Industrial America: Late 1800s

Question 1

What is laissez-faire

Answer 1

Laissez-faire is a French term, translated roughly as “let them be,” and refers to a belief that natural market forces, rather than the government, should regulate the marketplace.

Although part of American economic policy since the country’s birth, laissez-faire began to show its weakness in the late 1800s, as consolidation reduced natural competition, prompting the first government regulations of business and the economy.

Question 2

land grant

Answer 2

A land grant is a gift of real estate. After the Civil War, land grants by the federal government were used to finance the building of railways in the western United States. Congress granted land to more than 80 railroads, which the railroads then sold to settlers, applying the proceeds to finance construction.

Land grants were used in other ways as well; for instance, several states created “land grant universities.”

Question 3

Who was Cornelius Vanderbilt?

Answer 3

Cornelius Vanderbilt was the President of the New York Central Railroad during the 1860s and 1870s. The New York Central dominated rail traffic between Chicago and New York City, and was the result of the merger of several smaller railway lines in 1867.

Question 4

How did railroads affect consumerism during the late 1800s?

Answer 4

Both food and durable goods were shipped throughout the country via railway.

The development of the refrigerated railroad car meant that meat could be shipped long distances, and the increased number of canned goods meant that vegetables grown in Illinois could be eaten in Boston without spoilage.

Companies such as Sears & Roebuck and Montgomery Ward pioneered the idea of shopping by catalog, allowing distant farm families to purchase goods, which were then shipped to them via railroad.

Question 5

What were some of the positive effects of the growth of railroads in the years following the Civil War?

Answer 5

The massive growth of railroads resulted in a rise of mass consumption, spurring economic growth as manufactured goods were shipped throughout the country, and farmers and ranchers moved their products into urban areas. Related economic sectors, such as coal and steel, also experienced exponential growth during the period.

The complex nature of railway construction and finance also led to the creation of more complex forms of corporate structuring, such as trusts, and an increased use of the corporation.

In addition, the growth in railroads also spurred the standardization of time, resulting in the four time zones that exist today.

Question 6

As a result of railway overbuilding, the United States suffered a stock market crash and long depression in 1893, during which several railway companies went bankrupt. How did J.P. Morgan react?

Answer 6

J.P. Morgan, with the assistance of other bankers, organized the consolidation of various small railway lines into seven regional lines, which dominated railway traffic. While Morgan’s system was more efficient, it also led to monopolization and reduction in competition.

Question 7

merger

Answer 7

A merger is where two companies are joined into one, e.g. Company A and Company B are consolidated to form Company C.

Mergers were first used during the railway boom after the Civil War, as companies were consolidated to increase efficiency and to reduce duplication of railway lines.

Question 8

interlocking directorates

Answer 8

An interlocking directorate takes place when a member of the board of directors of one company also serves on the board of directors of a competitor. By serving on both boards, the director is able to coordinate policy between the two, harming competition.

Often used by corporations during the late nineteenth century, interlocking directorates became illegal with the Clayton Act (1914).

Question 9

In 1868, a revolution broke out in Cuba against Spain. How did President Grant react?

Answer 9

When Congress attempted to recognize the Cuban rebels, Grant sent a message to Congress reasserting his administration’s position of neutrality. Grant did attempt to negotiate the purchase of Cuba from Spain, but was rebuffed. Spain eventually put down the Cuban insurrection.

Question 10

Which country did Ulysses S. Grant propose annexing in 1870?

Answer 10

Grant proposed annexing the Caribbean nation of Santo Domingo, now known as the Dominican Republic. Both Grant and the government of Santo Domingo supported annexation, but Congress refused to authorize it.

Question 11

In 1868, Congress ratified the Burlingame Treaty with China. What did this treaty establish?

Answer 11

The Burlingame Treaty allowed unrestricted Chinese immigration, and large numbers of Chinese immigrants arrived on the West Coast. Many of the new immigrants found work in mines or building the western half of the Transcontinental Railroad.

Question 12

How did the state of California react to the high numbers of Chinese immigrants arriving as a result of the Burlingame Treaty of 1868?

