The+Rise+of+Big+Business+and+Labor

The Gilded Age - Economic Developments. Introduction--From "island communities" to corporate liberalism II. The Machine Age: Industrialization--1850s-1920 E. Mechanization and the changing status of labor
 * Societies in flux
 * American society, like those of other nations, constantly in flux, continuously changing
 * Changes that began in the North in the early 19th century, grew in strength and spread to the rest of the nation after the Civil War
 * Island communities
 * "America during the 19th century was a society of island communities"--Robert Wiebe
 * Weak communication severely restricted interaction among these islands
 * Education (formal and informal) inhibited specialization and accumulation of knowledge
 * Heart of American democracy was local autonomy
 * Controlling society was based on personal, informal ways
 * During latter part of 19th century, American began to turn away from the island communities to an urban-industrial life
 * system which ran the island communities could not handle this new life--people in the U.S. had to develop a new way of handling society
 * Corporate liberalism
 * By the end of World War I (1918), a new scheme was created for controlling American society
 * Urban-industrial lifestyle needed order to survive--an order based on regulations and hierarchies
 * This new scheme of creating order functioned by:
 * rules with impersonal sanctions
 * seeking continuity and predictability in the face of continuous change
 * giving far greater power to government--especially to various administrative agencies with flexible responses
 * encouraged centralization of authority
 * People were now identified more by their skill and occupation than their community
 * This new way of ordering the world came to be known as corporate liberalism
 * Change from agrarian to urban, industrial society
 * Technology, organization, and the quest for wealth
 * Railroads and telegraph
 * First large-scale industries
 * opening of Pennsylvania coalfields in 1840s made operation of steam trains possible on wide-scale basis
 * getting the full potential out of this new technology required unprecedented organizationl efforts in:
 * scheduling
 * bookkeeping--cost accounting
 * personnel management
 * organizational innovation came through the creation of administrative hierarchies which
 * hired men to supervise functional activities over a wide geographic area
 * and executives to monitor, coordinate, and evaluate the work of lower level managers
 * large numbers of salaried experts were needed to run these railroads
 * even with changes in organization, railroads in U.S. were by no means standardized at the end of the Civil War
 * standardization of railroads took place in a twenty year period following the war
 * the areas of standardization included:
 * track size
 * rate-setting
 * time keeping methods (standard time zones--mention resistance)
 * even after standardization took place, railroads still faced the problem of competition
 * cutthroat competition was keeping many railroads from making any profits, thus driving them into bankruptcy
 * often, managers of several railroads would run their lines to the same small towns, just so their competitors would not have an advantage (this proved very costly--often all roads lost)
 * some railroads began to join others to form cartels--to reduce competition by controlling rates and volume of traffic
 * the failure of so many railroads during the 1890s forced the adoption of centralized administrative structures for the railroads--frequently controlled by those outside the industry
 * still, overall success of railroad organizations was imitated by others in transportation and communications--steamships, streetcars, telegraph, and later, telephone companies
 * Railroads and telegraphs provided the fast, regular, and dependable transportation and communication essential to high-volume production and distribution
 * trains provided more direct communication than did other types of transportation and could do so in most any type of weather
 * telegraph provided almost instantaneous communication over long distances
 * Distribution
 * Next major group of industries to combine new organizational schemes with new technologies were distribution businesses--originally wholesalers, then retailers
 * distributors had to have fast transportation and communications to get goods from a large number of suppliers to a large number of buyers
 * first to do this were Marshall Field and A.T. Stewart, soon joined by John Wanamaker and Rowland Macy
 * they created department stores to sell a wide variety of merchandise
 * succeeded by maintaining high-volume, high-turnover flow of business by selling at low prices and low profit margins
 * Soon challenged by Montgomery Ward and Sears, Roebuck in 1890s--opening of mailorder firms
 * developed rigid system of timetables to fill orders
 * could process these orders from different departments
 * used RR's to ship
 * Manufacturing
 * last area to really take advantage of new organizational systems
 * had to wait for new technologies to mass produce, as well as all-weather transportation and organizational development
 * development of technology in form of continuous-process machines (turning out products automatically) or building of factories where materials flowed continuously from one stage of production to another allowed mass production
 * James Duke--cigarette rolling machines
 * Steel mills--automatic steel rollers
 * depression of the 1870s (beginning in 1873) turned managements attention from technology to management techniques (plants were underutilized during the period)--scientific management evolved during the period
 * Henry Metcalfe and especially Frederick Taylor develpoed of scientific management
 * they argued that costs and savings should be based on a standard time and output to be scientifically determined through detailed study of the work being done (time and motion studies)
 * humans become basically another piece of machinery to be fine tuned
 * Textile mills--technology without organization
 * Why and how do businesses become so large--Integration and birth of large-scale businesses
 * two types of integration
 * vertical
 * horizontal
 * the largest corporations that developed used one or both methods of integration to achieve large size
 * vertical integration allowed manufacturers to combine several parts together--supply, production, and distribution
