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com/ APUSH

Chapter Twenty-Four: Industry Comes of Age
Union Pacific The Union Pacific Railroad was commissioned by Congress to construct tracks beginning at Omaha, Nebraska. or each mile of track constructed the company was granted 20 square miles of land, alternating in 640-acre sections on either side of the track. They would also receive a federal loan, ranging from $16,000 per mile on flat prairie land to $48,000 for mountainous country. Utilized Irish labor. Built 1,086 miles. Central Pacific The Central Pacific Railroad was responsible for laying track eastward, beginning at Sacramento. The Big our were the chief financial backers of the enterprise—including ex-governor Leland Stanford and lobbyist Collis Huntington. They operated two construction companies and were not involved in bribing Congressmen. Utilized Chinese labor. Built 689 miles. Great Northern Railroad our other transcontinental railroads were completed before the century ended. While none of them secured monetary loans, all of them except the Great Northern railroad received generous land grants. Ran from Duluth to Seattle north of the Northern Pacific. Created by James J. Hill. James J. Hill Canadian-American behind the creation of the Great Northern Railroad. Perceived that the popularity of his railroad depended on the prosperity of the area that it served. He ran agricultural demonstration trains through the “Hill Country” and imported from England blooded bulls, which he distributed to the farmers. He efficiently organized his business in such a way that it was able to survive through the next few financial crises.

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Chapter Twenty-Four: Industry Comes of Age
Cornelius Vanderbilt Made his millions in the steamboat industry and turned to railroads in his late sixties. Responsible for welding together and expanding the older eastern networks, notably New York Central. Offered superior railway service at lower rates, amassing a fortune of $100 million. Contributed $1 million to the founding of Vanderbilt University in Tennessee. Popularized the steel rail by replacing the old iron tracks of New York Central with steel, which was safer and more economical. Pullman Palace Cars Advertised as “gorgeous traveling hotels” were introduced on a considerable scale in the 1860’s. Alarmists condemned them as deathtraps, for the wooden cars were equipped with swaying kerosene lamps. Watered Stock The term “stock watering” originated from making cattle thirsty by feeding them salt, then having them bloat themselves with water before they were weighed for sale. Railroad stock promoters inflated their claims about a given line’s assets and profitability, selling stocks and bonds in excess of the railroad’s actual value. Railroad managers then had to charge extremely high rates and wage competitive battles to pay off the financial obligations. Pooling Agreement to divide the business in a given area and share the profits. This was one of the earliest ways in which railroad bosses chose to cooperate with one another rather than competing. Secret Rebates Rail barons offered secret rebates or kickbacks to powerful shippers in return for steady and assured traffic. The Grange Organized agrarian group, a.k.a. the Patrons of Husbandry, tried to regulate the railroad monopoly.

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Chapter Twenty-Four: Industry Comes of Age
Wabash Case (1886)
The Supreme Court decreed that individual states had no power to regulate interstate commerce. If railroads were to be regulated, it would be the duty of the federal government. This led to the passage of the Interstate Commerce Act in 1887. Interstate Commerce Commission (1887) Prohibited rebates and pools and required the railroads to publish their rates openly. Forbade unfair discrimination against shippers and outlawed charging more for a short haul than a long haul over the same line. Set up the Interstate Commerce Commission to administer and enforce the new legislation. While it was not a complete victory, the new legislation provided a forum where competing business interests could resolve their conflicts in peaceable ways. It also eliminated rate wars among the railroads and attacks on the lines by state legislatures. irst large-scale attempt by Washington to regulate business in the interest of society at large. Alexander Graham Bell Invented the telephone in 1876. Soon, a communication network was built on his invention. This attracted “number please” women to serve on the switchboard as operators. Thomas Alva Edison Invented the phonograph, mimeograph, Dictaphone, and the moving picture, among many other devices. Best known for his perfection of the light bulb in 1879. Had his laboratory in New Jersey. Andrew Carnegie “The Steel King” – Integrated every phase of his steel-making operation, controlling miners, the ships and railroads that transported ores, blast furnaces, and the factories that made the ingots. Championed “vertical integration” combining into one organization all phases of manufacturing from mining to marketing. His goal was to improve efficiency by making supplies more reliable, controlling quality at all stages of production, and eliminating middlemen’s fees. By 1900, Carnegie was producing one-fourth of the nation’s Bessemer steel, and the partners were dividing profits of $40 million annually.

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Chapter Twenty-Four: Industry Comes of Age
Vertical Integration Describes the process of which several steps in the production and/or distribution of a product or service are controlled by a single service or entity. Legal. Horizontal Integration Allying with competitors to monopolize a given market. Illegal. John D. Rockefeller Oil baron who founded Standard Oil in 1870 and utilized horizontal integration. Stockholders in various smaller oil companies would assign their stock to the board of directors of Standard Oil. The company could then corner virtually the entire world petroleum markets. Any weaker competitors not included in the trust would be forced to the wall. Trust became a term used to describe any large-scale business combination. Directorates Interlocking Directorates J.P Morgan, banker, consolidated rival enterprises by placing officers of his own banking syndicate on their various boards of directors. Refers to the practice of members on a corporate board of directors also serving on other boards. Bessemer and Kelly Processes Within 20 years, the United States was producing more than one-thirds the amount of the world’s supply of steel. In the 1850s, the Bessemer process was developed by Henry Bessemer. William Kelly discovered that cold air blown on red-hot iron caused the metal to become white-hot by igniting the carbon and thus eliminating impurities. Gradually, the Bessemer-Kelly process was accepted. J. P. Morgan Made a reputation for himself and his Wall Street banking house by financing the reorganization of railroads, insurance companies, and banks. Had a reputation for honesty and did not believe that “money power” was dangerous, except when in dangerous hands.

