Brandon Duong
Mr. Ready
AP US History 11
5 March 2014
Between 1870 and 1900, corporations grew in number, size, and influence and, as a result, began to dominate other reliant and connected industries in the economy, reduced the need for skilled workers as they (the corporations) started to mechanize the workplace, and manipulated politicians so as to suit their (the corporations) own needs. Furthermore, all of these impacts culminated in these responses by Americans: the attempt to legitimize and defend the new corporate economy and the corporations' rapid accumulation of wealth by corporate leaders, the formation of unions by workers so as to protect fellow workers, and the creation of new political parties by the American people in order to combat the rapidly expanding influence of the monopolists. The domination of other industries by corporations--meaning that some industries were so crucial to the everyday functions of the American economy that if it faltered, all of the other industries that were dependent on it would also falter--was a result of the utilization by corporations of a couple of types of integration: vertical and horizontal. Meanwhile, as these events were occurring, the United States underwent massive changes in it culture and its politics; the American culture diversified so as to suit the needs of different groups of the American population (like the urban and rural populations, the rich and the poor, men and women, blacks and whites, and so on), and the policies of the governments that represented these groups evolved so as to meet some of these needs. Furthermore, American culture also changed as mass consumption (of both food and goods) and the consumer economy emerged; the middle-class (who usually worked as white-collar workers) were most affected by this change as they were now able to purchase and afford these new goods (like refrigerators, ready-made clothing, and so forth) as their incomes experienced a dramatic increase,--between 1890 and 1910, these white-collar workers experienced a one-third increase in their wages--while, on the other hand, factory workers only experienced a marginal wage increase and thus, were less likely to partake in the consumer economy as urgently or as actively. In fact, this new consumer economy, the rise of department stores, mail-order houses, and chain stores,--like the Great Atlantic and Pacific Tea Co. and the Five and Ten Cent Stores in New York which was established in the late 1870s and early 1880s under F.W. Woolworth--and the emergence of women as consumers were all exemplified in Theodore Dreiser's 1900 novel, Sister Carrie (I).
Resulting from their expansion in number, size, and influence, corporations began to dominate interrelated industries in the laissez-faire economy; corporations did so through both vertical integration--meaning the incorporation of all the different businesses on which a company is reliant upon for it primary function--and horizontal integration--meaning the combination of all the industries engaged in the same enterprise into a single corporation that contributed to the monopolization of certain industries (like steel). This vertical integration was best exemplified by John D. Rockefeller's Standard Oil which had control of the oil industry from its origin (oil wells) to its production (refineries) and everything in between including its transportation (railroads). In fact, Rockefeller's Standard Oil was also an example of horizontal integration as it was able to undercut its competitors by selling their products at less than the production cost so as to eliminate--and eventually merge and incorporate with--his competitors in the oil industry like Mr. George Rice's Ohio Oil Works (H). Furthermore, as the railroad industry--which was rapidly being controlled by Cornelius Vanderbilt, who owned a large portion of railroads (and therefore, was an example of horizontal integration)--expanded, it began to dominate other industries like the agricultural and oil industries; the railroad industry did so because--as it was the only truly effective and efficient mode of transportation west to the East Coast--it could artificially raise rates, thus forcing farmers and oil producers to either accept its exorbitant fees--and face going deeper into debt as it (the agricultural industry) was one of the hardest hit in the Depression of 1873 and the Panic of 1893--or pay even higher prices to transport their goods (crops or oil) short distances by railroad--for example to Chicago--and then transfer their goods onto boats (and thus through the shipping industry which was directly competing with the railroad industry) on the Mississippi or the Great Lakes in order for their goods to arrive in the South or on the East Coast, respectively. Therefore, these series of events resulted in a positive feedback loop--meaning that the cycle of debt, payments, and in effect, further debt would continue--for both the agricultural and oil industries as either method required the producers to pay large amount of sums so as to transport their goods. Moreover, as a result of the discrimination between rates on long and short distances and the railroad industry's expensive prices, farmers (especially), oil producers, and miners were forced to compensate for their loss of revenue by growing more crops and mining more oil and coal, thereby increasing the supply and contributing to the rapid decline in farm prices between 1870 and 1899 which was demonstrated in the Historical Statistics of the United States graph (A).