 * some wanted own distribution systems to sell to the now wide-based market
 * James Duke--American Tobacco could now make many cigarettes, but who would buy
 * developed his own system of marketing
 * first to use heavy advertising to convince people they needed his products
 * Others included Pillsbury (flour), Campbell and Heinz (canned goods), Pond and Proctor and Gamble (soap), George Eastman (photography)
 * others had special needs to met in distribution
 * Armour and Swift--meatpacking (needed refrigated train cars and warehouses)
 * McCormick and John Deere (farm equipment), Remington, and NCR needed to provide special instructions for their customers on how to use equipment
 * still others needed steady stream of suppliers
 * Rockefeller and Standard Oil (needed oil for refineries, as well as pipelines and tank cars for distribution)
 * Carnegie Steel and other steel mills bought mines (coal and iron ore) to guarantee themselves raw materials)
 * horizontal integration (mergers) came about mainly as an attempt to reduce competition and introduce stability and certainty to prices and profits
 * cartels were informal, and broke down easily
 * mergers worked sometimes, but were frowned upon as being non-competitive
 * some mergers worked (usually where vertical integration had taken place first)
 * New managerial class
 * As the larger corporations developed, a new class evolved--managers
 * Ownership and management of corporations becomes separate
 * Managers work to ensure stability, continuity--to protect their positions
 * Expertise becomes their key to advancement
 * Why do Americans accept this new way of doing business?
 * The new industrial world far different from what most Americans used to handling
 * brought hardships to many
 * run smaller, less efficient firms out of business
 * Americans embraced the new industrial order because
 * saw it as more promising environment in terms of material well-being
 * possibilities for economic and social mobility (climbing the ladder of success)
 * The gospel of wealth and progress
 * Social darwinism
 * Darwin had no direct ties to use of his ideas
 * Darwinism used to buttress the conservative outlook in two ways
 * it suggested that nature would provide that the best competitors in a competitive situation would win, thus leading to continued improvement ("survival of the fittest" and "struggle for existence")
 * idea of development of eons suggested that all sound development should be slow and unhurried (without assistance or interference from the government)
 * Herbert Spencer and Wm. Graham Sumner--leading proponents
 * Spencer (Britain, 1850s)
 * argued that a general law of evolution could be formulated
 * that law argued for a biological law of society--poor were obviously unfit, should be eleminated by nature
 * government should not interfere with natural process
 * At Yale, William Graham Sumner became strong advocate of Spencer's theories--popularized Social Darwinism in U.S.
 * progress of civilization depends upon the selection process, which in turn depends upon unrestricted competition
 * society is the product of gradual evolution, it cannot be quickly refashioned by changing the laws
 * Social Darwinism as a tool to promote racism
 * Rev. Josiah Strong, __Our Country__(1885)
 * believed in universal progress, both material and moral, so long as Anglo-Saxon race could be protected
 * he felt Anglos were threatened by immigrants, Catholics, Mormons, saloons, large cities, and socialists
 * Theodore Roosevelt--concluded that coming of the whites to the western frontier could not be stopped, and that a racial war to the finish was inevitable
 * Critics of Social Darwinism
 * Lester Ward and __Dynamic Sociology__--challenges Social Darwinism
 * sharply distinguished between what he called physical (animal) or purposeless evolution and mental (human) evolution--which could be modified by purposeful action
 * while environment transforms the animal, man transforms the environment
 * Ward believed unrestricted competition was harmful
 * it prevented the most fit from surviving
 * he argued rational economics not only saves resources, but produces superior organisms
 * pointed to cultivation of fruit trees and cereal grains and the breeding of cattle as examples of improvements
 * Ward believed education was a leveling instrument--a means of bringing opportunity to humble people and enabling them to use their talents--strong supporter of public schools
 * Washington Gladden--minister
 * warned that the weaker classes would unite to attack a competitive system in which they were threatened with annihilation
 * saw the principle of competition as the law of plants and animals and "brutish" men, not the highest law of civilized society
 * Why Social Darwinism on rise until 1890s
 * American society saw its own image in the tooth-and-claw version of natural selection--the rugged individualist
 * the dominant groups in society were able to dramatize this vision of competition as a thing good in itself
 * Culture of professionalism and Universities
 * during late 19th century, the developing middle class developed a culture of professionalism which dominated the habits of thought and action by which most educated Americans organized their behavior--both public and private
 * Middle-class Americans of late 19th century were a people in motion, seeking success and betterment--they saw their world not as a fixed organic whole, but as a fluid environment open to manipulation according to their needs and values
 * these people needed a new style of thought which could provide self-discipline and forms of esteem and achievement that fit with broader values of society
 * these needs were met by developing an outlook (a culture) that saw a profession as an occupation requiring mastery of esoteric skills and embodying an ethic of service to a client's interest
 * thus, becoming a professional in a given field provided a source of self-esteem and social prestige
 * Education and the culture of professionalism
 * the newly developing American universities served and promoted this middle-class professionalism
 * offered more electives to the traditional "classical" education
 * began classes in applied skills, especially in scientific areas
 * began to develop different schools--business, law, medicine, engineering, social work, education, etc.
