Nation of Nations Concise 2/e Davidson, Gienapp, Heyrman, Lytle, & Stoff
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This chapter begins, as the new industrial order itself began, with the railroads. They were America's first big business as well as the catalyst to the industrial transformations. An abortive journey along the "Great Southern Mail Route" from the Mississippi River to Washington, D. C., gives a sense of just how difficult rail travel was in 1866. A scant twenty years later, a more ambitious "scamper" by rail could takes place in relative comfort across America. "What made America in the 1880s so different," the authors stress, "was a new industrial order." The changes involved not just the comfort and efficiency, but interconnections. A complex system of transportation was needed to carry move people and goods, just as a complex network of industrial systems was required to create the new industrial order, and a system of organized labor seemed necessary to counteract the immense power of big business.

The Development of Industrial Systems

The rail transportation network was just one example of the emergence of interlocking industrial systems. Improving communication via telegraph and later telephone, harnessing natural resources through new industrial technologies, systematizing invention, raising capital, organizing large corporations, and recruiting a growing pool of labor-all became the systems undergirding the new industrial order.

Railroads: America's First Big Business

At the core of the new industrial order were the railroads. They moved people and freight, stimulated economic growth, and, above all, pioneered a revolution in management techniques that would be copied by other big businesses.

Because they brought together shorter branch or "feeder" lines, "trunk" lines were forced to pioneer new managerial strategies to control their growing operations. "Central offices" served as corporate nerve centers, while a new class of "middle managers" supervised separate functional divisions. Yet efficient management was not enough. Huge fixed costs, coupled with massive overexpansion, bred fierce competition, leading to rate wars and many bankruptcies. Consolidation, in the form of cooperative pools or outright mergers, became the ultimate solutions to the problems of overcapacity and ruinous competition. These consolidations were often the work of investment bankers, who raised the large amounts of capital required or helped to reorganize troubled firms.

The Growth of Big Business

Businesses grew in part to protect against competition. Some industries, like salt producers in Michigan, adopted a "horizontal strategy" for growth by joining with competitors in various ways. Others, such as meatpacker Gustavus Swift, adopted a "vertical strategy," acquiring both outlets to consumers and sources of raw materials.

Andrew Carnegie first vertically, then horizontally, to build a fully integrated steel empire. Oil-magnate John D. Rockefeller moved beyond horizontal and vertical integration to develop the trust, an arrangement in which stockholders surrendered control of their shares "in trust" to a central board of directors. In 1901 J. P. Morgan bought out the Carnegie steel interests to form the United States Steel Corporation, a giant holding company, or corporation of corporations, worth more than $1 billion. Similar holding companies sprang up in the 1890s as a wave of mergers swept through American industry in the wake of the depression of 1893.

Some Americans defended the new corporate order; others lashed out at its excesses. Carnegie himself reflected this mixed response, turning to philanthropy in his later years. Less nervous corporate apologists justified the system by applying Darwin's theories of evolution to society at large, claiming that "Social Darwinism" dictated the survival of the fittest. Meanwhile critics such as Henry George and Edward Bellamy attacked corporate capitalism as a greedy promoter of poverty and class exploitation. Socialists tried (mostly unsuccessfully) to win a sizable political following incite a radical response among working class Americans. On balance, big business brought both positive gains(a more organized economy, increased wealth-and wrenching disruptions, especially the roller-coaster cycles of boom and bust that hit everyone tied into the new industrial system.

The Workers' World

The new industrial order created a new culture imposed a new system of work that required people to work in new ways. Unlike the farm life, in the factory the harsh discipline of productivity-the unceasing machines, the routine specialized tasks, the unrelenting clock-dictated the rhythm of work. The 10-hour day and 6-days a week were common. The use of heavy machinery increased the dangers as well as the tedium of factory work. The Taylor system of scientific management, which studied the most efficient ways to get work done, boosted output but added to a growing sense that workers were mere cogs in the massive engine of industrialism.

Yet workers struggled to maintain control of their lives and work, believing themselves worthy citizens of a democratic republic. Women and children joined the work force, generally earning less than men; blacks found few opportunities except as strike breakers. Overall, however, workers enjoyed modest gains in real wages. And most held to the traditional belief in the American dream of success.

The Systems of Labor

To sustain their interests workers had to act as business acted: by organizing and integrating. A minority of workers attempted to organize by creating unions. Some, like the Knights of Labor, sought radical changes in society. Others, such as the American Federation of Labor, accepted the wage system and tried to improve conditions within it, especially for the most skilled workers. At the turn of the century, however, less than one worker in ten belonged to a union; individualism still reigned.

Yet discontent boiled over in the 1880s and 1890s as a wave of strikes crippled industry. Violence provoked sharp reactions. Ordinary citizens grew fearful. Managers fought back with no-strike contracts and strikebreakers. Government joined in suppressing worker resistance with court injunctions and federal troops. Successful unionism would have to wait for a new day; in the meantime, the new industrial order had transformed the economic landscape of America, drawing boss and worker alike into an integrated industrial system.

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