III'The Transformation of the West

1
III. The Transformation of the West

• A Farming Empire
• More land came into cultivation in the thirty
  years after the Civil War than in the previous
  two-and-a-half centuries of American history
• Even small farmers became increasingly oriented
  to national and international markets
• As crop production increased, prices fell and
  small farmers throughout the world suffered
  severe difficulties in the last quarter of the
  nineteenth century
• The future of western farming ultimately lay with
  giant agricultural enterprises

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III. The Transformation of the West (cont)

• The Day of the Cowboy
• The cowboys became symbols of a life of freedom
  on the open range
• The Corporate West
• Many western industries fell under the sway of
  companies that mobilized eastern and European
  investment to introduce advanced technology
• New Mexican sheepfarming

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THE WEST AFTER THE CIVIL WAR

• Large foreign born population
• One third of all Californians
• 40 of Nevadans
• Half of residents of Idaho and Arizona
• Large populations of Spanish-speaking Americans
  of Mexican origin
• Chinese and Irish laborers poured into California
  by the thousands
• Substantial number of Germans in Texas

4
THE WEST AFTER THE CIVIL WAR

• San Francisco had a population of 250,000 in
  1870s and was the commercial and financial center
  of the Pacific coast and a center of light
  manufacturing, food processing, and machine shops
• Denver, San Antonio, and Salt Lake City were
  smaller but growing rapidly
• Economy was agricultural and extractive but also
  commercial and entering early stages of
  industrial development

5
THE WEST AFTER THE CIVIL WAR

• Chinese immigration
• Beginning in 1850s, 4,000-5,000 per year as cheap
  labor for railroad construction
• After Burlingame Treaty of 1868 numbers doubled
• When railroads were finished, the Chinese began
  competing with white labor which led to a great
  cry of resentment on the west coast
• Riots broke out in San Francisco in 1877
• California constitution of 1879 denied the vote
  to the Chinese
• When Chinese immigration reached 40,000 in 1882,
  Congress banned further immigration for 10 years
  (later indefinitely extended)

6
THE PLAINS INDIANS

• Previously extinct in the Western Hemisphere, the
  horse was reintroduced by the Spanish and had
  become a vital part of Plains culture by the 18th
  century
• Easier to hunt buffalo
• Easier to move around
• More effective in fights
• Acquire and transport more possessions
• Increase size of tepees
• Also adopted modern weapons cavalry sword and
  rifle
• Result was decrease in buffalo and increase in
  frequency and bloodiness of warfare

7
THE PLAINS INDIANS

• Fort Laramie Treaty of 1851
• Great council called of western tribes
• 10,000 Indians attended
• Thomas Fitzpatrick persuaded each tribe to accept
  definite limits to its hunting grounds
• In return Indians were promised gifts and annual
  payments
• Policy known as concentration was designed to
  cut down on intertribal warfare and to enable the
  government to negotiate separately with each
  tribe
• Yet tribal chiefs had limited power and it was
  only in theory that the tribes would be treated
  as though they were European powers

8
INDIAN WARS

• Government showed little interest in honoring
  agreements with Indians
• Pressured Kansas, Omaha, Pawnee and Yankton Sioux
  for further concessions after passage of
  Kansas-Nebraska Act
• 1859 Colorado gold rush drove Cheyenne and
  Arapaho from land guaranteed them in 1851
• During Civil War Plains Indians rose against
  whites resulting in bloody guerilla warfare
• 1864 Sand Creek Massacre of some 450 Cheyenne by
  Colorado Militia under Colonel Chivington
• Indians slaughtered isolated white families,
  ambushed small parties, and fought troops

9
INDIAN WARS

• Fetterman Massacre (December 1866)
• Oglala Sioux under Red Cloud wiped out 82
  soldiers under Captain Fetterman in reaction to
  construction of Bozeman Trail through their main
  hunting grounds
• 1867 government decided to confine all Indians to
  two reservations, one in the Dakota Territory and
  one in Oklahoma, and force them to become farmers
• At two great meetings in 1867 and 1868 at
  Medicine Lodge and Fort Laramie the principal
  chiefs leaded to the governments demands

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INDIAN WARS

• Many Indians refused to abide by these agreements
• Indians made excellent guerilla fighters and were
  often able to stymie the military
• Difficult to determine difference between treaty
  and non-treaty Indians
• After 1849, Indian affairs were overseen by the
  Interior Department
• Most agents systematically cheated the Indians
• 1869 Congress created nonpolitical Board of
  Indian Commissioners to oversee Indian affairs
  but it was generally ignored