Responding to critics of their domination of the economy, the monopolistic corporations and several notable corporate leaders began to rationalize their rapid accumulation of wealth. The most common rationales of these corporations and corporate leaders was the ideology of individualism--meaning the belief that the industrial economy was actually expanding opportunities for individual advancement for the American people--and the myth of the self-made man--which claimed that corporate leaders had risen up the economic ladder due to their own individual determination and ingenuity and as such, had earned their wealth. However, this belief was accurately described as a myth because only a select few (like Andrew Carnegie, John D. Rockefeller, and E.H. Harriman) successfully moved up from their low and humble beginnings to positions of great wealth and prestige. In fact, contrary to this belief, most corporate leaders attained their great wealth and prestige through their own ruthlessness and arrogance and from rampant corruption in the government; for example, Cornelius Vanderbilt openly revealed that he believed that corporate leaders (including himself) were above the law due to their substantial wealth and influence and power over the government. Furthermore, this latter group of corporate leaders, through their financial contributions to political parties and politicians, gained tremendous government assistance (in the form of favorable laws and regulations or exemptions) and support, both of which continued to contribute to the increasing influence of corporations. Another rationale that emerged in favor of corporate leaders was Social Darwinism which manipulated Charles Darwin's belief in how only the fittest of organisms survived in the natural process of evolution so that it also applied to human society; this new Social Darwinist belief argued that only the fittest individuals (or humans) would survive and flourish in the marketplace, while those who were unfit (or poor) deserved to be in their situation due to their own inadequate or worthless traits; in fact, this was one of the most harsh rationale in favor of corporate leaders. In addition to these prior beliefs, Andrew Carnegie--the steel owner who sold his business (Carnegie Steel) to J.P. Morgan (who later merged the company with other smaller companies to form U.S. Steel) in 1901 for $450 million--developed a new rationale: the gospel of wealth which was espoused in Carnegie's own 1901 book, The Gospel of Wealth; in this, Carnegie argued that the wealthy should consider all revenues in excess of their own needs as trust funds--meaning that this excess would be used for the good and betterment of the community as a whole (E). This betterment of the community usually took the form of large donations that would be used to help build schools, libraries, and other institutions that would help the poor to help themselves.
As corporations expanded in size and complexity, the need for skilled workers became outdated and thus declined; this decline was a result of both the mechanization of factories and the emergence of the principles of scientific management. Because new machines and techniques (like the Bessemer and open-hearth processes in the steel industry) were introduced to the factory and were becoming more and more complicated and intricate, the need for skilled workers--who could work on a variety of tasks and who carried a variety of skill sets--declined partly because these machines needed the sole focus of workers or otherwise the machine could malfunction or the task would be incomplete as these machines still needed some human involvement and attention and partly because the subdivision of tasks allowed for an overall decrease in wages for most workers (as they could now be easily replaced) and an increase in production (and therefore increased profits for employers) which motivated employers to maintain these practices. This was evident in Henry Ford's automobile assembly line (introduced in 1941)--which allowed plants to cut the production time of automobiles by half and Ford to raise the wages and reduce the hours of the unskilled workers while cutting the price of his Model T by over fifty percent and yet still make a profit--and the photo illustrating a number of female typists in a sweat house--meaning a factory where there were unsafe and unregulated working conditions--working orderly and systematically so as to increase efficiency and production (J). As a result of these developments, the principles scientific management--which were developed by Frederick Winslow Taylor and became known as Taylorism--emerged and demonstrated the need to reorganize the production process by subdividing tasks in order to speed up production (so as to keep up with rising demand) and reduce the dependency of employers on any particular employee, resulting in the decline in independence and job security for workers (especially those working in factories); in fact, these factors were illuminated and addressed in David A. Wells' 1889 book Recent Economic Changes and Their Effect on the Production and Distribution of Wealth and the Well-Being of Society (C) which similarly described the uniform, military-like atmosphere in the factory and the demolition of the sense of individualism and job security of the employees by the employers.
