Social and Political Impact of the Second Phase of the Industrial Revolution

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Social and Political Impact of the Second Phase of the Industrial Revolution

By the year 1900, the impact of the Industrial Revolution was felt across the United States. Practically every aspect of everyday life had altered dramatically over the past century. Enormous fortunes had been made by the owners of factories, natural resources (notably oil), and business networks such as railroads. People who once were scattered among scores of small farms in the countryside were now living in cities, working for employers who in many respects viewed their employees as living parts of a complex machine called the factory. Those who still lived in rural areas used new machinery and chemicals to raise crops or livestock that would be transported to faraway markets. In the United States, 40 percent of the population lived in cities, up from just 6 percent in 1800. In the next twenty years, the majority of Americans would be found residing in urban areas.

Such profound transformations hardly went unnoticed. The reality of the Industrial Revolution was reflected in changes in government and politics, as well as in new social organizations that were established independent of the government.

Social and Political Impact of the Second Phase of the Industrial Revolution: Words to Know


A social philosophy that advocates voluntary associations among people as a form of self-government, as opposed to central governments dominated by a monarch or other central figure.


A system of organizing a society's economy under which ownership in machines and factories is private, rather than public.


A form of government in which all the people own property, including both land and capital, in common.

Labor union:

A voluntary association of workers who join together to apply pressure on their employer for improved pay, shorter hours, or other advantages.


A business large enough to be able to control the price of a product without regard to competition.


A monthly payment made to employees who retire from a company after reaching a certain age or after working a certain number of years for that company.


A political and economic system in which the people control both the government and also major elements of the economy, such as owning (or tightly regulating) factories.

Social work:

Efforts to alleviate a variety of problems often encountered by poorer people, such as unemployment, poverty, and lack of housing.


The refusal to work by members of a labor union who aim to close down a factory or other facility as a means of putting pressure on the employer to grant higher pay or other improvements in work conditions.


Workers who take the places of employees who are on strike. They are hired by company owners in an effort to defeat strikers.


A tax on imports.

Society in the industrial era

In 1914 automobile giant Henry Ford (1863–1947) made headline news when he started paying workers $5.00 a day—roughly double what other manufacturers were paying at the time. The average non-Ford laborer earned less than $800 a year for a six-day workweek. (Ford paid his workers better in part so they could afford to buy the cars they were making, generating more sales—and profits—for Ford.) Calculated in 2003 dollars, in 1914 a Ford worker earned around $28,000 a year while a typical worker earned around $14,000 a year.

The life of a typical worker at the turn of the twentieth century was difficult. Pay was low, hours were long, and working conditions were brutal and often wildly unsafe. The dangers of factories were dramatized at 4:30 p.m. on March 25, 1911, when a fire broke out inside the Triangle Shirtwaist Company located on the top three floors of the Asch Building in New York City. There, five hundred employees, mostly Jewish immigrant women aged thirteen to twenty-three, sewed women's shirts. Fueled by all the fabric, the fire spread rapidly to all three floors of the factory. Within fifteen minutes, 146 women had died. Many jumped to their deaths; others tried to slide down elevator cables, but lost their grip; many were burned to death. Firemen tried to rescue the women, but their ladders reached only to the sixth floor, one floor below the factory, and women jumping from the windows tore through fire nets as they plummeted, holding hands in groups of three or four.

The combination of low pay for long hours (ten hours a day, six days a week was typical) and unsafe working conditions was characteristic of the second phase of the Industrial Revolution. In addition, workers who lost a job suddenly found themselves without any income. Paid vacations and health insurance were unknown. When a person grew old and wanted to retire, it was necessary to have personal savings to live on; companies did not pay pensions to retired employees. Nor was work steady. If employers lacked orders for products, workers were told not to come in. No work, no pay. A worker who fell ill was not paid for that day and might lose his or her job to someone who could work. Many workers went for weeks every year without work, or pay, because his or her employer had shut down during a slow period. Even for higher-paid middle-class occupations, such as accountants, for whom daily life was more comfortable, economic disaster was often as close as one missed paycheck.

Housing conditions in the cities were often as dismal as those of the factories. Multiple families crammed into two- and three-room apartments, often without natural light or ventilation. Indoor plumbing was rare except in the homes of the middle class (such as those of doctors). People seldom bathed or washed their hair (once a month would have been common for working-class women in 1900). Sometimes, as in the case of cigar makers in New York City, tiny apartments were also the workplace, where the father and mother devoted one room to rolling tobacco leaves into cigars, used the other room for living and sleeping, and had a small kitchen off to the side.

Most working families needed the pay of both father and mother—and sometimes the children as well—to avoid starvation or being thrown into the street when the rent went unpaid. Work often began at a young age: thirteen, ten, or even six. The census of 1900 showed that almost 20 percent of children aged ten to fifteen who lived in urban areas worked full time.

In many respects, people living on farms were not much better off. Their incomes also were low, and they lacked modern things that provided comfort and enjoyment. On the other hand, farm houses were not crowded together, and farmers were able to grow their own food. But many farmers were subject to losing their farms to the banks that had loaned them money to live on until their crops came in. If the crops failed because of drought or plant disease, farmers became refugees headed for the city to find work.

The workers respond

Almost from the beginning of the Industrial Revolution, the people most directly affected by industrialization had responded. One initial approach was taken by the Luddites in England, who tried to wreck the new textile machines they blamed for the loss of their traditional jobs (see Chapter 4).

But the most widespread, and eventually the most effective, approach to fight the leaders of industrialization was to form a labor union. Unions are organizations of workers who have banded together to bargain with an employer for higher wages, shorter hours, and other improvements in their working conditions. The reasoning behind a union is that an individual worker can easily be dismissed, but a large group of workers stands a chance of success by threatening not to work until their demands are met.

