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Lesson 2

Capital and Labor in the Age of Enterprise,

The final decades of the nineteenth century witnessed profound economic changes in
the nation. Between 1860 and 1900 the number of Americans employed in
manufacturing quadrupled, and the value of the nations annual manufacturing output
increased sevenfold. By 1894 the United States was the worlds leading industrial
power. Gigantic factories turned out prodigious quantities of manufactured goods for
mass marketing. In 1870, a factory with one hundred workers had been considered
large; by 1900, though, thousands of employees labored in individual factories. For
instance, in 1905 the Singer Sewing Machine Company employed 90,000 workers in
eight factories. This lesson focuses upon the consequences of Americas Industrial
Revolution for the American economy, for the leaders of industry, and for workers who
labored in the nations factories.

Learning Outcomes
1. Describe the contributions of steel, coal, and the railway system, and mass markets to
the nation's industrial revolution, and identify key processes that accompanied industrial
2. Evaluate both the advantages and the disadvantages of industrialization from the
perspective of factory workers.
3. Trace the history of the labor movement in the United States, including its triumphs and
defeats and the evolution of its strategies and objectives.

Reading Assignment
Read chapter 17, "Capital and Labor in the Age of Enterprise," in your textbook, along
with the discussion material in this manual.

2.1: Key Developments

Your textbook discusses key developments that facilitated Americas Industrial
Revolution: including the rise of the steel industry, coal mining, the harnessing of
electricity, and development of an efficient railroad network. Two key processes
associated with industrialization, vertical integration and mass marketing and
advertising, are described in detail in your text. Another key process was technological
innovation and invention. An excellent example is the Bessemer process, described on
pp. 52021 in your text. Other advancements include improvements in canning, flour
milling, and petroleum refining, as well as new consumer products such as the sewing
machine and the light bulb. The innovative spirit of the industrial revolution was
epitomized by Americas greatest inventor, Thomas Edison. Edison claimed that
invention was 1 percent inspiration and 99 percent perspiration, and his career reflected
that aphorism. Edisons associate Edward Johnson recalled,
I came in one night and there sat Edison with a pile of chemical books that were five feet high
when laid one upon another. He had ordered them from New York, London, and Paris. He studied
them night and day. He ate at his desk and slept in a chair. In six weeks he had gone through the
books, written a volume of abstracts, made two thousand experiments, and produced a solution,
the only one that could do the thing he wanted (Hughes 1986).

Over his lifetime, Edison and his employees produced 3.5 million pages of notes,
abstracts and correspondence (Edison no date).

Another key process associated with the industrial revolution was fierce competition. An
excellent example of cutthroat competition involved Thomas Edison and George
Westinghouse. With financial backing from J. P. Morgan, Edison opened a power
company in 1882. His system of electrical transmission involved direct current, which is
the transmission of relatively low voltages over a short distance. The cost of the system
was consequently high. A competitor, George Westinghouse, built upon Edisons
technology and obtained a patent for a more efficient electrical transmission system,
which used alternating current. The system enabled Westinghouse to transmit electricity
at high voltages over long distances, and then to use a transformer to reduce the
voltage to safe levels before it entered individual homes and businesses. Edison
attempted to smear Westinghouse, insisting that his alternating current system was
deadly. To demonstrate his point Edison publicly electrocuted stray animals using high
voltages of electricity. While his demonstrations failed to discredit Westinghouse, they
did demonstrate that electricity could kill, which led to the adoption of the electric chair
as a form of execution in New York State. Ultimately, Edison sued Westinghouse for
patent violation, spending two million dollars (over half the value of his company) on
litigation, nearly ruining himself and Westinghouse in the process. However, he was
unable to drive Westinghouse out of business. Late in the 1880s, Edisons power
company was sold for $3.5 million to investment banker J. Pierpont Morgan, who
merged it with another company to form General Electric (GE). In 1896 GE and
Westinghouse resolved their disputes over electrical transmission, agreeing to share
patents, thereby assuring their continued domination of the industry.

Another process associated with the industrial revolution was standardization and
systematization. Your textbook illustrates one example of this: railroads adopted a
standard track gauge and divided the country into four standard time zones.
Standardization also proceeded in other ways. In large factories, machines made
products from bicycles to sewing machines with standardized parts. Factory owners
based their business decisions on results obtained using a cost-analysis approach to
quantify the savings in time and money that would accrue with the adoption of a new
technique or machine. In an attempt to further standardize and systematize the
production process, employers attempted to manage their workers by holding them to a
regimen of production. The most famous example of this is the scientific management
studies of Frederick Taylor, described on pp. 538 of your text.

