Foraging an Industrial Society

1. Foraging an Industrial Society UNIT 6 1869-1900

2. Forging an Industrial Society • America went from a rural society beginning of the Civil War to urbanizing, industrial one by the end of the century • Economic and technological change allowed a whole new civilization to emerge • The last part of the 1800’s saw the rise of industry and industrial giants • American movement to urban areas brought into question the spirit of individualism, but also expansion and closure onto the Western frontier • Reformers ushered in an age of more active governmental affairs on the social and business fronts • Economic change brought political and social turmoil and allowed for the expansion of labor unions • Disputes over monetary policies divided industrialists and farmers and gave rise to the Populist party • The South remained untouched by this prosperity and African Americans became victims of institutionalized racism • As the century ended Americans were again gripped by expansionism and people questioned American’s role on the world stage

3. Political Paralysis in the Gilded Age Chapter 23

4. I. The Bloody Shirt Elects Grant • Civil War brought government corruption and many Americans were disillusioned • Politics during the last 30 years of the century were corrupt at best • 1868 US Grant elected president • Grant’s victory could be attributed to former slaves voting him into office, also the memories of his war exploits (waving the bloody shirt) • First many money issues came up during this election; eastern wealth focused on gold standard vs. Midwestern farmers who wanted to stay with system of greenbacks (money backed by faith and credit of US) • Farmers wanted to keep more money in circulation and keep interest rates low

5. II. The Era of Good Stealings • Postwar political atmosphere was full of political corruption • Jay Gould and Jim Fisk and their plot to corner the gold market was an example of the time • Tweed Ring in NYC- Boss Tweed leader gained favor of immigrants by making promises, providing services to them in return for support • Once in office he stole, bribed and fleeced the city for over $200 million (cartoons of Thomas Nast brought public attention and put him behind bars (1871)

6. III. A Carnival of Corruption • Misdeeds of federal government • Grant’s cabinet was full of crooks • 1872Credit MobilierScandal Union Pacific RR formed Credit Mobilier Construction to build railroads and hired themselves at inflated prices • Gave stock to key Congressmen to cover up investigation, even paid off VP • 1874-1875Whiskey Ring robbed treasury of millions in excise tax revenue • 1876 Sec. of War had to resign after pocketing bribes from suppliers to Indian reservations

7. IV. The Liberal Republican Revolt of 1872 • Reformers tired of corruption formed Liberal Republican Party in 1872 • Nominated editor of New York Tribune, Horace Greely • Democrats endorse Greely and his views on national unity • Election 1872 between Grant and Greely a choice of the lesser of two evils and Grant won

8. V. Depression, Deflation and Inflation • 1873 Economic Panic • Over production, expansion caused loans to go unpaid • Riots in NYC, black Americans and business hardest hit (less stable footing) • Call for “greenbacks”, not money based on gold standard to pay back debt easier (greenbacks could be traded for gold) • Hard money people wanted to get rid of currency, removing it from circulation would make the value higher not lower (create scarcity) • Soft Money advocates wanted more money in circulation, it would cause higher prices, more profit and make debt easier to pay • Hard money won out, Grant refused to print more money

9. V. Depression, Deflation and Inflation Debtors looked to silver as a substitute for greenbacks and gold Silver undervalued by US government (16:1), higher prices on open market so miners did not sell to US government 1873 Congress formally drops making silver coins New discoveries in the same year, production up and mining interests and debtors called end of production “Crime of ’73” Demand for more silver scheme to promote inflation Grant has government buy more gold and reduce greenbacks, policy of contraction worsened panic 1874- Result of money policy led to Democrats regaining control of Congress 1878 limited production of silver coinage (Bland-Alison Act)

10. VI. Pallid Politics in the Gilded Age Political balance switched back and forth during this period, no president won popular vote during this period Voter turnout was high and few significant economic issues separated the parties Political affiliation came from ethnic and cultural differences Lifeblood of both parties was political patronage, federal jobs (civil service) in exchange for votes, kickbacks in exchange for votes 1870’s Republicans split into two camps Stalwarts (led by Roscoe Conkling) and Half Breeds (led by James Blaine) Stalwarts embraced system of exchanging votes for jobs, Half Breeds toyed with idea of civil service reform

11. Republicans vs. Democrats Northern Protestant African Americans Supported nativitist causes Supported prohibition Pro-business Southern whites Immigrants Catholics Jews Freethinkers Farmers

