HIS271 January 16, 2013
Toward Modern America c. 1870-1910
Industrialization and the Rise of Big Business
At the close of the American civil war, America is still a rural nation, trailing
Britain, Germany and France in production. However, by the 1900s, USA leap
frogs over its European counterparts in production, become one of the
The rapid and widespread adoption of the mechanical means of production,
leading to the creation of large factories. THe wage-labour system is the
driving force of labour of the nation.
Factors leading to industrialization.
- the railroad continues to expandand develop, creating trans-continental
Evolves the economy by creating a nationwide market for goods. Track
mileage by 1900 in the US supersedes that of all the other nations in the
- technological innovations
Electricity. Factories can be created anywhere, thanks to the accessibility of
electricity. No longer would factories have to be built along rivers where the
water would supply the steam-powered machinery.
- Patents. Hundreds of thousands of patents are taken out from the
telephone, furnaces, automotive technologies, typewriters, cash register.
These innovations create new class of workers from clerks to
communication workers, etc.
The implementation of new business methods in the late 19th century is a
new phenomenon that would usher in the stage of corporate america.
- Vertical Integration: Carnegie Steel, a scottish immigrant who built
himself from modest means. Built his first steel mill churning out 50 tons of
steel, 20 years later 10,000 tons.
- He was the first to use the method of vertical integration by buying
up every tier of production from mining, processing plants, to distribution. In
other words, one company owns every process of production from extraction
to distribution of the final product.
- Horizontal Integration: Standard Oil (Rockefeller) controls 9/10 of the oil
refining industry by acquiring all the other producers. In so doing, he
becomes a price-setter and therefore ensures his own prices and profit
margins by control every means of production. After which, he would also
indulge in Vertical Integration. In 1890, the Sherman Anti-trust act was passed to discourage large
companies to form, under the pretext of going against free-trade. However,
this act is not enforced.
Rockefeller becomes America's first billionaire.
J.P. Morgan - a banker who becomes America's richest man.
He is responsible for creating such industrial giants as General Electric and
US Steel. He oversaw the merger of many rail companies, and some smaller
steel companies. When Carnegie retires, J.P. Morgan purchases his steel
company, and with all the other companies he has a hand in creates US
Carnegie represents the older, individual entrepreneurial order.
JP Morgan represents the new order of corporations.
The rise of industrial capitalism, given free reign by government who
believes that it should not interfere in the market.
Labour, naturally impacted by these changes, sees a rise in organization. A
rapid growth in the working class, however, wages are going down, working
conditions are bad; they are losing grasp. Industrialists are also investing
heavily in machinery, which in turns is replacing expensive skilled workers.
The Rise of Organized Labour
Local union activity was not able to keep up with the growth of capitalism
and indistrualization. What was needed was a national, organized union.
The Knights of Labour
there was a movement towards collective ownership of major industries, ie
banking, railroad, steel, etc. A step towards socialism. They also stood for
higher wages, better working conditions, etc.
The movement fizzles under pressure of employers.
The American Federation of Labour (AFL) - d