The Industrial Revolution also triggered a massive human wave in the second half of the nineteenth century. An unimaginable 168 million acres of land were cleared—comparable to clearing the whole state of Texas—to make way for the new Americans. Almost one in five of Great Britain’s 27-million-person population would immigrate to America between 1851 and 1880. That sounds an awful lot like the one in five global migrants who have recently ended up living in the United States. Germans and Scandinavians joined the British and Irish immigrants who would take up one-third of the manufacturing jobs.6
In 1800, two-thirds of Americans were employed in agriculture. That fell sharply to 41 percent by 1900 as people flocked to the cities to work in the new factories. New York City grew from 79,000 in 1800 to 2.5 million in 1890, and Chicago, a “prairie town” of 30,000 in 1850, was the sixth-largest city in the world and home to almost 1 million people well before the turn of the century.7
The World’s Fairs of 1893 in Chicago and 1904 in St. Louis showcased America’s self-confidence as the leader of this new industrial era and America as a beacon to the world. The fairs promoted American business, and twenty million people came to St. Louis to see the newest products and technologies on display. Also on display were the leading industrialists, who would play an increasingly central role in this period.8
Standing prominently atop this new order was an emerging class of industrialists whom Morris aptly describes as “a new, steam-powered class of iron chieftains.” The steam engine “had unleashed a storm of moneymaking” by industrialists who grew their empires and profits, while the “workers who made the money saw precious little of it.” Nonetheless, the new industrialists were very conscious of their virtues and contributions to the nation. They fought bitterly to defend their enormous wealth and freedom to be entrepreneurs.9
Cities were at the heart of this American revolution. One observer wrote eloquently, “all the Central States, all the Great Northwest roared with traffic and industry; sawmills screamed; factories, their smoke blacking the sky, clashed and flamed; wheels turned, pistons leaped in their cylinders; cog gripped cog; beltings clasped the drums of mammoth wheels and converters of forges belched into the clouded air their tempest breath of molten steel. It was Empire.”10
That churning simultaneously grew the dark side of cities, the homes of the country’s diverse immigrant population. Of the 1.7 million living in Chicago in 1900, more than three-quarters were first-generation immigrants. For most, the new life in America was better than for their families in the impoverished rural areas of southern and eastern Europe and Ireland, though 40 percent did return to their native countries. America would win out. Over a half century, the new immigrants would establish stable communities.11
The industrialists got their labor force for the mines, railways, and factories in the cities by recruiting families from the most impoverished and rural parts of Europe. The recruitment as families would prove disruptive, too. While young single girls worked in the factories for very low wages in unsafe conditions, all the females were expected to marry and take over the very hard work at home. The husband was genuinely the male breadwinner with all the respect and legal status; his role was to earn enough to keep his family above subsistence. But the wives were still expected to earn more for the home by sewing, taking in boarders, or selling rags in addition to their labor-intensive chores. Unions, progressives, philanthropists, and enlightened employers worked for a higher family wage and for laws requiring kids to be in school and limiting female employment.
The working and living conditions in the heart of America’s Industrial Revolution, however, were a scandal in the making. The factory buildings and housing were built shoddily as local officials ignored building codes. The surging populations jammed into tenements where people lived in squalor and were at risk from epidemics of contagious diseases. That horror did galvanize local groups, charities, and the churches to work for change. The progressive Republican Jane Addams launched the national settlement house movement, and she won the support of wealthy donors, intellectuals, philanthropists, and a host of female volunteers. She opened the Hull House settlement house in Chicago’s Little Italy, though it also served the Germans and Jews, Greeks, Irish, and French Canadian immigrants in their neighborhoods.
Hull House battled for child labor laws and to protect immigrant women who were being pushed into sexual slavery. They worked to establish building codes and to expand health inspections, sanitation, and rubbish removal—and to get those, they had to challenge the local party bosses, whose corrupt relationship with landlords and factory owners allowed them to escape inspection.