Reacting to this loss of independence and job security as a result of both the mechanization of labor and the emergence of the principles of scientific management, workers throughout the country began to form unions so as to protect their health and regain some sense of control. Early efforts to form unions included the National Labor Union, which was established in 1866 under William H. Sylvis, and the Molly Maguires, which was established in the 1870s and who were a part of the Ancient Order of Hibernians. However, the disorganization and the widespread effects of the Panic of 1873 resulted in the disintegration of the National Labor Union; similarly, the accusations of radicalism, terrorism, and violence against the Molly Maguires culminated in their decline. Despite these early failures, efforts to unionize workers continued soon after the Panic of 1873,--which ended in 1877, saw the passing of the Specie Resumption Act that ended the use of greenback dollars, and the failure of the greenbackers (or inflationists), who wanted inflation to occur so that the people's debts (caused by mass layoffs and inadequate wages) would decline in value and thus be easier to pay off and who formed the National Greenback Party to advocate for their beliefs, to win in any of the next three presidential elections and or even challenge any of these presidential candidates--as the Great Railroad Strike of 1877 (America's first major national labor conflict) demonstrated; the Great Railroad Strike oversaw the disruption of railroad service from Baltimore to St. Louis, the destruction of equipment, and the rioting of people in the streets in several cities, but the strike failed in just a few weeks time as a result of federal involvement--meaning that President Rutherford B. Hayes responded to these strikes by calling in federal troops to break up demonstrators in Baltimore, resulting in the deaths of approximately 10 people (overall, over a hundred people died before the nationwide strike collapsed under both corporate and federal pressure). Another major effort to unionize workers came from the Knights of Labor (established in 1869)--which contained a female unit called the Woman's Bureau of the Knights and was under the leadership of Leonora Barry--who were led first by Uriah S. Stephens and then Terence V. Powderly. The Knights of Labor were loosely organized, championed the eight-hour workday, the abolition of child labor, and the establishment of a new cooperative system--in which workers would control a large part of the economy themselves--in place of the current wage system, but a series of failed strikes against the Gould railroad system--like the strike against the Texas and Pacific railroad in 1886-- and the Haymarket Square bombing in 1886 quickly discredited the organization and contributed to its decline in membership and influence. Meanwhile in 1881, another labor union--which mainly represented skilled workers--was forming and quickly expanding: the American Federation of Labor (AFL) under the leadership of Samuel Gompers. Gompers accepted the basic premises of capitalism as he was trying to win more and improved benefits for those he represented and because the accumulation of capital by corporate leaders allowed Gompers to make these claims; furthermore, Gompers was hostile to government involvement in protecting labor or improving working conditions because he feared that whatever the government could give, it could also take away; moreover, Gompers also advocated for better wages and working conditions--which was emphasized in his address titled What Does Labor Want? before the International Labor Congress in Chicago in 1893 (G). Prior to this conference, in 1886, the AFL took part in a general strike calling for an eight-hour workday (and in effect, better working conditions), but radical groups emerged in Chicago and came into conflict with police; in the midst of this strike, a bomb was detonated by a striker in Haymarket Square, resulting in nearly a dozen deaths and about fifty injuries. Because of the Haymarket Square bombing, the American people--namely the middle-class--became alarmed by the social chaos and radicalism these unions produced, and soon attributed anarchism to unionism, thus devastating the influence, favor, and authority of the unions of the time--namely the Knights of Labor, which was widely known as the most radical of the union organizations--in the face of public opinion. However, union efforts to mobilize workers so as to convince corporate leaders to make concessions did not stop there despite the Haymarket Square bombing setback as evidenced by the Homestead Strike of 1892--which was led by little shopfloor autocrats (meaning those workers who exercised significant control in the workplace), like Henry Clay Frick, of the Amalgamated Association of Iron and Steelworkers--and the Pullman Strike of 1894--which was led by Eugene V. Debs (one of the most prominent Socialists of the era) and the American Railway Union; however, even these strikes failed as the Pinkerton Detective Agency (who were widely renowned as strikebreakers) and the Pennsylvania National Guard ended the Homestead Strike, and the 2,000 troops sent by President Grover Cleveland and Attorney General Richard Olney broke up the Pullman Strike and arrested and imprisoned Debs and his associates.
