates often had no
direct control over the decisions of the trustees; they simply received a share
of the profits of the combination. Thus
while John D. Rockefeller officially owned only a few refinery companies, he
managed through the mechanism of the trust to extend his reach over a vast
range of enterprises. An even greater
master of the trust was J. P. Morgan. In
theory Morgan was simply a bank president; in reality he dominated scores of
industrial organizations.
Another form of consolidation, closely related to the
trust, began to emerge in the 1890s. In
1889 the state of New Jersey,
followed later by many other states, changed its laws of incorporation to
permit companies to buy up other companies.
This made the cumbersome awkward vehicle of the trust unnecessary
and permitted actual mergers of companies.
Rockefeller quickly relocated Standard Oil to New
Jersey and created what became known as a holding company, a central corporate
body that would formally buy up the stock of various members of the Standard
Oil trust and establish direct ownership of each company in the trust. Many other corporations followed suit. As a result, by the end of the nineteenth
century 1% of the corporations in America
were able to control more than 33% of the manufacturing. A congressional investigation disclosed in
1913 that Rockefeller and Morgan between them controlled companies valued at
more than $22 billion. What was
emerging, in other words, was a system of economic organization that lodged
enormous power in the hands of very few men, the great bankers of New York and
industrial titans such as Rockefeller (who himself gained control of a major
bank).
Whether or not the ruthless concentration of economic
power in huge monopolies such as Standard Oil and U.S. Steel was the only way
(or the best way) to promote industrial expansion became a major source of
debate in America
in the late nineteenth century and beyond.
It is, however, clear that the industrial giants of the era were
responsible for substantial economic growth and forever changing the face of
American business.
Just as the development of huge corporations forced a
change in techniques of business management, changes were also made to increase
the efficiency of factory work. Central
to the growth of many industries were advances in the science of
production. Convinced that a modern
economy required modernization of the manufacturing process, industrialists by
the turn of the century were employing new principles of “scientific
management,” or ways to manage human labor to increase its efficiency. The leading force behind this new science was
Frederick Winslow Taylor. Taylor
observed every minute detail of the manufacturing process and suggested ways to
save time and energy, realizing that, in a mass production business, even the
smallest savings would be duplicated millions of times in the course of a
single day. Taylor
urged employers to reorganize the production process by subdividing tasks into
specialties for each worker. This would
be a way to speed up production; it would also make workers more
interchangeable and thus diminish a manager's dependence on any particular
employee. If properly managed, he
argued, fewer and fewer workers could perform simple tasks at much greater
speed, greatly increasing productive efficiency.
Manufacturers also began placing greater emphasis on
industrial research to improve their products or develop new ones. In part because of the phenomenal success of
Thomas Edison's famous industrial laboratory in Menlo Park,
New Jersey, dozens of corporations began
establishing laboratories of their own.
By 1913 Bell Telephone, Du Pont, General Electric, Eastman Kodak, and
several other companies were budgeting hundreds of thousands of dollars each
year for research by their own engineers and scientists.
Out of all the new methods and machines emerged the
greatest triumph of production technology: mass production and, above all, the
moving assembly line, which Henry Ford introduced in his automobile plants in
1914. This revolutionary technique cut
the time for assembling an automobile chassis from twelve and a half to one and
a half hours. It also enabled Ford to
raise the wages and reduce the hours of his workers while cutting the base
price of his Model T from $950 to $290.
Ford’s accomplishment served as an example for many other industries.
Progress for Many
·
In what ways did the lives of many Americans benefit from
industrialization?
·
How did industrialization change the buying habits of most Americans?
The rise of American industry could not have occurred
without the growth of markets for the goods being produced. Although some Americans could not afford to
buy the products of their labor, a mass market for industrial goods did
emerge. Much of it consisted of members
of the middle class, whose own increasing wealth allowed them to purchase more
goods than they once had. Much of the
growth of sales consisted of people who became consumers less because they were
making more money than because mass production and mass distribution were
making consumer goods less expensive.