One other process associated with the industrial revolution was incorporation. Be sure
to consult your texts discussion of this process on pp. 52223. The text illustrates
incorporation by focusing on the railroads, but the same process pertained to other
industries, too.

A key outcome of the industrial revolution for the nations leading businessmen was the
acquisition of enormous wealth. By 1893, one-tenth of the families in the United States
owned 73 percent of the wealth. Over four thousand millionaires resided in the nation.
On the other hand, over 40 percent of American families incomes failed to clear the
poverty line.

American comedians poked fun at the wealth of the favored few. One of them, Eli
Perkins, told this joke about Jay Gould, an investor who is described on p. 523 of your
text. One day last summer the Reverend Doctor Cuyler, of Brooklyn, was making some
inquiries as to the religious status of the guests in Saratoga [a resort for the wealthy in
New York]. Meeting Mr. Morrosini, Goulds Italian partner, he asked him about Goulds
religious status. Gould, I suppose is a moral man, isnt he? said the Doctor. Gould
whatee? asked Morrosini with his Italian accent. I say, Gould is a moral man, he keeps
the Sabbath, doesnt he? Gould keep the Sabbath! repeated Morrosini. Gould keep
the Sabbath! Why Gould keeps anything he can get his hands on, you try heem!
(Landon 1900).
Others found the concentration of wealth to be no laughing matter. As one reformist
poet, Rose Elizabeth Smith, complained,
There are ninety and nine who live and die
In want and hunger and cold
That one may live in luxury
And be wrapped in a silken fold.
The ninety and nine in hovels bare
The one in a palace with riches rare. . . .
And the one owns cities, and houses and lands
And the ninety and nine have empty hands (Hicks 1931).
Some defended private wealth and maintained that it was the natural outcome of the
superior ability of the wealthy. California newspaperman Henry George questioned this
line of reasoning in Progress and Poverty(1879). George advised that the government
should reclaim wealth acquired through luck rather than labor. Speculators who
invested in property at the right moment, watched it appreciate in value, and then sold it
at a handsome profit were not entitled to the profits, George maintained.

The consequences of the industrial revolution and the factory system for the common
workers (most of whom were immigrants or the children of immigrants) were mixed.
Bear in mind that even in 1900 the majority of urban Americans worked in small
factories and locally owned businesses. Nevertheless, the trend was increasingly
toward employment in large factories. Your text discusses the struggle of the working
class families with low wages, and the consequence, that some children and women
(about 20 percent) entered the workforce. Indeed, low wages and wage reductions were
factory workers foremost complaints about their jobs. Relative to today, wages were
indeed low and many Americans lived in poverty. Few Americans descended into
poverty because they worked in industry, though. Instead, many poor rural Americans
and ambitious citizens of other nations flocked to Americas cities and factories, hoping
to acquire factory jobs that would provide them with regular wages. Eventually, jobs in
American industry did enable many to escape from poverty. In many industries, a
diligent and frugal male worker living alone could save $15 a month. This economic
opportunity, far greater than any available to most workers in Europe, goes far in
explaining the steady stream of young male immigrants who came to America to make
and save money. The industrial revolution both decreased the cost of living and
increased income, thereby boosting the standard of living for industrial workers between
1860 and 1900. Average real wages (adjusted for changes in the cost of living)
oscillated, but overall they rose by 31 percent for unskilled workers between 1860 and
1900. Skilled workers average real wages rose by 74 percent.
As your text indicates, at least one-third, and possibly as many as one-half, of the
immigrants who came to the United States eventually returned to their homelands.
According to the book no one knows how many left because they had saved enough
and how many left for lack of work (p. 531). Yet most of those who stayed could expect
to see their wages and economic opportunities rise over the course of their careers.
Over a lifetime, unskilled laborers commonly moved into skilled labor positions, nearly
tripling their wages.

On pp. 53639, the erosion of worker autonomy and deskilling (a narrowing of skills for
workers) are discussed as important outcomes of the factory system. Be sure that you
understand both of these consequences. Mechanization and assembly-line production
made it easier to train and replace workers, but it also made work more monotonous
and generally reduced laborers interest and pride in their work.