12. Role of Government During Gilded Age From 1870-1900 Govt. did very little domestically. Main duties of the federal govt.: Deliver the mail. Maintain a national military. Collect taxes & tariffs. Conduct a foreign policy. Administer the annual Civil War veterans’ pension. Americans expected little support from federal government most was local and state support Party bosses ruled. Congress most powerful branch of government during this period Presidents should avoid offending any factions within their own party. The President just doled out federal jobs. Roscoe Conkling US Senator aka Lord Conkling

13. VII. Hayes-Tilden Standoff and Compromise (1876-1877) 1876 Grant does not run, Republicans pick Rutherford Hayes as compromise (from electoral rich Ohio) Democrats pick Samuel J. Tilden (NY), man who bagged Boss Tweed Tilden wins popular vote, disputed electoral votes in SC, LA, FL- no official winner as inauguration approached Compromise of 1877 settled dispute Hayes would take office in exchange for federal troops leaving the south Republicans promised political patronage to Dems. and to subsidize construction of southern RR

14. VII. Hayes-Tilden Standoff and Compromise (1876-1877) Compromise brought end to Reconstruction, also sacrificed A-A’S in South Civil Rights Act of 1875 last major legislation by radicals in Congress (guaranteed equal accommodations in public places) Declared unconstitutional 1883, ruling stated only government, not individuals, were subject to 14th Amendment When troops left Republican regimes across South fell apart

15. VIII. The Birth of Jim Crow in the Post-Reconstruction South White Redeemers using fraud, intimidation and playing on racial fears retook power Blacks who tried to assert their rights faced discrimination at every turn Many blacks and poor whites were forced into tenant farming (crop-lien system) and remained perpetually in debt What began as informal separation of the races in 1870’s became systematic across the south within 20 years Legal codes that became known as Jim Crow laws

16. VIII. The Birth of Jim Crow in the Post-Reconstruction South Jim Crow laws: Literacy requirements and poll taxes ensure disenfranchisement of South’s black population 1896 Supreme Court validates South’s social order with Plessey vs. Ferguson ruled “separate but equal” was constitutional under 14th Amendment Created inferior schools, separated most public facilities, made blacks second class citizens Blacks that tried to stand up for themselves were dealt with harshly, indicated by record number of lynching's Would be nearly a century before these problems were addressed

17. IX. Class Conflicts and Ethnic Clashes • 1877 Ended age of regional warfare and opened age of racial and class warfare • Byproduct of economic depression following Panic in 1873 • RR workers wages cut and workers struck back • Work stoppages across nation and Hayes sent in troops to quell unrest (hundreds killed) • Failure of strike showed weakness and first stirrings of labor movement • Racial and ethnic tension fractured unity

18. IX. Class Conflicts and Ethnic Clashes • Tension high in California between Chinese and Irish • Many Chinese came to work in goldfields and RR’s • Irish (Kearneyites) resented competition of cheap Chinese labor , terrorized Chinese • 1882 Congress cuts off further immigration from China until 1943 • 1896 and 1898 victory for Chinese in YikWo vs. Hopkins, US vs. Wong Kim protected them in employment and citizenship (guaranteed by 14th Amendment) • Wong Kim case protected other immigrant groups as well

19. X. Garfield and Arthur • 1880 presidential campaign Republicans nominate James Garfield and Stalwart running mate Chester A. Arthur, they win election • Garfield was assassinated by disgruntled office seeker Charles Guiteau • Outcome of death was that it led to call for reforming spoils system • Arthur was thought to be a man in favor of the spoils system but he shut out many of his Stalwart pals and advocated for reform

20. X. Garfield and Arthur • 1883 Pendleton Act passed – established a Civil Service Commission that made appointment to federal jobs based on examination rather than influence and political favor • Banned practice of compulsory campaign donations from federal employees • Politicians had to find money elsewhere and they turned to the big corporations; they supported big business with legislation, they were rewarded with money

21. XI. Blaine- Cleveland Mudslingers of 1884 • 1884- Blaine (leader of Half- breeds) nominated , Democrats nominate Grover Cleveland • Cleveland had been reformer mayor of Buffalo, NY and Governor of NY • Reformers called Mugwumps • Reform to them, create a disinterested, impartial govt. run by an educated elite like themselves. • Social Darwinists • Laissez faire government to them: • Favoritism & the spoils system seen as govt. intervention in society. • Their target was political corruption, not social or economic reform • Campaign 1884 one of the dirtiest in American history with accusations and partisan fervor (turned many off to voting)