12
THE DESTRUCTION OF TRIBAL LIFE

• 1870s saw increased conflict as whites pushed
  into areas reserved for native groups
• Sioux Nation and the Dakotas
• Little Bighorn (cf. Ambrose article)
• Sheridans campaigns
• By 1887 tribes of mountains and deserts beyond
  the plains had also given up the fight
• Nez Perce attempted to escape to Canada but were
  captured in October 1877 and settled in Oklahoma
  where large numbers died
• I will fight no more forever
• Apache were last on the field with capture of
  leader Geronimo in 1886
• The answer to the Indian problem seemed to be
  to civilize the Indians

13
THE DESTRUCTION OF TRIBAL LIFE

• Dawes Severalty Act of 1887
• Tribal lands were to be split up into individual
  allotments
• Land could not be disposed of for 25 years
• Funds were to be appropriated for educating and
  training the Indians
• Those who accepted allotments, took up residence
  separate from tribes, and adopted habit of
  civilized life were to be granted U.S. citizenship

14
THE DESTRUCTION OF TRIBAL LIFE

• Effects
• Assumed Indians could be transformed into small
  agricultural capitalists
• Shattered what was left of Indians culture
  without enabling them to adjust to white ways
• Unscrupulous white men systematically tricked
  Indians into leasing their lands for a pittance
• Local authorities often taxed Indian lands at
  excessive rates
• By 1934 Indians had lost 86 of their 138 million
  acres

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(No Transcript)
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THE LURE OF GOLD AND SILVER IN THE WEST

• Gold and silver rushes started with a find and
  led to thousands pouring in
• Towns sprang up over night
• Then high prices, low yields, hardship, violence,
  and deception led to an end of the boom and the
  death of the towns with only a very few finding
  wealth
• Booms
• Spring 1858 Fraser River in Canada led by 30,000
  Californians
• 1859 Pikes Peak in Colorado
• June 1859 finds in Nevada, especially Comstock
  Lode worth 4000
• 1861 Idaho panhandle
• 1862 Snake River Valley
• 1863 and 1864 to Montana
• 1874-1876 Black Hills in South Dakota

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THE LURE OF GOLD AND SILVER IN THE WEST

• Law and order in the West was hard to come by
• Storekeepers charged outrageous prices
• Claim holders salted worthless claims
• Virginia City, Nevada
• At its height, produced 12 million a year in ore
• Had 25 saloons before it had 4,000 people
• Further finds made the future seem boundless
• But gradually mines came to be controlled by
  large corporations who made off with most of the
  wealth

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THE LURE OF GOLD AND SILVER IN THE WEST

• For mines to be profitable, large capital
  investments were required
• Tunnels had to be blasted into the earth
• Heavy machinery had to be purchased and
  transported
• Hundreds of skilled miners were needed (mostly
  deep miners from Cornwall, England) who had to
  be imported and paid
• Metal found bolstered financial position of U.S.
  enabling the country to pay for goods needed
  during the war and for postwar economic
  development

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THE LURE OF GOLD AND SILVER IN THE WEST

• Gold and silver also caused a great increase of
  interest in the West
• Each new strike brought permanent settlers
• People discovered they could make more money
  supplying miners than mining
• Mines speeded political organization of the West
• Womens suffrage aided

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BIG BUSINESS AND THE LAND BONANZA

• While Homestead Act intended to give land free,
  it still cost almost 1,000 to start a farm
• Industrial workers had neither the skills nor the
  inclination to become farmers
• Homesteaders usually came from districts not far
  removed from frontier conditions
• Despite the intent of the law, speculators often
  managed to obtain large tracts

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BIG BUSINESS AND THE LAND BONANZA

• 160 acres was not enough for raising livestock or
  for the commercial agriculture occurring west of
  the Mississippi
• 1873 Timber Culture Act permitted individuals to
  claim an additional 160 acres if they would agree
  to plant a quarter of it with trees within 10
  years
• Helped some farmers in Kansas, Nebraska, and
  Dakotas but less than 25 of the 245,000 who took
  up land under the act obtained final title

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BIG BUSINESS AND THE LAND BONANZA

• Timber and Stone Act 1878 allowed anyone to
  acquire a quarter section of forest land for
  2.50 an acre if it was unfit for civilization
• Enabled lumber companies to obtain thousands of
  acres
• Immediately after Civil War, Congress reserved
  47.7 million acres of public land in the South
  for homesteaders, stopping all cash sales in the
  region
• 1876 policy reversed and land thrown open
• Between 1877 and 1888 5.6 million acres were
  sold, mainly to speculators

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BIG BUSINESS AND THE LAND BONANZA