Business owners strongly resisted unions. They did not appreciate efforts to curb their power over the terms and conditions of work, or to raise the cost of hiring workers. Employers bitterly opposed unions at every opportunity. Workers who tried to form a union were often fired immediately and banned from the premises, sending a strong message to other workers that union activities would cost them their jobs. To most business owners, labor was a commodity to be bought and sold, just like raw materials, and workers who tried to gain bargaining leverage by joining a union were treated as a threat to the power and economic well-being of industrialists.

Workers also tried to improve their lives through politics. In Europe, members of the socialist movement had long campaigned governments to assume ownership and control of large companies, and they fought for worker control over government through democratic elections—or through violent revolution (see Chapter 4). Socialists, who sought political and economic equality for all people, were also active in the United States, but they were not as successful in elections as their counterparts in Europe.

In the campaign to defeat socialism in the United States, some opponents linked it to the "Old World" of Europe, where most socialist theorists had originated, thereby suggesting that socialism was unpatriotic. These opponents scoffed at a "foreign" idea of collective action by workers that contradicted the American ideal of rugged individualism. The cultural ideal of the United States as a fresh new beginning, a place where brave individuals came in order to strike out into the wilderness and create a living as a pioneer farmer, was deeply embedded in American culture in the late nineteenth century. These ideas were often promoted in newspapers and magazines of the era. In addition to the public opposition to unions and socialism, it was not so uncommon in the second half of the nineteenth century for business owners to try to influence government officials by offering bribes in the form of cash, lucrative stock in new ventures, or employment after an officeholder left the government.

Throughout the last half of the nineteenth century, the issue of industrial workers was intertwined with the issue of immigration. Tens of thousands of Europeans landed in the United States eager to find jobs and a better life. They often were willing to work for low wages, any wages, in order to buy food for their families. Employers used the fresh supply of inexpensive labor to combat the influence of trade unions and to keep wages low. It seemed there were always more workers willing to take jobs than there were jobs to go around. And because many industrial jobs required few skills or language training, immigration supplied a steady stream of qualified workers willing to forgo labor union membership for a job. (On the other hand, some of those who were most effective in building the influence of labor unions, including Samuel Gompers, were immigrants.)

American labor unions

The history of American labor unions is almost as long, and as complex, as the history of the Industrial Revolution itself. It is a story that took place through negotiations, violence, and political elections. It is the story of an ongoing struggle between workers and business owners for a share of the wealth created as a result of industrialization. There would be no history of labor unions without industrialization, just as there would be no story of industrialization without workers.

From the very beginning—and continuing into the present day—those who invented the new machinery or invested money to build new factories saw their workers as a cost of doing business. And just as the business owners tried to buy the least expensive raw materials, so did they try to save money on the cost of hiring workers. At the same time, the workers who operated the new machinery wanted to earn as much money as possible from their jobs. Thus there has always been a conflict between owners and workers. (Throughout history owners have sometimes disputed this idea; workers seldom have.) Sometimes the conflict has been resolved peacefully, oftentimes it has not. Even Henry Ford, who voluntarily doubled his workers' pay in 1914, was the target of bitter clashes a few years later between his company and unions representing his workers.

Like the growth of companies and industries during the Industrial Revolution, the growth of unions was uneven and disorganized. Efforts to organize workers to bargain for higher wages, shorter hours, and better conditions usually focused on a single company, or industry, or region. Early attempts to combine several unions into national organizations met with mixed results. The expansion of unions, and their influence, often took place through well-publicized events such as strikes, riots, or disasters, which in turn attracted workers from other companies or industries to join union ranks. (In a strike, union members acting as a group refuse to work in order to force a company to meet the union's demands, such as higher pay or shorter hours.)

Early government responses to unionization

While workers were organizing trade unions, employers often turned to the government for help in defeating them. As early as 1806, the activities of a group of Philadelphia shoemakers were found guilty of violating common law by joining together to demand higher wages. (Common law is the body of old English customs that were legally enforceable, even without a specific law.) Workers were viewed as individuals who should agree to work for certain wages, or not work at all. English law, like governments in general, frowned on unofficial groups getting together to achieve their objectives. Such groups were labeled criminal conspiracies and punished. This opposition to organized labor characterized U.S. law as well.

Official attitudes began to shift slightly by 1842, when the Massachusetts state supreme court ruled that another group of shoemakers had not violated the law by refusing to work for any company that paid less than the shoemakers' agreed-upon minimum wage. A shoemaking company that went out of business as a result sued the workers and lost.

After the Civil War, the federal government sometimes took a more aggressive stand against unions as strikes became more frequent, a sign of the growing influence of unions. Many strikes in the period from 1865 to 1900 turned violent as strikers tried to physically stop nonunion people from entering a struck company, or as companies hired private guards to escort strikebreakers (workers hired to replace the striking employees) through picket lines. Both the federal government and state governments often responded by sending the police or army troops to restore order, which usually meant breaking up union picket lines and defeating the strike.

It was not until 1935 that federal laws were passed giving labor unions the right to strike and to maintain picket lines (but not to interfere physically with strikebreakers). These laws were passed as part of the program called the New Deal of President Franklin D. Roosevelt (1882–1945), who came to power during a period of high unemployment called the Great Depression.

The Knights of Labor and the Haymarket Square Riot (1886)

A number of notable incidents went into building the union movement in the United States. In 1869, Uriah Stephens and some fellow garment workers in Philadelphia had founded the Noble Order of the Knights of Labor. The union was open to anyone (with the exception of bankers, lawyers, professional gamblers, liquor dealers—or stockholders). In this respect it differed from existing unions of workers with specific skills, such as cigar making, carpenters, or plumbers. Within twenty years, the Knights of Labor had seven hundred thousand members. Its main goal was reducing the workday to eight hours from the usual ten.