22. XII. Old Grover Takes Over • The “Veto Governor” from New York. • First Democratic elected since 1856. • A public office is a public trust • His laissez-faire presidency: • Opposed bills to assist the poor aswell as the rich. • Vetoed over 200 special pension billsfor Civil War veterans • Biggest political issue was the tariff • America had profited from protection and the Treasury had a huge surplus ($145 million) • 1887 Cleveland brings up tariff issue and this becomes a major issue in the next presidential election • 1888 Cleveland voted out of office and Republican Benjamin Harrison takes over

23. XIII. The Billion Dollar Congress • Republicans couldn’t wait to take office, Democrats planned to thwart all House business • Republicans in Congress passed first billion dollar budget and depleted treasury • Gave out more pensions to Civil War veterans, increased government purchases of silver, passed higher tariff • Tariff caused farmers more problems selling goods on the unprotected world markets, protected goods were very profitable for American industry • Rural voters turned out in 1890 Congressional elections and Republicans fell out of power

24. XII. Cleveland, Depression and Backlash • Democrats and Cleveland retake presidency 1892 • 1893 financial panic and depression hit American economy • Over speculation, overbuilding, depressed agricultural prices, labor unrest all contributed • Free silver agitation hurt American credit abroad and European banks called in loans • Federal government laissez faire policies did not help American people • Cleveland had to deal with deficit left behind by Harrison • Gold reserve in the Treasury fell and the Sherman Silver Purchase Act was repealed • US was in danger of going off gold standard and having currency become unreliable

25. XII. Cleveland, Depression and Backlash • 1895 Cleveland turns to financier J.P. Morgan and Wall Street to lend government $65 million worth of gold • Created a backlash that seemed like government was in bed with big business • Democrats tried to lower tariffs to make economy more competitive abroad and they passed a small income tax (later struck down by Supreme Court) • Disallowing income tax seemed like more proof that government was a tool of big business

26. XIV. The Drumbeat of Discontent • 1892Populist Party first appeared • It was a coalition of frustrated farmers in the south and west that denounced government injustice • They met in Omaha to announce their support for the following • System of “sub-treasuries.” • Abolition of the National Bank. • Direct election of Senators. • Govt. ownership of RRs, telephone & telegraph companies. • Government-operated postal savings banks. • Restriction of undesirable immigration. • 8-hour work day for government employees. • Abolition of the Pinkerton detective agency. • Australian secret ballot. • Re-monitization of silver. • A single term for President & Vice President

27. XIV. The Drumbeat of Discontent • 1892 Nationwide strikes, Homestead steel strike • Workers rights seen as trampled on • Populists see possibility of farmers and workers joining together • Populists run James Weaver for president and win over 1 million votes • The populists did not get the support from the industrial workers in the north and the farmers in the south • In the south the political elite played on racial fears to keep Populist support down • Caused Southern states to aggressively disenfranchise A-A voters (literacy tests and using the “grandfather clause”), 50 years before blacks would vote in heavy numbers again

28. Industry Comes of Age 1865-1900 Chapter 24

29. I. Iron Colt Becomes the Iron Horse • Many lured away from politics to business • America lost civic leadership in late 19th century • US move to industrialization caused transformation in everyday lives of Americans • Prime example of government and business entanglements was the RR industry • RR building expensive and needed government money • Arguments used- to populate country, postal needs and military needs • Federal government gave land grants to RR, all land given to them was not open to public until they decided what they wanted to do with it

30. I. Iron Colt Becomes the Iron Horse • 1887 Cleveland opens up unclaimed land to the public • Government received benefits of using RR for military and mail • Granting land was way to subsidize RR construction without taxes or cash • RR used land as collateral for loans, and to make money selling it (land had little value until RR ) • Many frontier outposts competed for RR, those that won bidding flourished

31. II. Spanning the Continent with Rails • 1862- Congress passes provisions to allow for transcontinental RR, to bind east and west • Construction begins after war • 1869- Union Pacific from the east, Central Pacific from the West meet in Ogden, Utah • Allowed goods to travel across country for first time, opened trade with Asia, allowed for opening of growth of West

32. III. Binding the Country With Railroad Ties • Four other Transcontinental lines completed by 1900 • All except Great Northern received federal land grants