• Problems with settling the Plains
• Soil rich but climate made agriculture difficult
  if not impossible
• Blizzards, floods, grasshopper plagues, and
  prairie fires caused repeated problems
• Bonanza farms giant corporate controlled farms
• Encouraged by the flat immensity of the land and
  newly available farm machinery
• Could buy supplies wholesale and obtain
  concessions from railroads and processors
• Most failed in the drought years of the late
  1880s
• Plains still became breadbasket of America after
  war

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WESTERN RAILROAD BUILDING

• Government subsidies of railroads further
  contributed to exploitation of land resources yet
  grants of land seemed like a reasonable way to
  get railroads built and they were needed for the
  development of the West
• Federal land grants to railroads began in 1850
• Over next two decades 49 million acres were given
  to various lines
• Most lavish grants went to intersectional trunk
  lines which received more than about 155 million
  acres
• 25 million reverted back to government when
  companies failed to lay requisite amount of track

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WESTERN RAILROAD BUILDING

• 75 went to aid construction of 4
  transcontinental railroads
• Union Pacific-Central Pacific line from Nebraska
  to San Francisco completed in 1869
• Atchinson, Topeka, and Santa Fe running from
  Kansas City to Los Angeles completed in 1883
• Southern Pacific running from San Francisco to
  New Orleans completed in 1883
• Northern Pacific running from Duluth, Minnesota,
  to Portland, Oregon, completed in 1883

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WESTERN RAILROAD BUILDING
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WESTERN RAILROAD BUILDING

• Pacific Railway Act of 1862
• Gave the builders of the Union Pacific and
  Central Pacific railroads 5 square miles of
  public land on each side of right of way per mile
  of track laid
• Land was allotted in alternate sections with the
  intervening sections held by the government, who
  did not sell land in order not to undercut the
  price of railroad land
• Railroads also obtained wide zone of indemnity
  land reserved to allow railroads to choose
  alternate sites to make up for lands settlers had
  already taken up
• Lands sold at prices from 2 to 5 per acre
  garnering railroads about 400 to 500 million
  over the course of a century
• In the end, the only transcontinental railroad to
  survive the economic depression of the 1890s was
  the Great Northern which had been built without
  land grants and thus had been built economically

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WESTERN RAILROAD BUILDING
Image taken from W. W. Norton (www.wwnorton.com/am
erica6)
29
THE CATTLE KINGDOM

• By late 18th Century large herds of cattle roamed
  southern Texas
• These descendants of Spanish cows interbred with
  English to produce the Texas longhorn
• While hardly the best beef cattle, they existed
  by the millions, largely un-owned
• Eastern urban growth combined with railroad
  expansion made it profitable to exploit the
  cattle
• Longhorns could be had locally for 3 to 4 a
  head and sold in the east for 10 times as much

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THE CATTLE KINGDOM

• Made sense to round up cattle, drive them north
  across federally owned land, allowing them to
  graze and fatten along the way, and deliver them
  to railroads running through Kansas
• Between 1867 and 1872 1.5 million cattle traveled
  the Chisolm Trail to Abilene, Kansas
• 10 million were driven north until practice ended
  in mid-1880s

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OPEN-RANGE RANCHING

• Cattlemen discovered Texas cattle could survive
  the winters of the northern Plains
• Introduced Hereford bulls to improve stock
• By 1880 some 4.5 million had spread across area
• Practiced open range ranching which required
  ownership of no more than a few acres along some
  watercourse because control of water allowed a
  rancher to dominate the surrounding area all the
  way to the next stream

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OPEN-RANGE RANCHING

• With demand for meat rising and transportation
  cheap, fortunes could be made in a few years
• Capitalists from the east and Europe poured funds
  into the business
• Soon large outfits dominated the business
• John Wesley Powell suggested western lands be
  divided into three classes
• Irrigable land
• Timber land
• Pasturage land where farm unit should be 2,560
  acres and four of these units should be organized
  into districts in which ranchers could make own
  regulations about division of land, use of water,
  etc.

