The Second Industrial Revolution

• Background of Industrialization
  • First industrial revolution led by Great Britain in producing textiles in 1750
  • Second industrial revolution, arguably led by USA
    • Laissez-faire government (literally means hands off)
    • Protective tarriff
    • Government subsidies
    • land grants
    • Cheap immigrant labor, for example "coolies" (Chinese immigrants), or the Irish, Italians, Greeks etc
    • Coal, oil, iron ore, water, lumber were all readily available in the US
    • Banking was doing well with lots of available capital. JP Morgan was a famous banker of this time.
    • *Civil War- the impetus for rapid industrialization
  • Technological Innovations
  • Inventions
  • New Marketing Techniques
• The Railroad Empire
  • Background- Entrepreneur vs. Government
    • What was different in the US with the railroads was that they were built privately from government land and subsidies. This attracted foreign investors, especially from GBR.
  • Different Issues
    • In the West: James J. Hill in the Great North refused to take money and land from the government in order to build the railroads since he knew there was no such thing as free. The problems that there were not enough rails in the West.
    • In the East: There were too many tracks in the same place. There were also gaps in the tra cks and places that people had to go backwards to go forwards. (like connecting through Dallas to go to Canada).
  • Scandals
    • Erie Railroad War- Vanderbilt, Jay Gould, Jim Fisk, and Daniel Drew
    • "Stock Watering:" printing and selling more stock for more than it was actually worth
    • Crédit Mobilier RR Scandal was secretly owned by the Union Pacific Railroad, hired itself to build a new railroad. Therefore, they could use the people's money instead of their own.
  • Railroad inventions and innovations
    • Vanderbilt
      • steel: lighter, stronger, doesn't rust
      • double tracking: trains can pass by each other
    • George Pullman
      • Sleeper Car, also called a Pullman Palace
    • George Westinghouse
      • Air brakes for trains
    • Gus Swift and Phillip Armour
      • refrigerated railroad cars
    • Time Zones
      • became necessary because of faster speeds and a need to synch the train times
    • The Standard Rail Gauge became 4ft 8.5in, based on the width of the Roman Chariots
  • Competition and Disorder
    • Illegal rebates were like todays rebates, except they were only available to rich people or to large orders
    • Pooling was when companies combined together and fixed the price at the same (usually too high) price. Current day example is the OPEC Cartel, a pool of oil producing countries.
    • States decide to fight back against Railroad pooling
      • Granger Laws were primarily meant to help the farmers. Most famous of these was Munn vs. Illinois (1877) Ruled in favor of the farmer, aka states are allowed to regulate the railroads
      • This was overturned by the Wabash Case in 1887, since states can't regulate interstate commerce (Article 1 Section 8 Clause 3)
      • Interstate Commerce Act (ICC) of 1887 was the first time the government would regulate a private industry
• Industrial Empire
  • Carnegie and Steel
    • Carnegie Biography
      • Carnegie was a kid with no education and he taught himself telegraphy and picked up the
      • caught the interest of Thomas A. Scott, who was teh owner of Pennsylvania RR
      • Carnegie became Scott's telegraph clerk and assistant to Scott's needs
      • Scott gives Carnegie the task of building a bridge across the Mississippi at St. Louis and he
      • finds out that steel is iron is too weak and steel was too scarce so he opens a steel farm
      • west of Pittsburg where he pioneers the Bessemer-Kelly Process
      • Bessemer Converter was what made this process unique by using a mixture of metals and
      • adding cold air for more oxygen to burn off impurities
    • Vertical Integration-Sharing profits with NOBODY
      • Carnegie was smart because he owned all parts of the steel business, even the iron ore, which was called the Mesabi Range
    • Charles Schwab
      • Carnegie takes Charles M. Schwab under his wing
      • Schwab impressed Carnegie a lot and soon became the president of Carnegie Steel
      • Carnegie writes Gospel of Wealth where it talks about how to become wealthy and what the rich owe their fellow human beings, not free stuff but opportunities
      • As the story goes, on a golf course Schwab and Carnegie were playing and Carnegie says he is tired and Schwab says to Carnegie that he should take his life and dedicate it to humanity
      • J.P. Morgan asks for an amount to buy him out with an offer from Carnegie of $480 million
        • J.P. Morgan now owns first billion dollar corporation in US history, called United States Steel Corporation means that it sells stock
        • This is an example of finance capitalism, where if you want to make money you turn money into ownership
          • example is how Bank of America is the second largest owner of Carolina Panthers
  • John D. Rockefeller and the Oil Business
    • Rockerfeller was the first billionaire in US history
    • First oil well was Colonel Edwin Drake and Standard Oil
    • Rockerfeller was a very religious man, and later on he was superstitious
    • He saw all the oil spilling out of the ground and that bothered him because his mother always instilled in him "waste to want" and also "survival of the fittest"
    • Kerosene becomes popular, replacing whale fat.
