Formatted exclusively for cliftonhonors.

com

Chapter 24: Industry Comes of Age

Talented men dominated the economy during the period of industrial growth.

I) The Iron Colt Becomes an Iron Horse

• As the politics ties up with business, railroad and other industries flourished
• The government made enormous loans and donations of land to the companies
willing to build a transcontinental railroad
⇒ land grants were given in alternate mile-square sections
⇒ Those sections were not utilized or available for any use to others until
Cleveland made it available in 1887
⇒ Although there were a lot of criticism regarding the land grant, the
government did receive preferential rates for mailing services and military
traffic
⇒ Corporations could easily turn land into gold by building railroads
II) Spanning the Continent with Rails
• The deadlock of the Transcontinental Railroad was broken by the civil War when
the South succeeded
⇒ The Union Pacific Railroad was commissioned by Congress; for each mile of
tracks laid by the corporations, they received corresponding loans from the
government and land grants
⇒ construction gangs made up of Irish people known as “Paddies” (Patricks)”,
who fought in the Union Army
⇒ Indians attacked the efforts of the people and casualties were from both sides
as the track crawled westward
• Railroad in California were controlled by the Big Four, the chief financial bankers
of the enterprise
⇒ They kept their hands clean away from bribery and made tens of millions in
profit
⇒ known as the Central Pacific Railroad
• Completion of the railroad was compared to the Declaration of Independence
and the Emancipation Proclamation
III) Binding the Country with Railroad Ties
• 4 other transcontinental railroads were completed by the end of the century, and
most of them received land grants
• Despite those successes, lots of pioneer builders suffered from multiple
bankruptcies
IV) Railroad Consolidation and Mechanization
• While railroad expanded westward, the fragmented eastern railroads are tied
together
⇒ Led by “Commodore” Cornelius Vanderbilt
⇒ 2 new improvements: Steel rail and air brake
V) Revolution by Railways

©2009 cliftonhonors.com All rights reserved.

1| Page
 Formatted exclusively for cliftonhonors.com

• The railroads not only united the U.S physically but also provided a strong
domestic market
⇒ Spurred industrialization and cities
⇒ Created standard time zones for each region on November 18, 1883

VI) Wrongdoing in railroading

• Corruption accompanied railroad building
• Jay Gould was the best at corruption
⇒ used techniques such as “stock watering”
⇒ Dominated the economy by bribing government officials and forming large
corporations
VII)Government Bridles the Iron Horse
• People feared to challenge this economic injustice
• As depression came in the 1870s, farmers finally protested against the case and
made it to the Supreme Court in 1886 with the famed Wabash case
⇒ The Supreme Court declared that states cannot regulate interstate trade, so
the federal government have to be the one to stop this wrongdoing
• While President Cleveland sat back, the Congress passed the Interstate
Commerce Act in 1887, which prohibited large pools and monopolies and made
railroad companies publish their rates, etc. Most importantly, it established the
Interstate commerce Commission to enforce the acts and regulate commerce
⇒ Stabilized the existing business system
• More people were interested in investing in private enterprises that are
monitored and protected by the government
VIII)Miracles of Mechanization
• There were certain factors that spurred economic growth of the nation such as
natural resources, immigration, and American inventions
⇒ The telephone was one of the most ingenious inventions, by Alexander
Graham Bell in 1876
⇒ Thomas Alva Edison was the most versatile inventor. His most important
invention was the electric light bulb
IX) The Trust Titan Emerges
• The steel king Andrew Carnegie demonstrated his tactic of vertical integration,
when he controlled all phases of manufacturing steel to ensure quality and fees
between processes
• The oil baron John D. Rockefeller demonstrated his tactic of horizontal
integration by forming trusts between his competitions to control and
monopolize the whole oil industry
• The banker’s banker J.P. Morgan used his tactic known as interlocking
directorates as he placed his officers into other bankers’ board of directors to
ensure equal (and usually poor) rates and treatment for the laboring class and
consumers

©2009 cliftonhonors.com All rights reserved.