Another key consequence of the industrial revolution for workers was a shift away from
pre-industrial work rhythms which had varied with the seasons, being heaviest in the
long days of summer and at harvest time and more relaxed in the winter. Under the new
industrial regimen, industrial time prevailed, based upon the clock and whistle, and
impervious to changes in season. Time was monitored for its monetary value and
workers followed an unrelenting pattern year-round governed by the clock. The workday
in most factories late in the nineteenth century was long by todays standards,
averaging ten hours; a six-day work week was the norm.
The fire in the Triangle Shirtwaist Company resulted in the death of 146 of the 500 workers.
BYU Independent Study

Large, complex machinery could maim or even kill workers, but the dangers of working
with machines were partially offset by the vast, new factories having been built late in
the nineteenth century were generally better lit, better ventilated, and safer than many of
the older warehouses where Americans had labored. Modern machinery often made
work less strenuous. Nevertheless, many places remained substandard. A 1912 study
of 153 foundries in New York found that 39 percent were poorly ventilated, 32 percent
had inadequate lighting, and 43 percent were poorly heated. On pp. 61821 you can
read about the most famous industrial accident of the era, the Triangle Shirtwaist
Company factory fire of 1911, which resulted in the death of 146 of the factorys almost
500 employees.

On pp. 53847, your textbook discusses one of the most consequential outcomes of
industrialization for workers: collective action such as unionization and striking. The
impersonal nature of large factories encouraged collective action as one of the only
ways for workers to bring their complaints to the attention of factory owners. There were
thousands of strikes in the nineteenth century (most of them spontaneous, wildcat
strikes) and hundreds of thousands of workers joined unions; still, the majority of
workers in the nineteenth century did neither.

Workers also resisted objectionable facets of employment in the factory system through
many informal, individual actions. The fragmentary evidence we have suggests that in
many factories, workers who objected to the six-day work week simply failed to show up
to work. In an average work week, it appears that roughly one in four workers missed at
least one day of work. Workers also took extended vacations of 35 days for wedding
celebrations and holy days. Another means of escaping monotonous jobs was to
change jobs frequently. In many factories the annual turnover rate for laborers was
close to 100 percent. Workers also softened and humanized the workplace through
lunchtime entertainment such as dancing and holiday parties. In some textile and
garment factories, where most of the employees were single women, the ritual of baking
and eating a Halloween cake developed. A thimble and a ring were placed in the cake
batter when it was poured into the baking pan. When the cake was cut and served, the
person whose piece contained the ring was supposed to be destined for romance, while
the person whose piece contained the thimble was said to be fated for spinsterhood.
Workers also humanized the workplace by befriending and visiting co-workers or by
assisting their relatives in securing employment in the same workplace. Disgruntled
workers were also capable of wielding effective power vis-a-vis their supervisors and
employers, either by occasionally destroying machinery, by damaging finished products,
or by threatening to physically harm abusive supervisors. In one extreme instance,
Slavic miners in an Appalachian community dragged their mine boss out of bed, placed
a crown of thorns on his head, nailed him to a cross, raised the cross, and then danced
and sang around it as they watched him suffer.

Your textbook indicates that injustice and exploitation within the industrial system
abetted the rise of socialism, a political movement that advocated the orderly transfer of
key industries from capitalists to the government if a majority of citizens voted for the
transfer (and after the previous owners had been justly compensated). Discontent with
the industrial order also inspired violent radicalism, or syndicalism, a strategy in which
workers would subvert production or forcibly seize property. You will have the
opportunity to become better acquainted with some of the Socialist Partys tenets as
you read the novel The Jungle in a subsequent lesson.

Inequities in the industrial system also inspired religiously based calls for reform known
as the Social Gospel. In the 1880s and 1890s, some ministers within liberal Protestant
denominations encouraged their parishioners to focus less upon salvation and the
afterlife and more upon the temporal welfare of the poor and the correction of
socioeconomic problems. The most widely circulated book emanating from the Social
Gospel movement, Charles M. Sheldons In His Steps (1896), considered the salience
of Jesus teachings for contemporary social problems. Sheldon posited that Christians
could exert immense power for reform if they would ask What would Jesus do? and
then act accordingly. Attempting to appeal to Christians whose social conscience had
been pricked by the Social Gospel, writer Upton Sinclair argued in The Jungle that
Jesus was the worlds first revolutionist, the true founder of the Socialist movement; a
man whose whole being was one flame of hatred for wealth, and all that wealth stands
for (Sinclair 1905).