33
BARBED-WIRE WARFARE

• Congress refused to change the land laws which
  had two bad effects
• Encouraged fraud
• Desert Land Act (1877) allowed anyone to obtain
  640 acres in arid states for 1.25 an acre
  provided part of it was irrigated within 3 years
• Since transfers of title were legal, cattlemen
  had minions buy areas then transfer the titles
• Claimed some 2.6 million acres with probably 90
  of claims fraudulent
• Overcrowding became a problem that led to serious
  conflicts because no one had uncontestable title
  to the land

34
BARBED-WIRE WARFARE

• Cattlemen formed associations and to keep other
  ranchers cattle they began to fence huge areas
• Fencing made possible by 1874 invention of barbed
  wire by Joseph F. Glidden
• By 1880s thousands of miles of fence had been
  strong across the plains
• Resulted in wars between competing interests
• On open range, cattle could fend for themselves
  but barbed wire became lethal during winter storms

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BARBED-WIRE WARFARE

• Boom times were ending
• Overproduction drove down the price of beef
• Expenses were rising
• Many sections of the range were badly overgrazed
• Dry summer of 1886 left stock in bad shape
• Blizzard of 1886-1887 wiped out 80-90 of the
  cattle and ended open range ranching
• Large companies went bankrupt
• Many independent operators sold out
• In wake of blizzard, fencing continued but now
  ranchers only enclosed land they actually owned
• Now brought in pedigreed bulls to improve the
  stock

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III. The Transformation of the West (cont)

• Remaking Indian Life
• In 1871, Congress eliminated the treaty system
  that dated back to the Revolutionary era
• Forced assimilation
• The crucial step in attacking tribalism came in
  1887 with the passage of the Dawes Act
• The policy proved to be a disaster for the
  Indians
• Lands given in trust to the Indians frequently
  sold under fradulent conditions

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III. The Transformation of the West (cont)

• The Ghost Dance and Wounded Knee
• Some Indians sought solace in the Ghost Dance, a
  religious revitalization campaign reminiscent of
  the pan-Indian movements led by earlier prophets
  like Neolin and Tenskwatawa
• On December 29, 1890, soldiers opened fire on
  Ghost Dancers encamped on Wounded Knee Creek in
  South Dakota, killing between 150 and 200
  Indians, mostly women and children

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II. The Second Industrial Revolution

• The Industrial Economy
• By 1913, the United States produced one-third of
  the worlds industrial output
• The 1880 census showed for the first time that a
  majority of the work force engaged in non-farming
  jobs
• Growth of cities were vital for financing
  industrialization
• Great Lakes region
• Pittsburgh
• Chicago

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ECONOMIC STATISTICS

• Value of manufactured products grew from 1.8
  billion in 1859 to over 13 billion in 1899
• GNP increased 44 between 1874 and 1883

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ESSENTIALS OF INDUSTRIAL GROWTH

• American manufacturing flourished because
• New natural resources were discovered and
  exploited thereby increasing opportunities
• Opportunities attracted the brightest and most
  energetic of an expanding population
• Growth of the country added to the size of the
  national market
• Protective tariffs shielded the market from
  foreign competition though foreign capital
  entered freely

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ESSENTIALS OF INDUSTRIAL GROWTH

• Search for wealth led to corrupt business
  practices stock manipulation, bribery, cutthroat
  competition, combinations in restraint of trade
• European immigrants provided needed labor
• 2.5 million arrived in 1870s
• Twice as many arrived in 1880s
• Period of rapid advance in basic science leading
  to new machines, processes and power sources that
  increased industrial and agricultural
  productivity
• Displaced some people
• Made farmers dependent on vagaries of distant
  markets and powerful economic forces beyond their
  control

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ESSENTIALS OF INDUSTRIAL GROWTH

• Improved milling of grain led to packaged cereals
  (Kelloggs --but not the first)
• Commercial canning of food expanded rapidly
• Cigarette rolling machine created a new industry
• Duke family in North Carolina
• George B. Eastman developed mass-produced, roll
  photographic film and simple but efficient Kodak
  camera
• Remington company perfected the typewriter in the
  1880s, revolutionizing the way office work was
  performed

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II. The Second Industrial Revolution (cont)

• The National Market
• The railroad made possible what is sometimes
  called the second industrial revolution
• The growing population formed an ever-expanding
  market for the mass production, mass
  distribution, and mass marketing of goods
• The Spirit of Innovation
• Scientific breakthroughs poured forth from Thomas
  A. Edison phonograph, movies, light bulb
• Tesla, Topsy and the Current Wars

44
II. The Second Industrial Revolution (cont)

• Competition and Consolidation
• Depression plagued the economy between 1873 and
  1897
• Deflation
• Low farm prices
• Businesses engaged in ruthless competition
• To avoid cutthroat competition, more and more
  corporations battled to control entire industries
  
• Between 1897 and 1904, 4,000 firms vanished into
  larger corporations

45
II. The Second Industrial Revolution (cont)

• Captains of Industry
• The railroad pioneered modern techniques of
  business organization
• Thomas Scott of Pennsylvania Railroad
• Andrew Carnegie worked for Scott at Pennsylvania
  Railroad
• By the 1890s, Carnegie dominated the steel
  industry
• Vertical integration
• Carnegies life reflected his desire to succeed
  and his desire to give back to society
• Gospel of Wealth you cant take it with you
• John D. Rockefeller dominated the oil industry
• Horizontal integration
• Captains of industry versus Robber Barons
• Jay Gould

