The Iron Colt Becomes an Iron Horse

Chapter 24
Industry Comes of Age
The Iron Colt Becomes an Iron Horse * After Lincolns death in 1865 the railroad production went up and by the 1900s it had gone up by at least 192,556 miles * In 1862 congress began to advance liberal money loans to 2 favored cross continent companies and gave them a lot of acres paralleling the tracks. Washington gave the railroads 155,504,994 acres & the western states contributed 49 million more. * Land grants to railroads were made in broad belts along the proposed route. They were allowed to choose alternate mile square sections in checker board fashion, but until they determined the precise location some railroads were withheld all the land from other users. * In 1887 president Grover Cleveland ended this and threw open to settlement the unclaimed public land. * The government received beneficial returns like: long term preferential rates for postal service and military traffic, granting land was also a cheap way to subsidize a much desired transportation system because it avoided new taxes for direct cash grants. * Where there were railroads there was towns, people and money. Were there weren’t there was none and would be considered a ghost town.
Spanning the Continent with Rails * In 1850 deadlock the transcontinental railroad when the south seceded leaving the field to the north. * In 1862 congress made the pacific coast bind to California. * For each mile of track constructed the company was granted 20 sq. miles of land alternating 640 acre sections on either side of the track. For each loan they were to receive a federal loan of 16,000 on prairie land to 48,000 for mountainous land. * The construction of rails began after the civil war ended in 1865; this gave power to the “groundhog” promoters. * Hells on wheels- where railroad workers tried to find relaxation and conviviality in their tented towns. * Big four- the chief financial backers of the enterprise, which included Leland Stanford of California and Collis P. Huntington although they had lots of money they stayed clean by not becoming involved in the bribery of congress men. * Central pacific used Chinese workers and they received the same incentive as the union pacific. * They had to work with the Sierra Nevada while the union pacific got the open plains. In 1869 at Ogden Utah the pacific built more rail than the central by 1,086 to 689 mil.
Binding the Country with Railroad Ties * Before the centuries end (1900s) 4 other transcontinental railroad were built they were known as : 1. The northern pacific railroad(1883)- from lake superior to Puget sound 2. The Atchison, Topeka and Santa Fe(1884)- from southwest deserts to California 3. The southern pacific(1884)- from new Orleans to san Francisco 4. The great northern (1893) - from Duluth to Seattle, created by James J. Hill probably the greatest railroad builder of all. * A lot of pioneers bought lots of land but then the land becomes more then they originally thought and this made a lot of banks go bankrupt.
Railroad Consolidation and Mechanization * Cornelius Vanderbilt helped to popularize the steel rail, replacing the old iron tracks. * The Westinghouse air brake- adopted in the 1870s * The Pullman palace cars- 1860s, but they considered this “cars” dangerous bc they had kerosene lamps.
Revolution by Railways * The railroads helped to give people not only jobs but a place to settle at in the Great Plains. * The people started to get used to the four “time zones” that the railroads had adapted that way there would be no chaos.
Wrongdoing in Railroading * Jay Gould busted the stocks of the Erie, the Kansas pacific, the union pacific, and the Texas and pacific railroad co. * Stock watering – railroad companies would grossly over inflate the worth of their stock and sold them at high prices. * Promoters’ profit – railroad managers were forced to charge extortionate rates and wage ruthless battles in order to pay off the exaggerated financial obligations with which they were settled. * People that owned railroads abused all kinds of people from regular people to judges & legislatures they too took passes on journalist and politicians in profusion & elected themselves for their political office. * Railroad companies joined together to make a bigger profit * “Pool” – an agreement to divide the businesses in a given area and share profits.
Government Bridles the Iron Horse * In 1886 the supreme court passed the Wabash case, which said that the individual states had no power to regulate interstate commerce * In 1887 congress passed the Interstate Commerce Act which prohibited rebates and pools and required the railroads to publish their gates openly, it too forbade unfair discrimination against shippers and outlawed charging more for a short haul then for a long one over the same line. It too set up the ICC to administer and enforce the new legislation. * Richard Olney said that the law actually could be used for their advantage. * It was the 1st large scale attempt by Washington to regulate business in the interest of society at large.
Miracles of Mechanization * The steel industry was majorly worked by eastern and southern European immigrant workers. * Alexander Graham Bell - introduced the telephone in 1876 * Thomas Alva Edison – invented the phonograph, mimeograph, the Dictaphone and the moving picture, but perfected the electric light bulb in 1879
The Trust Titan Emerges * Andrew Carnegie, the steel king; John D. Rockefeller, the oil baron; and J. Piermont Morgan, the bankers’ banker. * Andrew Carnegie used a method called “vertical integration,” which meant that he bought out and controlled all aspects of an industry (in his case, he mined the iron, transported it, refined it, and turned it into steel, controlling all parts of the process). * John D. Rockefeller came up with the horizontal integration which meant that he bought out competitors to monopolize a market. * Trust – stockholders in various smaller oil companies assigned their stock to the board of directors of his Standard Oil Company formed in the 1870s. it then was used to describe any large scale business combination.