33. III. Railroad Consolidation and Mechanization • Many western lines were expansion of older eastern lines • Major player behind this was Cornelius Vanderbilt, offered superior railway service at lower rates • Technology and standardization effected RR industry • Steel, not iron rails • Air brakes • Standard gauge track width • Pullman cars

34. IV. Revolution on the Railways • RR changed many parts of American life • Country united in a physical sense • Created domestic market for consumer goods and raw materials, spurred industrialization • Opened up new markets and sources for raw materials • Allowed cities to grow • Immigrants came to regions advertised in Europe • Land Impact: Destruction of tall grass prairie, “industrialized” land into square grain plots, cattle displaced buffalo, forests cut and transported to growing cities • Time was “industrialized” with establishment of standardized time zones to keep train running on schedule • Made millionaires of men (new RR aristocracy), became an investment opportunity for those on Wall Street

35. V. Wrongdoing in Railroading • Corruption allowed fortunes to grow • Credit Mobilier, land speculation, boom and bust of RR stock • Stock watering favorite get rich quick scheme • Inflated value of lines assets and profitability, sold overvalued stocks to investors • Forced RR to charge higher rates to provide return on investments • Railroaders bought and sold public officials to gain favor • Control of RR by few allowed monopoly to grow • Competition between RR grew into cooperation, used the “pool” method to divide business in given area and split the profits • Some granted special rates to some shippers for steady money and traffic • Charged more for short haul than long haul • These actions were done with little regard to the American consumer

36. VI. Government Bridles the Iron Horse • Farmers resented RR plutocracy because of high rates • Government slow to respond to economic injustice, counter to American ideal of free enterprise, competition and government interference in business • Depression of 1870’s hit farmers hard and felt RR rates were part of the problem • Agrarian groups like the Grange formed to lobby for farmers and use state legislative action to regulate the RR monopoly

37. VI. Government Bridles the Iron Horse • States had some successes in the Midwest (Grange Laws) but Supreme Court put an end to all of it • 1886Wabash vs. Illinois decided that states had no authority to regulate interstate commerce, only the federal government • 1887 Congress passes the Interstate Commerce Act • Prohibited rebates and pools • RR had to publish rates openly • Forbid discrimination against shippers, rates for short and long haul • Set up Interstate Commerce Commission (ICC) to enforce, regulate new legislation • Act provided a way for business interests to resolve their differences in the open, country could avoid rate wars and action by state legislatures • ICC stabilized business in America • First large scale attempt to regulate business in the interest of society at large, demonstrated that government would protect public interest

38. VII. Miracles of Mechanization • After the war America steadily grew to be the world leader in Industrial production • Why? • Natural resources- coal, timber, many navigable rivers, in 1859 oil was discovered - new source of inexpensive energy • Workforce growth- Immigrants pushed from their homeland pulled by the opportunity that America offered. Mechanization of agriculture pushed many farmers to the new, growing cities to find work. Provided new industry a huge workforce • Capitalism- liquid capital became more available after the war, system of free enterprise allowed entrepreneurs to fuel industrial growth, established factories, created jobs, attracted foreign investment • Government Policies- encouraged growth of business. Provided railroads millions of acres of land to link the country. Passed protective tariffs, encouraged laissez- faire policies Strong legal system and private property rights encouraged investment and growth • Technological Innovation- capitalism encouraged innovation and efficiency, brought women into the workplace, established a communication network, changed the daily lives of Americans

39. VIII. The Trust Titan Emerges • New ways of doing business emerged that concentrated capital and allowed for more efficient control of industry • Corporation people share ownership through stock ownership, created huge pool of capital to invest in the business, run different factories • Corporations worked to maximize profits, tried to pay workers as little as possible, pay low prices for raw materials. • Monopolies were formed to gain complete control of a product or service charge low fares to put others out of business, • Others tried to eliminate competition by forming cartels to keep prices artificially high • More efficient ways of doing business and organizing their companies • Two new methods: • Horizontal Integration- consolidating many firms into one business (Standard Oil and refineries) • Vertical Integration- gaining control of the many different businesses that make up all parts of a products development (Carnegie Steel)

40. Vertical and Horizontal Integration

41. Capitan’s of Industry • Andrew Carnegie, John D. Rockefeller, J.P. Morgan, Richard Sears and Alvah Roebuck were men skilled in organizing and promoting big business. • Rockefeller, Carnegie were known for their innovations in organization • J.P. Morgan developed investment banking • Sears and Roebuck were the pioneers of mail order retailing

