Chapter 17 Capital and Labor in the Age of Enterprise 1877–1900

I.        Industrial Capitalism Triumphant

A.      Growth of the Industrial Base

1.   Early factories produced consumer goods—goods that replaced articles made at home or by individual artisans.

2.   Gradually, capital goods—goods that added to the productive capacity of the economy—began to drive America’s industrial economy.

3.   In 1856, British inventor Henry Bessemer designed the Bessemer converter, a furnace that refined raw pig iron into steel, which is harder and more durable than wrought iron.

4.   In 1872, Andrew Carnegie erected a massive steel mill that used the Bessemer converter; the Edgar Thompson Works of Pittsburgh became a model for the modern steel industry.

5.   The technological breakthrough in steel spurred the intensive mining of some of the country’s rich mineral resources: iron ore and coal.

6.   The nation’s energy revolution was completed with the coupling of the steam turbine with the electric generator; after 1900, American factories began a conversion to electric power.

B.      The Railroad Boom

1.   Americans were impatient for year-round, ontime transportation service that canal barges and riverboats could not provide; the arrival of locomotives from Britain in the 1830s was the solution.

2.   The United States chose to pay for its railroads by free enterprise, but the governments of many states and localities lured railroads with offers of financial aid.

3.   The most important boost that government gave the railroads was a legal form of organization—the corporation with limited liability.

4.   Railroad promoters ran the railroad construction companies, which raised cash by buying and selling railroads’ bonds.

5.   The most successful railroad promoters were those with access to capital; John Murray Forbes, Cornelius Vanderbilt, and James J. Hill were the most famous.

6.   With the early railroads, gauges of track varied widely, and at terminal points the railroads were not connected.

7.   In 1883 the railroads divided the country into the four standard time zones to manage scheduling, and by the end of the 1880s, the track gauge was standardized.

8.   The inventor George Westinghouse perfected the automatic coupler, the air brake, and the friction gear; this resulted in a steady drop in freight rates for shippers.

9.   For investors, the price of railroad competition was high; when the economy turned bad, as in 1893, a third of the industry went into receivership.

10. After 1893, the investment banks of J. P.Morgan & Co. and Kuhn Loeb & Co. stepped in to court new investors and consolidate old railroad rivals; this reorganization shifted the nerve center of American railroading to Wall Street.

11. By the early twentieth century, a half dozen great regional systems had emerged out of the jumble of rival systems.

C.      Mass Markets and Large-Scale Enterprise

1.   Until well into the industrial age, most manufacturers operated on a small scale for nearby markets and left distribution to wholesale merchants and commission agents.

2.   As America’s swelling population flocked to the cities, the railroads brought tightly packed markets within the reach of distant producers.

3.   The Union Stock Yard of Chicago opened in 1865; livestock came in by rail from the Great Plains, was auctioned off in Chicago, and then shipped east for processing in “butchertowns.”

4.   Gustavus F. Swift and his engineers developed an effective cooling system for shipping beef.  Swift invested in a fleet of refrigerator cars and built a central beef-processing plant in Chicago as well as a network of branch houses.

5.   Swift & Co. was a vertically integrated firm, absorbing the functions of many small, specialized enterprises within a single centralized structure.

6.   John D. Rockefeller’s Standard Oil Company had a national distribution system for kerosene, and the Singer Sewing Machine Company used retail stores as well as door-todoor salesmen.

7.   In the late nineteenth century, modern advertising appeared as big businesses set about creating a national demand for their brand names.

D.      The New South

1.   After the Civil War, the South remained overwhelmingly agricultural, and wages for farm labor in the South were low.

2.   Southern textile mills recruited workers from the surrounding hill farms; mill wages exceeded farm earnings, but not by much.

3.   The new southern mills had an advantage over those of the long-established New England industry—southern mills’ wages were as much as 40 percent less.

4.   A “family system” of mill labor developed, with a labor force that was half female and very young.

5.   Blacks sometimes worked as day laborers and janitors but seldom got jobs as operatives in the cotton mills.

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6.   When cigarettes became fashionable in the 1880s, southerner James B. Duke took advantage of James A. Bonsack’s new machine that produced cigarettes automatically.