Behind the scenes, some of these corporations effectively began to manipulate and dominate the government and its politicians so as to suit their (the companies) needs, thus making the government more and more corrupt. In fact, Joseph Keppler published a political cartoon titled "The Bosses of the Senate" in Puck magazine in 1889 which clearly illustrated how the government was no longer an independent entity but was becoming increasingly controlled (at least behind the scenes) by big businesses and trusts (D); these corporations were able to effectively control the Senate by endorsing certain politicians in return for political favors in the form of beneficial laws, regulations, tariffs, and exemptions. Two of these beneficial tariffs were the McKinley Tariff of 1890 and the Dingley Tariff of 1897, both of which raised duties on foreign goods to the highest point in American history at their respective times, thus benefitting American corporations by reducing competition (as its competitors had to increase prices so as to compensate for the increased tariffs) and expanding American reliance on domestic goods (as these were usually cheapest and readily available). Yet, the effort to increase tariffs momentarily failed as the later Wilson-Gorman Tariff of 1894 reduced the tariffs once again, thereby (in a sense) repealing the McKinley Tariff which was already facing widespread criticism and likely caused the Republican reversal of power in the 1890 congressional election which saw the Republicans' Senate majority and House strength slashed and reduced. Also, American bankers helped to influence the creation of a law that officially discontinued silver in spite of the opposition by mine owners, farmers, and inflationists (like the greenbackers); thus this law became known as the Crime of '73 as it became apparent that these bankers--who wanted their debts paid in full and not inflated in value--were manipulating or, at least, influencing Congress so that this beneficial law (to the bankers) would be passed. Furthermore, the endorsement process, as described by Keppler, was demonstrated by New York's Tammany Hall and especially George Washington Plunkitt who argued that there were two different forms in which politicians could accept endorsements and make a profit. One of these ways was honest graft which according to Plunkitt, meant that politicians were pursuing personal profits in both the public's and their own interests; however, in contrast, the other form of endorsement was covert graft which meant that politicians were actually taking money from the public treasury or taking bribes from private interests in return for making beneficial public decisions that would aid the corporations. Meanwhile, the influence of corporations was not simply restricted to the production industries; it also included the railroad industry and other, minor industries. The was asserted in the 1887 novel, The Labor Movement: The Problem of Today, by George E. McNeill, a labor leader, which explicitly described the widespread influence of and the authority held by the railroad industry in the workplace, in the legislature, in the courts, in the press, in the economy, and in public opinion, thus demonstrating their near absolute control of both the government and the people (B).
However, due to big businesses' political influence, the American people began to advocate for government reforms and, actually, formed political parties so as to reduce the authority of big business leaders. One of the most significant ways the government--in this case, Chester A. Arthur's administration--was able to reduce the influence of these corporations was the enactment of the Pendleton Act (1883) which required that some federal jobs (approximately ten percent) be filled by some competitive written exams rather than by patronage--which was commonly used by the urban bosses and the corporations in order to gain favors. By limiting the strength of the old spoils system (which was introduced by Andrew Jackson), the government was reflecting public sentiment that the system was outdated and needed to be altered and that the urban bosses were corrupting the government and thus needed to be limited and removed. In addition, despite its ineffectiveness, the Interstate Commerce Act (1887) was intended to ban discrimination between long and short hauls, require railroads to publish their rate schedules and file them with the government, and declare that all interstate rates be deemed reasonable and justifiable; the five person Interstate Commerce Commission (ICC) was to administer the act but it had to rely on the courts to enforce its rulings which it never did. Overall, this act ended up being a failed symbolic statement rather than a bold attack on the domineering railroad industry. Additionally, the agriculture industry, responding to economic frustrations and eager for government assistance, began a one of the most significant political movements and protests in the nation's history: this movement became known as populism. The first major organization that exemplified this movement was the Grange (established in the 1860s) which was under the leadership of Oliver H. Kelley who left the Agricultural Department because he was appalled by the isolation and mundaneness of rural life. Under Kelley, the Grange attempted to bring farmers together to learn new scientific and profitable