42. IX. The Supremacy of Steel and Andrew Carnegie • Steel was a scarce expensive commodity before the Civil War, after the war with the perfection of the Bessemer Process steel became inexpensive and fueled industrial and economic expansion in the US • By 1900 the US produced 1/3 of the worlds steel • America was one of the few places in the world where the raw materials needed for steel production were found close together (coal, iron ore, abundant labor supply)

43. IX. The Supremacy of Steel and Andrew Carnegie • Master of steel industry was Andrew Carnegie • Born in Scotland to a poor family experienced a rise from rags to riches • During the Civil War developed a military telegraph system • After the war- built railroad bridges, steelmaking and investments • 1873 Carnegie began to concentrate on steel • Not a technical expert but a salesman, promoter and organizer • Hired men of ability to run business and used the most up to date machinery • Bought out struggling companies and had a philosophy of continual innovation • Stood out as a thinker and publicized a philosophy for big business, “ The Gospel of Wealth” (1889) • When he retired at 65 devoted himself to giving away his fortune for the public good. Gave money to universities, libraries, parks, churches, public buildings

44. John D. Rockefeller • Obsessed with order, precision, tidiness he decided to bring order to the oil industry • Recognized the potential for profits in the oil industry • 1870-Standard Oil of Ohio, began to buy out other refiners, in less than six weeks he controlled 90% of all oil refining in the United States • Began to purchase all aspects of production barrels, pipelines, tank cars, oil storage facilities and he made deals with railroads to ship his products cheaply • Established a trust to make business more efficient, centralize control of the business, established the idea of a holding company (controlling the majority of stock of many different companies) • End of his life Rockefeller gave most of his fortune away, gave away more than $500 m.

45. J.P. Morgan • Born to a wealthy family • Used his connections to bring capital from Europe to the United States to invest in businesses • Purchased stock and bonds wholesale and sold them for a profit- beginning of investment banking • Morgan began to consolidate these companies into trusts • By the 1890’s he was in charge of one sixth of the nations railroads • Morgan believed that control brought stability to the economy • 1901 Morgan purchased Carnegie’s steel and iron holdings • Created the first billion dollar corporation in the United States (US Steel)

46. Sears and Roebuck • Many new products in the later 1800’s needed markets. • How did retailers reach the millions of people that lived in small towns and isolated farms? • 1890’s two Chicago entrepreneurs Richard Sears and Alvah Roebuck began offering goods by mail. • They purchased goods in high volume from wholesalers and sold it at prices lower than the local rural stores • Development of free rural mail delivery in 1898 meant that rural Americans could purchase goods, before were expensive or only available to city dwellers • The new business helped create a truly national market

47. X. The Gospel of Wealth and Social Darwinism • Industrialists credited heavenly help for success • Carnegie said wealthy entrusted with riches of society, they must be morally responsible according to Gospel of Wealth • Wealthy trustees of poor • Many business leaders followed idea of Social Darwinism, survival of the fittest theories (business and race) • Questioned what do social classes owe each other? • Involved contempt for the poor • Industrial plutocracy took its stand based on the Constitution • Lawyers stood behind 14th Amendment, corporation was a legal entity and had same protections as individuals when it came to protection of rights • Many business incorporated in easy states like where restrictions were mild or nonexistent

48. XI. Government Tackles the Trust Evil • Masses begin to mobilize against the monopolies • State legislation did not work • 1890- Congress passes the Sherman Anti-Trust Act • Forbid monopolies that restrained trade (bigness was the sin) • Law was ineffective and hard to enforce, actually used against labor unions to curb their activities • Early step to government control of the business sector

49. Robber Barons or Captains of Industry? Captains of Industry Business leaders served nation positively Provided jobs Technology, innovation helped American economy, allowed America to become an international leader Many were important philanthropists Robber Barons Americans felt that cartels, trusts, monopolies gave businessmen unfair advantage Consumers and workers were harmed by these business practices

50. XII. The South in the Age of Industry Industrial expansion did not touch south, after Reconstruction South struggled to develop industry, remained agricultural and poor Absentee land ownership (land worked by sharecroppers) South produced fraction of manufactured goods as the north 1880’s Southern agriculture received a boost with invention of machine rolled cigarettes, tobacco consumption went up Tobacco became a consolidated monopoly , controlled by James Duke Southern leaders pushed for “New South”- modernized economy, agriculture and industry