7.   The businesses that developed in the South produced raw materials or engaged in the lowtech processing of coarse products; the South consistently lagged behind the North economically.

8.   Many southerners blamed the North for economic disparity, as most of the capital came from the North.

9.   Low wages in the South discouraged employers from replacing workers with machinery, attracted labor-intensive industry, and inhibited investment in education.

10. Northerners and immigrants avoided the South and its low wages, and prior to World War I, few southerners left for the higher wages of the North.

II.       The World ofWork

A.      Labor Recruits

1.   Unlike Europe, the United States did not rely primarily on its own population for a labor supply.

2.   The U.S. demand for labor tripled between 1870 and 1900; white Americans found opportunities in the multiplying white-collar jobs in the cities.

3.   Modest numbers of blacks began to migrate out of the South between 1870 and 1910; most settled in cities but were not given factory work because immigrants provided cheaper labor.

4.   Ethnic origin largely determined the kind of work immigrants took in America: the Welsh were mostly tin-plate workers; the English were miners; and Germans were machinists.

5.   With the advance of technology, fewer European craftsmen were needed, yet the demand for ordinary labor skyrocketed.

6.   By 1895, arrivals from southern and Eastern Europe far outstripped immigrants from Western Europe.

7.   Heavy, low-paid labor became the domain of the immigrants; their relatives and neighbors often followed them to America, and a high degree of clustering resulted.

8.   Immigrants were often peasants displaced by the breakdown of the traditional rural economies of southern and Eastern Europe; many returned home during America’s depression years.

9.   In 1900, women made up a quarter of the nonagricultural labor force. Contemporary beliefs about womanhood determined which jobs women took and how they were treated at work.

10. In 1890, fewer than 5 percent of white wives had worked outside the home, while more than 30 percent of black wives worked for wages.

11. Women were not permitted to do “men’s work” nor were they paid the same wages as men, regardless of their skills. Employers maintained that because women had men to support them, they did not require a “living wage.”

12. At the turn of the century, women’s work fell into three categories: domestic service; female white-collar jobs; and industry, such as the garment trade.

13. Black women were excluded from all but the most menial jobs, as were black men.

14. The family household could not function without the wife’s contribution; therefore, society disapproved of wives taking paying jobs.

15. Working-class families had a hard time getting by on one income; in 1900, one in five children under the age of sixteen worked.

16. By the 1890s, all northern industrial states had passed child labor laws and regulations on work hours for teenagers.

17. Deprived of their children’s earnings, yet still needing more than one income, more women in working-class families entered the workplace.

B.      Autonomous Labor

1.   Autonomous male craftsmen flourished in many branches of nineteenth-century industry.

2.   These workers abided by the “stint,” an informal system of restricting output that infuriated efficiency-minded engineers.

3.   Many young female workers found a new sense of independence and new social outlets from working.

4.   Women workers rarely wielded the kind of craft power that the skilled male worker commonly enjoyed.

5.   For men, dispersal of authority was characteristic of nineteenth-century industry; the most skilled workers were autonomous—hiring, supervising, and paying their own helpers—but the subordinates were sometimes exploited.

C.      Systems of Control

1.   With mass production, machine tools became more specialized, and the need for skilled operatives disappeared.

2.   Employers were attracted to “dedicated” machinery because it increased output; the impact on workers was not their greatest concern.

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3.   Frederick W. Taylor’s method of scientific management eliminated the brainwork from manual labor and deprived workers of the authority they had previously known.

4.   Influenced by Taylor, managers subjected tasks to time-and-motion studies in order to determine the workers’ pay; Taylor assumed that workers would automatically respond to the lure of higher earnings.

5.   Scientific management did not solve the labor problem as Taylor had thought it would, rather it embittered relationships on the shop floor.

6.   Taylor’s disciples created the new fields of personnel work and industrial psychology, which they claimed extracted more and better labor from workers.

7.   For textile workers, the loss of autonomy came early; for miners and ironworkers, it came more slowly; and construction workers mostly retained their autonomy.