agricultural techniques and hoped to create a sense of community in order to relieve the isolation of rural life. As a result of the depression of 1873, membership in the Grange increased, allowing for the organization to establish marketing cooperatives (like cooperative stores, creameries, elevators, warehouses, insurance companies, and factories) to circumvent and curb the monopolistic practices by railroads and warehouses and making the practice more sustainable. Further, due to their increase in membership, the Grange was able to form such political parties such as the Antimonopoly and the Reform parties, both of which were minor, independent parties, and which were able to gain control of states legislatures in several mid-western states, permitting the Grange to pass the Granger laws of the early 1870s which imposed strict regulations on railroad rates and practices; however, these policies were defeated in the courts and were soon repealed, thus partly resulting in a decline in membership in the late 1870s. Soon after the decline of the Grange, the Farmers' Alliance began to emerge as early as 1875 and became a coalition of Southern farmers (mainly from Texas) and farmers from the plain and Midwestern states (the so-called Northwestern Alliance). Similar to the Grange, the Farmers' Alliance established cooperatives, stores, banks, and processing plants and other facilities for their members in order to circumvent the so-called furnishing merchants (who these farmers were likely indebted to). This Farmers' Alliance argued that a sense of community would unite the farmers against the oppressive forces of the outside world (for example, the banks, the merchants, and the landowners). These farmers did so by completing the merger between the Southern and Northwestern Alliances and by issuing the Ocala Demands of 1890, which became their party platform. As a result of the formation of this party platform, candidates who were supported by the Farmers' Alliance--mainly Democrats--won at least partial control of state legislatures in twelve states, six governorships, three seats in the U.S. Senate, and nearly fifty seats in the House of Representatives. Partially as a result of their political success and the support of members of the Northwestern Alliance (like Tom Watson of Georgia and Leonidas L. Polk of North Carolina), the Farmers' Alliance established the Omaha Platform of 1892 which proclaimed the creation of the People's Party, approved a set of principles, and nominated James B. Weaver as their presidential candidate in the presidential election of 1892. These principles established in the Omaha Platform of 1892 were expanded upon in the July 1892 article "People's Party Platform" in the Omaha Morning World-Herald (F); these demands included the abolition of national banks, the end of absentee ownership of land, the direct election of United States senators (thus further weakening the authority of urban bosses and corporations), the regulation and (after 1892) government ownership of railroads, telephones, and telegraphs, a system of government-operated postal savings banks, a graduated income tax, and the inflation of the currency (so as to reduce the value of the debts of farmers). In order to attract support for the People's Party in the elections (both congressional and presidential), Populist leaders in the Rocky Mountain states endorsed the free silver movement--which was the idea that by permitting silver to become the basis of the currency (like gold), the money supply would expand and inflation would occur (thus relieving indebted farmers, miners, and oilers)--so as to win over the miners to their cause. Another effort to attract support came in the form of the Colored Alliance in the South, which was established so as to win over black farmers to the Populist cause. Finally, these efforts by the Populists to garner support culminated in the presidential election of 1896 which saw the Republicans nominate Governor William McKinley of Ohio and the Democrats nominate William Jennings Bryan following his "A Cross of Gold" speech which supported the free silver cause. As a result of this speech, the Populists were left in disarray as they were hoping that both traditional parties would adopt conservative programs and nominate conservative candidates; therefore, the Populists were forced to make a choice: either nominate their own candidate and risk splitting the protest vote with Bryan or endorse Bryan and merge their party with the Democrats'. The Populists ended up fusing with the Democrats and endorsing Bryan; however, Bryan was defeated by McKinley, which proved to be a disaster for the Populists as they had gambled everything on their fusion with the Democratic Party and lost. And thus, as a result, the People's Party began to disintegrate.
Overall, as big business expanded in size, number, and influence, it negatively affected numerous sectors of American life. The expansion allowed big business corporations to dominate reliant corporations and industries, reduce the dependence on skilled workers, and manipulate politicians in the government. In response to these changes, the American people created rationales for the accumulation of wealth by corporate leaders, established unions to combat the mistreatment of employees by the employers, and formed political parties so as to combat the rampant corruption in the government.
