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The American Yawp, Volume 2, edited by Joseph Locke and Ben Wright, licensed under CC BY-SA 4.0. Read the original free This shelf’s study material is shared under the same license (CC BY-SA 4.0).
Chapter 3 · pp. 54–84
This chapter looks at how the United States became an industrial giant in the decades after the Civil War, and at the conflicts that followed. It covers the rise of railroads, corporations, mass production, advertising, and giant mergers. It also covers the Gilded Age's inequality, the new unions, the farmers' Populist revolt, and the radical alternatives of anarchism and socialism. This part begins with the Great Railroad Strike of 1877 and the early building blocks of industrial capitalism.
The strike began during a long slump. The railroad bubble had burst in 1873, and the economy stayed weak. Rail companies responded by cutting wages. Workers were angry because the same companies had received large government subsidies and still paid shareholders generous dividends. Strikes spread from Baltimore to St. Louis. Because trains carried the nation's goods, stopping them threatened the whole economy. (p. 54)
The strike was crushed in stages:
Six weeks after it began, the strike was over. Nearly a hundred people had died, and about $40 million in property had been destroyed. (p. 55)
The strike taught two opposite lessons. Workers decided that short, scattered protests were too weak, and that they needed lasting, organized unions. Business leaders decided that they needed even more political influence and more help from government. Both conclusions shaped about fifty years of labor conflict. (p. 55)
Major strikes hit the railroads first because no other industry combined three things so fully: huge amounts of capital, government support, and bureaucratic management. Railroad mileage tripled in the twenty years after 1861 and then tripled again over the next forty years. Railroads forced the country to adopt uniform time zones, linked factories to distant markets, and opened the West. They were also the nation's largest businesses. Running them required new ways of organizing companies, advanced management methods, and enormous sums of money. A strike against them therefore stopped much of the economy at once. (pp. 55–56)
No single investor would risk the sums railroads needed. Incorporation solved this problem. It is a legal form that lets many people pool their money in one company. Each shareholder can lose only what he or she paid for the shares, not personal property, but still receives a share of profits. Corporations had once been mostly reserved for public works or government-backed monopolies. After the Civil War, state laws let almost any business incorporate. Investors then poured capital into corporations. (pp. 56, 61)
Government also gave direct help. Federal, state, and local governments gave railroads hundreds of millions of acres of land and millions of dollars in bonds. The Republican Party, which dominated policy during the Civil War and Reconstruction, passed the laws that made these gifts. The money built the transcontinental lines and many trunk lines that connected regions that had once been separated by distance. (p. 56)
Railroads did not work alone. New technology and heavy investment lowered the costs of making and shipping goods. Credit agencies made it easier and safer to move money among investors, manufacturers, and shopkeepers. Cheaper transportation and communication also created national newspapers and magazines. Advertising agencies used them to promote the same products across the whole country. Together these changes produced a national market and national advertising. (p. 56)
Before the war, many wage earners saw factory work as temporary, a step toward owning a farm or small shop. Machines changed that. As mechanization spread, skills counted for less, and companies grew so large that a single worker seemed powerless. Fewer people could realistically hope to become independent, so many became permanent wage earners. Long hours, dangerous conditions, and low, unpredictable pay pushed workers to organize into stronger unions. (p. 57)
Growth also changed the owners. Firms became too big for owners to run day to day, so owners hired salaried managers. These educated administrators stood between owners and workers, and their growing numbers helped build an emerging middle class. (pp. 57, 61)
Meatpacking shows how the national market worked. Between 1866 and 1886, ranchers drove about a million cattle a year from Texas to railroad depots in Kansas. Trains carried them to Chicago. There the animals moved through slaughterhouse "disassembly lines" and left as meat packed into refrigerated rail cars bound for butcher shops across the country. By 1885, a few large Chicago packers were producing nearly 500 million pounds of dressed beef a year. (p. 57)
This scale reshaped the land. Buffalo herds, grasslands, and old forests gave way to cattle, corn, and wheat. Chicago became known as the "Gateway City" because it connected western farms and ranches, capital markets in New York and London, and consumers all over the nation. (p. 57)