46
RAILROADS THE FIRST BIG BUSINESS

• Emphasis in railroad construction after 1865 was
  on organizing integrated systems
• Lines had high fixed coststaxes, interest on
  bonds, maintenance of track and rolling stock,
  salaries of office personnelso to earn profits
  had to carry as much traffic as possible
• Spread out feeder lines to draw business into
  main lines

47
RAILROADS THE FIRST BIG BUSINESS

• Cornelius Vanderbilt built one of first
  interregional railroad networks with his
  combination of lines in New York with those in
  Midwest in 1870s
• At same time Thomas Scott was building
  connections from Pennsylvania to Midwest
• By 1869 Erie extended from New York to Cleveland,
  Cincinnati, and St. Louis and soon extended to
  Chicago
• 1874 Baltimore Ohio also reached Chicago

Cornelius Vanderbilt, first of the Robber
Barons (from Wikipedia)
48
RAILROADS THE FIRST BIG BUSINESS

• Jay Gould was dominant system builder of
  Southwest
• Consolidated Kansas Pacific (Kansas City to
  Denver) with Union Pacific and Missouri Pacific
  (Kansas City to St. Louis)
• Henry Villard constructed another great complex
  in Northwest based on control of Northern Pacific
• James J. Hill controlled another large network,
  the Great Northern

Jay Goulds war with Vanderbilt for control of
the Erie and Ohio was infamous for Goulds
ingenious manipulation of stocks and bonds
49
RAILROADS THE FIRST BIG BUSINESS

• Civil War highlighted need for railroad
  connections to South
• Chesapeake and Ohio opened a direct route from
  Norfolk, Virginia, to Cincinnati
• By 1880s Richmond and West Point Terminal Company
  controlled 8558 mile network
• Trunk lines connected which meant they had to
  standardize many of their activities
• 1883 railroads developed present system of time
  zones
• 1886 standard track gauge developed
• Standardized car coupling and braking systems,
  even standard methods of accounting were essential

50
RAILROADS THE FIRST BIG BUSINESS

• Lines sought to work out fixed rates for carrying
  different types of freight, charging more for
  valuable than for bulky freight and agreeing to
  permit rate concessions to shippers to avoid
  hauling empty cars
• By 1880s a professionalized railroad management
  saw the advantages of cooperating with one
  another to avoid senseless competition
• Railroads in sparsely settled regions and in
  areas with underdeveloped resources devoted money
  and effort to stimulating local economic growth

51
RAILROADS THE FIRST BIG BUSINESS

• To speed settlement of new regions, railroads
• Sold land cheaply and on easy terms
• Offered reduced rates to travelers interested in
  buying farms an set up bureaus of immigrations
  that distributed brochures describing the wonders
  of the new country
• Sent agents to eastern ports and to Europe to
  encourage immigrants

52
RAILROADS THE FIRST BIG BUSINESS

• Technological advances accelerated economic
  development
• 1869 George Westinghouse invented air brake which
  made possible increase in size of trains and
  speed at which could operated
• 1864 George Pullman invented sleeping car
• To pull heavier trains, more powerful locomotives
  were needed
• In turn led to call for more durable rails which
  supplied by steel that had become cheaper due to
  technological innovations
• Railroads had close ties with Western Union
  Telegraph which they let string wires along their
  rights of way in exchange for free telegraph
  service

53
IRON, OIL, AND ELECTRICITY

• Iron industry
• Output rose from 920,000 tons in 1860 to 10.3
  million tons in 1900
• Big break in production of steel which combines
  hardness of cast iron with toughness of wrought
  iron
• Problem too expensive
• Solution 1850s Bessemer Process developed by
  Henry Bessemer of England and perfected by
  William Kelly of Kentucky
• Bessemer process and open-hearth method
  introduced commercially in 1860s
• 1870 77,000 tons of steel produced
• 1890 5 million tons
• Made possible by enormous iron concentrations of
  the Mesabi region
• Pittsburgh became iron and steel capital of
  country (separate complex developed around
  Birmingham, Alabama)

54
IRON, OIL, AND ELECTRICITY

• Petroleum Industry
• 1859 first successful well drilled by Edwin Drake
  in Pennsylvania
• Production ranged between 2 and 3 million barrels
  a year during Civil War but had reached 50
  million barrels by 1890
• Prior to auto and gasoline engine, major use was
  kerosene for lamps
• By early 1870s refiners developed process to
  obtain more kerosene and to use the byproducts
• Increase in supply of crude oil drove prices down
• Put a premium on refining efficiency which meant
  larger plants using more expensive machinery and
  employing skilled technicians became more
  important
• In mid-1860s only three refineries could process
  2,000 barrels a week
• By 1870s plants capable of handling 1,000 barrels
  a day were common