On May 1, 1886, members of the union went on strike against the McCormick Harvester factory in Chicago, Illinois, in an effort to reduce the workday to eight hours. Two days later, fighting broke out at the factory and police who were on the scene monitoring the strike opened fire, killing four people. The next day, May 4, the Knights of Labor organized a demonstration at Haymarket Square in Chicago to protest the shootings. The rally started at 4:30 in the afternoon, and at around 10:00 that night police moved in to demand that the rally end. Suddenly a bomb exploded among the police, killing seven. In the consequent riot, about sixty more policemen were injured, most of them by bullets fired by other policemen.

The Chicago district attorney, strongly backed by a press campaign led by the publisher of the Chicago Tribune newspaper, seized on the incident as an opportunity to get rid of labor organizers, some of whom advocated anarchism

The Pullman Strike of 1894

One milestone in the history of American labor unions was the 1894 strike against the Pullman Palace Car Company of Pullman, Illinois. The company, owned by George Pullman (1831–1897), manufactured and operated luxurious railroad passenger cars. Pullman had built a town near Chicago, named after himself, which had a population of about 12,000. He rented modest homes to his workers and larger homes to factory managers, and he built a grand hotel where he lived when he was in town and where visitors stayed. He even built a church and rented the space to different denominations, which took turns for Sunday services. It was, in Pullman's view, a model town.

Pullman thought his town made good business sense. "Such advantages and surroundings made better workmen by removing from them the feeling of discontent and desire for change which so generally characterize the American workman; thus protecting the employer from loss of time and money consequent upon intemperance, labor strikes, and dissatisfaction," he said.

In 1893 an economic downturn (the term "recession" was used a century later to describe this phenomenon) had reduced the demand for Pullman's cars. Consequently, the company laid off (let go) some workers and reduced the pay of others by 25 percent. Rents for housing in his company town, however, did not come down; money was still taken from now-reduced paychecks. This squeeze made many workers desperate, and in 1894 Pull-man's workers organized a local branch of the American Railway Union.

On May 9, 1894, a committee of the union met with Pullman and demanded that wages be restored. Pullman refused, but he agreed to look into other complaints about the behavior of foremen in his shops. The day after the meeting, three members of the union delegation who had met with Pullman were fired. In response, the union members at Pullman Palace Car Company went on strike.

The Pullman workers asked other railroad workers to refuse to work on trains that were pulling Pullman's cars, and in June, the American Railway Union, led by Eugene Debs (1855–1926), agreed. The result was a widespread shutdown of U.S. railroads, including those that delivered mail.

With the Pullman company refusing to bargain with the strikers on either the issue of reduced wages or the rent the company charged to its workers to live in company-owned houses near the Pullman factory, occasional fights erupted between frustrated workers and the armed guards hired by the railroads. Some trains were set on fire.

On July 2, two federal judges, Peter S. Grosscup and William A. Woods, issued an order barring leaders of the American Railway Union from encouraging members to interfere with railroad traffic. (Technically, the strike was against the Pullman Company; refusing to let trains operated by other companies run as a means of putting pressure on the Pullman Company was called a secondary strike, and was declared illegal.) The government cited a law against business monopolies in obtaining the order, arguing that the railway union was acting as a monopoly by using its power to strike against railroad operators that were not part of the Pullman company.

The next day, July 3, despite opposition from the governor of Illinois and the mayor of Chicago, President Grover Cleveland (1837–1908) sent twelve thousand troops (about half the U.S. Army) to Chicago to restore order. The mail started moving again, but the strike that had affected the entire nation's railroad traffic was defeated.

The union leader Debs was arrested for refusing to obey the judges' order to end the strike, and he was sentenced to six months in jail. There, he spent his time reading and as a result became a socialist. After his release from jail, Debs went on to become the most popular socialist leader in the country, eventually running for president in five elections between 1900 and 1920. He never won more than a small percentage of the popular vote.

After the strike, Pullman insisted that workers promise not to join any union as a condition of going back to work, and he refused to rehire local union leaders. Most of the strikers went back to work at their old wages. With its leader Debs in jail, the Amerian Railway Union soon disbanded, having failed to achieve the Pullman workers' demands.

The Pullman strike was a major setback in efforts to organize workers. George Pullman died two years later. He ordered that his grave be lined in concrete, fearing that resentful union members might try to vandalize it.

and socialism. (Anarchism and socialism were political philosophies that advocated democratic control over economic institutions, as well as political institutions. Anarchists believed in the elimination of government institutions in favor of voluntary associations; socialists believed that government, controlled democratically, should own and operate major businesses. Business owners viewed both as threats to their property and prosperity.) Police arrested eight well-known socialists and anarchists and charged them with murdering the policemen.

Despite a lack of proof connecting the accused men with the bomb, all eight were found guilty. Seven were sentenced to hang (the eighth was sentenced to fifteen years in prison). Four of them were hanged on November 11, 1887, one committed suicide in jail, and the remaining two were pardoned (freed) by the governor of Illinois, John Altgeld (1847–1902), six years later. The governor showed that the trial had been a travesty of justice, and that the judge had allowed citizens with strong prejudices against unions to serve on the jury, while the prosecution never offered any proof that the accused had anything to do with the bomb.

The Haymarket Square incident marked the end of the Knights of Labor. It also was a setback for the campaign for the eight-hour workday.

