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Chapter 24 Notes

Chapter 24 Notes As 19th Century closed most were lured away from politics & into industry-major economic growth Iron Belt----Iron Horse Boom of RR & government entanglements-by 1900 192,500 miles Transcontinental RR was costly & risky-many government subsidies-Why?

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Chapter 24 Notes

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  1. Chapter 24 Notes As 19th Century closed most were lured away from politics & into industry-major economic growth Iron Belt----Iron Horse Boom of RR & government entanglements-by 1900 192,500 miles Transcontinental RR was costly & risky-many government subsidies-Why? Congress began to allocate land and $ liberally 155 million acres given by DC and western states contributed 49 million more Tied up lands-checkerboard agreements-until RR chose location none of the land was available-1887-Grover Cleveland put an end Much criticism to government for giveaway yet received preferential rates for postal service and military traffic Cheap way for government to subsidize transportation-land worth little until RR laid Cities Grew-Competition for RR

  2. Spanning the Continent • 1862-Congress made provisions for Transcontinental RR-North pushed to connect gold rich California-Union Pacific • Pushed westward from Omaha-each mile of track the company was granted 20 sq. miles of track, alternating 640 acre sections on either side-each mile, builders received federal loan ranging from $16,000 on flat land to $48,000 for mountainous land • Building began in earnest after 1865 • Promoters made millions-bribes for Congress • Many battles with Native Americans took place • Various RR emerged & met for the first time at Ogden, Utah in 1869 • Much gained and much lost • Major improvements also-steel rails, standard gauge, Westinghouse airbrake, Pullman Palace Cars

  3. RR Revolution • RR unified the nation, enormous domestic market for raw materials & manufactured goods-spurred industrialization • Stimulated mining and agriculture-farm settlements surrounded RR • Boom for cities-carry food & provide raw materials & markets • Stimulated Immigrants • Ecological Imperialism? • Established time zones

  4. Wrongdoings • Jay Gould-corrupt speculator-Stock Watering-inflated claims of lines’ assets & profitability & sold stocks well in excess of actual value-RR managers had to charge huge rates in order to pay off-public usually lost • Abused public-bought and sold judges and politicians-kings of RR-monarchs-huge control & eventually aligned themselves-”pool”-divide business in an area & share profits, kickbacks & slashed rates on competing lines

  5. Government Intervention • Many commoners concerned-slow to act-free enterprise-competition! Small government! • Depression of the 1870s forced farmers to act-Midwest legislatures tried to regulate RR monopoly-1886 Wabash case. • Many felt federal government needed to act • 1887 Congress passed the Interstate Commerce Act-prohibited rebates & pools & RR had to publish rates openly, forbid discrimination vs. shippers • Set up the ICC • Provided an orderly forum to resolve conflicts

  6. Miracles of Mechanization • By 1894 manufacturing was tops in the world-why? • 1. Capital-Civil War spurred wealth-profiteering 2. Natural resources(Iron Ore) 3. Immigration (Steel spurred by cheap labor) 4. US ingenuity-mass production-1860-1890-440,000 patents/ex. Telephone, T. Edison-Genious

  7. Trust Titans • Carnegie, Rockefeller, & JP Morgan devised ways to limit competition • How did this work? Mining to marketing-improve efficiency by making supplies more reliable, controlling quality & eliminating middlemen fees-Vertical Integration • Horizontal Integration-allying w/ competitors to monopolize a market • Stockholders in various oil companies assigned stock to Standard Oil Company-consolidate operations of competing companies-total control of oil • Morgan-consolidated rivals by placing officers of his own banks on their boards-”Interlocking Directorates”

  8. Steel • Production of capital goods-eventually formed rails of RR • By 1900 we were producing as much steel as Britain & Germany combined-Bessemer Process-cold air blown on red hot iron-America allowed for close proximity of coal, iron ore & other essentials Carnegie • Scottish immigrant-partnership involved 40 “Pittsburgh Millionaires” • By 1900 1/4 of nation’s Bessemer Steel-millions tax free • Carnegie wanted to sell-Morgan into steel tubing-Carnegie threatened to enter business & Morgan bought out Carnegie for $400 million