By 1878 Americans had seen so many technological surprises that a joke article about an Edison machine making food from air, water, and dirt seemed believable to some readers. That year Thomas Edison turned to electric power and lighting. The science of converting mechanical energy to electricity, and back, was already known. What Edison added was business-style management of research. He called his Menlo Park laboratory an "invention factory," and he promised a minor invention every ten days and a major one every six months. He used a team of skilled machinists and scientists and planned to sell what they made. (p. 58)
The system spread fast. Edison showed his power and lighting system to reporters and investors in late 1879. He then sold generators to businesses and persuaded city officials to build central power stations. By mid-1883 he had overseen 330 plants that powered over sixty thousand lamps. New York's Pearl Street station opened in September 1882 and lit a square mile of lower Manhattan. (p. 58)
Electricity powered the Second Industrial Revolution. Factories could run anywhere and at any hour. Electric rail cars let cities spread outward, and electric elevators let them grow upward. (p. 58)
Many people picture Edison as a lone genius who worked in isolation and relied on a flash of inspiration. That picture is wrong. He ran a commercially minded laboratory with a skilled staff and investors, and he used the management methods of his era. He was also a salesman who sold generators and convinced cities to build power stations. His success came from organization and business as much as from ideas. (p. 58)
Scientific management (Taylorism) is the system of Frederick Taylor. He argued that factories in the machine age needed a scientific design. His main idea was to split production into narrow tasks and have trained experts oversee them. Instead of thirty mechanics each building a whole machine, thirty workers would each do one separate task. This sped up output, and it also made workers as interchangeable as the parts they made. Taylorism helped mass production grow in scale and scope. (p. 59)
Mass production did not start with Henry Ford. It built on the interchangeable parts first used in weapons made during the Civil War. Long before Ford's assembly line made cars cheap, other firms reached record output with similar methods. Examples include Singer sewing machines, the Chicago packers' "disassembly" lines, McCormick reapers, and Duke cigarette rollers. (pp. 59–60)
Example: McCormick's reapers. Skilled blacksmiths, machinists, and woodworkers once built each reaper by hand. That made the machines slow to produce and too expensive for most wheat farmers. In 1880 McCormick hired a production manager who had worked on Colt firearms. The Chicago plant then adopted jigs, steel gauges, and pattern machines that could copy interchangeable parts exactly. Output rose from 21,000 machines in 1880 to about twice that in 1885, and to over 100,000 a year by 1889. (p. 60)
These changes moved the United States up in the world rankings. In the 1860s its economy trailed Britain, Germany, and France. By 1900 it led the world in manufacturing. By 1913 it made about one third of all industrial output, more than those three countries combined. (pp. 60–61)
Economies of scale are the savings a firm gets when it makes a huge up-front investment in machines and marketing. After that investment, each extra unit costs relatively little to make. So bigger production brings bigger profits, and firms needed large markets to keep their factories busy. (p. 61)
This was also a danger. Factories had high fixed costs, so a firm could not easily cut back. A company with an expensive plant would sell goods at low prices and take small losses rather than let the plant sit idle. When rivals did the same, price-cutting ate into profits, and investors lost money. For this reason economies of scale are called a double-edged sword: they brought large profits but also made competition destructive. (p. 61)
Firms looking for any edge turned to advertising, which became a professional, multi-million-dollar industry. New York City had about 40 advertising firms in the 1860s and about 300 by 1890. Business colleges taught marketing, and new specialized jobs such as copywriter and commercial artist appeared. Ads became more colorful, more entertaining, and nearly everywhere: in magazines, on billboards and buildings, and even on small collectible chromolithograph cards given away at shop counters. (pp. 61–62)
Congress created national trademark protection in 1870. Companies responded with logos and corporate characters, such as the Quaker Oat Man (trademarked in 1895). Trademarks made products recognizable and helped build brand loyalty. (p. 62)
Brand loyalty could not remove the pressure of price competition, so firms looked for ways to avoid it. They escalated in steps:
By combining, firms bypassed competition altogether. (p. 62)
The great merger movement ran from 1895 to 1904 and peaked between 1898 and 1902. In those years about four thousand companies, nearly 20 percent of the economy, were folded into rivals. Forty-one consolidations each controlled over 70 percent of their industry, and firms like General Electric and DuPont dominated their markets. In 1901 J. P. Morgan oversaw the creation of United States Steel from eight leading steel companies. It was the first billion-dollar company. Since industrialization rested on steel, one firm controlling that market was a clear case of monopoly. (p. 62)