Mother Jones and the coal miners

The history of unions in coal mines was often marked by violence, both in eastern mines (largely in Pennsylvania) and in the West, especially in Colorado. The list of strikes that resulted in violence from both the miners and the mine owners is a long one. In 1877 ten union activists were hanged in Pennsylvania; in 1892 eighteen miners and private guards died during the Homestead Strike near Homestead, Pennsylvania. Also that year, striking miners dynamited the Frisco Mill in Coeur d'Alene, Idaho. The year 1893 saw the first of several violent strikes in Cripple Creek, Colorado. In 1897 nineteen striking coal miners were killed and thirty-six were wounded by a posse (an armed band) hired by the mine owner near Lattimer, Pennsylvania. In 1898 fourteen were killed and twenty-five wounded in violence at a
coal mine strike near Virden, Illinois. In 1899 and again in 1901 U.S. troops occupied the region around Coeur d'Alene. In 1902 fourteen miners were killed and twenty-two were wounded at Pana, Illinois. The following year troops quelled rioting by striking miners at Cripple Creek. In 1904 six miners were killed during a battle between striking miners and militiamen (the National Guard) at Dunnville, Colorado. In 1914 company guards and Colorado militiamen fired into a union tent at Ludlow, Colorado, killing nineteen, including twelve children.

Into this atmosphere marched Mary Harris Jones (1830–1930), one of the most colorful characters in the history of labor unions. Once called "the grandmother of all agitators," Jones the former schoolteacher and seamstress traveled the United States organizing coal miners, textile workers, and railroad workers into unions and campaigning on behalf of child workers. Her prim, petite figure and snow-white hair, which she kept under a bonnet, prompted the nickname Mother Jones. Her modest appearance masked an unstoppable passion to achieve what she saw as social justice.

Mother Jones was a native of Ireland and the widow of George Jones, himself a union organizer in Memphis, Tennessee, who had died alongside their children in a yellow fever epidemic in 1867. Jones moved from Memphis to Chicago and devoted the rest of her long life to organizing workers to achieve higher pay and shorter hours. Although she battled for the rights of all workers, her special concern was coal miners, and in 1890 she became a paid organizer for the United Mineworkers Union.

One of Jones's most famous campaigns took place in 1903, when at age seventy-three she led a long march of textile workers, half of them children, from Kensington, Pennsylvania, near Philadelphia, to President Theodore Roosevelt's house in Oyster Bay, New York, on Long Island. The march served to attract national attention to the plight of women and children working in factories.

Samuel Gompers and the American Federation of Labor

Samuel Gompers (1850–1924) came to New York from a London slum, the son of a cigar maker. Forced to drop out of school at age ten in order to earn money for his family, he is known today as the founder of the Federation of Labor and the union leader who focused attention on purely union issues, like pay, benefits, and shorter hours, without concentrating on basic political changes, as the socialists favored.

In New York Gompers and his family lived in another slum where families were jammed into two- or three-room apartments. As a cigar maker, Gompers often took the role of a "reader"; other cigar makers would set aside some of their own production for him in exchange for having Gompers read books out loud to them, in order to relieve the boredom of their work. In this way, Gompers educated himself on the job.

In 1864 Gompers joined the cigar makers' union, and ten years later he became the president of its local chapter (branch). Gompers set about making the union a more important force in workers' lives. He insisted that union
members pay more to belong, so that the union had funds to operate, recruit new members, and pay union officials who worked full time on union affairs. He also set aside funds that were used to help cigar makers who were injured, fell ill, or lost work. The union, for Gompers, did more than demand higher pay for workers; it also became a kind of social welfare organization, a role that was largely taken over by the government sixty years later.

By 1881 Gompers was active in establishing a union of unions, the Federation of Organized Trades and Labor Unions of the United States and Canada. This organization was an alliance of unions that represented skilled workers, such as cigar makers, carpenters, and plumbers, regardless of their employer. In this way, Gompers's organization resembled medieval guilds (associations of skilled craftsmen that set rules and standards for their work). In 1886 this organization became the American Federation of Labor (AFL). Gompers served as its president, a post he held for the rest of his life, with the exception of one year. That year was 1895, during a national economic slowdown that made progress by unions exceptionally difficult. The labor federation defeated Gompers's bid for reelection to a one-year term as union president and instead chose John McBride, who favored a more political, socialist-oriented approach. The following year, Gompers stood for reelection and defeated McBride.

Although Gompers started out believing that unions should limit their activities to strictly economic goals, he later shifted his position and encouraged the AFL to stand behind politicians who promised to support laws favorable to workers. The union first played an active role in politics in the election of 1908, when the AFL supported William Jennings Bryan (1860–1925), a democrat who favored such union goals as an eight-hour maximum work day. Despite union support, Bryan lost to the Republican candidate, William Howard Taft (1857–1930).

John L. Lewis and the Congress of Industrial Organizations

The counterpart of Samuel Gompers's notion of organizing skilled workers around their particular skills (cigar makers, bricklayers, carpenters, and so forth) was the Congress of Industrial Organizations (CIO), which aimed to organize all workers based on the industry they worked for (such as miners, railroad workers, steelworkers) regardless of their individual skills. In some respects, the CIO was a reflection of the second phase of the Industrial Revolution, since it focused on workers in so-called mass-production industries like coal, steel, automobiles, rubber, glass, and textiles.

The founding father of the CIO was John L. Lewis (1880–1969), president of the United Mine Workers Union. Mine workers—primarily coal miners—had a long history of union organization that included many incidents of violence. Miners were a special case among workers, since many lived in towns owned by mine operators and faced constant dangers inside the mines. When they went out on strike, miners were often ready to use their fists to stop strikebreakers, workers hired by mine owners to replace striking employees. Because coal was vital both to industrial operations (notably railroads and steel mills) and for domestic purposes (for heating homes), government intervention in coal workers' strikes was not unusual.

The United Mine Workers Union had been formed in 1890 through the merger of two other mine workers' unions. The United Mine Workers Union already had a long history of success—it achieved an eight-hour workday through a strike in 1898—when Lewis became its president in 1920. Lewis would hold that position for the next forty years. Among his greatest successes was convincing mine owners to pay for a union-operated health and welfare fund called the United Mine Workers' Health and Retirement Fund, which paid for miners' medical bills and provided a $100 monthly pension for miners who stopped working after age sixty-two. The fund paid for hospitals in coal mining regions and established health clinics, staffed by doctors hired by the union and paid for by employer contributions.

