America s Rapid Growth

Transcription

1 America s Rapid Growth The late 19th century was a time of extraordinary growth in population as well as in business and industry. The U.S. population basically doubled during this time period, with lots of immigrants coming from Europe. The U.S. GNP increased by 600% between 1865 and (A country s GNP -- its Gross National Product -- is an estimate of the total value of all the products and services produced in a specific time period in a that country.) The U.S. went from 35,000 miles of railroads in 1865 to over 160,000 miles in 1900 more than in all of Europe. There was tremendous growth in coal, steel, oil almost everything associated with industrialization. U.S. factories and industry had begun to grow especially in the North even before the Civil War. o In 1865, there were an estimated 1.3 million American factory workers. o In 1900, there were an estimated 5.3 million American factory workers, plus an additional 4 million workers employed in the construction and transportation industries. Along with this growth came a variety of problems that are now commonly associated with industrialization. For example, the working conditions in the various industries were often harsh for workers. (see text pp ) o Many of the jobs in factories, construction, and transportation were not safe. (Example: Between 1890 and 1917 some 230,000 workers were killed on the job and some 2 million were injured. (p. 457) o With industrialization, the push for increased production changed what had previously been relatively cooperative and social workplaces. The new industrial machines were noisy, making it hard for workers to talk. o The divide between the owner or the manager/supervisor and the workers got wider with industrialization: The rules got tougher on workers, wages for workers were low while profits for owners were high (i.e. there was high income inequality), working conditions were difficult or even dangerous for workers (usually little or no compensation if injured or even killed on the job). o Factory workers usually worked 12 hours a day, 6 days a week. They were paid low wages ranging from $3 to $12 a week (whereas living costs averaged $18.50 per week). o There was a work-at-home sweatshop system, mostly for making clothes (i.e., garment industry). Wages averaged $5 per week, the workers (mostly female) had to supply their own equipment, and sometimes a group of workers crowded together into a dwelling place (like an apartment) to work on finishing garments for a specific contract or employer. o o Children often went to work as young as 5 years old. They worked the same 12 hours a day as adults, but for much less pay. If they worked, they didn t go to school and thus missed a chance to advance later through education. Some industries took place in factory towns (sort of like industrial plantations) where the owners controlled everything apartments, grocery stores, local government, and so on. (pp ) Eventually, laborers began to strike for better working conditions and wages. (pp ). They began to organize and form unions to try to counter the power of the owners. Generally, the government sided with the company owners. American History notes in timeline and presidential order 92

2 Year(s) Population Growth census: 1869 population 31,400,000 (35% increase since the 1850 census) census: pop. 38,600,000 (23% increase since 1860) census: pop. 50,200,000 (30% increase since 1870) 62,900,000 (24% increase since 1890) ,200,000 (Note: m\more than doubled since 1860) Economic Growth Morrill Tariff Act of 1861 (had imposed a 20% tariff on imported goods) Start of Texas cattle drives (see Cowboys, pp ; also see trails map p. 426) Panic of 1873 problem with worldwide switch to gold standard for currency causes sudden shrinkage of credit for businessmen. (p. 396) Mineral resources found in the western Plains iron (MN), coal (PN and Appalachia), oil (PN, OK) (see map, pp. 440) 1890 End of Texas cattle drives (pp ) McKinley tariff (55% -- highest) Panic of 1893 another financial mess Carnagie pioneers systematic business practices (446-47) 1900 Gold Standard Act Industrial and Technological Growth Connection of Central & Union Pacific, first U.S. transcontinental railroad -- with simultaneous completion of first transcontinental telegraph lines (pp ) Free or cheap western land for homesteading farmers (pp ) Kansas Pacific RR loop added, 1870 Four inventions aid farmers and change farming on the Plains (pp ): 1. Barbed wire, Steel windmill, Steel plow, 1860s 4. McCormick s reaper, 1860s 1st telephone system 1878 (p. 438) Edison s light bulb 1879 (p. 437) Typewriters in use 1874 (p. 438) 2 nd transcontinental RR Southern Pacific, 1881 (see map, p. 442) 3 rd transcontinental RR --Atchison, Topeka, & Santa Fe RR th tr-cont. RR Northern Pacific 1883 End of free land for homesteading 5 th tr-cont. RR Great Northern 1893 New methods (Bessemer process) used to make steel (pp ) also tinplated steel cans used for food (439) 1 st steel-framed skyscrapers built Trusts dominate 80% of industries ( corporations now) p Sherman Anti-Trust Act (1890) it s mostly not enforced (cartoon, p. 448) Labor Issues Many young men looking for work after the Civil War built the Union Pacific RR The Grange for farmers (p. 444) Women became office workers (96% of telephone operators and the majority of office typists). They began to try to improve their work situations. (pp. 462) 1887 Interstate Commerce Act for regulation of railroad rates (445) (judicial review) American Railway Union 1893 (p.461) Other unions for garment workers, mine workers, longshoremen, etc. 2% of firms make 50% of products made in U.S. (income inequality) Social Issues Chinese who came to CA for gold rush; ended up building the Central Pacific RR. ( ) 1 st labor union strike (458-59) Destruction of buffalo, (p ) Custer s last stand, WY, 1876 (Indians won) (pp Women workers want unions & the vote (462) AFL (460) 1889 Wounded Knee, massacre of Sioux Indians (p. 418) mothers in industry (p.462) Several major strikes by workers some became violent Govt. generally supports management over labo American History notes in timeline and presidential order 93

