entrepreneur someone who starts a business and is good at making money
laissez-faire the theory that economies work best when governments do not interfere with them. (Laissez-faire is French for “leave alone.”)
westward migration. The frontier was closed. The new “land of opportunity” was located in the cities of the Northeast and around the Great Lakes, where factories provided thousands of new jobs.
Outside the cities, even farming was getting to be big business. In the Midwest, commercial farmers used new machinery and techniques to grow crops on a larger scale than ever before. “The wildest dream has become reality,” marveled one writer in 1887. “Nothing is too large for belief. Twenty and even thirty thousand acre farms, and a hundred bushels to the acre…The New West…is a veritable ‘Wonderland.’”
The Gilded Age As businesses got bigger, so did the fortunes of those who owned or invested in them. Between 1860 and 1892, the number of millionaires in the United States grew from 400 to more than 4,000. The newly rich filled their palace-like homes with gaudy decorations and European art and antiques. In 1873, the great American writer Mark Twain scornfully dubbed this time of showy wealth “the Gilded Age.”
Twain’s name stuck, but it did not describe the lives of most Americans. While wealthy capitalists lived like royalty, many workers lived in dire poverty. Those who were immigrants often faced prejudice and discrimination. During business downturns many workers lost their jobs. People were angry about the cozy relationships between tycoons and politicians which resulted in widespread corruption. As you will learn, these conditions eventually sparked protests and calls for reform.
This lavish dining room in the summer home of the powerful Vanderbilt family is typical of the showy wealth of the Gilded Age.
25.3 Improved Technology
By the 1860s, many of the factors necessary for the rapid industrialization of the United States were already in place. Machines had taken over much of the work once done by hand. Work had moved from homes to factories. Railroads had begun to connect customers and manufacturers with an efficient transportation system.
After the Civil War, new inventions and improved technology prompted the growth of new industries. Some of these innovations, or new ideas, helped businesses to grow and become more efficient. Others made daily life easier for many Americans.
The Age of Steel Before the Civil War, the nation’s railroads ran on iron rails that wore out quickly. Railroad owners knew that rails made of steel—a mixture of iron, carbon, and sometimes other metals—were stronger and would last longer. Steel, however, was difficult and costly to make.
In 1872, a Scottish immigrant named Andrew Carnegie went to England to study a less expensive method of making steel, invented by Henry Bessemer. Carnegie owned a company that made iron bridges for railroads. But he knew that his bridges would be better if made out of steel. Carnegie was so impressed by the Bessemer process that he brought it back to the United States. “The day of iron has passed,” he announced. “Steel is king!”
Carnegie was right. Within a decade, steel was replacing iron in rails, locomotives, and bridges. Other industries also took advantage of less expensive steel. Steel nails, needles, and knives became common household items.
Many steel companies competed fiercely to supply steel for such products. To remain the leader, Carnegie hired scientists to improve the quality of his company’s steel. He employed good managers to make his steel mills run efficiently. His recipe for success was, “Adopt every improvement, have the best machinery, and know the most.”
To keep costs low, Carnegie set out to control every step in the steel-making process. He purchased iron mines to supply his ore, coal fields to fire his furnaces, and railroads to ship his finished steel to customers.
To reduce his competition, Carnegie also bought up several rival steel companies. He then combined them all to form the giant Carnegie Steel Company. By 1900, Carnegie Steel produced a quarter of the nation’s steel.
Sparks fly in a steel-manufacturing plant as molten metal meets cold air in the Kelly-Bessemer process. The process cleaned the steel of impurities.
Electric Power In 1876, Thomas Edison opened an “invention factory” in New Jersey. With a team of workers, he set out to create a “minor” invention every ten days and a major one “every six months or so.”
Edison succeeded brilliantly. More than any other inventor, he helped turn electricity into an everyday source of light and power. His workshop turned out the first practical electric lightbulb, the phonograph, the motion picture projector, and many other inventions.
In 1882, Edison built the first electrical power station and distribution system in New York City. His team invented everything the system required, including generators, regulators, meters, switches, light sockets, fuse boxes, and underground electric cables. When he finally turned the generator on, electricity began to flow to homes, stores, and factories. The age of electricity had begun.