In 1935 the United Mine Workers Union led in the formation of the CIO, a federation of other unions organized by industry: the International Typographical Union; Amalgamated Clothing Workers; International Ladies' Garment Workers; United Textile Workers; Oil Field, Gas Well, and Refinery Workers; United Hatters, Cap, and Millinery Workers; and International Mine, Mill, and Smelter Workers. The new CIO in turn became affiliated with the American Federation of Labor, but it was not a happy alliance. The CIO was expelled from the AFL in 1937, and five years later, in 1942, the United Mine Workers Union withdrew from the CIO. In 1942 the federal government seized coal mines to end a strike that was viewed as crippling the U.S. economy at a time when the nation was fighting World War II.

The CIO and its member unions represented labor's most serious challenge to the power of industrialists since the first fabric factory was set up in Rhode Island. First, the CIO represented huge numbers of workers and initiated an aggressive drive to sign up more. Second, member unions could shut down key industries (steel, automobile, and coal, for example), and in turn have a huge impact on the rest of the U.S. economy. Third, the CIO was active politically. From the mid-1930s it focused its efforts on influencing the Democratic Party to adopt positions that favored its members (as opposed to the owners of factories, whom the Republicans favored). After World War II, when the Republican Party achieved a majority in Congress, Ohio senator Robert Taft (a Republican and son of the former president) tried to counter union influence by passing the Taft-Hartley Act of 1947, which amended the 1935 National Labor Relations Act and imposed new limits on union rights. (The National Labor Relations Act of 1935 gave workers the right to organize and
belong to unions; the Taft-Hartley Act put limits on how unions could go about achieving their goals.)

Part of the new influence of unions resulted from a relative new weapon in their armory that formerly was exclusive to business owners: money. When John L. Lewis had formed the United Mine Workers' Health and Retirement Fund in 1946, it was created by an agreement with the federal government, which had temporarily seized control of some coal mines that had been shut down by a United Mine Workers strike. Fearing a national emergency without continuing supplies of coal, President Harry Truman (1884–1972) took over operation of the mines on May 22, 1946, and threatened to draft striking miners into the army. The strike was soon settled, and establishment of the Health and Retirement Fund was part of the settlement. (After the settlement, the government returned control of the mines to their owners.) Taking advantage of the emergency, Lewis successfully bargained for payments by employers to contribute money to a union fund that would in turn pay union members a pension (pay that continues after retirement) after age 62. Having the union control the fund meant that workers would still receive a pension, even if the company for which they worked had gone out of business.

The union pension funds came to be enormous pools of money that fund managers invested, sometimes in the very companies that were paying into the fund. In this way, the unions came to own large parts of important businesses. In effect, the workers who were once pitted against the wealthy had become part-owners of their own companies. The funds also gave workers a stake in the economic well-being of these businesses, a factor that separated some unions from the political theories of socialism that called for the government to take over and run companies.

Approaches besides unions

Labor unions were not the only response by workers wishing to alleviate the misery of their living conditions. Two other approaches involved forming voluntary associations (sometimes along ethnic lines) called fraternal orders and engaging in efforts known as social work that helped those in need.

Voluntary associations have a history dating back to sixteenth-century England. They were organized by working people as social organizations, and also to provide economic benefits to members' families in case of sickness or premature death.

Among the organizations with English origins that took root in the United States were the Independent Order of Odd Fellows (brought to the United States in 1819), the Ancient Order of Foresters (American branch founded in Philadelphia in 1838), and the Freemasons, a large secret society with uncertain origins. Purely American counterparts were established in the 1830s, including the Improved Order of Red Men (formed in 1833), Ancient Order of Hibernians in America (1836), the Knights of Pythias (1864), the Benevolent and Protective Order of Elks (1868), Knights of Columbus (1882), and the Fraternal Order of Eagles (1898). Many of these organizations are still active.

The original purpose of voluntary groups was not strictly related to labor issues or the Industrial Revolution (although the Knights of Labor, 1869, took its name and organization from other fraternal groups and for a time viewed itself as a secret society open to laborers). The fraternal orders did, however, offer life insurance and medical insurance to members, filling a gap created by the surging population and lack of government alternatives.

Hull House was among the first examples of what we today call social work, efforts to help the social conditions of people without necessarily addressing the root causes, such as pay or unemployment. The founder of Hull House was Jane Addams (1860–1935), who came from a well-to-do family in Cedarville, Iowa. On a trip to London, England, she visited Toynbee House, a settlement house in a London slum that provided some essential services and counseling to poor workers. She returned to the United States determined to set up a similar house in the slums of Chicago.

In 1889 Addams and a friend, Ellen Starr, rented part of an old mansion in Chicago and called it Hull House. Their purpose, they declared, as quoted in Twenty Years at Hull-House, was "to provide a center for higher civic and social life, to institute and maintain educational and philanthropic [charity] enterprises, and to investigate and improve the conditions in the industrial districts of Chicago." At Hull House a worker could get a hot lunch, leave a child in day care, learn English, and receive medical care and legal advice. Later Addams added kindergarten classes, evening classes for adults, an employment bureau, even an art gallery, a gymnasium, a book bindery, and a music school.

Hull House pioneered many social services provided today by government agencies as well as by churches and volunteers. Jane Addams herself made the connection between the specific services provided by Hull House and the larger issue of human welfare in the new factory system created by the Industrial Revolution. Addams campaigned vigorously for laws governing child labor, mandatory schooling for children, factory safety inspections, and labor unions. She also became a leading campaigner for the right of women to vote, which was finally achieved in 1920.