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Chapter Twenty-Four: Industry Comes of Age
United States Steel By 1900, Carnegie was eager to sell his holdings while Morgan was becoming involved in manufacturing steel pipe tubing. Morgan agreed to buy out Carnegie for over $400 million. Morgan took the Carnegie holdings, added others, watered the stock, and launched the United States Steel Corporation in 1901. Capitalized at $1.4 billion, it was America’s first billion-dollar corporation. Standard Oil Rockefeller organized the Standard Oil Company of Ohio in 1870. He located his refineries in Cleveland and sought to eliminate the middlemen and competitors. By 1877, Rockefeller controlled 95% of all oil refineries in the country. “American Beauty Rose” Concept The giant American Beauty rose could only be produced by sacrificing the early buds that grew up around it. John D. Rockefeller adhered to the principle by ruthlessly getting rid of his competitors in order to consolidate the industry. Trusts Consolidation came to be much more profitable than price wars. Along with Standard Oil came the sugar trust, the tobacco trust, the leather trust, and the harvester trust. “Old” and “New” Wealth The old American aristocracy of modestly successful merchants and professionals was being eclipsed by the “new rich” of trusts. Gospel of Wealth Andrew Carnegie’s doctrine that the wealthy, entrusted with society’s riches, had to prove themselves morally responsible.

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Chapter Twenty-Four: Industry Comes of Age
William Graham Sumner A Yale professor and Social Darwinist who concluded, “The millionaires are a product of national selection. They get high wages and live in luxury, but the bargain is a good one for society.” Social Darwinism An application of Charles Darwin’s theory of natural selection to human society, which was not supported by Darwin. Reverend Russell Conwell Delivered his “Acres of Diamonds” speech thousands of times, in which he took an especially critical attitude of the poor in America. He claimed that “There is not a poor person in the United States who was not made poor by his own shortcomings,” taking the view that there were so many opportunities in America, anyone truly industrious could become wealthy. Antitrust Sherman Antitrust Act (1890) orbade combinations in restraint of trade, without any distinction between “good” trusts and ‘bad” trust. The law proved ineffective because it contained legal loopholes. Instead, it actually became effective for curbing labor unions deemed to be restraining trade. Early prosecutions of trusts were not successful. However, both the Interstate Commerce Act of 1887 and the Sherman Antitrust Act set important precedents as to the control of monopolistic corporations by the government. “Gibson Girl” Magazine image of an independent and athletic “new woman” created in the 1890s by Charles Dana Gibson. Careers often meant delayed marriages and smaller families. Scabs Strikebreakers.

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Chapter Twenty-Four: Industry Comes of Age
Lockout Companies had the power to lock their doors against rebellious workers, preventing them from working, and starving them into submission. Blacklist The names of those involved in labor unions could be put on a “black list” and circulated among fellow employers. Company Town A corporation might own the “company town,” with high-priced grocery stores and “easy” credit. Workers might only receive wages in the form of credit at company-owned stores. Often, the workers were in perpetual debt. National Labor Union Organized in 1866, the union lasted six years and attracted some 600,000 members, excluding the Chinese and making little effort to attract women and African-Americans. They worked for the arbitration of industrial disputes and the eight-hour workday, succeeding in obtaining the latter for government workers. The depression of the 1870s led to its downfall. Knights of Labor It began in 1869 as a secret society, complete with a private ritual, passwords, and a special handshake. Secrecy continued until 1881 so as to prevent reprisal by employers. It sought to include all workers in “one big union” and welcomed the skilled and unskilled, whether they were male, female, white, or black. They only barred “nonproducers” such as liquor dealers, professional gamblers, lawyers, bankers, and stockbrokers. They campaigned for economic and social reform, including producers’ cooperatives and codes for safety and health. They waged a determined campaign for the eight-hour workday. They were led by Terence Powderly and were able to win a number of strikes for the eighthour day. They staged a successful strike against Jay Gould’s Wabash Railroad in 1885, which led to membership increasing to three-fourths of a million workers. One of its major failures was to include both skilled and unskilled laborers. While unskilled laborers could easily be replaced by scabs, high-class craft unionists could not readily be supplanted. By the 1890s, membership had reduced to 100,000.

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Chapter Twenty-Four: Industry Comes of Age
Haymarket Square Riot On May 4, 1886, the Chicago police advanced on a meeting called to protest alleged brutalities by the authorities. A dynamite bomb was thrown that killed or injured several dozen people, including the police. Hysteria abounded, with eight anarchists being rounded up, although there was no proof they had any direct involvement with the bomb. ive were sentenced to death, one of who committed suicide, while the other three were given long prison sentences. This led to the Knights of Labor being associated with the anarchists in the public mind. John Altgeld Some six years later, Altgeld was elected governor of Illinois. He pardoned the three survivors after studying the Haymarket case. He was defeated for reelection and died in relative obscurity. American ederation of Labor Skilled laborers formed the American ederation of Labor in 1886, rather than stay with the Knights of Labor. It was an association of self-governing national unions, each of which kept its independence, with the A L unifying overall strategy. No individual laborer could join the central organization. Walkouts and boycotts were the main weapons, with the stronger craft unions of the federation pooling funds to save money that would enable the federation to survive prolonged strikes. The federation was basically nonpolitical, but did attempt to persuade members to vote for supporters at the polls. By 1900 it had a membership of 500,000. Samuel Gompers Major leader of the American ederation of Labor, he was elected president every year except one from 1886 to 1924. Rather than taking an idealistic approach and opposing capitalism entirely, Gompers believed in demanding a fairer share for labor. He sought better wages, hours, and working conditions. A major goal of Gompers was the “trade agreement” authorizing the “closed shop”—all-union labor.

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