3 Political Factors that Promoted Post-Civil War Industrial Growth Before the Civil War, the South had had a lot of political influence in the national government. They set it up that way from the beginning (meaning it s in the Constitution). The South s use of the 3/5ths rule to count slaves for counting the population of states to determine how many members they had in the House of Representatives gave the south more members. This also gave the South extra weight in the electoral college when electing the President (because a state s electoral college votes are made up of the number of House members plus number of Senators. Thus, most of the Presidents up to the Civil War were from the South.) After the Civil War, the South no longer had the same political clout in Washington D.C. This meant the South could no longer use the 3/5ths rule (officially there were no more slaves and the former slaves could now, supposedly, vote in their own interests), so they had fewer representatives in the House (and fewer electoral votes). Many of those who, before the war, had been wealthy and powerful lost most of their money and especially during the Radical Republican era were barred from holding national office (and sometimes state offices as well). This continued through Reconstruction (which ended in 1877). The decrease in Southern political power meant that the North and East and Midwest ran things politically and economically. One consequence of this was that the first transcontinental railroad was begun immediately after Lincoln took office in (The South had blocked this project for 20 years, insisting that the railroad be built in the South. They wanted to be sure they could use the financial power that would come with the first coast-to-coast railroad to support slavery. They lost out when they seceded and then lost the war.) Another consequence was that the North, East, and Midwest increased the number of railroads through its territory during the war and also greatly increased its industrial power (making uniforms, weapons, and ammunition for the war effort). Most of the new immigrants (i.e., increase in available labor) from Europe to America during this time came to the North. That s where the jobs were, and Washington D.C. provided the way for them to get free or cheap land for homesteading. (These two factors were what drew the flood of immigrants to America during this era. Europe was having various problems with wars, its economies, and its industries, and the common people definitely saw that they had a chance for a better life in America.) The government (mostly Republican) had a very business friendly attitude. They generally supported anything that was good for business. This meant that they tended to allow businesses to do pretty much as they liked. (Literally. This was called a laissez-faire philosophy, which basically means, in French, let them do as they like. ) This resulted in the rise of big business monopolies and wealthy owners while the workers had low wages and bad working conditions. American History notes in timeline and presidential order 94