III.      The Labor Movement

A.      Reformers and Unionists

1.   The Knights of Labor was founded in 1869 as a secret society of garment workers in Philadelphia, and by 1878 had emerged as a national movement.

2.   To achieve labor “emancipation,” the Knights had originally intended to set up factories run by the employees; led by Terence V. Powderly, they instead devoted themselves to “education.”

3.   The labor reformers expressed the higher aspirations of American workers, but the trade unions tended to the workers’ day-to-day needs.

4.   The earliest unions were organizations of workers in the same craft and sometimes the same ethnic group.

5.   By the 1870s the national union was becoming the dominant organizational form for American trade unionism.

6.   Many workers carried membership cards in both the Knights of Labor and a trade union.

7.   As did most trade unions, the Knights barred women until 1881, when women shoe workers won the right to form their own local assembly.

8.   The Knights of Labor allowed black workers to join out of the need for solidarity and in deference to the Order’s egalitarian principles.

B.      The Triumph of “Pure and Simple”Unionism

1.   In the early 1880s the Knights began to act more like trade unions; as the Knights won more strikes, its membership rapidly increased.

2.   As the Knights stood poised as a potential industrial-union movement, the national trade unions insisted on a clear separation of roles, with the Knights confined to labor reform.

3.   Samuel Gompers led the ideological assault on the Knights, and he hammered out the philosophical position known as pure and simple unionism.

4.   The Knights favored an eight-hour workday because workers had duties to perform as American citizens, and unionists favored it because it spread the work among more people, providing more jobs and protecting them from overwork.

5.   Seizing on the antiunion hysteria set off by the Haymarket affair, employers broke strikes violently, compiled blacklists, and forced some workers to sign “yellow-dog contracts” that renounced union membership.

6.   In December 1886, the national trade unions formed the American Federation of Labor (AFL); the underlying principle was that workers had to take the world as it was.

7.   The Knights of Labor never recovered from the Haymarket affair, and by the mid-1890s, the Knights had faded away while the AFL took firm root.

C.      Industrial War

1.   American trade unions wanted a larger share for working people; this made employers opposed to collective bargaining.

2.   Andrew Carnegie had once stated that workers had the right to organize and that employers should honor workers’ jobs during labor disputes.

3.   Carnegie decided that collective bargaining had become too expensive and wanted to replace the workers at his steel mill in Homestead, Pennsylvania, with advanced machinery.

4.   Carnegie’s second-in-command, Henry Clay Frick, announced that Carnegie’s mill would no longer deal with the Amalgamated Association of Iron and Steel Workers.

5.   The Homestead strike on July 6, 1892, ushered in a decade of strife that pitted working people against the power of corporate industry often backed by the government.

6.   George M. Pullman cut wages at his factory but not the rents for employee housing; he denied that there was any connection between his roles as employer and landlord.

7.   Pullman workers belonged to the American Railway Union (ARU), and Eugene V. Debs directed all ARU members not to handle Pullman sleeping cars (a secondary labor boycott).

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8.   The Pullman boycott was crushed by the federal government, which—pressured by the railroad companies—used its power to protect the U.S. mail carried in railcars.

D.      American Radicalism in the Making

1.   Eugene Debs devoted himself to the American Railway Union, a union that organized all railroad workers irrespective of skill—an industrial union.

2.   With the formation of the Socialist Labor Party in 1877,Marxist socialism established itself as a permanent presence in American politics.

3.   After being incarcerated after the Pullman strike, Debs gravitated to the socialist camp and helped to launch the Socialist Party of America in 1901.

4.   Under Debs, the Socialist Party of America began to attract not only immigrants but farmers and women as well.

5.   A different brand of American Marxist radicalism was taking shape as the atmosphere of western mining camps turned violent in the 1890s.

6.   The Western Federation of Miners joined with left-wing socialists in 1905 to create the Industrial Workers of the World (Wobblies).

7.   The Wobblies supported the Marxist class struggle at the workplace rather than in politics (syndicalism).

8.   American radicalism bore witness to what was exploitative and unjust in the new industrial order.