55
COMPETITION AND MONOPOLYThe Railroads

• Expansion combined with concentration which was
  driven by economies of scale and by downward
  trend in prices after 1873
• Deflation result of failure of money supply to
  keep pace with rapid increase in volume of goods
  produced (lasted until 1896-97)
• To deal with loss of profits from competition,
  railroads
• Issued rebates
• Gave passes to favored shippers
• Built sidings at the plants of important
  companies without charge
• Gave freely of their landholdings to attract
  businesses to their territory
• Charged higher rates at waypoints where no
  competition existed

56
COMPETITION AND MONOPOLYThe Railroads

• Cheap transportation stimulated economy but
  cutthroat competition hurt it
• Small shippers and anyone located where there was
  no competition, suffered
• Railroad discrimination speeded concentration of
  industry in large corporations located in major
  centers
• Instability of rates hampered planning
• Loss of revenue from rate cutting combined with
  inflated debts put most railroads into trouble
  when economic downturn came

57
COMPETITION AND MONOPOLYThe Railroads

• 1880s major roads responded to problems by
  building or buying lines to create interregional
  systemsthe first giant corporations, capitalized
  n the hundreds of millions of dollars
• Led to another wave of bankruptcies when true
  depression hit in 1890s
• Reorganization put most railroads under control
  of financiers such as J. Pierpont Morgan
• Opposed rate wars, rebating and other competitive
  practices
• Because representatives of bankers sat on the
  board of every railroad they saved, control of
  railroad network became centralized

58
COMPETITION AND MONOPOLYSteel

• Iron and steel industry intensely competitive
• Demand varied erratically
• New technology put emphasis on efficiency
• Improved transportation let widely separated
  manufacturers compete with one another
• Andrew Carnegie (born in Scotland in 1848) was
  the kingpin of the industry
• 1890 Carnegie Steel Company dominated the
  industry
• Gentlemen, remember that I am the lowest-cost
  producer.
• Output increased tenfold in next decade

59
COMPETITION AND MONOPOLYSteel

• 1901 Morgan put together United States
  Steelworlds first billion dollar corporation
• Included all Carnegie properties (wanted to
  retire and do social good), Federal Steel Company
  (Carnegies largest competitor), American Steel
  and Wire Company, the American Tin Plate Company,
  and National Tube Company

48-inch universal plate mill, Homestead Steel Wks
Library of Congress, Prints and Photographs
Division, Detroit Publishing Company Collection
Reproduction Number LC-D4-70680 DLC (bw glass
neg.)
60
COMPETITION AND MONOPOLYOil

• Output surged ahead of demand
• 1870s chief refining areas were Cleveland,
  Pittsburgh, Baltimore, and New York City
• 1870 Standard Oil Company of Cleveland founded by
  John D. Rockefeller
• By 1879 controlled 90 of nations oil refining
  capacity along with a network of oil pipelines
  and large reserves of petroleum in the ground

THE SANDUSKY NEAR TIFFIN Library of Congress,
Prints and Photographs Division, Detroit
Publishing Company Collection Reproduction Number
LC-D43-T01-1925 DLC (bw film dup. neg.)
61
COMPETITION AND MONOPOLYOil

• Won control of market
• Obtained 10 rebate and drawbacks on competitors
  shipments from railroads
• Cut prices locally to force small independents to
  sell out or face ruin
• Kerosene was sold in grocery stores so Standard
  supplied its outlets with meat, sugar, and other
  supplies at artificially low prices in order to
  crush outlets that sold other brands
• Employed spies to track down customers of other
  brands and offer them cheap prices
• Bribery
• Rockefeller sought not so much to crush
  competition as to get them to join him
• Bad rep with the anti-monopolists (Ida Tarbells
  father)
• To stabilize monopoly, Rockefeller created the
  trust (1879, perfected 1882)stock from companies
  acquired was turned over to trustees who were
  empowered to exercise general supervision and in
  exchange stock holders received trust
  certificates on which dividends were paid