The Gilded Age is the name for the late nineteenth century, when shiny wealth and technological progress covered deep inequality and corruption. The label comes from an 1873 satirical novel by Mark Twain and Charles Warner. Industrial capitalism produced enormous fortunes but also millions of low-paid, unskilled, unstable jobs with long hours and dangerous conditions. Economist Henry George, in 1879, called the pairing of poverty with progress "the great enigma" of the age. (pp. 62–63)
The richest industrialists and financiers, often called robber barons, included Vanderbilt (railroads), Rockefeller (oil), Carnegie (steel), and Morgan (banking). Adjusted for inflation, their fortunes remain among the largest in US history. In 1890 the top 1 percent owned about one fourth of national assets, and the top 10 percent owned over 70 percent. By 1900 the richest 10 percent may have held about 90 percent of the wealth. (p. 63)
Social Darwinism took Charles Darwin's idea of natural selection and applied it to human society. Herbert Spencer popularized the phrase "survival of the fittest." He claimed that the fit would prove themselves through economic success. He also claimed that state welfare and private charity would harm society by helping the weak survive. In this view, society was a constant struggle, and unequal outcomes were a sign of progress, not something to regret. (pp. 63–64)
Spencer's work sold nearly 400,000 copies in the United States by 1903. Carnegie, Edison, and Rockefeller were among his followers. Yale's William Graham Sumner spread similar ideas, arguing that people have no special natural claim to life or liberty beyond the struggle to survive. (pp. 64–65)
If inequality was natural and good, then regulating business or helping the poor looked harmful. So Social Darwinism supplied a moral argument for keeping government out of the economy, except when it was protecting and supporting business. (p. 65)
Both major parties used state power to back capital against labor, but big business looked mainly to the Republicans. The party began as an antislavery "free labor" party, yet it was also strongly pro-business. Lincoln had been a corporate lawyer for railroads. During the Civil War, with southern Democrats absent from Congress, Republicans passed a pro-business agenda that gave railroads millions of acres and dollars. (p. 65)
Republicans then dominated politics from the Civil War to the Great Depression. They won all but four of sixteen presidential elections and controlled the Senate in twenty-seven of thirty-two sessions. Their dominance kept in place a high protective tariff, an import tax meant to shield American firms from foreign competition. Southern planters had opposed the tariff before the war but could no longer stop it. The tariff protected the new industrial order, while Social Darwinism justified the limited government role that went with it. (p. 65)
After the Civil War, the Republican Party became the main political ally of big business. Its dominance had a concrete policy result: a high protective tariff. A protective tariff is a tax on imported goods. Its purpose is to make foreign products more expensive so that American companies face less competition. Before the war, southern planters had fought this policy because it raised the cost of goods they bought. After the war they lacked the power to stop it. The tariff became a protective base for the new industrial order. For example, if a foreign steel maker had to pay a tax to sell in the United States, a domestic mill could charge more and still win customers. (p. 65)
Most workers did not share the comfortable views of social Darwinists. A typical industrial worker lost about a month of work each year, because factory jobs rose and fell with the economy. Workers also put in around sixty hours a week. Even so, yearly income often stayed below the poverty line. (pp. 65–66)
Several forces explain this. Machines and mass production pushed skilled workers into unskilled jobs, which paid less and were easier to replace. Low pay forced wives and children into paid work. Crowded cities did not have enough housing, so rents shot up and families were stuck in slums. (pp. 65–66)
Workers had struck for higher wages, shorter hours, and safer conditions before the Civil War, but their unions usually did not last. After the war, giant firms and a huge industrial workforce helped a lasting labor movement grow. The failure of the 1877 railroad strike convinced many workers that they needed organization, and union membership rose. (p. 66)
The Knights of Labor tried to unite skilled and unskilled workers in one group. It welcomed women. It barred only lawyers, bankers, and liquor dealers. By 1886 it had over 700,000 members. The Knights dreamed of a cooperative society that rewarded labor rather than capital. In practice, though, they focused on gains that local unions could win. (pp. 66, 68)