 * opened more graduate schools, for advanced training
 * provided education and skills in professions--key to authority--helpd to set standards for what it meant to be a professional in a particular field
 * in turn, the middle class looked upon the universities as institutional centers for this cultural process of creating professionalism
 * Government assistance to business
 * Tariffs
 * taxes on foreign goods
 * raised prices on foreign goods, thus protected American industries from strong competition by outsiders
 * Subsidies--government grants to businesses
 * land grants to railroads
 * Homestead and Morrill Act--designed to help provide land for settlers and colleges, it principally benefitted businessmen, speculators, merchants, lawyers
 * patent protection
 * legal system
 * tort law--especially negligence
 * fellow-servant rule, which held that an employee could not sue the employer for injuries caused by the negligence of another employee.
 * Contributory negligence rules also limited the tort liability of businesses--if employee least bit negligent, company's negligence was negated
 * assumption of risk--person who undertook a dangerous activity (such as riding trains or working in hazardous occupation) assumed the risk of any injury
 * forseeability--injury caused by negligence must be foreseeable before it could be compensated--RR fire case in N.Y.
 * employment contracts--enforced strictly to the letter, most often favored employers over employees
 * Caveat emptor--buyer beware
 * Gospel of Wealth
 * Andrew Carnegie
 * America as land of free and prosperous
 * reasons for America's success
 * ethnic character of people--esp. Anglo-Saxons
 * geography--plentitude of North America
 * influence of political institutions based on equality of the citizen
 * Rev.Russell Conwell (1915)
 * Baptist businessman and lay minister
 * Christian duty to become rich
 * "98 out of 100 of the rich men of America are honest. That is why they are rich." Dishonest rich men are rare
 * People are poor because of their own shortcomings (God is punishing them)
 * Money also helps the churches--especially the ministers (Crowell will not turn down a raise in salary)
 * Rev. DeWitt Talmage
 * Presbyterian minister in Brooklyn
 * wanted no working men stinking up his church--"If you are going to kill the church thus with bad smells, I will have nothing to do with this type of evangelization."
 * Dissenting voices
 * Henry George and __Progress and Poverty__(1879)
 * disturbed by amount of poverty in land of plenty
 * proposed to redistribute wealth
 * advocated a single (flat) tax on "unearned increment" that speculators got from rising land prices
 * Mark Twain and "Poor Little Stephen Girard"
 * "rags to riches" was just a myth
 * business success was more likely to come to those who lied and cheated
 * Edward Bellamy and __Looking Backward__(1888)
 * hero falls asleep and wakes up in 2000
 * finds a nation without wars or poverty
 * government runs a centralized economy--everyone works for common welfare
 * religion of solidarity among all preached
 * Karl Marx and __Das Kapital__ (1867)--had little appeal--mostly to a small group of German immigrants
 * Antitrust legislation
 * Sherman Anti-trust Act
 * explain a trust
 * Sponsored by Sen. John Sherman in 1890
 * outlawed trusts and "any other contracts or combinations in restraint of trade"
 * Act based on Congress' power to regulate interstate commerce
 * failed to define its terms clearly
 * Rockefeller dissolves the Standard Oil Trust and creates a holding company--avoids the Sherman Act
 * __U.S. v. E.C. Knight Co.__(USSC, 1895)
 * E.C. Knight Co., a Louisiana trust manufacturing sugar
 * controls almost 95% of all sugar refining in U.S.--clearly restrained trade
 * Supreme Court ruled that sugar refining was manufacturing, not part of interstate commerce
 * Atty. Gen. Richard Olney
 * did not go after business trusts agressively
 * did turn around though and use the law against labor unions
 * From workshops to mass production
 * Typical working days
 * workshops
 * work done in small shops by skilled artisans
 * artisans controlled pace of work and flow of workday (breaks, working conditions, etc.)