4 Problems with Industrialization -- Big Businesses Having Too Much Power and Wealth Pools: In the 1860s and 1870s, businesses often formed a pool or cartel. In a pool or a cartel, business competitors made informal or "gentlemen's" agreements about production levels and pricing. Critics charged that these were unethical, but defenders among businessmen and the government argued that the pools eliminated the irregularity and wastefulness of unregulated markets. One of the best examples was how the various railroad companies pooled to set prices for tickets or shipping rates on the railroad. Often they d give big businesses low rates while raising the rates on ordinary customers. This was bitterly resented by common people and farmers in the Plains (trying to ship their crops to markets back east). The pools were hit hard in the Panic of 1873, when many railroads went bankrupt. Trusts and Holding Companies: Holding companies and trusts operated in much the same way: They were large partnerships, formed by supposedly competing companies to increase their control over the market while hiding their collusion and conspiring to set rates and fees (which would violate anti-monopoly laws). o In these partnerships, the stock certificates from several companies were exchanged for trust certificates, and then a board of trustees exercised control over all of the (theoretically independent) companies within the trust or holding company. It was an effective device for creating a monopoly. Under trusts, former competitors combined by putting the stock of competing companies in the hands of a board of trustees in return for trust certificates. The trustees voted the stock of all the companies and managed them as a unit. (Clearly, that s a monopoly but it was hard to fight them.) o It was supposedly an efficient way of doing business, but it let many of the big businesses and their competitors control their businesses, shut out new competition, and not allow labor unions change workers situations. o By the 1890s, about 80% of American businesses were controlled by some sort of trust. o A holding company was very similar, being a corporation created for the purpose of buying and holding shares of operating corporations in order to manage them. Holding companies acquired control over other companies by buying physical properties or stock and by leasing agreements (or contracts). One of the first industries the trusts and holding companies went after was the railroads. Because of the promise of low shipping costs, the trusts and holding companies needed to have railroads that were favorable to them. Once a monopoly gained influence over a railroad, it immediately demanded lower rates. In order to keep from losing money, the railroads would then raise the price of shipping for smaller customers needing to ship by rail, especially the farmers and ranchers. Because of the need for railroads for transportation, the smaller industries were forced to pay the higher prices, even though it meant much smaller profits. State governments had a hard time dealing with this. If they came down hard on the railroad companies, then the railroads would just move to a different state with easier regulations. Also, one state had no way to control what the railroads charged customers in another state. Meanwhile the railroads were making a lot of money and paid a lot to politicians at the local, state, and federal level just to make sure nothing was done in any of these legislative bodies that would be unfavorable to the railroads. American History notes in timeline and presidential order 95

5 Other Factors That Promoted Economic Growth From America had an abundance of natural resources, and all of these things could be made into products that Americans could use and surpluses that they could sell overseas. [See map of mining industries and resources on p. 440.] o It had lots of land -- much of it fertile soil that provided more food than the country could eat. o It had forests that provided the country with more wood than it could use. o It had all kinds of mineral and materials like gold, silver, coal, iron, copper, lead, and oil that could be made into various goods. The transcontinental railroad completed in 1869 was critical in getting access to all of this natural wealth and in transporting it (to the factories or to markets where it could be sold). After the first transcontinental railroad (the Union Pacific and the Central Pacific) was built, it was much easier to build the next ones. (Example: Every single rail that was laid by the Central Pacific as it headed east had been brought there on a boat that had traveled all the way around the tip of South America. This tripled the expense of each rail, each spike.) Raw materials could be brought together by the railroads from all parts of the country and the finished products could be marketed over huge domestic or international markets. After the war, the North, East, and Midwest had plenty of investment capital. The industries in these areas had made money during the war and because of difficulties in the European economies there was a lot of investment money from Europe that was invested in American businesses. American gold and silver mines produced more ore, which was able to put more money into circulation and allow more business credit for more growth. The rapid expansion of the population (which doubled between 1865 and 1890) provided industries with a supply of cheap labor necessary for industrial growth. Many of these were immigrants, but many were young Americans from the North who had fought in the war and who, once the war was over, were having families and looking for jobs. New technology (like mass production methods made possible by use of Eli Whitney s principle of interchangeable parts) and many new inventions created new industries, increased production, and made existing industries more efficient. Improved transportation and rapid communications (first the transcontinental telegraph in 1869, then the telephone system starting in 1878) were made possible by nationwide businesses. (The use of these communications networks by ordinary people was only possible because the need for these tools by businesses paved the way to create these inventions and pay for the building of the networks to use them.) Factors That Caused Economic Problems Two major issues of this period ( ) were (1) how to keep the American economy growing and whether to impose protective tariffs on imported goods in order to help American industrial growth, and (2) whether to use gold or silver or both (sometimes called bi-metalism ) as support for the American money supply. These two issues were major policies of the business friendly Republican Party which dominated politics in this period just after the Civil War and up to American History notes in timeline and presidential order 96