The Southwest strike. In spring 1886, a Jay Gould railroad in Marshall, Texas, fired a Knights member for attending a union meeting. His local walked out, and others followed. Nearly 200,000 workers across Texas, Arkansas, Missouri, Kansas, and Illinois struck Gould's lines. Gould answered with strikebreakers and Pinkerton detectives, a private security force. State militias backed him, and the Texas governor sent the Texas Rangers. Some strikers destroyed property. That brought bad press and made it easier to defend the use of strikebreakers and troops. The strike collapsed. (p. 68)
The eight-hour campaign and Haymarket. The Knights then turned to a national push for an eight-hour workday. About 400,000 workers struck on May 1, 1886. In Chicago, police killed several workers at the McCormick reaper works. Labor leaders called a protest at Haymarket Square the next day. Police moved to break it up, and a bomb killed seven officers. Police then fired into the crowd and killed four people. (p. 68)
Eight anarchists were convicted of conspiracy even though no direct evidence tied them to the bomb. Four were hanged. The event led many Americans to link unions with radicalism. Knights membership had peaked earlier that year and then fell quickly, and the eight-hour movement fell apart. (pp. 68, 78)
The American Federation of Labor (AFL) offered a more cautious path. It was an alliance of craft unions, which are unions of skilled workers. It rejected the Knights' vision of an economy built around producers. It backed "pure and simple trade unionism," meaning practical goals: higher wages, shorter hours, and safer conditions. It tried to reach them while avoiding strikes. Workers kept striking anyway. (pp. 68–69)
Homestead, 1892. After repeated wage cuts, members of the Amalgamated Association of Iron and Steel Workers shut down Carnegie's Homestead plant in Pennsylvania. Plant manager Henry Clay Frick brought in hundreds of Pinkertons. They tried to approach by river barge, but strikers besieged them, and they surrendered. Then the Pennsylvania governor sent the state militia. It broke the strike and reopened the mill, and the union was essentially destroyed. (p. 69)
Pullman, 1894. George Pullman cut wages by a quarter but did not lower rents in his company town. Workers struck. Eugene Debs's American Railway Union responded with a sympathy strike: members would not handle Pullman cars on any line in the country. National rail traffic stopped. Illinois's governor sided with the workers and kept the militia home. President Grover Cleveland instead sent thousands of soldiers, and a federal court issued an injunction against Debs and the union leaders. Debs was jailed, and without leaders the strike ended. (p. 69)
The same pattern appeared again and again. Militias, federal troops, and court injunctions broke strikes, so government usually helped employers. Debs concluded from jail that political and judicial leaders served capital. This helped push him toward radical ideas. Conflict was constant: over twenty thousand strikes and lockouts occurred in the last two decades of the nineteenth century. (p. 69)
Farmers were still most of the population, and industrialization hurt them. Bigger markets and better technology lowered crop prices. Commercial farming made farmers depend on bankers, railroads, and middlemen. Railroad spurs and telegraph lines tied rural areas to Chicago, New York, and even London. Farmers now faced a national economy with sharp price swings, speculation, and little regulation. More and more went into debt and lost their land. Some became industrial workers. In the South, many became landless farmworkers. (pp. 70–71)
In 1877, Texas farmers met in Lampasas and formed the first Farmers' Alliance. Their reasoning was simple: big business used its large numbers to gain power, so farmers could unite too. They could share machinery, bargain with wholesalers, and press for better crop prices. Organizers held camp meetings, handed out pamphlets, and started over a thousand newspapers. They promoted a "cooperative commonwealth." At its height the Alliance had about 1.5 million members in forty thousand local sub-alliances. (p. 71)
Its most inventive programs were farmers' cooperatives. These let farmers bargain together for higher prices on what they sold and lower prices on what they bought. They spread across the South from 1886 to 1892 and claimed over a million members. Most failed financially, but they showed farmers the value of large-scale organization. (pp. 71–72)
In 1890, Alliance-backed Democrats won four southern governorships and forty-eight congressional seats. Still, neither major party seemed to address the problems of poor farmers, so Alliance members created the People's Party, called the Populists. Currency reformers, discontented workers, followers of Edward Bellamy's Looking Backward, and supporters of Henry George's "single tax" joined them. At its first national convention in Omaha on July 4, 1892, the party nominated former Civil War general James B. Weaver for president. (p. 72)
The Populists wanted to answer the power of huge monopolies with a strong, active federal government. Their platform was adopted at the party's founding convention in Omaha. It is called the Omaha Platform. Its preamble was written by Ignatius Donnelly of Minnesota. It warned that the work of millions had been taken to build giant fortunes for a few people (p. 73).
