Lecture 3--Immigrants, Industry, and the City
Background of Industrial Revolution:
War of 1812 helped to drive the rise of American Industry.
Transportation Revolution made IR possible by opening new markets, so that improvements in production would be profitable instead of destructive.
Textiles were the key product in the earlier years; as we'll see, steel, machine tools, and things made from steel help to drive the next phase.
Artificial Power was another key component; water and steam power (driven by wood and coal) enabled the Mechanization of Production.
Replaceable Parts were also key, allowing standardization of production and repair.
Factory production was a key component of industrialization; it required forcing people into new work habits and allowed the rationalization of production into low-skill steps.
Destruction of the Artisan Class began to take place as a result of industrialization. The old artisans could not compete with cheap mass-produced goods.
The Rise of Industry
Inventing Technology: The key to the Industrial Revolution was the development of technologies which improved human productivity and technologies which led to new products.
Thomas Edison: Thomas Edison was a major innovator of 19th century technologies, creating the phonograph and the moving picture, the electric light, methods for the transmission of direct current electricity, and many other things. Research and development facilities became important to US industry.
Chemistry: Chemistry was a major area for American innovation in technologies. Charles Goodyear invented the vulcanization process for rubber in 1839, John Wesley Hyatt created the first commercial synthetic plastic, celluloid, in 1863. Belgian immigrant to the US Leo Hendrik Baekeland invented Bakelite in 1909. The DuPont corporation was a leader in gunpowder technologies, then in the 20th century moved into research and development of cellulose chemistry, lacquers and other non-explosive products.
Information Technology: Typewriters and rotary printing presses, combined with telegraph and telephones to spread information.
Agriculture: In 1860, the US still had to import a majority of its manufactured goods and a majority of the population still worked in agriculture. Cotton, for example, was mostly shipped abroad instead of being processed in the US.
Rising Agriculture: 1860: US produced 1.5 billion in agriculture; by 1919, the US produced 7.5 billion dollars of farm produce.
Fuels: Coal, Oil, and Lumber rose massively in levels of production during this period, providing the fuel of industrial growth. Thomas Edison also developed electrical power transmission in the late nineteenth century.
Infrastructure: By 1910, there were 240,000 miles of railroads, up from about 10,000 before the Civil War. Telegraph lines crossed the country and telephones were rising (1.5 million by 1910)
Rising Factories: 140,000 in 1859 to 268,000 in 1914, many of them much larger than any in 1859.
Shifting Employment: 1870: Of 12.9 million workers, 50% were farmers, only 23% manufacturing and construction and 11% in commerce. By 1910: 36 million workers of whom 31% were agriculture and 29% were manufacturing and construction and 19% were in commerce.
Industry:
Steel was the dominant rising area of industry, along with extractive enterprises.
Bessemer Steel and Open Hearth: These methods made it much easier to make steel, leading to a rise in its use. The Bessemer steel process forced oxygen through molten iron; the impurities in the iron would oxidize and form new compounds which escaped as gases or solid slag. It took only 10-20 minutes per containerload and cut costs to nearly 1/6th the previous level. Open Hearth basically involved cooking the impurities out of the iron, using the waste gases to heat up bricks over which new fuel and air pass, heating them up. This increases efficiency because less energy has to be spent raising the new fuel and air to the heat already achieved by previous fuel expenditure. It had a higher volume than Bessemer but was not as fast.
Applications: Steel was used in railroads, bridges, buildings, trains, and boats.
Rise: 13,000 tons in 1860. By 1910, 28 million tons.
