T3 Economic

Question 1

Industrial Growth (1890 - 1912)

Answer 1

• Industry continued to expand, particularly oil and steel.
• Iron production rose from 920,000 tons in 1860 to 10.3 million tons by 1900.
• The city of Pittsburgh, in Pennsylvania, became the centre of the iron industry. It was highly
  centralised with 38 steel plants along 42 km of navigable rivers.
• Modern oil production began in January 1901 with the success of the Lucas Well in Spindlehop,
  Texas.
• This well produced 70,000–110,000 barrels per day for nine days before being capped. Further
  ‘gushes’ were discovered throughout the Southwest.
• Indeed, by 1907 Oklahoma was the leading oil producer and, six years later, was producing 25 per
  cent of the nation’s oil.
• Trusts and monopolies also continued to develop.
• By 1904, the largest 4 per cent of US companies produced 57 per cent of the total industry of the
  USA. Between 1898 and 1902, there were 319 major consolidations.
• For example, the firm of Dupont controlled 85 per cent of the nation’s electric power.
• The Carnegie Steel Corporation, which had been set up by Andrew Carnegie, was sold to J. P.
  Morgan in 1901. It was renamed US Steel and became the world’s first billion-dollar corporation.

Question 2

The Depression of 1893

Answer 2

• The Depression of 1893 sparked a stock market crash that turned into the worst depression in
  American history up to that time.
• The financial panic began when the Reading Railroad declared bankruptcy.
• Soon afterwards, ‘Industrial Black Friday’ hit, and 24 businesses failed per day in May alone.
• The crisis sparked a four-year depression in which 15,000 companies and 600 banks closed and
  the national unemployment rate approached 20 per cent.
• The unemployment rate in Pennsylvania hit 25 per cent, in New York 35 per cent, and in Michigan
  43 per cent.
• Soup kitchens were opened to help feed the destitute.
• President Grover Cleveland was among the last of the conservative Democrats who supported
  limited federal government and believed, like most people of both major parties, that the
  business cycle was a natural occurrence and should not be tampered with by politicians.
• He was a supporter of a sound monetary system based on gold. As such, he opposed many in his
  party by calling for the repeal of the Silver Purchase Act.
• Cleveland persuaded enough members of Congress to pass the Repeal of the Silver Purchase Act
  in October 1893. This helped boost business confidence and gradually stemmed unemployment.
• Perhaps most importantly, the panic of 1893 and the subsequent depression alienated many
  people from both the economy and the political process and led to the rise of Progressivism.
• The panic of 1893 and other factors had a lasting impact. The effects of the Depression lasted until
  1897.
• One response to the series of failures and bankruptcies was an upsurge in business consolidations.
• The poorer elements of society believed they had been ignored during the hard times and then
  were left at the mercy of the trusts. This encouraged the rise of Progressivism.

Question 3

Agricultural Discontent (1890 - 1912)

Answer 3

• Farmers in the South and West did not share the prosperity and expansion experienced by
  industry. Moreover, they objected to the power of bankers and corporations.
• Farmers traditionally saw themselves as independent and self-sufficient, but many relied on loans
  to get them through the farming year.
• However, falling agricultural prices, together with higher prices charged for grain storage and
  transportation, meant less income for repaying loans.
• Many farmers blamed the railroads and bankers for their problems.
• They joined together into Farmers’ Alliances, creating unity for themselves through co-operation
  and mutual self-respect.
• These Alliances led to the Populist Party and support for the Democrats in the presidential election
  of 1896.

Question 4

Trade Unions (1890 - 1912)

Answer 4

• Labour unions representing different crafts were set up in the years following the Civil War.
• In 1885, The American Federation of Labour (AFL) was created to represent these labour unions,
  speaking on behalf of all member unions, and encouraging mutual support between unions.
• It tried to bring about better working conditions and better wages with its main weapon being
  strike action.
• In 1886, there were 1,400 strikes involving 500,000 members.
• Employers were generally hostile to trade unions and would often sack workers who joined trade
  unions and use blackleg labour to break strikes, as shown during two significant labour conflicts
  of the 1890s.

Question 5

The Pittsburgh steelworkers’ strike of 1892

Answer 5

• At Carnegie’s Homestead Steelworks plant the manager, Henry Clay Frick, cut wages in 1892 and
  refused to accept union negotiation.
• In an attempt to break the power of the union, the Amalgamated Association of Iron and Steel
  Workers, private detectives were used to smuggle in strike-breakers, who were then attacked by
  the strikers.
• The Company called in the militia, armed with rifles and machine guns.
• However, after five months without wages, the strikers were starving, and their action collapsed.
• This defeat set back union power considerably.

Question 6

The Pullman strike of 1894

Answer 6

• This was the first national strike in the USA, and it paralysed the railway system.
• The Pullman company had cut wages but refused to lower rents for the houses where employees
  were required to live.
• When the workers went on strike, the American Railway Union (ARU) run by Eugene Debs refused
  to handle any trains carrying Pullman cars including mail trains.
• The railway owners asked President Cleveland for support, and he agreed to send in troops to
  keep the trains running.
• Rioting was followed by the troops firing into the crowd and killing four people. The strike
  gradually ended in failure with the rents remaining as they were.
• The federal government had shown itself hostile to unions and willing to shoot its own citizens.
• The Omnibus Indictment Act, used against the ARU, permitted the legal banning of strikes, and
  remained in force until the 1930s.
• It was this belief that federal government did not care about the less well off in society that was
  to turn many of the industrial classes towards the more radical ideas of the Populist Party.