The platform asked for a big expansion of federal power:
Subtreasuries were the most distinctive idea. They were federally run warehouses. A farmer could store a crop there and get a government loan against it. Then the farmer could wait for better prices instead of selling at harvest, when prices were lowest. This fixed two problems at once: farmers had little credit, and they were forced to sell cheap (p. 73).
The Populists believed these steps would move power back to the "producing classes," such as farmers and workers.
Electoral success. In 1892, the party's first national race, James B. Weaver won over one million votes and 22 electoral votes. That was a strong start. The Panic of 1893 then brought the worst depression the country had yet seen. Populist speakers blamed greedy business elites and corrupt politicians for the crisis and for growing inequality, so the movement gained credibility. In the 1894 elections Populists won six Senate seats and seven House seats (pp. 73–74).
Three problems held the movement back (p. 74):
William Jennings Bryan was a Nebraska congressman and a gifted speaker. He worked inside the Democratic Party and not in the Populist Party. In 1895–1896 he toured the country promoting free coinage of silver. He argued that bimetallism (using both silver and gold as money) would inflate the currency and ease farmers' debts. Republicans defended the gold standard (pp. 75–76).
At the July 1896 Democratic convention, Bryan gave his "Cross of Gold" speech. He said the gold standard would crucify mankind, and the crowd erupted. He won the nomination (p. 76).
The Republican candidate, William McKinley, backed business and the gold standard. Republicans outspent Bryan about five to one. Turnout was very high, at 79.3 percent. Republicans carried the Northeast and Midwest and McKinley won. Congress passed the Gold Standard Act in 1900, which settled the money debate. Bryan lost again in 1900 and 1908 (p. 76).
Fusion and the Populist legacy. Bryan took up Populist issues such as free silver. Two weeks after the Democrats chose him, the People's Party's moderate wing also nominated him. It overrode purer Populists to do so. This "fusion" split the party. Energy flowed from the weak but radical People's Party into the stronger, more moderate Democrats, and Populism ended as a separate force (p. 77).
A common misconception is that Populism was a total failure because the party faded and never won the presidency. It is true that its electoral gains were short-lived and its cooperative commonwealth never appeared. Even so, it was the most significant third-party movement in American history. Middle-class reformers later enacted most of the Omaha Platform, and Populist ideas prepared the ground for the progressive movement (p. 77).
Anarchists opposed all government and economic authority. Anarchism was more an attitude than a fixed program, and it was linked in the public mind with European immigrants. The 1886 Haymarket bombing in Chicago, during eight-hour-day protests, killed police officers and protesters. Eight anarchists were convicted without direct evidence, and four were hanged. The case turned many Americans against radicals and weakened the wider labor movement (pp. 78–79).
Emma Goldman, a Russian-born anarchist, supported "propaganda of the deed." This means a targeted act of violence meant to spark revolution. Goldman and Alexander Berkman plotted to kill Henry Clay Frick, the anti-union Carnegie Steel officer at Homestead. They failed, and Berkman served fourteen years in prison. In 1901 the anarchist Leon Czolgosz killed President McKinley (p. 79).
Socialists said wealth and power were held by too few people. They said trusts controlled the economy while workers had low pay, long hours, and unsafe jobs. They drew on Karl Marx's idea of conflict between the bourgeoisie (owners of factories and farms) and the proletariat (people who work for others' wealth). They wanted the means of production owned collectively in a cooperative commonwealth. Eugene Debs described the goal as ending the capitalist system and "wage slavery" (p. 79).
Two groups were open to all races and genders (p. 80):
The SPA elected mayors in 33 cities and towns and two congressmen. It had 150,000 members by 1913. In 1912 Debs won almost one million votes, about 6 percent. The party later sank for several reasons. Progressives adopted many of its ideas. Members disagreed. Most Americans still saw socialism as un-American. The government also repressed it, especially during and after World War I (pp. 80–81).
