Industrialization/Immigration Flashcards
Railroads
First Big Business in the U.S. was Railroads. R.R. greatly grew from the mid-late 19th Century. They were responsible for being both the largest consumers and largest shippers of industrial products (steel, lumber, coal—they both transported and required these materials). Very significant in increasing industry in the U.S. —Railroads began the push for industrialization.
Causes/Factors of Industrialization
1) U.S. was rich in natural resources- (iron ore, coal, oil, lumber)
—America is large and diverse–therefore having lots of resources. (Britain does not have a lot of natural resources so they turned to colonization and took resources from other countries)
2) Large population is needed- for labor and consumers…we had a huge population explosion as a result of immigration.
Between 1860-90, America’s population more than doubled.
—-Large populations cause demand and the push which started industrialization. In America, immigration caused population growth which caused the industrialization revolution. (large supply of cheap labor—immigrants tend to work for low wages since they are desperate for a job)
(Ex. Britain had an agricultural revolution—there was more food, so people didn’t starve and the population grew. Also improvements in hygiene/sanitation allowed people to survive more. More people meant a greater demand for products and more people to work to make those products/perform those services)
3) Economic System: Capitalism/Laissez-Faire (No Gov’t regulation of business/economy)
This encouraged businesses to grow. But the “American” definition of laissez faire just meant no gov’t regulation of business, even though laissez-faire really means no gov’t involvement in business. In fact, the American version of laissez faire aided business because the U.S. Gov’t. aided businesses with things such as :
a) High protective tariff (these tariffs encouraged Americans to buy domestically and support American industry, as opposed to buying from other countries)
b) Open/unrestricted immigration policy so as to have large supply of cheap labor (exception was the Chinese- Chinese Exclusion Act- 1882—more described below)
c) Tax breaks/subsidies (deduction/exemption from taxes—people didn’t have to pay them—thus helping them keep more money and supporting their business)
d) Free/cheap land to railroad and other businesses (railroads helped ship materials and boosted industry as a whole)
e) Soldiers sent to break strikes (Ex. if there was a railroad strike, then railroads/trade would stop which would hurt the US economy, so the US had to intervene—the government tended to be on the side of the employer)
-The government supported business because it believed it was the future of America and would make the country rich and powerful like Europe.
-In the U.S. business attracted men with great skill and ambition. Business/profit became an “art form.” Great inventors also became great businessmen. Many defined their sense of “self” with the success of their businesses. This helped to explain their hard work and drive. (They worked to get rich and richer—they didn’t stop once they got rich) (Ex. Warren Buffet a really rich guy, still works at 92 years of age—he can’t stop working because he won’t recognize himself without it)
American Capitalism vs. Adam Smith’s Capitalism
Capitalism:
(Smith made it during the Enlightenment) is an economic system in which everything revolves around the individual—the individual has the power and freedom to own their own business. The goal of the individual and their business is to make profit (surplus money—money that you don’t need to serve your needs)
——Adam Smith laissez faire: No government involvement in the economy or business whatsoever
—–American laissez faire: No government regulation/interference in the economy or business. Government aid is allowed—Ex: tax breaks, high protective tariffs (it encourages American to buy domestically, which aids American businesses), cheap loans, distributing land, open (unrestricted) immigration policy/open borders (let everybody in who wanted to come—this gave American industry more and cheaper workers/cheap labor).
Summary:
-Adam Smith did not trust the government and so he wanted no government involvement whatsoever
-US: No government regulation/interference in the economy, but government aid is allowed.
Alexander Graham Bell
-Invented the telephone and the Bell telephone Company (which provided service as well as the telephone and was the only phone company in the world for a while). (The Bell Telephone Company was sued for being a monopoly and so it had to break up. It became Verizon)
-In the beginning (1870s-80s), phone service was very expensive. Mainly only owned/used by businessmen. (By using a phone, their jobs were made easier. Normally they would send letters or travel. However, it was difficult and expensive to travel, and things were lost in translation via letters.)
-This also created new jobs (telephone operators were needed—they would connect people’s calls. These jobs were only taken by women—He told the women to keep the businessmen on the phone longer and flirt with them to encourage them to call back. Being on the phone costed money—the longer they were on the phone, the more money Bell was making)
-By 1900, telephone rates had decreased and therefore, telephones began to be introduced into American homes.
-Phones/phone service revolutionized both communication and business (look above)
(Just like Edison, Bell did not invent the telephone—he perfected it, which is why he gets the credit)
Thomas Edison
-More famous/significant than Bell was Edison. Most known for perfecting the incandescent electric light bulb. (he didn’t invent it but he perfected it into a usable form)
-Edison’s electric company revolutionized work and life- by 1900, electricity became much more widely available…especially in cities.
-It revolutionized nighttime activity—now people could do things where they needed to see things at night. (candles and lanterns do not provide enough light)
-Edison became a businessman too (his company, first called Edison Electric Company, became General Electric {GE})
(Today, we don’t have these because they take up a lot of electricity which harms the environment)
Big Business
-Big Businesses refer to large companies that become corporations.