The impact of industrialization on government

When the transplanted Englishman Samuel Slater (1768–1835) established a textile mill in Rhode Island in 1797, he did more than open a fabric-making business: he set the stage for a long argument over the proper role of government in economic affairs. Even though Scottish economist Adam Smith (1723–1790) had argued in 1776 in The Wealth of Nations that governments should refrain from meddling in economic matters, the reality is that people have come to expect the government to do something to improve the economy. (For more on Slater see Chapter 5; for more on Smith see Chapter 1.)

The responses of the federal government to the Industrial Revolution can be divided into four broad categories:

  • Encouraging the growth of industry by taxing imported manufactured goods (1820–1860).
  • Aiding industrial growth and discouraging organized labor (1865–1900).
  • Asserting controls over private business through regulation (1900–1911).
  • Actively alleviating suffering resulting from economic depression (1932 to present).

These government activities are not mutually exclusive. Government has tried to stimulate economic growth almost since the beginning of the United States, with some presidential administrations being more active than others. For much of the nation's history, agriculture was more important, and engaged more people, than industrialization. Sometimes, agriculture and industry have been in conflict, and industry did not always carry the day. Attitudes toward organized labor have been hostile or friendly, largely depending on the political party in power. Government programs such as pensions (social security) and unemployment insurance were started during the presidency of Democrat President Franklin Delano Roosevelt (in office from 1933 to 1945); they have continued, and even expanded, in the decades since, during both Democratic and Republican administrations. The job of government has come to be seen as helping people as well as helping businesses expand.

The period of U.S. history since 1952 (a year marked by the election of Republican Dwight D. Eisenhower as president) might be best described as post-industrial, a period when the rapid changes brought about by the Industrial Revolution slowed. During this period, industrial production was gradually moving to Asia, to be replaced in the United States by new industries such as computer technologies and entertainment, as well as by service industries such as health care and finance (see Chapter 8).

The United States and the great tariff debate

The role of government changed significantly over the course of the Industrial Revolution, or, more exactly, notions of what the government should do about the economy changed. In the 1750s, as the Industrial Revolution was just underway in England, the makeup of the English Parliament (governing body) reflected the main economic influence of the time: major landowners, the aristocracy, inherited seats in the House of Lords and shared power with the king. Even the House of Commons, despite its name, did not represent the common man but reflected the power of wealth: people in England were not allowed to vote in parliamentary elections unless they could show they had a certain amount of wealth, an amount that enabled knights and middle-class merchants to vote, but not farm workers or factory workers (see Chapter 4).

The chief concerns of the British government in the 1700s were protecting the country from foreign attack and protecting private property from possible attempts by the poor to seize wealth via a revolution, or even via a democratic vote. Alleviating suffering among the poor was a lesser issue, carried out in England under the so-called Poor Laws that distributed government money to the very poor and sick through local churches (remembering that the Church of England was, and is, the official church of England and is supported by the government).

In the United States, as more and more industrial enterprises opened (especially in New England) to manufacture goods (especially cloth), the government confronted the issue of whether, and how, to help these struggling companies succeed against larger, more established competitors in Britain. The problem was that English factories could produce cloth and ship it to the United States less expensively than native factories could make it. What was the government to do, if anything?

The most popular answer (popular among the New England factory owners, anyway) was to wipe out England's advantage by taxing goods imported into the United States. Such taxes, which had the effect of raising the price of imported materials (such as cotton fabric), are called tariffs, and they continue to be applied in the twenty-first century. (In 2002, for example, the U.S. government imposed a 30 percent tariff on some types of imported steel to help U.S. manufacturers compete against foreign companies).

The issue of tariffs contributed to the conflict between North and South that eventually helped lead to civil war in 1861. In the 1820s, newly built textile factories could not compete with imported English cloth, which was cheaper despite the cost of transportation. In northern states, where the textile factories were located, this was a problem—Americans were tempted to go for the lower price of imported English cloth.

But getting cheaper cloth was not a problem for people in the South. Southern cotton plantations supplied the raw material, cotton, for factories in Britain as well as in New England, and Southerners saw no reason to pay more for fabric (as a result of tariffs) in order to benefit businesses in New England.

In 1816 the U.S. Congress passed a tariff act that imposed a 25 percent tax on imports. Part of the aim was to pay the government's bills, but another goal was to help industries in the United States compete with foreign competitors. In 1825 Representative Henry Clay (1777–1852) of Kentucky, who strongly believed that the government should help encourage economic growth, helped pass a law that set tariffs on imported iron, wool, cotton, and hemp (hemp is a tough fiber used to make rope and certain types of fabric) even higher (at 35 percent). In 1828, the tariff on manufactured goods was raised again, to 50 percent.

Tariffs on imported manufactured goods were unpopular with many people in the South, who resented paying higher prices for manufactured goods without gaining any of the economic benefits that flowed to manufacturers in the North. John C. Calhoun (1782–1850), vice president under Andrew Jackson (1767–1845), wrote an essay in 1828 titled "South Carolina Exposition and Protest," in which he argued that the tariff of 1828 violated the U.S. Constitution, and that therefore a state had the right to nullify it (declare it invalid), or else secede from the United States (pull out of or break away from the country). Calhoun's constitutional argument was that the tariff unfairly benefited some states at the expense of others, which he viewed as unconstitutional. Because the Northern states were already growing in population faster than the Southern states, which entitled them to send more members to the House of Representatives, Calhoun foresaw a day when some states could, in effect, gang up on the others. Calhoun's protest raised the idea of secession (a state withdrawing from the United States) for the first time. The debate over tariffs continued right up to the early 1860s and was one of the issues that led to the American Civil War (1861–65).

