Why the U.S. Became the Leading Industrial Power by 1900
By 1900, the U.S. surpassed Great Britain, France, and Germany in industrial production.
Key Factors:
- Abundant Natural Resources
-Coal, iron ore, copper, lead, timber, oil
-Great Lakes region became industrial core
-Large Labor Supply
-Post–Civil War population growth
-Massive immigration (Europe & Asia)
-Cheap labor kept wages low
-Large Domestic Market
-Growing population
-Advanced transportation network
-Encouraged mass production & specialization
-Capital Investment
-European investors + wealthy Americans
-Heavy investment in railroads, steel, oil
-Technological Innovation
-Labor-saving machinery
-440,000+ patents (1860–1890)
-Pro-Business Government Policies
-Protective tariffs
-Land grants & loans to railroads
-Few regulations
-Low corporate taxes
-Strong protection of private property
-Entrepreneurship
-Rise of powerful industrial leaders
The Business of Railroads
Railroads were the nation’s first big business and model for modern corporations.
Growth:
35,000 miles (1865) → 193,000 miles (1900)
Importance:
Created national market
Encouraged mass production & consumption
Boosted coal & steel industries
Standardized time (4 time zones, 1883)
Introduced:
Modern stockholder corporations
Complex financial structures
Corporate management systems
Eastern Trunk Lines
Consolidation solved incompatible gauges
Major trunk lines connected big cities
Key Figures:
Cornelius Vanderbilt
Created New York Central (NYC → Chicago)
4,500+ miles of track
Baltimore & Ohio Railroad
Pennsylvania Railroad
These set efficiency standards for industry.
Western Railroads
Helped settle the West and create national unity.
Federal Land Grants:
170+ million acres granted
Checkerboard land pattern
Railroads sold land to settlers
Government expected:
Settlement
Increased land value
Military/mail transport benefit
Negative Consequences:
Corruption (Credit Mobilier scandal)
Poor construction
Railroads owned huge amounts of western land
Public backlash in 1880s
Transcontinental Railroads
First Transcontinental (1869)
Union Pacific Railroad
Built west from Omaha
Irish immigrants, Civil War vets
Central Pacific Railroad
Built east from Sacramento
6,000 Chinese laborers
Sierra Nevada tunnels
Met at Promontory Point, Utah (Golden Spike)
Other Transcontinentals:
Southern Pacific
Atchison, Topeka & Santa Fe
Northern Pacific
Great Northern (James Hill)
Many failed financially due to overbuilding
Competition and Consolidation
Problems:
Overbuilding
Fraud
Stock watering
Rebates to big shippers
High rates for farmers
Pools (rate-fixing agreements)
Panic of 1893:
25% of railroads bankrupt
J. P. Morgan
Consolidated railroads
Reduced competition
Created giant systems
Used interlocking directorates
Created regional monopolies
Industrial Empires
Shift from light industry → heavy industry
The Steel Industry
Bessemer Process:
Air blasted through molten iron → stronger steel
Revolutionized heavy industry
Andrew Carnegie
Immigrant from Scotland
Used vertical integration
Controlled mines → transport → steel mills
Carnegie Steel produced more than Britain by 1900
U.S. Steel
Created by J.P. Morgan
First billion-dollar corporation
Controlled 60%+ of steel
Rockefeller and the Oil Industry
John D. Rockefeller
Founded Standard Oil
Used:
Rebates from railroads
Price-cutting
Horizontal integration
By 1881: controlled 90% of oil refining
Standard Oil Trust
Board of trustees controlled many companies
Model for other trusts
Effects:
Eliminated waste
Lowered consumer prices
Massive wealth accumulation
Antitrust Movement
Sherman Antitrust Act
Outlawed combinations restraining trade
Weakly enforced
United States v. E. C. Knight Co.
Limited Sherman Act to commerce, not manufacturing
Allowed trusts to continue
Laissez-Faire Capitalism
Economic Theory:
Adam Smith’s “invisible hand”
Minimal government interference
Social Darwinism:
Herbert Spencer
Survival of the fittest applied to business
Wealth = natural superiority
William Graham Sumner
Helping poor interferes with natural law
Gospel of Wealth
Andrew Carnegie (again conceptually, not re-tagged)
Wealthy must give back
Donated $350+ million
Rockefeller believed wealth was God-given
Thomas Edison
Menlo Park laboratory
1,000+ patents
Lightbulb
Phonograph
Motion picture camera
Dynamo
Technology and Innovations
Communications:
Telegraph (Samuel Morse)
Transatlantic cable (Cyrus Field)
Business Inventions:
Typewriter
Telephone
Cash register
Adding machine
Consumer Goods:
Kodak camera
Fountain pen
Safety razor
George Westinghouse
Air brake
Alternating current transformer
Electrification of cities
Marketing Consumer Goods
Department stores:
R.H. Macy
Marshall Field
Chain stores: Woolworth
Mail order:
Sears
Montgomery Ward
Packaged brands:
Kellogg
Post
Refrigerated railcars (Swift)
Created consumer culture
Impact of Industrialization
Concentration of Wealth
Top 10% owned 90% of wealth
Visible luxury (Vanderbilts)
Horatio Alger Myth
Rags-to-riches stories
Reality: most wealthy came from middle/upper class
Wage Earners
2/3 of Americans worked for wages by 1900
10-hour days, 6 days/week
Low wages due to surplus labor
Women & children worked
Average family income under $380/year (1890)
Expanding Middle Class
Rise of white-collar jobs:
Managers
Clerks
Accountants
Growth of professional services
Working Women
20% of adult women worked
Mostly young, single
Textile, garment, food industries
Clerical jobs feminized → lower pay
Labor Discontent
Factory Work:
Repetitive, monotonous
Dangerous conditions
High turnover
The Struggle of Organized Labor
Management Tactics:
Lockouts
Blacklists
Yellow-dog contracts
Private guards
Injunctions
Use of militia
Government usually sided with business.
Great Railroad Strike of 1877
Wage cuts during depression
Spread to 11 states
100+ killed
Federal troops used
First major national strike
National Labor Union (1866)
First national union
640,000 members
8-hour day
Equal rights
Declined after 1873 depression