Meatpacking and other Processed Foods: The American Civil War cemented Chicago's position as the main meat-processing capital of the United States, especially pork. The Union Stockyards, created in 1865, were vast. “Fifteen miles of track delivered livestock directly to the stockyards from the city's main rail lines. Five hundred thousand gallons of fresh water were pumped daily from the Chicago River into the yards, and waste drained into a fork of the river that would be dubbed "Bubbly Creek" due to the contamination. Drovers herded cattle, hogs, and sheep down two wide thoroughfares from the railroad cars to the pens. By 1900, the stockyard grew to 475 acres, contained 50 miles of road, and had 130 miles of track along its perimeter.” (“The Birth of the Chicago Union Stockyards,” in http://www.chicagohs.org/history/stockyard/stock1.html). “Pork packers such as Philip Armour built large plants west of the stockyards, developed ice-cooled rooms so they could pack year round, and introduced steam hoists to elevate carcasses and an overhead assembly line to move them. Gustavus Swift, who came to Chicago to ship cattle, developed a way to send fresh-chilled beef in ice-cooled railroad cars all the way to the East Coast. By 1900 this dressed beef trade was as important as pork packing, and mechanical refrigeration increased the efficiency of both pork and beef operations. Moreover, Chicago packers were preserving meat in tin cans, manufacturing an inexpensive butter substitute called oleomargarine, and, with the help of chemists, turning previously discarded parts of the animals into glue, fertilizer, glycerin, ammonia, and gelatin.” (“Meatpacking” in http://www.encyclopedia.chicagohistory.org/pages/804.html)
In addition, Chicago became a major center for the grain trade. After 1850, the Chicago Board of Trade created standard grades of grain; farmers now deposited their grain not in bags, but mixed in with other farmer's produce of the same grade and got a receipt they could use to withdraw an equal amount of grain later of the grades they deposited. They could now sell this withdrawal right to another person and thus sell their grain. This made storage and sale easier in the 'grain elevators' of Chicago. During the Civil War, the need to plan ahead for food needs of the military led to the creation of 'futures', contracts to deliver X amount of commodity for Y amount of money at a future fixed date. Speculators bought and sold them, hoping fluctuations in commodity prices would enable them to turn a profit on the contract.
The first breakfast cereal, Granula, was invented in 1863; it had to be soaked in water or milk overnight to soften it for consumption. In 1877, the Quaker Oats man was trademarked by the Quaker Mill Company; by 1887, they introduced the cereal box, allowing cereals to be bought in smaller than bulk quantities. In 1895, C. W. Post invented Postum, a coffee substitute made out of cereal. In 1897, he invented Grape Nuts and began the modern breakfast cereal. W. K. Kellogg invented Toasted Corn Flakes in 1906 and breakfast cereals really began to take off; his brother John Harvey Kellogg developed 'granola', a variant of granula that didn't require overnight soaking.
The Corporation
Advantages of the Corporation:
1) Able to outlive its founders. This eases long term planning
2) Its shareholders and officials are not liable for its debts, which allows for greater risk-taking necessary to innovation.
3) As a fictive legal person, it can own things itself.
Vertical Integration: Taking control of the entire chain of companies which extract, process, and sell some material, such as controlling mines, railroads, steel plants, and shipyards. The meatpacking industry, which came to incompass raising cattle, processing them at the railhead, then shipping the meat in refrigerated cars, was an example of this.
Horizontal Integration: Taking control of everyone in one field, such as steel production. A common response in this era. The Standard Oil Company (now Exxon and 33 other companies) embodied this, controlling 90% of American oil refining by 1890.
Financing the Industrial Revolution:
Greenbacks: Paper money had inflationary effects; debtors favored it, creditors did not. The government let banks issue them who made deposits of bonds with the Federal Comptroller, to the value of those bonds. These were the 'national' banks.
Flaws: This system failed to provide central financial direction and currency did not grow as fast as was needed. Furthermore, creditors viewed it as unreliable.
Silver: Debtors also favored silver as it could more easily be expanded in volume of coinage and was less deflationary than a gold standard. The shift to the Gold Standard in 1879 tended to restrain inflation and expansion of the currency supply.
Bland-Allison Silver Purchase Act (1870) and Sherman Silver Purchase Act (1890) both tried to expand the money supply by requiring purchase of silver and its issuance as coins.
Rise of Wall Street: Investment bankers drove the rise of commodity exchanges and the Wall Street stock exchange. Their operations resembled a gambling casino; many stock issues were inadequately backed. The call loan market allowed for daily lending, which was rather risky, as it could be recalled at any time. Furthermore, the yearly harvest pulled money out of the stock market each fall.
Bonds: Bonds became a popular investment for more conservative bankers.
Mergers: Companies began to buy each other or take interests in each other's stock; consolidation of business was a common ploy in this period, leading to trusts and monopolies. In 1898-1905, 3,000 business mergers ensued.