Incomes did rise in the industrial era, although at highly
uneven rates. The most conspicuous
(obvious, easy to see) result of the new economy was the creation of vast fortunes;
but perhaps the most important result for society as a whole was the growth and
increasing prosperity of the middle class.
The salaries of clerks, accountants, supervisors, and other white-collar workers rose by an average
of a third between 1890 and 1910 and in some parts of the middle class much
higher. Doctors, lawyers, and other
professionals, for example, experienced a particularly dramatic increase in
both the prestige and the profitability of their professions. Working-class incomes for factory workers
rose too in these years, although from a much lower base and at a far less
rapid pace. Iron and steelworkers, for
example, saw their hourly wages increase by a third between 1890 and 1910. Industries with large female workforces,
shoes, textiles, and paper saw more modest increases, as did almost all
industries in the South. Family incomes
for working-class people increased, too, because women and children so often
worked to supplement the husband and father's earnings, or because families
took in boarders or did laundry for the neighborhood.
Far more important than rising incomes, however, was the
development of affordable products and the creation of new merchandising
techniques, which made many consumer goods available to a mass market for the
first time. A good example of such
changes was the emergence of ready-made clothing as the basis of the American
wardrobe. In the early nineteenth
century most Americans had made their own clothing, usually from cloth they
bought from merchants or from fabrics they spun and wove themselves. The invention of the sewing machine and the
spur that the Civil War (with its demand for uniforms) gave to the manufacture
of clothing created an enormous industry devoted to producing ready-made
garments. By the end of the century,
virtually all Americans bought their clothing from stores; and partly as a
result, much larger numbers of people were becoming concerned with questions of
style. Interest in women's fashion, for
example, had once been a luxury reserved for the relatively affluent. Now middle-class and even working-class women
could strive to develop a distinctive style of dress.
Another example was the way Americans bought and prepared
food. The development and mass
production of tin cans in the 1880s created a large new industry devoted to
packaging and selling canned food and condensed milk. Refrigerated railroad cars were making it
possible for meats, vegetables, dairy products, and other foodstuffs to be transported
over long distances without spoiling.
The growth of artificially frozen ice made possible the proliferation of
iceboxes in homes that in the past had not been able to afford them. For most Americans, these changes meant
improved diets, better health, and ultimately longer lives. As a result, life expectancy rose six years
in the first two decades of the twentieth century.
Changes in marketing also served to alter the way
Americans purchased products. Small
local stores began to face competition from national “chain stores.” The Atlantic
and Pacific Tea Company (A & P) began to establish a national network of
grocery stores beginning in the 1870s.
F. W. Woolworth's created a chain of dry goods stores. Sears Roebuck and Montgomery Ward established
a large market for their mail-order merchandise by distributing enormous
catalogues from which even people in remote rural areas could order new
products. In larger cities, the
emergence of the great department stores helped to transform buying habits and
to turn shopping into a more fascinating and glamorous activity. Marshall Field in Chicago
created one of the first American department stores, a place deliberately
designed to create a sense of wonder and excitement. Similar department stores such as Macy's and
Abraham and Straus emerged in New York,
Brooklyn, Boston,
Philadelphia, and other cities.
For many Americans the industrial revolution eventually
brought access to more abundant and less expensive products, improving their
lives greatly. But for other Americans,
most notably farmers and the urban poor, the dramatic social changes brought
only hardship and misery. This gap
between advancing and declining segments of society would produce decades of
social and political turmoil. Beginning
in the 1880s calls for reform of the political system, in order to adjust to
the rapidly changing economic and social conditions, began to be heard. Modern industrial development created great
wealth for some and significant progress for others. It was, however, the problems created by this
development that would alter the political system and further change American
society.
Jeffrey
T. Stroebel, The Sycamore School, 1995. Revised 2002.