62
COMPETITION AND MONOPOLYRetailing and Utilities

• In early stages of electric light and telephone
  industry, Edison and Bell spent a large amount of
  time in court protecting their patents
• In 1892 Edison and Thomson-Houston Electric
  merged to form General Electric, a 35 million
  corporation whose only major competition was
  Westinghouse (cf. The Current Wars and Topsy)
• Life insurance industry expanded after Civil War
  due to the tontine group policy which led to
  cutthroat competition
• By 1900 three giants dominated industry
  Equitable, New York Life, and Mutual Life
• In retail, the period saw the growth of
  department stores
• 1862 Alexander Stewart had an 8-story emporium in
  New York City
• By 1880s John Wanamaker in Philadelphia and
  Marshall Field in Chicago had similar
  establishments
• Advertised heavily, stressing low prices,
  efficient service, and money-back guarantees
• High volume made for large profits

63
AMERICAN AMBIVALENCE TO BIG BUSINESS

• Americans believed in laissez-faire government
  non-interference
• Encouraged by belief in Darwinian theories
• By the 1870s his theory was influencing opinion
  in U.S.
• Nature had ordained a kind of inevitable
  progress, governed by natural selection of
  individual organisms best adapted to survive in a
  particular environment
• Complemented reasoning of classical economists
  and concept of invisible hand
• William Graham Sumner took these ideas and
  applied to social relationsSocial Darwinism

64
AMERICAN AMBIVALENCE TO BIG BUSINESS

• Yet while Americans disliked powerful governments
  in general and strict regulation of the economy
  in particular never meant they objected to all
  government activity in the economic sphere
• Banking laws, tariffs, internal improvement
  legislation, and the granting of public land to
  railroads
• Americans saw such laws as intended to release
  human energy and increase the area in which
  freedom could operate
• Americans concerned by new corporate enterprises
• Also concerned about monopoly
• Worried raise prices (in fact prices fell and
  consumer bonanza resulted)
• Worried were destroying economic opportunity and
  threatening democratic institutions
• Businessmen responded that concentration
  necessary to create stability, economy, and
  efficiency and benefit the community

65
II. The Second Industrial Revolution (cont)

• Workers Freedom in an Industrial Age
• For a minority of workers, the rapidly expanding
  industrial system created new forms of freedom
• For most workers, economic insecurity remained a
  basic fact of life
• Between 1880 and 1900, an average of 35,000
  workers perished each year in factory and mine
  accidents, the highest rate in the industrial
  world
• Women were part of the working class

66
II. The Second Industrial Revolution (cont)

• Sunshine and Shadow
• Class divisions became more and more visible
• Many of the wealthiest Americans consciously
  pursued an aristocratic lifestyle
• Thorstein Veblen on conspicuous consumption
• The working class lived in desperate conditions
• Jacob Riis, How The Other Half Lives

67
IV. Politics in a Gilded Age

• The Corruption of Politics
• Americans during the Gilded Age saw their nation
  as an island of political democracy in a world
  still dominated by undemocratic governments
• Political corruption was rife
• Urban politics fell under the sway of corrupt
  political machines
• Boss Tweed
• Corruption was at the national level too
• Credit Mobilier

68
IV. Politics in a Gilded Age (cont)

• The Politics of Dead Center
• Every Republican candidate for president from
  1868 to 1900 had fought in the Union army
• Union soldiers pensions
• Democrats dominated the South and Catholic votes
• The parties were closely divided and national
  elections were very close
• Gilded Age presidents made little effort to
  mobilize public opinion or exert executive
  leadership
• In some ways, American democracy in the Gilded
  Age seemed remarkably healthy

69
Review politics of the 1880s

• 1880 Stalwarts vs Half-breeds vs. Democrats
• Garfield (Rep) wins, then gets assassinated
• Arthur supports Pendleton Act, reforming civil
  service
• 1884 Blaine (Rep) vs Cleveland (Dem)
• Continental liar from the state of Maine
• Ma, Ma, wheres my Pa?
• Cleveland wins
• Catholic vote key to his victory
• 1888 Dirty Tricks!
• Cleveland (Dem) vs. Benjamin Harrison (Rep)
• Murchison letters
• Vote pay-out schedule in Indiana
• Harrison wins with a minority of the popular vote

70
IV. Politics in a Gilded Age (cont)

• Government and the Economy
• The nations political structure proved
  ill-equipped to deal with the problems created by
  the economys rapid growth
• Tariff policy was debated
• Return to gold standard in 1879
• Great Robbery silver redemption quietly
  discontinued
• Republican economic policies strongly favored the
  interests of eastern industrialists and bankers
• The Civil Service Act of 1883 created a merit
  system for federal employees
• Congress established the Interstate Commerce
  Commission (ICC) in 1887
• Sherman Antitrust Act