Pool: Written contracts backed gentleman's agreements.
Trusts: Companies consolidated by creating a group of trustees to control the stock of all, paying dividends to the original holders.
Holding companies created in order to control other companies, usually to consolidate industries.
Changing Forms of Selling Products:
Retail: Retailers shifted from importing goods to buying American goods from wholesalers. Also, fixed prices came to replace haggling.
General Store: Serviced small communities by providing a wide range of manufactured goods, but nothing too esoteric.
The Department Store: Department stores served large towns, selling a huge range of goods and using their large scale buying to cut better deals with wholesalers so they could sell cheaper goods. Department stores could also offer more services, such as delivery of goods, warranties, bridal registries, internal restaurants, and the like. Department stores were especially aimed at middle-class women, who began developing the art of shopping as a way to get out of the house.
The first American department store was the Marble Palace, built in New York City in 1846. He offered European goods at fixed prices. In 1862, he built a bigger store which occupied a full city block, with 8 floors and 19 departments, from dress goods to toys and sporting equipment. Macy's was founded in 1858 and still exists today. Lord and Taylor's was founded around the same time.
Chain Stores: Chains of businesses began to arise, first in the area of grocery retail. Like the Department store, they used their volume of purchase as a tool to drive down prices.
Mail-Order House: Rural communities could enjoy the new goods by ordering them by mail-order from the Mail order houses--Sears and Roebuck, Montgomery Ward's. “1872 - Aaron Montgomery Ward mailed the first general merchandise catalog, a single sheet of 50 items that would grow in 30 years to 500 pages, a successful method of sales soon duplicated by Richard Sears and A. C. Roebuck with a catalog in 1893 that became America's "Wish Book." ” (“Evolution of the Department Store” in http://history.sandiego.edu/gen/soc/shoppingcenter4.html )
The Creation of the Modern Labor Force:
Transition: In 1870, most Americans were self-employed. In 1900, 19 out of 27 million American workers worked for wages.
Undercut Artisans: The old artisan class collapsed in the face of the rising factory system.
Multi-Job Families: Most families, both parents worked and likely some of the kids too.
Wage Problems: Steel workers got $12.50 a week; government estimated $15 a week was needed to support a 4 person family.
Unsafe Conditions: In 1881, 30,000 railroad workers died on the job; in Pittsburgh, one US Steel plant killed 25% of its employees between 1907 and 1910.
Mobility: Having few possessions and no home of their own, many American workers had a high level of geographic mobility.
Work Insecurity: Few Americans who worked for wages had year-round employment; all industries had slack and high seasons and laid people off in the slack seasons. Furthermore, the absence of unions meant low job security. Finally, recurrent depressions: 1873-9, 1884-6, and 1893-7 forced businesses to tighten belts.
Long Hours: Typically 60 hour weeks. (10 hours a day, 6 days a week)
Female and Child Labor:
1880: Women made up 2.6 million of 17.4 million workers. Women tended to work irregularly, but most women worked at some point, especially Working Class Women. Most workers were single.
1900: 85% of working women were unmarried and 25 or younger.
No Family Wage: Most men were not paid enough to support a whole family until the 20th century, after WWII.
Inadequte Female Wages: Women were paid much less than men for doing the same work. Employers claimed they were only working for personal spending cash, not to support a family. (At the same time, the employers wouldn't pay men enough to support a family either, though better than women.) They might earn only half or even a quarter what men did. In 1900, a typical woman in a factory made 6$ a week where a man made $12
Prejudices: Women were excluded from the learned professions except in very tiny numbers.
Teachers: Post-Civil-War, women came to dominate teaching. 1860: 25%. 1910: 80%. Men continued to hold the administrative 'boss' positions.
Nurses: Nursing also became increasingly the field of women, starting in the Civil War. Nursing schools were now created.
Social Work: Due to their role as 'moral examplars', women had come into this area through the reform movements starting in the 1830s, and increasingly in the latter half of the century. They were tied to the new charities of the period.
Social Housekeeping: Many women combined an interest in social science, social work and social reform to back movements to improve the moral character of society by enforcing uniform rules of sexuality and behavior on both genders.