By 1900, some 25 million lightbulbs were glowing across the country. Many factories were replacing waterwheels and steam engines with electric motors. Streetcars powered by electricity carried workers and shoppers along city streets. New electric-powered devices, such as washing machines and vacuum cleaners, were making housework easier.
The Telephone The telephone was invented by a Scottish immigrant named Alexander Graham Bell. In 1876, as he was getting ready to test his “talking machine,” Bell spilled acid on himself. “Watson, come here, I want you,” he commanded his assistant. Watson, who was in another room, heard every word over a telephone.
Bell’s invention worked so well that, by 1915, Americans were communicating with one another over nine million telephones. All these telephones made American industry more efficient and competitive by allowing producers, sellers, and customers to communicate quickly and easily.
New Production Methods New methods of organizing work were also making business more efficient. Factory owners adopted Eli Whitney’s idea of assembling a wide variety of products from interchangeable parts. They also used the assembly line. In a shoe factory, for example, one worker operated a heel-cutting machine. Another operated a sole-cutting machine. Another made shoelaces. Still other workers assembled, labeled, and packaged the shoes.
These techniques of mass production enabled workers to produce more goods per day at less cost. As prices dropped, more Americans could afford to buy manufactured products. More customers meant more factories. By 1900, almost four times as many Americans worked in factories as had a generation earlier.
Electric lines form a crisscross canopy over this city street. Thomas Edison’s invention of the lightbulb in the 1880s spurred tremendous growth in the electric industry.
mass production the use of interchangeable parts and assembly lines to make large quantities of identical goods
The Triangle Factory
The Triangle Shirtwaist Factory was just one of many new businesses that took advantage of improved technology to mass-produce a quality product at a good price. The Triangle Factory specialized in a style of women’s blouse known as a shirtwaist. A shirtwaist had puffy sleeves, a neat collar, front buttons, and a snug waist. Women liked shirtwaists so much that by 1909, New York City had more than 500 factories that made only such blouses.
Sam Bernstein, the production manager at the Triangle Shirtwaist Factory, loved watching his workers use up-to-date tools and production methods. Each person at the cutting tables had a special steel knife. This knife could slice through many layers of fabric at a time, cutting dozens of sleeves, then fronts, then backs. That was the way to get things done in a modern factory!
From the next floor of the building, Bernstein could hear the whirring of 240 sewing machines. The machines were neatly laid out in 16 tightly packed rows. Flexible belts connected each machine to a rotating axle running down each row just above the floor. This axle, which was spun by an electric motor, delivered power to each machine. The machines clattered loudly as women sewed the pieces of shirtwaists together.
Piles of finished blouses were then lifted to the floor above by electric freight elevators. There, two rows of workers gave the shirtwaists a final pressing. Finally, shipping clerks packed the shirtwaists into boxes for shipment.
Usually, the factory almost ran itself. But if a problem occurred, the company’s switchboard operator could reach Bernstein by telephone on any of the three floors of the factory.
Sewing machines, shirtmakers, bobbins, and piles of cloth crowd this factory. Imagine working here in the heat of summer.
25.4 The Rise of Big Business
When Carnegie opened his first factory in 1865, most businesses were still owned by one person or a few partners. Because the owners’ funds were limited, businesses were small. Owners knew their employees and often treated them like family.
Growth of Corporations A partnership might work well for a garment, or clothing, factory. But big businesses, such as railroads, needed much more capital (money to start a business) than a few partners could provide. To raise larger sums, entrepreneurs set up corporations. A corporation is a business that is owned by many investors, or people who help pay its initial expenses.
A corporation raises funds by selling stock, or shares in a business. The investors who buy the stock are known as stockholders. In return for their investment, stockholders hope to receive dividends, or a share of the corporation’s profits.
The money invested by the stockholders is used to build the business. To make sure their money is used properly, stockholders elect a board of directors. The people on the board of directors oversee the running of the corporation.
After the Civil War, corporations attracted large amounts of money from investors. By the 1880s, thousands of corporations were doing business across the United States.
Rockefeller’s Oil Trust A giant in the oil business, John D. Rockefeller introduced another form of business organization known as the trust. A trust is a group of corporations run by a single board of directors.