The Gospel of Wealth

Here are two resources to listen to and read Andrew Carnegies The Gospel of
Wealth. and
Americas wealthiest industrialists in the late nineteenth century also attempted to
harmonize their understanding of Jesus message with their conservative economic
views. Consider the attempt of Americas rags-to-riches icon, Andrew Carnegie, whose
essay Wealth appeared in the North American Review in June 1889. The ideas
expressed in that essay came to be known as the Gospel of Wealth. Industrialization,
Carnegie admitted, had produced fabulous wealth for a favored few, including himself,
but it had also provided well-made, affordable commodities for the masses and thereby
improved their standard of living. On the downside, in large factories, the industrialist
had little if any contact with his employers, resulting in friction between the employer
and the employed, between capital and labor, between rich and poor (Carnegie, 1889).

Carnegie rejected the Socialist or Anarchist who questioned the sanctity of private
property. He argued that the law of competition, which permitted the industrious man
or woman to rise and the neer-do-well to falter, was the foundation upon which
civilization itself rests (Carnegie, 1889). Utopian thinkers, who argued that a higher
ideal would be that man should labor, not for himself alone, but in and for a
brotherhood of his fellows, were ignoring human nature and proposing something
impractical. Those like the Social Gospel writers, who argued that the followers of Christ
should heedlessly open their pocket books to the poor, were also misguided. It were
better for mankind that the millions of the rich were thrown into the sea than so spent as
to encourage the slothful, the drunken, the unworthy, he charged (Carnegie 1889). It
was also inefficient, Carnegie maintained, for the wealthy to pass on their fortunes to
their workers by raising wages for their employees. Carnegie assumed that factory
workers wages were already just and sufficient. At best, the wage earners would spend
their increased salaries on themselves, improving the comfort of their individual homes.
Wealthy individuals like Carnegie should be animated by Christs spirit but should
recognize that they lived in a much different era than when Jesus had walked the earth.
They should still labor for the good of our fellows, which was the essence of his
[Christs] life and teaching but do so in a different manner than Christ had done. A far
greater improvement of the race would occur if the wealthy established foundations,
philanthropic organizations and educational and cultural institutions to ensure that their
surplus revenues benefitted large numbers of people. This would thereby help those
who will help themselves; to provide part of the means by which those who desire to
improve may do so; to give those who desire to rise the aids by which they may rise; to
assist, but rarely or never to do all (Carnegie, 1889). Carnegie summarized his view of
the stewardship of the wealthy as follows:
This, then, is held to be the duty of the man of Wealth; First, to set an example of modest,
unostentatious living, shunning display or extravagance; to provide moderately for the legitimate
wants of those dependent upon him; and after doing so to consider all surplus revenues which
come to him simply as trust funds, which he is called upon to administer, and strictly bound as a
matter of duty to administer in the manner which, in his judgment, is best calculated to produce
the most beneficial results for the community, the man of wealth thus becoming the mere agent
and trustee for his poorer brethren, bringing to their service his superior wisdom, experience, and
ability to administer, doing for them better than they would or could do for themselves.

Carnegie was convinced that many of the wealthy, out of a sense of social obligation,
would contribute generously to worthy causes; some would not, though, and in these
cases, the government should tax estates heavily at death thereby condemn[ing] the
selfish millionaires unworthy life (Carnegie 1889).

The ethical questions raised by Carnegie, Sinclair, and Sheldon mattered to many
Americans of their era who were struggling to recover a sense of organic unity and
community in a nation transformed by an industrial revolution and by the immigration of
millions of ambitious but impoverished people from abroad. The questions may have
been particularly acute in the late nineteenth century, but they also demand answers
from thoughtful Christians in the twenty-first century.

Lesson 2 Self Check

As you prepare for the exam, be sure that you are able to identify each of the following
terms and can describe each terms historical significance, furnishing as much relevant
detail as possible within a maximum of four sentences.

Key Terms
Great Deflation
Andrew Carnegie
Bessemer process/Henry Bessemer
Jay Gould
Vertical integration
Sex typing (see caption on p. 533)
Scientific management/Frederick W. Taylor
Kights of Labor
Samuel Gompers
Haymarket Square
Homestead Steel Strike
Pullman Boycott
Eugene V. Debs
Western Federation of Miners
Thomas Edison
Progress and Poverty
Industrial time
Triangle Shirtwaist Factory
Gospel of Wealth

As you prepare for the exam, prepare to respond to the following study question:

Discuss the impact of the industrial revolution on the American economy, the nation's
leading industrialists, and the common workers. In your opinion, which features of the
industrial revolution were positive and which were negative? On balance, was the
industrial revolution desirable or undesirable?