Answer 12

In response to the influx, California included articles in its 1878 state constitution which disenfranchised the Chinese, blocked their work on public projects, and disallowed their employment with any corporation licensed by the state.

The federal courts struck down these measures as unconstitutional, but they signaled a growing hostility towards Chinese immigrants.

Question 13

The process of pumping air through molten iron is known as the _____ _____.

Answer 13

Bessemer Process

By removing impurities, the Bessemer Process converts iron into steel, a stronger building material than iron alone. The Process revolutionized the making of steel by significantly lowering the cost of its production.

Question 14

Who was Andrew Carnegie?

Answer 14

Carnegie was the owner of the Carnegie Steel Company, which by the late 1880s supplied half of all steel used worldwide. A poor Scottish immigrant, Carnegie became one of the nation’s wealthiest men by using a business technique known as vertical integration.

Question 15

What is vertical integration?

Answer 15

Under vertical integration, all the aspects of production for a manufactured good are owned by a single person or trust. For instance, Andrew Carnegie’s steel company owned the iron mines where steel originated, the distribution network where steel was sold, and everything in between.

Question 16

What is horizontal integration?

Answer 16

Horizontal integration is where a single person or trust owns virtually all of one aspect in the production process. Horizontal integration is usually brought about by consolidating several smaller companies in the same field into one cooperating enterprise.

John D. Rockefeller’s Standard Oil Company controlled virtually all the oil refining capability in the United States in the late 1800s by using horizontal integration. The control of this crucial phase in the production of oil gave him power over the entire market for oil.

Question 17

What was the Standard Oil Company?

Answer 17

The Standard Oil Company, under the control of John D. Rockefeller, was the largest oil producer in the United States in the late 1800s, with ownership of 95% of the market.

Rockefeller grew Standard Oil through the use of horizontal integration; stockholders of competitors sold their stock to Rockefeller, giving him control of their company. Using this tactic, Rockefeller then drove the price of oil down, forcing other competitors out of business.

Question 18

How were corporate trusts used in the late 1800s to eliminate business competition?

Answer 18

Trusts were used to combine several smaller competitors into large business concerns, the resulting company being known as a “trust.” The tactic eliminated competition between the firms. Trusts existed in a number of industries, including sugar, whiskey, meat, leather, and tobacco.

Question 19

How did Congress attempt to regulate the growth of trusts in 1890?

Answer 19

In 1890, Congress passed the Sherman Antitrust Act, which prohibited all restraints of trade and unfair methods of competition. The new act was ambiguously written and rarely enforced.

In United States v. E.C. Knight Co. (1895), the Supreme Court further weakened the Sherman Act by stating that it applied only to commerce, not manufacturing.

Question 20

What did Social Darwinists such as Herbert Spencer and William Graham Sumner argue?

Answer 20

Social Darwinists extended the evolutionary theory of “survival of the fittest” to the world of business, and justified the concentration of large amounts of wealth into the hands of a small few by contending that it benefited the country and humanity as a whole. Essentially, Social Darwinists believed that wealth belonged in the hands of those best suited to control it.

Many of the wealthiest Americans, such as Andrew Carnegie, rejected Social Darwinism.

Question 21

What did Andrew Carnegie argue in his essay Gospel of Wealth?

Answer 21

Carnegie argued that the wealthy had a duty to better society by aiding the poor. Carnegie did not, however, advocate merely providing the poor with money. Rather, Carnegie believed that it was the duty of the wealthy to provide means by which the poor could achieve success, such as by endowing free libraries, schools, and universities.

Carnegie’s vision was at odds with Social Darwinists, who contended that giving assistance to the poor went against evolution.

Question 22

Who invented the telephone in 1876?

Answer 22

Alexander Graham Bell

Bell’s studies in deaf education gave him many of his ideas for the telephone, which mimicked the human ear to transmit sound. The Bell Telephone Company later became one of the world’s largest companies.

Question 23

Who was known as “The Wizard of Menlo Park”?

Answer 23

Thomas Alva Edison

Working in his laboratory in Menlo Park, NJ, Edison was the most prolific inventor of the late 1800s, inventing the light bulb, phonograph, and movie camera, as well as hundreds of other items.