The settlement house movement was on the front line of the push for reform in the cities and became a platform for progressives fighting for working people. At age twenty-five, Frances Perkins volunteered at Hull House and worked closely with Jane Addams, and would later become FDR’s secretary of labor and America’s first female cabinet secretary. This was where she met the writer Upton Sinclair, the famous muckraker who worked undercover in the factories and wrote the best-selling novel The Jungle. It depicted the struggles of a Lithuanian immigrant family that worked in a meatpacking factory with brazenly unsanitary and desperate working conditions. The book caused a sensation and led to the passage of the Pure Food and Drug Act in 1906, one of the first major progressive reforms at the national level.12
The workers organized and fought to establish unions to affect their working conditions and terms of employment. They pushed back against pay cuts, demanded safer working conditions, and wanted a say in the speed of the production process. The industrialists opposed any recognition of labor unions, wanted the freedom to speed up the production process, and above all, to institute a twelve-hour workday. The longer hours would allow them to employ only two shifts of workers, which business management professionals told them would be maximally efficient and profitable in a very competitive world—just as the workers, the unions, and their allies were demanding an eight-hour day as a new norm.13
With workers and owners on a collision course in these closing decades of the nineteenth century, the country witnessed pitched battles between striking workers and armed police, militias, state National Guard units, and sometimes the U.S. Army. Authorities resorted to widespread violence in Chicago, Baltimore, Pittsburgh, and St. Louis to put down the Great Railroad Strike of 1877. That hardly ended the industrial unrest. The coal strikes in 1884 were joined by 132,000 United Mine Workers in Pennsylvania, Ohio, Iowa, West Virginia, Tennessee, Kentucky, Missouri, Alabama, and Colorado, and 25,000 miners joined the strike in Illinois. And in 1886, Doris Kearns Goodwin estimates, 600,000 workers were out on strike.14
The industrialists atop this new economic order created huge trusts—gigantic corporate monopolies—that allowed them to dominate America’s industrial economy. They succeeded by dramatically eliminating competitors and achieving enough market power to push up prices, or in the view of the industrialists, “stabilize prices.” The trust was wholly a product of a special deal between the industrialists and government. To start, the federal government maintained high tariffs on a broad range of specific products and commodities to protect America’s industry from foreign competition. It blessed or turned a blind eye to market practices that allowed the big companies to drive competitors out of business and establish preferential rates for favored companies while setting higher rates for farmers. Finally, at the federal, state, and local levels, government used violence to suppress worker demands for higher wages.
The industrialists kept these corrupt deals hidden from public scrutiny, the investigative journalists would write, “by manipulating local political machines and wooing legislators and journalists.” The companies made big payoffs, though small payoffs, such as passes for a legislator and his friends and family to travel free on the railroads, were also effective.15
Andrew Carnegie gave America its first billion-dollar corporation, achieved with American ingenuity at manipul
ation, taking advantage of favorable government policies and new technology, and defeating all competition. He began his career in finance, using insider information to make investments. He became a broker for the shares of overcapitalized companies, sold stocks at inflated prices, and took a cut off the top for himself, which he used to start his iron business. Faced with overproduction and instability, Carnegie used his market power to cut special deals with the Pennsylvania Railroad and bridge companies at the expense of his competitors. This domestic steel industry became viable because the federal government imposed a high tariff on imported steel in 1870. With that advantage, Carnegie visited the Bessemer steel plant in Sheffield, England, and introduced their advanced technology in his new steel plant near Pittsburgh. And when the railroads shifted from iron to steel, Carnegie realized a yet bigger fortune. He was not just the right person in the right place at the right time.16
John D. Rockefeller would surpass all the other “robber barons,” achieving a net worth of $1 billion by 1913—2 percent of the country’s GNP at the time. Very talented and daring, he viewed himself as a man of rectitude, though this self-image masked the breathtakingly dishonest and brutal market practices that allowed him to crush his rivals, an exposé by McClure’s Magazine concluded. Ida Tarbell described the Standard Oil Trust as “the most perfectly developed trust in existence; that is, it satisfies most nearly the trust ideal of entire control of the commodity in which it deals.”17
Rockefeller started his oil refining business in Cleveland, expanding his control of the market and eventually establishing the Standard Oil Company. In 1871, he joined what Tarbell called “a remarkable scheme” to force foreigners to purchase refined U.S. oil instead of crude, which could be refined more cheaply abroad. He established a secret partnership with a large portion of the oil refiners and shippers. That allowed them the power to negotiate rebates with the railroads for themselves and impose price penalties on their competition. He then forced twenty-one of twenty-six refineries in Cleveland to sell out to him. With such market dominance, he cut output to keep prices up. At the same time, the railroads conspired to stop exporting American crude oil, forcing Europe to buy America’s refined oil products.18
Rockefeller’s business model and fortune were made possible by his “power in state and federal government, in the press, in the college, [and] in the pulpit,” Tarbell writes. He was tireless in fighting against any “legislation directed against combinations.”19
John Pierpont Morgan emerged as the most respected Wall Street banker, known for his “sobriety and responsibility.” As Jackson Lears writes, he was American capitalism’s assured leader in time of crisis. He looked on the booming railway industry as a kind of Wild West, and he worked to get rid of the weak players. He backed the “natural monopoly” in each region where the state governments were happy to play a helpful role by granting state charters and rights-of-way. In a process that became known as “Morganization,” he shifted investments in the railroad from bonds to equities. That consolidated the financing of these industries in the Wall Street investment banks.20
In the late 1880s, J. Pierpont Morgan joined two other railroad owners and merged their holdings into a trust—the Northern Securities Company—putting control of half the rail mileage in the United States under his control. Journalist Ray Stannard Baker wrote in McClure’s at the time that “You can now ride from England to China on regular lines of steamships and railroads without once passing from the protecting hollow of Mr. Morgan’s hand.” It was the largest railroad corporation in the world.21
An America powerfully shaped by its frontier and new immigrant experience was transformed by an Industrial Revolution that left it as divided as old Europe. It has never witnessed such an extreme inequality again—until today. During America’s first century as a country, the top 1 percent owned between 25 and 32 percent of the wealth. However, the Industrial Revolution allowed the top 1 percent to increase its share remarkably to 45 percent between 1870 and 1910.22
In reality, this was a difficult period for many businesses, with endemic low prices, frequent economic crises, and rampant business failures. Many of the trusts, such as the “rope trust,” went bankrupt in the economic crisis of 1893, and the economy fell into depression. Andrew Carnegie, John D. Rockefeller, and J. P. Morgan argued that the trusts’ efforts to cut costs and wages and eliminate competition, with government help, were prerequisites to America’s economic hegemony. At one point it was an argument accepted by Theodore Roosevelt.