2| Page
 Formatted exclusively for cliftonhonors.com

X) The Supremacy of Steel

• Steel is a tougher metal than iron
• The Bessemer process made cheaper steal, making American the largest source
of steel by 1900
• Not only was a revolutionary process the key to American steel production,
immigration and natural resources also provided labor and raw material to the
production of steel
XI) Carnegie and Other Sultans of Steel
• Andrew Carnegie was the king of steel
⇒ Came to U.S at the age of 13 and stepped up to the top of the business by
accumulating capital, picking high-class associates, and taking on
responsibilities
• Legendary banker J.P. Morgan did not believe that money power was dangerous
• Carnegie and Morgan finally collided when they wanted to invest in the same
industry: steel pipe tubing. After 8 hours of negotiation, Morgan finally agreed to
buy Carnegie out of this business for $400 million
• Morgan launched the U.S Steel Corporation which capitalized $1.4 billion, and it
became the 1st billion dollar corporation in the U.S. This was the estimated
nation’s wealth in 1800
XII)Rockefeller Grows an American Beauty Rose
• Not until 1859 did the oil industry become discovered
• Despite the fact that the oil industry was turned down in 1885 for the invention
of the Electric light bulb, it was brought back by the invention of automobiles
• John D. Rockefeller became a successful businessman at the age of 19, and
planned to eliminate middlemen and squeeze out competitors
⇒ By 1877 Rockefeller controlled 95% of the oil refineries of the country
⇒ Showed little mercy in business
• Other trusts also blossomed along with the oil trust
• Trust owners made themselves very rich while monopolizing the economy
XIII)The Gospel of Wealth
• English philosopher Herbert Spencer and Yale professor William Graham thought
that millionaires’ formation are simply “survival of the fittest”
• Many rich people concluded that poor people are poor because f their own
shortcomings
• The plutocracy believed that the Constitution saying that states cannot regulate
interstate commerce is a god-sent protection to the monopolies. The 14th
amendment further protected the corporations’ rights as an “individual”
XIV)Government Tackles the Trust Evil
• Sherman Anti-Trust Act of 1890 were finally signed into law after people’s
protests
⇒ proved to be ineffective
⇒ became a law on paper in 1914, until then did people in the government
question should trusts be controlled
• The iron grip on monopolies is going to get loose

©2009 cliftonhonors.com All rights reserved.

3| Page
 Formatted exclusively for cliftonhonors.com

XV)The South in the Age of Industry

• Although industrialists tried to push it to the south, the south remained
agricultural as a source of raw material
• An increasing number of textile mills were built in the South to “Bring the mills to
the cotton”
• White southern workers received half of the wages as the northerners and often
they received compensation in the form of credit for their bankers, since most of
them are under heavy debt
XVI)The Impact of the New Industrial Revolution on America
• Increased Americans’ standard of living and immigration
• Federal authority are committed against monopolies, trusts, and corporations
• Rural American immigrants lived their lives under the factory whistle
• The most affected group of people was women
⇒ Found new opportunities as “hello girls” since the invention of telephone
⇒ Worked in factories and wanted to earn money
• Accentuated class division
• Most people depended on wages to live and support a family, and therefore
employers have much control of their wages and working conditions
• Promoted foreign trade
XVII)In Union There is Strength
• Under the new impact of the Industrial Revolution, workers formed unions and
went on strikes to demand higher wages
⇒ Corporations have more money power, they could buy off the press and
politicians and put the strikers down using federal power
⇒ Workers seem predestined to be unflavored
XVIII)Labor Limps Along
• Civil War gave a boost to labor unions
• In 1872, there were 32 national labor unions
• The National Labor Union in 1866 had over 600,000 members. Lasted 6 years
• The Colored National Labor Unions was formed for former slaves. However they
did not coexist well with the National Labor Union due to their support of the
Republicans
• After the depression in the 1870s, the Knights of Labor bequeathed the torch of
the National Labor Union
⇒ Began as a secret society in 1869, the Knights of Labor cared for proletariats
of all race and gender
⇒ Campaigned for worker’s rights, crying out their slogan “Labor is the only
creator of values and capital”
⇒ Under the leadership of Terence V. Powderly, the Knights of Labor won
numerous strikes for an 8 hour workday and after the successful strike
against Jay Gould’s Wabash Railroad in 1885, their membership went up to ¾
a million
XIX)Unhorsing the Knights of Labor

©2009 cliftonhonors.com All rights reserved.

4| Page
 Formatted exclusively for cliftonhonors.com

• On May 4, 1886, a protest led by the Knights of Labor and anarchists with a
dynamite bomb injured several dozen people
⇒ 8 anarchists were charged with conspiracy
⇒ In 1892, Democrat governor of Illinois John P. Altgeld looked over the case
and pardoned the 3 survivors of the prosecution. He was showered with
abuse by the conservatives and defeated at the reelection
⇒ Brought down the fame of the Knights of Labor
• Later on, most of the skilled workers looked into another union just for them —
the American Federation of Labor
• By the 1890s the Knights of Labor memberships were down to 100,000 and
gradually they merged with other protest groups
XX)The AF of L to the Fore
• The elitist of the American Federation of Labor was Samuel Gompers, a Jewish
cigar maker
⇒ Elected as President of the federation every year except one from 1886 to
1924
• The AF of L was a federation of labor unions
• Gompers used socialist ideas and set realistic goals. His main weapons was
boycotting and the “walkout”
• The federation was able to gather a war chest that was enough for prolonged
strikes
• Only favored skilled laborers
• By 1900, its membership boosted up to ½ million
• Attitudes towards labor began to change at the beginning of the 20th century.
Few industrialists accepted agreements from labor unions and many more
decades were up and coming before laborers finally gets their rights

©2009 cliftonhonors.com All rights reserved.

5| Page