-Corporation- a company that is publicly owned through the issuance/purchase of stock (how much of an individual owns a company depends on the amount of stocks they have).
-Companies become corporations when the demand for their product is so high that they need to issue stock in order to raise enough capital (money used for investment). —–If a company grows too quick, they cannot keep up with the demand for their inventory (they cannot meet the demand of the people because it’s so high—they make stocks in their company for this purpose—by buying a piece of their company, the company is gaining more money to meet the demand)
-The main benefit for a corporation is limited liability— if the business loses money or goes bankrupt, you only lose the amount of your original investment. (the bankruptcy is split between all of the owners/shareholders—you can only lose the amount you first put in/first investment)
Benefits of Corporations:
1) Large companies could manufacture enough products to meet the demands of a large national market. (The business can now meet the public demand/product amount increases—this is good for consumers because as the product increases in amount, the price goes down)
2) Cheaper prices for products (see above)
3) Increase in standard of living (with prices going down, people can use their money on other things, so the condition they live in gets better)
4) Increase in middle class (more lower class people become middle class)
Negatives of Corporations:
1) As a result of laissez-faire, many corporations formed monopolies/trusts (the only provider of a particular good/service—when a company becomes so powerful that it controls all aspects of that particular business/product) Significance: it allows the monopoly to crush all its competition and thus, raise the prices to whatever it wants. (It gives corporations power to do whatever it wants—it becomes corrupt)–REALLY bad for consumers.
Ex: If tesla was the only car manufacturer in the world they would have a lot of power. The monopoly knows the product is in high demand and because they are the only provider, they can charge whatever they want because there’s no other competition that will challenge the prices.
The monopoly can buy out their competition—they own the smaller companies and those smaller companies join other small companies under the control of the monopoly, forming a trust. (A trust is like if Tesla bought Honda and Toyota, and so it controls all of them)
2) Since corporations cared about profit above all else, they did not treat their workers well= low wages, no unemployment insurance, no workers’ compensation, no health benefits, dangerous/unsanitary working conditions, etc.
Reiteration of Monopolies/Trusts
As a result of laissez-faire (no government intereference/obstruction in economy—this meant that government could not stop businesses from becoming monopolies), many corporations formed monopolies/trusts (the only provider of a particular good/service—when a company becomes so powerful that it controls all aspects of that particular business/product) Significance: it allows the monopoly to crush all its competition and thus, raise the prices to whatever it wants. (It gives corporations power to do whatever it wants—it becomes corrupt)–REALLY bad for consumers.
Ex: If tesla was the only car manufacturer in the world they would have a lot of power. The monopoly knows the product is in high demand and because they are the only provider, they can charge whatever they want because there’s no other competition that will challenge the prices.
The monopoly can buy out their competition—they own the smaller companies and those smaller companies join other small companies under the control of the monopoly, forming a trust. (A trust is like if Tesla bought Honda and Toyota, and so it controls all of them)
-Also, monopolies care solely for the profit—they often treat their workers terribly.
Business Consolidation
Powerful corporations were able to consolidate their businesses either horizontally (companies engaged in the same kind of business joining together and forming trusts) or vertically (companies engaged in different but related businesses joining together). (Vertically = Ex. Nike, a shoe company, owning the cotton/fabric factories—as opposed to buying fabric from others—instead of shipping they buy transportation…they cut out the middleman) All examples of monopolization
John D. Rockefeller
(Born rich) Standard Oil Company- by 1870, more than 90 percent of the nation’s oil refining business was controlled by Rockefeller. He would use brutal tactics/strategies to crush his competition and monopolize. He used the rebate- a way to monopolize shippers to only ship his oil and get his oil to market before his competitors in order to “sell low.” —(Rebate scenario: Rockefeller goes to a shipping company and tells them, “only you are going to ship my oil…on two conditions, you charge me 50% less than all my competitors, and you’re gonna tell me in advance where and how much my competitors are selling their things for”—Basically asking the shipping company to snitch on his competition. If the shipping company refused, Rockefeller would go to the shipping company’s competitor and make them rich once he gains control of the oil industry. Rockefeller monopolized the shippers) Soon, Rockefeller began selling oil to Europe. Soon, his monopoly (Standard Oil Trust) became so large, it expanded vertically, by owning a fleet of ships, railroads, etc. to cut out the middle man. (He also owned a stove company—stoves use oil—it increased the demand for oil)——Rockefeller wielded immense power.