 * Small manufacturing concerns
 * centralized workers in one place
 * skilled craftsmen worked in groups, each doing one job (over and over)
 * skilled workers still controlled pace of work, but lost control over other areas (holidays, drinking on job, etc.)
 * Mechanized shops
 * workers still centralized
 * skilled craftsmen not needed to handle routine operations any more as more sophisticated machines took over those tasks--could be run by unskilled operatives
 * control of shop-floor now passed to management--skilled workers now did set-up, moved into management, or were troubleshooters
 * Working conditions
 * length of workday/workweek
 * normally a 10-12 hour day, depending on industry
 * six days a week
 * pay
 * Men in the North--anywhere from $3.00/day for highly skilled laborers to $1.25/day for unskilled workers
 * Pay sufficient for people to survive if they worked full time, year-round
 * Men in the South--$.75-$1.50/day in the South, depending on skill levels--most jobs called for unskilled workers
 * sporadic nature of work
 * seasonal unemployment a norm for workers
 * few worked year round
 * economic downswings often meant loss of hours and/or reductions in pay
 * industrial safety
 * little concern on part of many employers for industrial safety
 * workers seldom received more than minimal training on equipment
 * accidents were common, especially in heavy industries--steel, railroad, mining, and textiles
 * 1913--25,000 fatalities and 700,000 injured severely enough to miss more than 4 weeks work
 * even minor injuries could become bad, due to lack of proper treatment
 * diseases common in some industries-- black lung (coal), brown lung (textiles), and white lung (baking) in particular
 * employers fought against government regulation of safety and health--arguing that these measures would be too expensive
 * fate of disabled workers
 * usually no compensation from employers--hazards were a risk borne by employees (their regular wages were seen as taking the risk into account)
 * no government safety net--workers' comp. and disability payments did not exist
 * some workers joined fraternal organizations (brotherhoods) which provided minimal coverage in case of disabilities--could not provide much for long-term or death
 * families and neighbors became the only source of help
 * Employment of women
 * Number working
 * by 1890s, large number of women had entered the workplace
 * women were entering the factories in large numbers for the first time
 * Types of work
 * occupations that employed what were seen as traditional female skills
 * domestic
 * teaching
 * nursing
 * non-traditional occupations
 * industrial--garment, shoe, cigar, and cigarette, baking
 * secretarial
 * previously dominated by males
 * now with large numbers needed to handle growing paperwork and new machines, women moved into positions
 * store clerks
 * Wages
 * generally half of what men received
 * reasons
 * in jobs seen as unskilled
 * women seen as temporary, not permanent breadwinners for families
 * Reactions to women entering workforce in large numbers
 * some traditional occupations were seen as fitting for women--fit in with notions as being in the proper sphere for "ladies" (nursing and teaching)
 * other occupations viewed as being unfit for "good" women
 * Employment of children
 * Working conditions
 * Child-Labor laws
 * Labor reform laws
 * States and the 14th Amendment
 * a number of state legislatures passed acts limiting amount of hours person could work in certain industries, also age children could work
 * state courts generally struck the laws down on basis that it violated due process clause of the 14th Amendment, no state could interfere with the right to make lawful contracts
 * U.S. Supreme Court becomes involved
 * __Holden v. Hardy__(1898)
 * Utah passes law limiting miners to eight-hour work day as proper health measure
 * Court upheld law due to hazardous nature of mining
 * __Lochner v. New York__(1905)
 * New York passes law limiting bakers to 10-hour work days, or 60-hour work week as health measure
 * Supreme Court strikes down the law (5-4 decision)--baking not considered a hazardous occupation in their mind (what difference between 10 hours or 12 hours per day?), thus the law unwarranted restriction of freedom of contract
 * strong dissent from Justices Harlan and Holmes--arguing court should not override valid exercise of state legislature's police power and side with one economic faction
 * __Muller v. Oregon__(USSC, 1908)
 * Oregon law set max. working hours for women laundry workers to 10 per day
 * Supreme Court upheld law--gender of workers seen as key element, women could be treated differently than men
 * showed slight change in nature of the legal climate--laws affecting adult males still strictly scrutinized
 * Other than the courts, the federal government remains uninvolved in labor reform legislation
 * Should government become involved in regulating working conditions and hours? Are there reasons for protecting children or women that don't apply to men?