The Supremacy of Steel * In Lincoln’s day, steel was very scarce and expensive, but by 1900, Americans produced as much steel as England and Germany combined. * This was due to an invention that made steel-making cheaper and much more effective: the Bessemer process, which was named after an English inventor even though an American, William Kelly, had discovered it first: Cold air blown on red-hot iron burned carbon deposits and purified it. America was one of the few nations that had a lot of coal for fuel, iron for smelting, and other essential ingredients for steel making, and thus, quickly became #1.
Carnegie and Other Sultans of Steel * Andrew Carnegie started off as a poor boy in a bad job, but by working hard, assuming responsibility, and charming influential people, he worked his way up to wealth. * He started in the Pittsburgh area, but he was not a man who liked trusts; still, by 1900, he was producing 1/4 of the nation’s
Bessemer steel, and getting $25 million a year. * J. Pierpont Morgan, having already made a fortune in the banking industry and in Wall Street, was ready to step into the steel tubing industry, but Carnegie threatened to ruin him, so after some tense negotiation, Morgan bought Carnegie’s entire business at $400 million (this was before income tax). But Carnegie, fearing ridicule for possessing so much money, spent the rest of his life donating $350 million of it to charity, pensions, and libraries. * Meanwhile, Morgan took Carnegie’s holdings, added others, and launched the United States Steel Corporation in 1901, a company that became the world’s first billion-dollar corporation (it was capitalized at $1.4 billion).

Rockefeller Grows an American Beauty Rose * 1859, a man named Drake first used oil to get money, and by the
1870s, kerosene, a type of oil, was used to light lamps all over the nation. * However, by 1885, 250,000 of Edison’s electric light bulbs were in use, and the electric industry soon rendered kerosene obsolete, just as kerosene had made whale oil obsolete. * Oil, however, was just beginning with the gasoline-burning internal combustion engine. * John D. Rockefeller, ruthless and merciless, organized the Standard
Oil Company of Ohio in 1882 (five years earlier, he had already controlled 95% of all the oil refineries in the country). * Rockefeller crushed weaker competitors—part of the natural process according to him—but his company did produce superior oil at a cheaper price. * Other trusts, which also generally made better products at cheaper prices, emerged, such as the meat industry of Gustavus F. Swift and
Philip Armour.
Grows an American Beauty Rockefeller Rose * In 1859, a man named Drake first used oil to get money, and by the
1870s, kerosene, a type of oil, was used to light lamps all over the nation. * However, by 1885, 250,000 of Edison’s electric light bulbs were in use, and the electric industry soon rendered kerosene obsolete, just as kerosene had made whale oil obsolete. * Oil, however, was just beginning with the gasoline-burning internal combustion engine. * John D. Rockefeller, ruthless and merciless, organized the Standard
Oil Company of Ohio in 1882 (five years earlier, he had already controlled 95% of all the oil refineries in the country). * Rockefeller crushed weaker competitors—part of the natural process according to him—but his company did produce superior oil at a cheaper price. * Other trusts, which also generally made better products at cheaper prices, emerged, such as the meat industry of Gustavus F. Swift and
Philip Armour.
The Gospel of Wealth * Many of the newly rich had worked from poverty to wealth, and thus felt that some people in the world were destined to become rich and then help society with their money. This was the “Gospel of
Wealth.”
* “Social Darwinism” applied Charles Darwin’s survival-of-the-fittest theories to business. It said the reason a
Carnegie was at the top of the steel industry was that he was most fit to run such a business. * The Reverend Russell Conwell of Philadelphia became rich by delivering his lecture, “Acres of Diamonds” thousands of times, and in it he preached that poor people made themselves poor and rich people made themselves rich; everything was because of one’s actions only. * Corporate lawyers used the 14th Amendment to defend trusts, the judges agreed, saying that corporations were legal people and thus entitled to their property, and plutocracy ruled. Government Tackles the Trust Evil * In 1890, the Sherman Anti-Trust Act was signed into law; it forbade combinations (trusts, pools, interlocking directorates, holding companies) in restraint of trade, without any distinction between
“good” and “bad” trusts. * It proved ineffective, however, because it couldn’t be enforced. * Not until 1914 was it properly enforced and those prosecuted for violating the law were actually punished. The South in the Age of Industry * The South remained agrarian despite all the industrial advances, though James Buchanan Duke developed a huge cigarette industry in the form of the American Tobacco Company and made many donations to what is now Duke University. * Men like Henry W. Grady, editor of the Atlanta Constitution newspaper urged the South to industrialize. * However, many northern companies set rates to keep the South from gaining any competitive edge whatsoever, with examples including the rich deposits of iron and coal near Birmingham, Alabama, and the textile mills of the South. * However, cheap labor led to the creation of many jobs, and despite poor wages, many white Southerners saw employment as a blessing. * The Impact of the New Industrial Revolution on America * As the Industrial Revolution spread in America, the standard of living rose, immigrants swarmed to the U.S., and early Jeffersonian ideals about the dominance of agriculture fell. * Women, who had swarmed to factories and had been encouraged by recent inventions, found new opportunities, and the “Gibson
Girl,” created by Charles Dana Gibson, became the romantic ideal of the age. * The Gibson Girl was young, athletic, attractive, and outdoorsy (not the stay-at-home mom type). * However, many women never achieved this, and instead toiled in hard work because they had to do so in order to earn money. * A nation of farmers was becoming a nation of wage earners, but the fear of unemployment was never far, and the illness of a breadwinner
(the main wage owner) in a family was disastrous. * Strong pressures in foreign trade developed as the tireless industrial machine threatened to flood the domestic market.