71
IV. Politics in a Gilded Age (cont)

• Political Conflict in the States
• State governments expanded their responsibilities
  to the public
• Third parties enjoyed significant, if
  short-lived, success in local elections
• The Greenback-Labor Party
• Farmers responded to railroad policies by
  organizing the Grange
• Some states passed eight-hour-day laws

72
V. Freedom in the Gilded Age

• The Social Problem
• As the United States matured into an industrial
  economy, Americans struggled to make sense of the
  new social order
• Many Americans sensed that something had gone
  wrong in the nations social development
• Freedom, Inequality, and Democracy
• Many Americans viewed the concentration of wealth
  as inevitable, natural, and justified by progress
  
• Gilded Age reformers feared that with lower-class
  groups seeking to use government to advance their
  own interests, democracy was becoming a threat to
  individual liberty and the rights of property

73
Political Stalemate, 18761892 pg. 616
Political Stalemate, 18761892
74
V. Freedom in the Gilded Age (cont)

• Social Darwinism in America
• Charles Darwin put forth the theory of evolution
  whereby plant and animal species best suited to
  their environment took the place of those less
  able to adapt
• Social Darwinism argued that evolution was as
  natural a process in human society as in nature,
  and government must not interfere
• Failure to advance in society was widely thought
  to indicate a lack of character
• Social Darwinist William Sumner believed that
  freedom required frank acceptance of inequality
• Root, hog, or die
• Contrary viewpoint Reform Darwinism (Ward)

75
V. Freedom in the Gilded Age (cont)

• The Courts and Freedom
• The courts viewed state regulation of business as
  an insult to free labor
• The courts generally sided with business
  enterprises that complained of a loss of economic
  freedom
• Lochner v. New York voided a state law
  establishing ten hours per day or sixty per week
  as the maximum hours of work for bakers, citing
  that it infringed upon individual freedom
• Procedural due process at work again
• Context of conservative decisions Munn Wabash
  Knight

76
VI. Labor and the Republic

• The Overwhelming Labor Question
• The 1877 Great Railroad Strike demonstrated that
  there was an overwhelming labor question
• Gould as Robber Baron
• Role of the Pinkertons all-seeing eye
• The Knights of Labor in an Industrial Age
• The Knights of Labor organized all workers to
  improve social conditions
• Problems of an industrial union
• The Conditions Essential to Liberty
• Labor raised the question whether meaningful
  freedom could exist in a situation of extreme
  economic inequality

77
VI. Labor and the Republic (cont)

• Middle-Class Reformers
• Alarmed by fear of class warfare and the growing
  power of concentrated capital, social thinkers
  offered numerous plans for change
• Progress and Poverty
• Henry Georges solution was the single tax
• Tax on land, not on wages
• George rejected the traditional equation of
  liberty with ownership of land

78
VI. Labor and the Republic (cont)

• Gronlund and Bellamy
• Lawrence Gronlunds Cooperative Commonwealth was
  the first book to popularize socialist ideas for
  an American audience
• It explained socialist concepts in
  easy-to-understand prose
• Freedom, Edward Bellamy insisted, was a social
  condition, resting on interdependence, not
  autonomy (Looking Backwards)
• Earliest American sci-fi novel
• Bellamy held out the hope of retaining the
  material abundance made possible by industrial
  capitalism while eliminating inequality

79
VI. Labor and the Republic (cont)

• A Social Gospel
• Walter Rauschenbusch insisted that freedom and
  spiritual self-development required an
  equalization of wealth and power and that
  unbridled competition mocked the Christian ideal
  of brotherhood
• Critics this is Christianity without Christ
• Social Gospel adherents established mission and
  relief programs in urban areas
• The Haymarket Affair
• On May 1, 1886, some 350,000 workers in cities
  across the country demonstrated for an eight-hour
  day
• A riot ensued after a bomb killed a police
  officer on May 4
• International context Bakhunin and the Anarchist
  movement
• First international terrorist threat?

80
VI. Labor and the Republic (cont)

• Employers took the opportunity to paint the labor
  movement as a dangerous and un-American force
  prone to violence and controlled by foreign-born
  radicals
• Seven of the eight men accused of plotting the
  Haymarket bombing were foreign-born
• Labor and Politics
• Henry George ran for mayor of New York in 1886 on
  a labor ticket
• The events of 1886 suggested that labor might be
  on the verge of establishing itself as a
  permanent political force

81
The Railroad Network, 1880 pg. 596
The Railroad Network, 1880
82
U.S. Steel A Vertically Integrated Corporation
pg. 598
U.S. Steel A VerticallyIntegrated Corporation
83
Indian Reservations, ca. 1890 pg. 611
Indian Reservations, ca. 1890
84
Table 16.1 pg. 594
85
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