6 o Protective Tariffs These are tariffs that are enacted with the aim of protecting a domestic industry by making it more expensive to import goods from overseas (tariffs put a tax on imported goods). The Morrill Tariff passed in 1861 put a 20% tariff on goods imported to the United States. It didn t really work to protect American industries because foreign countries just imposed tariffs on American goods that were exported to them. However, since at that time customs duties were the chief means of raising revenue for the U.S. government, this tariff helped to reduce the heavy debts of the U.S. government. The U.S. gained a lot of currency metals at this time because of gold and silver found in the West and in the Plains States. The government thinking it was shoring up the economy went on and off the gold standard. (The gold standard meant that U.S. dollars were exchangeable for gold, and banks had to maintain a certain amount of actual gold or silver before they could lend credit. The usual rate was 20% actual silver or gold in the bank (or in the state bank s repository) to each dollar loaned out.) Because of the influx of so much gold and silver, the currency could sometimes fluctuate. The 1873 Panic was actually caused by Germany s decision to stop minting silver coins, since so much silver was being produced by the U.S. that the value of silver had fallen. The U.S. at that time had a bi-metal standard (both silver and gold). By 1873, the devaluation effects had spread to the U.S. In 1879, the U.S. returned to the gold standard. In 1890, it attempted to return to bimetals. The Panic that started in 1893 was due to a currency crisis in Argentina. o Gold Standard, Silver Standard, and Bimetalism The discovery of large silver deposits in the Western United States in the mid-to-late 19th century created a political controversy. Due to the large amount of silver available, the value of silver in American coinage dropped sharply. On one side were farming interests such as the United States Greenback Party that wanted to retain the bimetal standard in order to inflate the dollar (which would allow farmers to more easily repay their debts). On the other side were Eastern banking and commercial interests, who advocated sound money and a switch to the gold standard. This issue split the Democratic Party in It led to the famous "cross of gold" speech given by William Jennings Bryan (see text p. 473), by which he meant that he was against making farmers and miners suffer by making them adhere to the gold standard preferred by the bankers. American History notes in timeline and presidential order 97

7 On these charts you can see the problem. For example, look at the amount of gold produced in the U.S. in 1870 (about 75 metric tons) compared with the amount of silver produced in the same year (about 750 metric tons 10 times the amount of gold). It was this imbalance and the falling price of silver that prompted the Germans to stop using silver for their coins (resulting in the Panic of 1873 in the U.S.). Now look at 1890 (gold, about 50 metric tons; silver, about 1,650 metric tons). This led to conditions that when the Argentinian bank collapse occurred created the Panic of 1893 in the U.S. What do we learn from this? (Economics is complicated!) The money supply, credit and debit balance, and international money markets are fairly volatile and can be difficult to predict especially when the world s trade markets and many other currencies around the world are part of the equation. Making risky investments can pay off for some but they can also be lost, and sudden shifts in one area of the currency market can have major consequences in other areas. Some people manage to see problems coming and make the right moves at the right time. However, these tend to be rich guys with good advice from special analysts. Even then, the big guys don t always realize that they re in trouble before it s too late. Most of the ordinary people whose financial security depends on the steady growth of the economy don t see problems coming and they are the ones who get hurt the most when sudden economic shifts occur. American History notes in timeline and presidential order 98