Question 24

Who was George Westinghouse?

Answer 24

Westinghouse was Thomas Edison’s main competitor in the field of electricity products during the late 1800s, and successfully manufactured machinery for alternating current (AC) transformers. Westinghouse’s transformer made it possible to bring electricity to cities in large quantities.

Edison advocated for direct current (DC) electricity, and in an effort to convince the public of the dangers of AC electricity, publicly electrocuted a number of animals, including an elephant. Although he failed to convince the public to adopt DC, Edison’s displays were a prime motivating factor in the establishment of the electric chair.

Question 25

Author _____ _____’s books such as Ragged Dick, which told “rags to riches” stories, were best-sellers during the late 1800s.

Answer 25

Horatio Alger

Alger’s hugely popular books generally featured a hero who rises from poor surroundings to the middle class, via a bit of luck, clean living, and a large amount of hard work. In Alger’s Ragged Dick for instance, a young bootblack rises to become a respectable middle-class businessman.

Question 26

How did the rise in industrialism affect the upper class in the late nineteenth century?

Answer 26

As a whole, the amount of wealth in the hands of the upper class grew, as industrialists such as John D. Rockefeller and Andrew Carnegie amassed vast sums of wealth. Many of the wealthy were self-made men, having achieved great wealth in manufacturing or mining.

Question 27

After the Civil War, there was an exponential increase in manufacturing in the United States. How did this increase affect the middle class?

Answer 27

The middle class grew, as the companies in new industries needed white-collar workers, such as clerks, bookkeepers and salesmen.

There was also an increase due to the need for professional men who worked with the new industries, such as lawyers and accountants.

Question 28

What type of working conditions prevailed in the new factories during the late nineteenth century?

Answer 28

By modern standards, working conditions were atrocious in the new factories. Workers toiled for ten hours per day, six days a week, often in dangerous conditions. Deaths at the workplace were common in the absence of worker safety laws.

Low pay and an increase in prices of basic goods during and after the Civil War led women into the workforce to supplement familial income. Most working women found employment in textile mills or garment factories.

Question 29

What are company towns?

Answer 29

Company towns are towns in which most, if not all, the real estate and buildings are owned by a company that employs the populace of the town.

During the late nineteenth century, industrialists such as George Pullman (railroad cars) and William Steinway (pianos) built company towns that provided workers with indoor plumbing, sewers, and gas heating.

Question 30

yellow dog contract

Answer 30

A yellow dog contract is an agreement between a worker and an employer that requires the worker to agree not to join a union as a condition of employment.

Beginning in the late 1800s until they were outlawed in 1932, yellow dog contracts were used to prevent unionization of the workplace.

Question 31

What pejorative term is applied to employees hired to replace striking workers?

Answer 31

Scabs

Scabs are often hired during a strike to keep a company’s production flowing, and can be used by a company to prolong and defeat a strike by the company’s workforce.

Question 32

Two of the tactics used by employers to prevent unionization during the late 1800s were lockouts and blacklisting. What did these tactics entail?

Answer 32

A lockout is the opposite of a strike, whereby unionized workers are prevented from coming into the workplace.

Employers often shared the names of union agitators amongst themselves, with each agreeing not to hire the agitator, a tactic known as blacklisting.

Question 33

The first nationwide labor union, the National Labor Union was formed in 1866, and at one point had 600,000 members. For what reforms did the National Labor Union advocate?

Answer 33

Before it collapsed as a result of the Depression of 1873, the National Labor Union advocated for an eight-hour work day, rights for black and female workers, and an end to child labor.

Members of the National Labor Union joined with the Grange supporters to found the Greenback Party.

Question 34

What was the Greenback Party?

Answer 34

The Greenback Party was an alliance of reform-minded farmers and organized labor. Founded in 1873, the Greenback Party advocated for the printing of Greenbacks to ease the economic depression, labor reforms, and government regulation of the railroads.

Although it failed to become a lasting political force, the Greenback Party did win a few state and Congressional elections. Several of the Party’s leaders, however, went on to be prominent voices in the Populist Party.

Question 35

What prompted the 1877 Railroad Strike?