Government economic intervention

After the Civil War, the Republican Party largely dominated the federal government. (In the seventy-two years from 1861 to 1933, a Republican was president for fifty-six years, a Democrat for sixteen years. Only two Democrats, Grover Cleveland and Woodrow Wilson, were elected in that period, each of whom served two terms.) For the most part, the Republican Party, which was formed in 1854, adopted policies favorable to the emerging industrial corporations of the era. On the one hand, the Republicans believed in letting business alone to pursue their interests as they saw fit, without government interference. On the other hand, the Republicans resisted efforts supported by workers to pass laws that would limit the length of the work day or provide protection for women and children employed in factories.

Tariffs and other taxes

As in the 1820s, after the Civil War, tariffs were increasingly placed on specific goods to benefit specific industries and sometimes to appease voters in a particular state or congressional district. From 1865 to 1900 federal tariffs averaged 47 percent of the price of imports. By raising the price for manufactured goods particularly, tariffs aided new manufacturing companies. As these companies became more profitable, they found it easier to attract new investments. Tariff collections also had the advantage of raising money to pay off loans taken out to finance the Civil War, to provide pensions for Union war veterans, to pay for the war against Native Americans as the country expanded westward, and to bankroll public improvements such as highways (themselves an indirect way of supporting industry).

In the twentieth century, the federal government turned to other taxes (or reductions in taxes) to influence the behavior of consumers and businesses alike. Taxes were cut to make more money available to be spent (by both businesses and consumers), or to encourage businesses to invest in new factories as a means of stimulating economic growth. Whether politicians favored tax breaks for individuals or for businesses, there was little argument that the government should play an active role in helping to manage the overall economy.

Trust Busters

Prior to 1890 it was perfectly legal for corporations to band together and behave in ways that promoted their own interests, such as agreeing not to lower prices on goods they all manufactured. Other businesses tried to achieve monopolies by buying up the competition or driving smaller competitors out of business. The unprecedented size and influence of the companies that had monopolies on markets raised concerns that such companies (called trusts in that era) could seriously harm consumers by raising prices higher and higher since they had no competition (see Chapter 6).

To contain the power of these industrial leaders, the U.S. Congress passed the Sherman Antitrust Act in 1890 and the Clayton Act and the Federal Trade Commission Act in 1914. The Sherman Antitrust Act made it illegal for companies to conspire with one another to set (fix) prices on goods sold across state lines. Other activities that became illegal were group boycotts, in which two companies refused to do business with a third company as a means of driving that third company out of business, and horizontal market division, in which companies agreed to stay out of each other's geographical areas.

Despite passage of the Sherman Antitrust Act, little was done to enforce it until the administration of President Theodore Roosevelt (1901–09). Roosevelt became known as a "trust buster" for the legal challenges he mounted against monopolies. In the 1904 case Northern Securities Co. v. United States, the government had claimed that Northern Securities Company had violated the Sherman Antitrust Act by bringing under common ownership two railroad companies, the Northern Pacific Railroad and the Great Northern Railroad, that ran roughly parallel tracks east and west across the northern tier of states. The government wanted the company broken up in order to restore competition between the two constituent companies, and thereby to avoid higher prices for both passengers and companies shipping freight by rail. The Supreme Court agreed with the government's argument and ordered that Northern Securities be dissolved and that the two railroads once again be operated as separate companies.

The Roosevelt administration's most famous case was Standard Oil Co. v. United States. In 1906 the government filed a suit in federal court, charging that the Standard Oil Trust, a group of thirty-four oil companies owned or controlled by the financier John D. Rockefeller (1839–1937), violated the Sherman Antitrust Act by limiting competition.

Starting in 1868, with the Standard Oil Company incorporated in Ohio, Rockefeller had steadily bought a series of oil refineries and other companies associated with the petroleum business. At first, the main product was kerosene, used in lamps. With the development of the automobile, another product derived from oil, gasoline, became highly profitable.

Rockefeller often used the word Standard in company names. In his company, Rockefeller assigned certain geographical areas to each company; other companies owned by Rockefeller were not allowed to compete in those areas.

In 1882, Rockefeller had formed the Standard Oil Company of New Jersey in order to take advantage of a New Jersey law that let corporations own other companies. Over the next two decades, Rockefeller came to control enough of the U.S. oil industry that he could largely dictate prices, even if it meant using profits from one area of the country to drive competitors out of business in another.

In 1911, the Supreme Court issued its ruling in the case, agreeing with the government and ordering that Standard Oil be broken up into independent companies. The ruling also included guidelines about how companies could use the name Standard in their new operations. The result of the breakup of Standard Oil was the formation of oil companies that were in operation ninety years later, with such names as Sohio (Standard of Ohio) and Standard Oil Co. New York (Mobil). Eventually, starting in the 1930s, some of these separate companies merged, but the enormous combination created by John D. Rockefeller was never reassembled.

The government's role in assisting workers

Should the government take a leading role in helping people suffering from unemployment, poverty, or homelessness? In the newly organized United States of 1776, the role of government was seen as being minimal: protect the new nation from foreign attack and look after issues that might arise as a result of commerce that crossed state or international boundaries. No provision was made in the Constitution for aiding large numbers of people in cities who were without jobs, money, food, or homes. The Founding Fathers had never seen such problems, which arose as unwelcome results of the Industrial Revolution.

The social problems arising from industrialization began to be seen in the nineteenth century. Often, the affected workers were immigrants who had flooded into big cities; thus it was often easier to blame poverty and unemployment on immigration rather than on shortcomings of industrialization. If the urban poor posed any problem, it was more often seen as one of crime or potential rioting, which was an issue for the police. Charity was assigned to churches or to voluntary social workers, like Jane Addams.

In October 1929 an event took place that eventually challenged whether the system of private ownership of business could survive. On October 29, prices on the New York Stock exchange plunged. The causes of the stock market crash, as it was known, were complex. Stock prices had risen sharply in the preceding six months, and many investors had borrowed money from banks to buy stocks, expecting to sell them at higher prices, repay the loans, and make a tidy profit.