 * Strikes of 1877
 * Importance of strikes
 * helped spur organized labor movement
 * caused many middle-class Americans to view workers as a mob, influenced by outside agitators
 * Causes
 * depression of 1870s cuts down on rail traffic
 * rail lines go through a series of pay cuts to workers
 * Workers on B & O strike, blocking the railroad
 * Pittsburgh
 * heavy violence in Pittsburgh against Penn RR
 * Railroad calls in Pinkertons to break the strike and protect property
 * Pinkertons run off by strikers in gun battle
 * State militias called out in a number of states
 * Federal government's response
 * Pres. Rutherford B. Hayes sends in U.S. Army--reason, to protect the U.S. Mail
 * When shooting stopped, almost 100 people had died
 * The union movement
 * Knights of Labor
 * formed a wide-scale labor union in 1877, amid the turmoil of the railway strikes of that year
 * Reason for founding K of L
 * belief that the producer of a good (laborers) deserves the fruits of his or her work (i.e.--labor creates value)
 * many new workers came from farming background, where farmer works and receives pay for product
 * Terrence Powderly
 * Irish Catholic President of the union
 * dynamic speaker
 * helped bring in thousands of new members
 * sought to work through collective bargaining, against strikes
 * Membership
 * included all wage earners
 * excluded: gamblers, speculators, lawyers, bankers, doctors, and stockbrokers
 * Platform
 * supported greenbacks, government regulation of health and safety, public ownership of railways and telegraphs, equal pay for women, graduated income tax, and worker-owned cooperative manufacturing enterprises
 * against child and convict labor
 * worked to influence politics, sought to elect those friendly to labor
 * Railroad strikes in 1884-85
 * several locals launched successful wildcat strikes against a few railroads in 1884 (without Powderly's approval)
 * in 1885, Jay Gould tries to get rid of all K of L supporters working on his Wabash RR
 * Powderly authorized a strike against the line and ordered all members to refuse to handle Wabash cars
 * Gould backs down
 * 1886--Success leads to demise of K of L
 * success of the strike against Wabash caused ranks to swell to over 700,000 members by 1886
 * number too large for national leadership to control
 * a number of locals launched unsuccessful strikes without support of national leadership, which left many disillusioned
 * Haymarket riot and backlash against unionism
 * Union membership declines to less than 200,000 over next three years
 * Rise of yellow-dog contracts
 * Haymarket Riot
 * Chicago in May 1886
 * booming city
 * meatpacking, railroad, and farming equipment major industries
 * pro-business atmosphere in government, pro-labor among workers
 * Events leading to riot
 * McCormick Harvester plant scene of strike
 * workers wanted an 8 hour work day
 * four striking workers shot and killed by police at the plant
 * May 4, protest rally at Haymarket Square
 * someone throws a bomb into crowd, killing 7 policemen
 * police return fire, killing 4 protestors
 * 8 labor activists arrested for murder
 * Trial and aftermath
 * trial
 * no evidence to link 8 arrested to bombing
 * all were convicted
 * 4 executed, one commits suicide
 * Gov. John Altgeld pardons remaining 3 in 1893
 * backlash against labor--organizers seen by middle and upper class as being in league with anarchists
 * American Federation of Labor
 * founded in 1886
 * Reasons for founding A F of L
 * belief in trade unionism--use the bargaining power of skilled workers
 * Samuel Gompers
 * English immigrant, started in cigar-making trade
 * believed that large-scale industrial organization required large-scale labor organization
 * work through individual craft guilds for collective bargaining
 * Membership
 * limited to members of craft guilds
 * unskilled laborers not welcome
 * women and blacks excluded
 * new immigrants discouraged from joining
 * membership remained limited until after 1900, when number grew to nearly 1.5 million
 * Activities
 * sought to control shop floor--working conditions
 * worked primarily through attempts at collective bargaining
 * avoided strikes
 * stayed out of politics until 1910s, did not trust politicians
 * Pullman Strike and American Railway Union (1893)
 * Pullman company policies -- company town
 * __Debs vs. Olney__
 * IWW (Wobblies)
 * "Big Bill" Haywood
 * most radical of American labor unions
 * membership open to all
 * Women and the labor movement
 * Opposition by men
 * Women form own unions (ILGWU--International Ladies Garment Workers Union)
 * Immigrants, blacks, and the labor movement
 * Excluded by most labor groups
 * Accepted by IWW and K of L
 * Problems of coping outside of labor unions