Answer 35

In 1877, the largest railroads announced a 10% cut in wages for all workers as a result of the 1870s depression. Workers struck first in West Virginia, and the strike spread to 10 other states. In sympathy, workers in several other industries struck as well.

The strike ended when President Rutherford B. Hayes used federal troops to put down the strike. Some 100 strikers were killed.

Question 36

Who were the Knights of Labor?

Answer 36

The Knights of Labor was the second large-scale national labor union, reaching a million members in the 1880s. The Knights of Labor advocated for arbitration (rather than strikes) to end disputes between workers and employers, an eight-hour work day, the end of child labor, and increased government regulation of business.

Question 37

What event prompted the demise of the Knights of Labor?

Answer 37

During a Knights of Labor rally in Haymarket Square in Chicago, an unknown anarchist with ties to the Knights threw a bomb, which injured seven policemen.

Americans condemned the labor union movement, believing it too radical and prone to violence. Membership in the Knights of Labor plummeted and the union movement as a whole received a severe setback.

Question 38

In 1892, workers at Carnegie’s Homestead Steel Mill went on strike when manager Henry Clay Frick announced a 20% reduction in wages. How did Frick respond to the strike?

Answer 38

Frick instituted a lockout and brought in scabs. When strikers attacked the scabs, Frick hired Pinkerton detectives, who worked as a type of private army. Frick ordered the detectives to remove the strikers. In the ensuing violence 16 workers died and 150 were injured.

To stop the violence, the governor of Pennsylvania ordered out the state militia, who joined the mill’s management in protecting scabs. The strike was crushed.

Question 39

What prompted the Pullman Strike in 1894?

Answer 39

Pullman was the largest maker of railroad cars in the country. In 1894 George Pullman announced a reduction in wages, but not a corresponding reduction in rents at the Pullman company town. Workers struck and sought the assistance of Eugene V. Debs, head of the American Railway Union.

Throughout the country, Debs instructed workers to refuse to load, link, or carry any train that had a Pullman car attached, and the nation’s transportation infrastructure ground to a halt.

Question 40

How did rail owners respond to the Pullman Strike of 1894?

Answer 40

The Pullman Strike of 1894 paralyzed the nation’s rail network, as workers refused to load, link, or carry any train with a Pullman car. Rail owners attached mail cars to the Pullman cars, and then claimed to the U.S. government that the strikers were blocking the mail, a violation of U.S. law.

With the approval of Grover Cleveland, rail owners sought and received an injunction from the courts, which required workers to stop striking. Workers and the American Railway Union leadership who refused (including Eugene V. Debs) were jailed.

Question 41

What did the Supreme Court hold in In re Debs (1895)?

Answer 41

Eugene V. Debs was the head of the American Railway Union, who had been arrested in the Pullman Strike of 1894 for violating a court injunction ending the strike. Debs argued that the use of court injunctions to stop strikes was impermissible. The Court disagreed, and justified the use of injunctions to avoid interruptions of interstate commerce during strikes.

The decision had two results: a) it tacitly allowed corporations to destroy labor unions through the use of the courts, and b) Debs concluded that more radical solutions were needed to assist labor, and turned to socialism.

Question 42

In 1886, Samuel Gompers founded the American Federation of Labor (AFL), a combination of craft unions that had one million members by the early 1900s. What did the AFL advocate?

Answer 42

Far more peaceable than the National Labor Union or the Knights of Labor, the AFL denounced violent revolutions and political radicalism. While the AFL used militant strikers, they sought a peaceful resolution of strikes through collective bargaining, in which all employees negotiated with management together.

The AFL achieved success in part because it represented hard-to-replace skilled labor, and workers could not be easily substituted by scabs.

Question 43

Between the Civil War and 1900, railway track miles in the U.S. increased from 35,000 to 193,000. What negative effects did this massive growth have?

Answer 43

Many of the new railways were of shoddy construction and the land grant system by which Congress funded their growth was fraught with corruption, including scandals such as the Crédit Mobilier. Some 80 different railroad companies built railway lines, and many were in precarious financial shape from the outset.

In both 1873 and 1893, railroad overbuilding and speculation in railroad stocks led to the collapse of the stock market and major economic depressions