Rockefeller invested in his first oil refinery in 1862, at the age of 23. At that time, petroleum, or oil found underground, was just becoming a valuable resource. Oil refineries purify petroleum into fuel oil. During the 19th century, oil was used to light homes, cook food, and run engines and generators.
Before long, many small refineries were competing fiercely in the oil business. The amount of oil produced by these firms rose and fell wildly, along with prices. Rockefeller saw this as wasteful and inefficient. To reduce competition, he did everything he could to drive his rivals out of business. Those companies he could not destroy, he bought.
Like Carnegie, Rockefeller took control of every step of his business. He bought oil fields along with railroads, pipelines, and ships to move his oil. He built his own warehouses and even made his own oil barrels for storing oil products. By 1880, Rockefeller controlled 95 percent of the nation’s oil refining.
To manage his many businesses, Rockefeller combined them into the Standard Oil Trust. The trust made the oil industry more efficient than ever before. But, as a monopoly, it had the power to control oil prices. This worried people who depended on oil in their homes and businesses.
Following Rockefeller’s example, entrepreneurs created trusts in other businesses such as railroads, meatpacking, sugar, whiskey, and tobacco.
J. P. Morgan, pictured above, was to banking and finance what Carnegie and Rockefeller were to steel and oil. In 1901, Morgan used his financial resources to buy Carnegie’s steel company. Morgan founded U.S. Steel, America’s first billion-dollar corporation.
corporation a business that is owned by many investors
trust a group of corporations that unite in order to reduce competition and control prices in a business or an industry
monopoly a company that controls all production and sales of a particular product or service
The business leaders who controlled these huge trusts became fabulously wealthy. Because most had made their fortunes by crushing their competitors, critics called them “robber barons.”
The Evils of Trusts The growth of trusts alarmed many Americans. They saw these monopolies as a threat to the free-enterprise system. This system depends on free competition among businesses to provide the public quality products at fair prices. A monopoly, people argued, has little reason to improve its products or to keep prices low because it has no competition.
People also worried about the influence of trusts on the political process. Wealthy entrepreneurs, they complained, were using their enormous wealth to buy elections and corrupt public officials. As the Chicago Tribune warned, “liberty and monopoly cannot live together.”
The Triangle Factory
The Triangle Shirtwaist Factory would never be the size of U.S. Steel or Standard Oil. However, it was the largest shirtwaist factory in the country. The two men who owned the factory, Max Blanck and Isaac Harris, were known in the garment industry as “the shirtwaist kings.”
The owners worked well together. While Max Blanck entertained buyers from stores to convince them to carry Triangle products, Isaac Harris ran the factory. Harris kept up with garment production, machinery maintenance, and work flow. He did not, however, try to keep up with his workforce. The factory had too many workers for him to get to know them all personally.
The shirtwaist business made Blanck and Harris very wealthy. They drove fancy cars and enjoyed comforts that their workers could only dream about. Both had worked hard in a competitive business and probably felt that they had earned their success.
The “people’s entrance” to the United States Senate is “closed” in this turn-of-the-century cartoon. According to the cartoonist, the Senate was controlled by business trusts, depicted here as giant, bloated moneybags.
25.5 The Growth of Cities
Industrialization brought with it urbanization, or city growth. Most of the nation’s new industries were located in cities. Immigrants and rural Americans flocked to these industrial centers looking for jobs. Chicago, for example, more than tripled its population between 1880 and 1900.
Urban Tenements As cities swelled with workers, demand for cheap housing exploded. To meet this demand, developers threw up cheap apartment buildings called tenements. One person described tenements as “great prison-like structures of brick, with narrow doors and windows, cramped passages and steep, rickety stairs.” By 1900, about two thirds of New Yorkers lived in such buildings.
A poor family might occupy just one or two rooms in a tenement, usually with no heat or water. Friends or family often took in newcomers who arrived in cities without money for rent. As a result, tenement neighborhoods were some of the most heavily populated areas on Earth.
Tenements were unclean and even dangerous places to live. Only a few rooms had windows to provide light and fresh air. The rest were dark and airless. In some tenements, the only source of water was a single faucet in a courtyard. Many lacked sewer services. In such conditions, diseases such as typhoid and cholera spread quickly, killing infants and young children. Fire was another constant worry.