      • Through marketing Rockerfeller repackages kerosene, takes out ads, and makes money
    • Rockefeller buys internal combustion engines from Europe to prove to American people that gasoline can produce a lot of power
    • Before they just dumped gasoline out because they didn’t know what to do with it
    • Trusts, monopoly, horizontal integration, makes Rockefeller really rich
  • "Wreck-a-feller" and Social Darwinism
    • Sherman Anti Trust Fund
      • When public complains to state governments companies or corporations would move to any easy state like New Jersey
      • Eventually federal government passes Sherman Antitrust Act of 1890 which was mostly a publicity stunt at first. It was vague and wasn’t really boosted until Teddy.
      • First test of the Sherman Act was US vs. E.C. Knight Co. in 1895
        • Supreme Court rules that it wasn’t a monopoly even though Knight Co. manufactured 97% of sugar in the US because they said that it didn’t violate interstate commerce. This was a very narrow interpretation of Constitution.
    • Holding Companies was a great way to get around Sherman Laws
      • If somebody investigates company you just subdivide over and over agian so that there is a lot of deception and the government cant figure out if the company is illegal or legal
      • A holding company becomes illegal if all of the companies produce the same thing
• Laissez Faire Capitalism Gilded Age Style
  • The Gospel of Wealth
    • Natural Aristocracy- Spencerianism or Social darwinism
    • Politicians not to be trusted
    • Government only has one duty, which is to protect the private property of the people. Basically the government is like a police force. If you believe this today, you would definitely be a libertarian.
    • Poverty is unavoidable and uncorrectable
      • Thomas Malthus- An Essay on the Principle of Population : it is useless to fight the fact that there are poor people. Poor people would be poor people.
      • William Graham Sumner- What the Social Classes Owe Each Other : the answer to this question is nothing.
    • "Stewardship of the Rich" means that you create opportunities for the poor (not handouts). Example was the Carnegie libraries created by Carnegie and kept up by the local communities.
  • Social critics and Dissenters
    • Lester Frank Ward- Dynamic Sociology
      • You can't compare human beings to the rest of natural selection, since humans have abilities that no other creatures have. Governments job was to protect private property and to make sure that the competition/playing field were even.
    • Henry George- Progress and Poverty
      • "Unearned Increment" meant that some land was more valuable based on convenience of location. George argued that all land should be kept equal, and that land that was more expensive due to its "unearned increment" was required to pay a single tax. This evolved into property tax.
    • Edward Bellamy- Looking Backwards
      • Written from a man who lives in 2000's point of view. He writes that america reaches utopia through socialism.
    • Thorsten Veblen- The Theory of the Leisure Class
      • "Conspicuous Consumption" buying name brand items for the name, buying expensive cars like BMW, books in libraries that are there to look good.
    • "The Social Gospel Movement" Walter Rauschenbusch- A Theology for the Social Gospel
      • Including William Booth and the Salvation Army
      • The Young Men's Christian Association
      • The Young Women's Christian Association
    • Jane Addams founded the Hull House in South Chicago, which was a settlement house for women- especially immigrant women
  • A Farmer's "No Bull" Look at economic sstems
    • Socialism: You have two cows, and you give one to your neighbor
    • Communism: You have two cows, the government takes them both and gives you the milk.
    • Fascism: You have two cows, the government takes them both and sells you the milk.
    • Nazism: You have two cows, the government takes them both and shoots you
    • Bureaucracy: You have two cows, the government takes them both, shoots one, takes your tax dollars to pay someone to milk it, but the milk goes bad anyway.
    • Socialism: You have two cows, you sell one, and buy a bull with the money.
• The Growth of the American Labor Movement
  • The changing role of the worker and the changing american labor force
    • Workers became part of the machine: they could be easily injured, replaced, and there was no skill involved in what they did.
    • Working conditions were terrible! There was no workman's compensation, safety guards, or health care.
  • New Business Culture
    • "The American Dream"
      • What is the american dream? Rags to middle class. Is the american dream dead?
      • Protestant (Puritain) Work ethic
      • Horatio Alger was a popular writer. He wrote cheesy, short "dime novels" for a living. He wrote about the three ways to become middle class:
        • Hardworking and industrios
        • virtuous, no cheating, reliable, trustworthy
        • a little bit of luck
    • "Success to those who look"
      • Russel Conwell was like the major self help guru. He thought the key to success was yourself.
  • The New Imigrants
    • Mostly from Southern and Eastern Europe, especially Russian Jews.
    • Push factor was the Pograhms- Russia was persecuting the Jews in an attempt to push them out. Pull factor was the opportunities everyone thought you could find in the US.
    • Most immigrants thought that they were "birds of passage," which meant they would make enough money to live comfortably and then go back home. This often didn't happen since the wages in the US were just as low as back home.
    • The Chinese were hated, especially by the Irish. Nickname is the "Yellow Peril."
    • The Tong Wars 1850-1920
      • Chinese gangs fighting other Chinese gangs for scarce Chinese women
    • Chinese Exclusion Act closed Chinese immigration for about 10 years.