-Rockefeller treated his workers better than Carnegie. He paid them better, gave them benefits, and gave them pensions. Rockefeller treated them better, not good. He treated them better because they would do better work. “A happy worker is a productive worker”.—The worker’s attitude will affect their work
Andrew Carnegie
(he grew up as a poor immigrant) (Steel) As a young man, he works on the R.R. and comes to the conclusion that steel is the next big business. He is able to get investors and builds the most modern steel factories in Pittsburgh. (Carnegie uses the Bessemer Steel process—metal turns to steel…steel is better because it doesn’t rust, it’s stronger, and it’s lighter) (He did this in Pittsburgh—hence Pittsburgh Steelers) Within a 20 year period, from the mid-late 19th Century, the Carnegie Steel Corporation dominates/monopolizes steel manufacturing and distribution. He is able to crush his competition. Becomes the richest man in the world by the late 19th Century. World’s first billionaire.
-Unlike Rockefeller, Carnegie treated his workers poorly (long hours, no training, no benefits, terrible wages, horrible conditions, etc.) He grew up poor, but didn’t empathize with the workers he made poor. He said basically, “it’s your fault for being poor”—”If I can do it, so can you”. (This is not true…It’s like saying, if Einstein can do it, so can you)
Carnegie had lots of labor problems, unlike Rockefeller, who paid his workers a fair wage. Carnegie would crush labor unions and strikes, using tactics such as lockouts (he would shut down the factory and put the workers out of work—he would lose money, but he had more than enough to spare), he fired the workers and hired immigrants (who worked for lower wages—they also didn’t need much experience, these jobs were just like pulling levers), hiring strike breaking replacement workers, blacklists (the boss would put a worker’s name on a list and give it to other employers, making sure that person never got a job again), hiring armed guards (they would shoot peaceful workers and get away with it), getting the U.S. Army to help break/end strikes (Ex. if there was a railroad strike, then railroads/trade would stop which would hurt the US economy, so the US had to intervene—the government tended to be on the side of the employer) (Back then, there were no laws that said employers had to negotiate with their workers. There were more strikes back then because of this—it was the workers’ main tool)
J.P. Morgan
Banking giant…at the turn of the 20th Century, bought the Carnegie Steel Corporation (renamed U.S. Steel).
Philanthropy
The bosses did a lot of bad things, like establishing monopolies and mistreating their workers, but they tried to make up for it with philanthropy:
Most of the leaders of business would engage in philanthropy- contributing large sums of money to worthy causes and charities (according to the giver) - libraries, museums, universities, etc.- mainly in the arts and culture…helped poor people enjoy these things. (Ex. Carnegie Hall—they would pay for it. Also Carnegie Mellon University) Carnegie gave away most of his money. He died a billionaire and gave a couple million to his children, the rest to charities)
Social Darwinism
Philosophy that helped to justify the cruel tactics of monopolies/trusts, in terms of crushing/eliminating their competition- “survival of the fittest”
People applied it to the human world. (Herbert Spencer applied it to imperialism) If you are a social darwinian, you could justify big businesses monopolizing—that it’s the way it’s supposed to be, the natural order of things. (If you’re stronger, you should control it—however this is not the right thing to do)
Labor Unions
-Labor unions are organizations made up of workers whose goal is to protect workers’ rights.
-They fight for higher wages, better working conditions, benefits (health insurance/unemployment insurance/workman’s compensation/sick days), etc.
-They believe that they need protection (from the gov’t) in order to regulate business. Thus, they oppose laissez-faire.
-They greatly opposed child labor
-They, for the most part, OPPOSED open immigration policies because they believed that immigrants would compete for the same jobs as them and lower their wages (the government was pro-immigration because they wanted more low-wage workers to boost business and the economy)
The most powerful labor unions were:
1) The Knights of Labor- leader was Terence Powderly-
-They were an “all-inclusive” labor union, accepting all workers, regardless of skill level, race, gender, ethnicity, religion. (there were 2 groups—skilled and unskilled workers; most were unskilled/worked in factories….this union accepted all workers)
-They did not last long because different types of workers had different priorities, which led to fighting (Ex. Haymarket).
-Also, after the Haymarket Square protest (1886) which led to a riot, the leaders of the protest, the Knights of Labor, were labeled anarchists and associated with violence, even though the riot had nothing to do with them. (The anarchists had nothing to do with the Knights of Labor, but everyone blamed terrorism and anarchy on them because it was their event. )
2) The American Federation of Labor- AFL- most powerful labor union for over 50 years- from the late 19th Century to the mid 20th Century.
-They were a skilled labor union only (only accepted skilled workers: electricians/plumbers/carpenters/etc.—now unskilled workers no longer have a venue to voice their discontent)
-(Only white, christian, males were accepted) This union was particularly AGAINST immigration.
-Their leader was Samuel Gompers. Very effective in getting higher wages, shorter hours, safer working conditions, unemployment insurance, pensions, etc.
Famous Strikes
-During the mid-late 19th Century there were many large, national strikes, such as the Great Railroad strike of 1877 and the Pullman Strike of 1893. Hundreds of thousands of workers went on strike. (When railroad people are on strike, they’re not working, which means the railroad stops and trade stops, and the economy sinks. For this reason, the government gets involved) These two strikes were broken by the employers by using injunctions- court orders that required the strike to end by law…and by the gov’t calling in the military…so strikes were ended by violence.