Cities Expand Upward As cities expanded, urban land costs shot up. In New York, land that had sold for $80 in 1804 was selling for $8,000 by 1880. Such prices inspired builders to construct more building space on less land by going upward. Using lightweight steel beams to support walls and ceilings, builders constructed skyscrapers that rose ten or more stories into the air. Electric elevators whisked people and freight effortlessly from floor to floor.
Businesspeople rented space in city skyscrapers for their offices and factories. Factory owners preferred the top floors. Rents were cheaper higher up, and the natural light was better, saving owners money on electric lighting. The cost of insurance was low as well because steel buildings were thought to be fireproof. By the early 1900s, more than half of New York City’s workers labored above the seventh floor.
City Excitement For all their problems, cities were also exciting places to live. City stores were filled with products never seen on a farm. City dwellers enjoyed all sorts of entertainment, from operas and art museums to dance halls and sporting events. When writer Hamlin
A family in a New York City tenement in the early 1900s. Cramped, dirty, dark, and crowded, tenements spread disease and misery among their inhabitants.
urbanization the growth of cities
Garland came to Chicago with his brother, he found that, “Everything interested us…. Nothing was commonplace; nothing was ugly to us.”
The Triangle Factory
Blanck and Harris located their thriving shirtwaist business on the top three floors of the ten-story Asch Building in New York City. They chose this space partly because of the morning sunlight that streamed in through its large windows. Their landlord, Joseph Asch, boasted that when construction was completed in 1901, “the architects claimed my building was ahead of any other building of its kind which had previously been constructed.”
It may have been ahead of other buildings, but the Asch Building was not perfect. It had only two staircases, even though the city building code required three. The city had agreed to count the building’s fire escape as the third staircase. But the fire escape ended at the second floor. Nor was the Asch Building well designed for evacuation during an emergency. Its staircases were narrow. Instead of opening outward to let people escape easily, the building’s doors opened inward. Despite scares from several small fires in the building, Asch had not bothered to fix these problems.
The Triangle Factory’s workforce was made up mainly of young immigrant women, most of them Italians and Jews from Eastern Europe. Even if they had been aware of these safety problems, they would have hesitated to demand improvements for fear of being fired. Often their jobs provided their family’s only income.
Like most factory workers, Triangle employees could only afford housing in crowded slums. “I lived in a two-room tenement with my mother and two sisters and the bedroom had no windows,” recalled one employee. “There was nothing to look forward to.”
The ten-story Asch Building in New York City had only two staircases, even though the city required at least three for safety reasons.
United States Industry and Agriculture in 1900
1. What do these two maps show?
2. Which direction is agricultural development moving? How might weather present a problem for farmers settling in some parts of the West? Judging from the map, how do they solve their problems?
3. Where are iron ore and coal deposits? Where is iron and steel production located? Where are railroads located? What is the relationship between the location of rawmaterials, transportation, and industry?
25.6 Working Conditions
Working conditions in most industries were appalling. Gone were the days when business owners knew and cared about the people who worked for them. Men like Carnegie and Rockefeller knew little about their workers.
Working Families Gone too were the days when factory workers could expect decent pay. With so many people looking for jobs, business owners could pay low wages. Many wages were so low that men could not support their families. To get by, wives and children had to work as well, usually at even lower wages.
Most factory women earned about $1 to $3 per day. If business was slow, wages dropped. A boss might not pay a new worker anything until she had learned her job. Then he would charge her for the sewing machine she worked on. If a worker complained, she could easily be replaced with a new one, perhaps for less money.
Millions of young children worked in mines, mills, and factories. A newspaper reported that young boys hired by coal miners to separate lumps of coal from rocks, “go to work…at seven o’clock in the morning and work till it is too dark to see any longer. For this they get $1 to $3 a week.” They also got curved spines from bending over piles of coal all day.
Inside Factories Mills and factories were hot in summer and cold in winter. To keep costs low, owners crowded workers together.
Of all working dangers, fire claimed the most lives. In New York, tall buildings often lacked fire escapes. New York City’s fire chief wanted buildings to have fire escapes and sprinkler systems that could put out fires quickly. But factory owners objected to such added expenses.