The workers and farmers were harder to convince of the value of the trusts, and they fought against them and the high tariffs. At a time when the great majority of Americans were living near subsistence, the government embraced policies that produced higher rail fares and production costs for farmers and higher prices for consumers. That sparked a rising popular resistance that helped propel the populist William Jennings Bryan to the Democratic nomination for president.
For America’s industrialists, the election of 1896 would be a titanic battle that would decide the fate of the new industrial order and the role of the federal government.
The industrial magnates got behind William McKinley, whose first speech in the U.S. Congress was on the need to maintain high tariffs. That was the animating issue for them, and McKinley was an unapologetic candidate of industry and finance and champion of an economic nationalism that benefited the workingman, too.
His campaign manager was wealthy businessman Mark Hanna, who rallied America’s industrial magnates to bankroll an unprecedented campaign to win the presidency. The railroad companies provided almost a million people with special discounted fares to hear McKinley speak on his porch in Canton, Ohio, and the Republicans spent $3.5 million on the campaign, nearly all of that raised in New York City. Paul Krugman is right to remind us that what the Republicans spent on that election is equivalent as a share of the GDP to $3 billion today, more than in any election in U.S. history. The billionaire donors to the post–Citizens United Republican campaigns look like pikers by comparison.23
It was a good investment. After McKinley’s victory in 1896, money poured into the New York Stock Exchange, and the number of corporate mergers surged. Wall Street became the primary source of investment capital, and the number of investors doubled. Wall Street financed the “triumph of the trusts” and the concentrated control over industries after 1900 that gave us U.S. Steel, International Harvester, American Tobacco, Standard Oil, and Carnation Milk.24
The industrialists were not shy about pushing further concentration after defeating the populist forces in 1896, though popular opposition was hardly suppressed and reformers were making themselves heard in both parties. It would take two decades of growing progressive momentum in civil society and in the cities and states, but eventually conservatives would be put on the defensive. The public demanded that leaders address the excesses of the industrial order, and progressives would ultimately win control of Congress and the presidency. “A new political movement rose from the flames,” Michael Wolraich wrote, “and triggered one of the greatest explosions of change in U.S. history: income taxes, labor law, women’s suffrage, campaign finance reform, environmentalism, industrial regulation, the Federal Reserve and other reforms that define modern America.” These reforms made it possible to restrain the industrialists and create an industrializing America whose excesses are checked and bounty more broadly shared.25
The impetus for reform came in civil society, and the “socially responsible reporter-reformer” played a big part, as described in Doris Kearns Goodwin’s account of Taft and Roosevelt. The pioneers of investigative journalism—Lincoln Steffens, Ray Stannard Baker, William Allen White, and Ida M. Tarbell—were all recruited to McClure’s Magazine. It was priced to sell, and circulation hit a quarter million. The magazine, Goodwin writes, “would play a signal role in rousing the country to the need for political and economic reform, animating the Progressive movement.” In an exchange of letters with President Ted
dy Roosevelt in 1908, Steffens explains his zeal for exposing the corrupted link between business and government: “Trace every case of corruption you know to its source, and you will see, I believe, that somebody was trying to get out of Government some special right; to keep a saloon open after hours; a protective tariff; a ship subsidy; a public-service franchise.” Those are the “principal evils” that the muckraking journalists worked to expose.26
Many journalists would form close relationships with and advise the most prominent progressive leaders. As a police reporter, Lincoln Steffens accompanied New York City’s new reform police commissioner, Teddy Roosevelt, on his raids, and they talked often during Roosevelt’s time as commissioner and later at the White House. Steffens also formed a personal relationship with governor and then senator Robert La Follette of Wisconsin and admired his impatience and bolder approach to winning reforms. Ray Stannard Baker’s writings were important to Teddy Roosevelt, and later Baker worked hard to see President Woodrow Wilson succeed.27
Herbert Croly founded The New Republic as a political weekly in 1914 to build on the ferment for reform generated by the temperance, suffrage, anti-trust, and trade union movements and by the huge progressive electoral battles. Croly’s new progressive insight was that Thomas Jefferson’s individualism could only be realized with the help of a strong central state. He spent many hours with Teddy Roosevelt after his third-party race and launched the political weekly to “serve as a transmission belt of ideas, carrying the thoughts of intellectuals to a much broader and, therefore, much more meaningful audience,” Franklin Foer wrote for the magazine’s uncertain hundred-year anniversary. A young Walter Lippmann joined the magazine in 1914, and he would advise President Woodrow Wilson and help with his work to fashion a liberal postwar order.28
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