  9. Rockefeller • Real Discovery in Pennsylvania in 1859-Quickly became large export • Kerosene was first product for light-eventually done away by light bulbs-Oil may not have been a big deal except for gas burning internal combustion engine • John D. Rockefeller-1870 organized Standard Oil Company in Cleveland-employed questionable tactics-by 1877 controlled 95% of all refineries-had spies and received secret rebates from RR-Ruthless! • Turned out a great product-cheap-large scale production became the model-New Aristocracy-Anti Trust campaigns

  10. Gospel of Wealth • “Godliness in the league of riches”, “Natural Selection”, according to Carnegie society’s riches belonged to those who had proven themselves morally responsible • “Poor made poor by their own shortcomings” • Growth of plutocracy taking on the Constitution-Congress had sole control of Interstate Commerce-used this to stop efforts by state legislatures-14th Amendments-corporation like a person could not be deprived-also looked for easy states

  11. Government Tackles the Evil Trusts • Masses began to mobilize-Sherman Anti-Trust Act of 1890 • Act forbid combinations in restraint of trade without distinctions between good and bad trusts • Too many loopholes-actually used to curb labor unions • Early persecutions futile-1890s under McKinley more trusts formed • 1887 Interstate Commerce Act & Sherman Anti-Trust 1890 threatened iron grip-private greed must be subordinate to the public need!

  12. South-Age of Industry • 2nd Industrial wave had not affected South greatly-plantation system replaced by tenant farming and sharecropping • South received a boost w/machine made cigarettes-James Duke • Industrialists could not change the South-still rural • Why?-1. Rate-setting systems imposed by Northern RR interests-rate cuts to Southward moving yet not Northward moving-kept South in in developing world attitude as supplier unable to develop industry • 2. Economic discrimination-”Pittsburgh Plus”-Pressure on RR by steel • Southern cotton and textile mills grew-1880s Northern capital began to erect mills in South(Why?) • Mixed blessing-took advantage of cheap labor-took root in depressed Piedmont region of S. Appalachia • Rural Southerners(white) worked tirelessly and earned little-better than farming

  13. Impact of New Industrial Revolution • Great wealth after the Civil War-standard of living rose-cities grew rapidly(Jefferson ideas dying) government would no longer be hands-off • Women-propelled into industry-typewriter, switchboard-new opportunities-delayed marriages/smaller families-not glamorous-dangerous • Class division-wealthy few-socialists and radicals protested • 1900-1/10 of people owned 9/10 of nation’s wealth • Nation of wage earners-by 1900 2/3 of workers depended on wages-very dependent on economy and employers • Reformers worked for job security(job & wage) & provision for temporary unemployment • Strong pressures for foreign trade developed

  14. Union Strength • Workers were being taken advantage of -depersonalized atmosphere-New machines emerged-glutted labor market brought down wages-Industrial workers were powerless-Employers could pool wealth from stockholders, retain lawyers, buy local press, & pressure politicians-Bring in scabs and employ thugs • They could also call on federal courts to order strikes stopped & troops could be brought in or “lockouts” & sign contracts to not join Unions-”Blacklist” or own “Company Towns” • Not much sympathy for the worker or strikes

  15. Labor Limps • Civil War w/ premium on labor pushed forth Unions-National Labor Union(1866)-lasted 6 years-600,000 members • Knights of Labor-1869-secret union-include workers in 1 large Union-barred only non producers • Campaigned for social and economic reform-pushed for 8 hour day & won several strikes Knights • May Day Strikes-1886-1/2 failed-focus on Chicago • Haymarket Square Riot-May 4-Police advanced on a meeting and a bomb was thrown-8 anarchists rounded up-severe sentences • Illinois Gov. J. Altgeld pardoned-Reaction? • Knights faltered & including unskilled a mistake?-AFL formed-skilled only

  16. AF of L • American Federation of Labor-1886-Samuel Gompers • Association of self-governing unions-sought better wages, hours, & working conditions-wanted “closed shop”, “walkout”, “boycott” • Willing to let unskilled fend for themselves • By 1900-500,000 members-some successes yet not enough workers were members • Labor Day-1894 Act of Congress • Big Business had dawned yet Big Labor was still distant

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