New York City did require that factory doors “open outwardly” and “shall not be locked” so workers might escape quickly in case of fire. The law was not enforced, however. In 1910, some 94 percent of all factory doors in the city opened inward instead of outward.
A young girl stands between looms in a textile factory. At the turn of the century, millions of children worked long hours in mines, mills, and factories.
The Triangle Factory
Saturday was payday at the Triangle Shirtwaist Factory. Most workers earned only $9 per week, with the most experienced making up to $12. The younger workers, some only 13 years old, earned just $6 per week for sewing on buttons all day. The very youngest earned even less. Worker Pauline Newman recalled:
We were young, eight, nine, ten years old…. The hours were from 7:30 in the morning to 6:30 at night when it wasn’t busy. When the [busy] season was on we worked until 9 o’clock. No overtime pay, not even supper money…. My wages were $1.50 for a seven-day week. Of course, these pay rates were what workers earned before deductions. The company charged its employees for the thread and electricity they used, for the chairs they sat on, and even for using Triangle’s coat lockers.
Everybody was expected to work at least 59 hours a week. This included every Saturday, plus occasional Sundays. To keep workers from claiming overtime pay, the managers sometimes set the clock back. To keep workers from being “interrupted,” the heavy steel doors to the hall and stairs remained locked until closing time.
To make sure workers didn’t steal any shirtwaists, fabric, or lace, the factory built a narrow corridor leading to the elevators. Every day at quitting time, employees filed through this corridor one at a time so that a watchman could inspect each woman’s handbag.
Working at Triangle was unhealthy, uncomfortable, and unsafe. Managers seldom let workers leave the factory floor to use the toilet or drink from the dirty tap in the hallway. In the crowded sewing room, women could barely squeeze by each other’s machines. The wooden chairs behind the machines often lacked backs to support the sewers while they worked. When all the machines were in use, the noise could be deafening.
Fire hazards abounded. Even though the city prohibited smoking, the factory rarely enforced that rule. Workers stuffed leftover fabric into wooden bins where it sat for months just waiting for a misplaced spark to set it ablaze. The Asch Building’s only fire protection was a few hundred pails of water scattered throughout its ten floors.
An inspector points to a bolted door in the Triangle Shirtwaist Factory. The inspection came too late for the women who lost their lives in the fire. Tragically, the factory owners had locked the door to keep workers on the job.
25.7 Labor Unions
As a teenager, Rose Schneiderman found work in a cap factory. After three years, she later wrote, “it began to dawn on me that we girls needed an organization. We were helpless; no one girl dared stand up for anything alone.”
Workers like Rose Schneiderman had been forming unions since the 1830s. These early labor organizations were trade unions. They organized workers in the same trade, or job, to fight for better wages and working conditions. Sometimes these unions went out on strike, refusing to work until their employers agreed to meet their demands.
Knights of Labor In 1869, Uriah Stephens organized a new union known as the Knights of Labor. Stephens hoped to unite “men and women of every craft, creed, and color” into “one common brotherhood.” The Knights led several successful strikes against telegraph and railroad companies. With such victories, the union grew to over 700,000 members.
In 1886, nearly 200,000 workers went on strike nationwide to demand an eight-hour workday. During a rally at Haymarket Square in Chicago, someone threw a bomb at police. The police shot back, injuring many workers. Four workers were sentenced to death for the bombing, even though no evidence tied them to the bomb.
Fearing more violence, employers fired anyone associated with the Knights. Membership dropped quickly, and the organization faded away.
American Federation of Labor As the Knights declined, a group of local trade unions formed the American Federation of Labor (AFL). Led by Samuel Gompers, the AFL used collective bargaining to reach its goals. Instead of striking, union representatives tried to negotiate agreements with employers on such issues as wages.
Despite the AFL’s peaceful approach, many employers made their workers sign pledges not to join unions. They also fired union members and exchanged lists of such “troublemakers” with other employers.
Strikes often pitted the police against labor organizers. This image shows a policeman being shot on Haymarket Square in Chicago during a strike of the Knights of Labor in 1886. A short time later, a dynamite bomb killed or injured several dozen persons, including police.