Chapter 18: Industrialization and the Rise of Big Business, 1870-1900
Summary
Inventors of the Age
Inventors in the late nineteenth century flooded the market with new technological advances. Encouraged by Great Britain’s Industrial Revolution, and eager for economic development in the wake of the Civil War, business investors sought the latest ideas upon which they could capitalize, both to transform the nation as well as to make a personal profit. These inventions were a key piece of the massive shift towards industrialization that followed. For both families and businesses, these inventions eventually represented a fundamental change in their way of life. Although the technology spread slowly, it did spread across the country. Whether it was a company that could now produce ten times more products with new factories, or a household that could communicate with distant relations, the old way of doing things was disappearing.
Communication technologies, electric power production, and steel production were perhaps the three most significant developments of the time. While the first two affected both personal lives and business development, the latter influenced business growth first and foremost, as the ability to produce large steel elements efficiently and cost-effectively led to permanently changes in the direction of industrial growth.
From Invention to Industrial Growth
As the three tycoons profiled in this section illustrate, the end of the nineteenth century was a period in history that offered tremendous financial rewards to those who had the right combination of skill, ambition, and luck. Whether self-made millionaires like Carnegie or Rockefeller, or born to wealth like Morgan, these men were the lynchpins that turned inventors’ ideas into industrial growth. Steel production, in particular, but also oil refining techniques and countless other inventions, changed how industries in the country could operate, allowing them to grow in scale and scope like never before.
It is also critical to note how these different men managed their businesses and ambition. Where Carnegie felt strongly that it was the job of the wealthy to give back in their lifetime to the greater community, his fellow tycoons did not necessarily agree. Although he contributed to many philanthropic efforts, Rockefeller’s financial success was built on the backs of ruined and bankrupt companies, and he came to be condemned by progressive reformers who questioned the impact on the working class as well as the dangers of consolidating too much power and wealth into one individual’s hands. Morgan sought wealth strictly through the investment in, and subsequent purchase of, others’ hard work. Along the way, the models of management they adopted—horizontal and vertical integration, trusts, holding companies, and investment brokerages—became commonplace in American businesses. Very quickly, large business enterprises fell under the control of fewer and fewer individuals and trusts. In sum, their ruthlessness, their ambition, their generosity, and their management made up the workings of America’s industrial age.
Building Industrial America on the Backs of Labor
After the Civil War, as more and more people crowded into urban areas and joined the ranks of wage earners, the landscape of American labor changed. For the first time, the majority of workers were employed by others in factories and offices in the cities. Factory workers, in particular, suffered from the inequity of their positions. Owners had no legal restrictions on exploiting employees with long hours in dehumanizing and poorly paid work. Women and children were hired for the lowest possible wages, but even men’s wages were barely enough upon which to live.
Poor working conditions, combined with few substantial options for relief, led workers to frustration and sporadic acts of protest and violence, acts that rarely, if ever, gained them any lasting, positive effects. Workers realized that change would require organization, and thus began early labor unions that sought to win rights for all workers through political advocacy and owner engagement. Groups like the National Labor Union and Knights of Labor both opened their membership to any and all wage earners, male or female, black or white, regardless of skill. Their approach was a departure from the craft unions of the very early nineteenth century, which were unique to their individual industries. While these organizations gained members for a time, they both ultimately failed when public reaction to violent labor strikes turned opinion against them. The American Federation of Labor, a loose affiliation of different unions, grew in the wake of these universal organizations, although negative publicity impeded their work as well. In all, the century ended with the vast majority of American laborers unrepresented by any collective or union, leaving them vulnerable to the power wielded by factory ownership.
A New American Consumer Culture
While tensions between owners and workers continued to grow, and wage earners struggled with the challenges of industrial work, the culture of American consumerism was changing. Greater choice, easier access, and improved goods at lower prices meant that even lower-income Americans, whether rural and shopping via mail order, or urban and shopping in large department stores, had more options. These increased options led to a rise in advertising, as businesses competed for customers. Furthermore, the opportunity to buy on credit meant that Americans could have their goods, even without ready cash. The result was a population that had a better standard of living than ever before, even as they went into debt or worked long factory hours to pay for it.