In Unions There Is Strength * With the inflow of immigrants providing a labor force that would work for low wages and in poor environments, the workers who wanted to improve their conditions found that they could not, since their bosses could easily hire the unemployed to take their places. * Corporations had many weapons against strikers, such as hiring strikebreakers or asking the courts to order strikers to stop striking, and if they continued, to bring in troops. Other methods included hiring “scabs” or replacements or “lockouts” to starve strikers into submission, and often, workers had to sign
“ironclad oaths” or “yellow dog contracts” which banned them from joining unions. * Workers could be “blacklisted,” or put on a list and denied privileges elsewhere. * The middle-class, annoyed by the recurrent strikes, grew deaf to the workers’ outcry. * The view was that people like Carnegie and Rockefeller had battled and worked hard to get to the top, and workers could do the same if they “really” wanted to improve their situations.
In Unions There Is Strength * The Civil War put a premium on labor, which helped labor unions grow. * The National Labor Union, formed in 1866, represented a giant boot stride by workers and attracted an impressive total of 600,000 members, but it only lasted six years. * However, it excluded Chinese and didn’t really try to get Blacks and women to join. * It worked for the arbitration of industrial disputes and the eight-hour workday, and won the latter for government workers, but the depression of 1873 knocked it out. * A new organization, the Knights of Labor, was begun in 1869 and continued secretly until 1881. This organization was similar to the
National Labor Union. * It only barred liquor dealers, professional gamblers, lawyers, bankers, and stockbrokers, and they campaigned for economic and social reform. * Led by Terence V. Powderly, the Knights won a number of strikes for the eight-hour day, and when they staged a successful strike against
Jay Gould’s Wabash Railroad in 1885, membership mushroomed to 3/4 of a million workers. Unhorsing the Knights of Labor * However, the Knights became involved in a number of May Day strikes of which half failed. * In Chicago, home to about 80,000 Knights and a few hundred anarchists that advocated a violent overthrow of the American government, tensions had been building, and on May 4, 1886, Chicago police were advancing on a meeting that had been called to protest brutalities by authorities when a dynamite bomb was thrown, killing or injuring several dozen people. * Eight anarchists were rounded up yet no one could prove that they had any association with the bombing, but since they had preached incendiary doctrines, the jury sentenced five of them to death on account of conspiracy and gave the other three stiff prison terms. * In 1892, John P. Altgeld, a German-born Democrat was elected governor of Illinois and pardoned the three survivors after studying the case extensively. * He received violent verbal abuse for that and was defeated during re-election. * This so-called Haymarket Square Bombing forever associated the
Knights of Labor with anarchists and lowered their popularity and effectiveness; membership declined, and those that remained fused with other labor unions.
The AF of L to the Fore * In 1886, Samuel Gompers founded the American Federation of Labor. * It consisted of an association of self-governing national unions, each of which kept its independence, with the AF of L unifying overall strategy. * Gompers demanded a fairer share for labor. * He simply wanted “more,” and sought better wages, hours, and working conditions. * The AF of L established itself on solid but narrow foundations, since it tried to speak for all workers but fell far short of that. * Composed of skilled laborers, it was willing to let unskilled laborers fend for themselves. Critics called it “the labor trust.” * From 1881 to 1900, there were over 23,000 strikes involving
6,610,000 workers with a total loss to both employers and employees of about $450 million. * Perhaps the greatest weakness of labor unions was that they only embraced a small minority—3%—of all workers. * However, by 1900, the public was starting to concede the rights of workers and beginning to give them some or most of what they wanted. * In 1894, Labor Day was made a legal holiday. * A few owners were beginning to realize that losing money to fight labor strikes was useless, though most owners still dogmatically fought labor unions. * If the age of big business had dawned, the age of big labor was still some distance over the horizon.