8 The Economy Was Growing Rapidly Up North But Not So Much Down South The Civil War devastated the South. Most of the war was fought there and much of the region's infrastructure was destroyed (meaning roads, bridges, railroads, dams, etc.) as well as many homes, plus the entire city of Atlanta (burned down during Sherman s March through Georgia). There was little capital available in the South to finance major rebuilding. Confederate bonds and currency issued during the war by the CSA government became worthless when the war ended. The overall effect of war-related destruction, CSA currency collapse, and freeing of the slaves -- was that the whole Southern region lost a great proportion of its wealth. The emancipation of the slaves created an urgent need for a new labor system in the South. The sharecropping system that replaced slavery provided some agricultural labor, but under this system there were few incentives for innovation. The Southern region remained capital poor and population growth there was slow. The South failed to attract many new immigrants because of its limited opportunities. The South s slow growth did not create a demand for expanded infrastructure, one of the factors driving the rapid expansion of the Northern economy. (Look at the figures on this doc. p. 92 the 4 million workers employed in 1900 doing primarily construction and railroad building were almost all in the North) For at least two generations after the American Civil War the South remained predominantly agricultural and largely untouched by the industrial expansion of the national economy. One exception was the development of the iron and steel industry around Birmingham, Alabama. [Look at the mineral resources map on your textbook p Birmingham doesn t have a label, but it s the spot where the iron and the coal resources overlap.] Southern leaders tried to find ways to build (or re-build) the Southern economy. [Example: In the deal they made during the 1876 election, Southerners only made two major requests: (1) to end Reconstruction and remove the Northern military occupation of the South, and (2) to be given funds to build the Southern Pacific RR. The South obviously believed that having a railroad like the North was the single most important factor that would help them expand their economy. o The South mostly had agricultural products, but the railroads helped them transport their produce to wider markets. o In the early 1880s, the Southern railroads were completed all the way to Texas. [See map on text p. 442, the Texas & Pacific and the Southern Pacific railroads.] This meant that all of the former cotton-growing areas were connected. The South began to try to attract Northern investment money for building textile mills in the South. Why did that make economic sense? Because relevant raw materials cotton for the cloth, coal for the fuel to run the machines were located there. [See map on p. 440] They just had to convince the Northern business investors, that they d changed their ways. Southern politicians knew they had to avoid sectional or partisan politics (meaning don t talk about the CSA or states rights or black people s rights). A 1870 meeting of Southern business leaders in Charleston, SC passed a resolution saying, A new era is upon us. The policies attending the institutions of the past no longer control our actions. (by institutions they meant CSA) American History notes in timeline and presidential order 99

9 One of the most effective spokesmen for the New South was Henry W. Grady, managing editor of the Atlanta Constitution. Speaking to a group of Northern investors in New York in 1886, Grady said, We have sowed towns and cities in place of theories, and put business above politics. We have fallen in love with work. o By the 1880s, a few new textile mills (processing raw cotton and making cotton cloth) were established in the South in the foothills of the Appalachian region. [Background: Early on in the 1860s old Southern mills had depended on water power to run their machines. This limited the mills in terms of the size of their operations, their locations, and production levels. By the 1880s, however, the newly repaired railroads helped open up the nearby coalfields in West Virginia, Virginia, Kentucky, Alabama, and Tennessee. As coal mines grew in the region, they produced coal that allowed textile mill owners to use steam engines. This increased the size of the mills and their level of production. o As the South was aware, during this era, the Northern businessmen were worried about the labor movement that was making inroads in the Northern textile mills. The South was so desperate for the jobs that their workers accepted lower wages than they would have made in the North and they avoided any involvement with labor unions. This made the Northern investors more willing to build more textile mills in the South. o There were only a few new textile mills in the South in the 1880s, but by the 1920s, Southern mills had surpassed New England in yarn and cloth production. Once the Southern railroads were completed (in the 1880s), the South began to be able to export lumber, ore, minerals, and agricultural products like cotton and tobacco. Their economy was still largely agricultural, but it began to grow. Slowly. Politically, Southern whites regained control of their governments (when Reconstruction ended in 1877) and so they were able (1) to suppress the freed slaves with Jim Crow laws (basically keeping most blacks on the farms as sharecroppers and denying them the right to vote, up until the 1960s Civil Rights movement) and (2) to suppress the growth of the labor movement (with right to work laws, which still exist up to the present day). Politics in the South After the War Once Reconstruction ended, Southern white leaders dominated politics through a virtual single-party system. (Until 1928, all the Southern states voted as a single Democratic block.) Political leaders used a number of devices to keep blacks away from the polls, including intimidation, threats, and killings. These devices included poll taxes, literacy tests, and citizen s exams (tests about the Constitution). These devices excluded not only almost all black people, but also poor whites. These suppression methods allowed the wealthiest and most powerful whites to maintain a tight control over their state and regional politics (and helped them regain national power as well). During this period, Southern Democrats were focused on trying to be sure that as many policy items as possible (like voting districts being redrawn after each national census) were left up to the states rather than the federal government to decide. Their Senators and Representatives (because they were guaranteed re-election) slowly began to dominate the Congressional committees, eventually giving the South considerable leverage in Congress (in the days of the seniority leadership system). American History notes in timeline and presidential order 100