But in early October, prices stopped rising. Many investors decided that stocks were over-priced. As investors realized that prices had reached a peak, they started selling shares to take advantage of prices that were still high. The basic law of supply and demand set in: there were more stocks for sale than investors to buy them, and as a result prices started falling. On October 29, the drop in prices was severe.

Investors, including many ordinary people, owed banks for the money they had borrowed to buy the stocks. But the money had disappeared. Even after selling their stocks, investors did not have enough to repay the loans. In just two weeks, from October 29 to November 13 (when prices finally stopped falling), more than thirty billion dollars in value simply disappeared.

The fact that so many loans had gone bad posed a problem for banks. The source of the loans was depositors' money, which was now gone. As depositors went to withdraw money from banks, some institutions did not have the cash and closed their doors.

Within a few years, economic activity had dropped sharply. Eager to protect their savings, most people were reluctant to buy things, and companies laid off workers by the thousands. The sight of so many unemployed caused a further contraction of sales, which led to more layoffs. Companies, foreseeing much reduced demand, laid off workers.

By 1932, at least 25 percent of workers did not have a job, and many others could only find part-time work. People endured the humiliation of standing in long lines to get a handout of bread just to keep their families from starving. The traditional advice to the unemployed—"Get a job!—" was a mockery: there were no jobs to get.

To make things even worse, a severe drought that lasted for most of the 1930s hit states in the West and Southwest. Many farmers saw their crops dry up and die for lack of rain. Enormous clouds of dust that looked like tornadoes swept through Oklahoma, forcing families off their farms and into a desperate migration to California, where they were stopped from entering at the state border. The American economic system had broken down almost completely.

The Phenomenon of the Crash

Although the Industrial Revolution overall resulted in economic growth, it also had an unwelcome side effect: the economic slowdown. Economic growth means that factories are producing more and more. People who invest in such enterprises see the value of their investments rise steadily. But any hint of an end to this growth often causes investors to try to sell their shares in companies (for fear the company might eventually go out of business). When this selling becomes widespread, the result is an economic slowdown.

There are many words used to describe this cycle: panic, crash, depression, and recession. All these words represent the same basic thing: a widespread and relatively sudden decrease in economic activity. Driven partly by fear of what might happen in the future, consumers order fewer goods, manufacturers produce less and hire fewer workers. Workers who do not have jobs purchase less (and may cause their neighbors to buy less, for fear of what might happen to them), which causes other manufacturers to order fewer goods. The cycle of fear feeds on itself, sometimes for several years.

In the United States, notable periods of economic slowdown have occurred in 1819, 1837, 1857, 1873, 1893, 1914, 1929, 1957, 1982, 1991, and 2001, with other less severe downturns in between.

Experts disagree on what causes an economic slowdown, and on how to stop the cycle and resume growth. They even disagree on precisely when recessions begin and end.

As the second phase of the Industrial Revolution resulted in enormousgrowth in individual businesses, economic downturns also became larger, partly because they affected more people who worked in factories.

The downturn that started in 1929 was the worst that had taken place in U.S. history. It created a national emergency, with tens of thousands of people without work or food. Some observers feared that workers would start a revolution, similar to the 1917 communist revolution that had taken place in Russia just twelve years earlier.

President Herbert Hoover (1874–1964), in office only a few months when the stock market crashed, focused on small-scale local efforts to encourage private initiatives to address the needs of workers who could not find work, as well as encouraging so-called character building, suggesting that unemployment was the fault of the workers rather than a national calamity far beyond the control of those out of work.

In 1932, Congress considered a bill to immediately provide a bonus payment to World War I veterans. In May 1932, about 10,000 veterans gathered in Washington to demonstrate their support for the bill. The House of Representatives passed the measure, but the Senate did not. Shortly afterwards, General Douglas MacArthur drove the "bonus marchers" out of the capital, where they were camped on the site of a former recruiting station. MacArthur used tanks and soldiers with bayonets, justifying his controversial tactics on the grounds that he thought the United States was on the verge of a communist revolution.

In the 1932 presidential election, the Democratic candidate, Franklin Delano Roosevelt (1882–1945), won 88.9 percent of the vote. It was one of the most lopsided elections in U.S. history. Roosevelt had promised the American people a New Deal. The next eight years saw a whirlwind of federal agencies and programs designed to alleviate the suffering of ordinary workers. One of the most familiar was a pension program for retired people called Social Security. The Tennessee Valley Authority built electricity-generating plants powered by water falling over dams, and as a result brought electricity to many farms for the first time. The Civilian Conservation Corps provided jobs in federal parks to unemployed urban workers.

Of particular interest to labor unions was the National Labor Relations Act, passed in 1935. The act gave workers the right to organize unions and to go on strike (refuse to work) in order to persuade employers to grant their demands for higher wages or better working conditions. It also established the National Labor Relations Board, giving the federal government a role in helping companies and unions avoid strikes by providing professional mediators. The National Labor Relations Act redressed what had been an imbalance in the U.S. economy. While business owners were covered by laws protecting private property, workers had not previously been given parallel protection in pursuing their interests in the form of unions.

Some New Deal programs worked, some did not. Some people accused Roosevelt of promoting socialism through government control of the economy, others credited him with saving the economy from socialism by alleviating suffering without attacking private ownership of business. One thing was certain: the role of the government had changed drastically in response to dire emergency.

After Roosevelt's death in 1945, Republicans continued to resist some New Deal programs, or to modify them. In 1947, for example, the Republican-controlled Congress passed the Taft-Hartley Act over President Truman's veto. The act limited the ability of unions to require workers to join the union and pay dues, and the law banned secondary strikes (strikes against companies that were customers or suppliers of the firm that was the initial target of a strike). The Taft-Hartley Act also gave the U.S. Attorney General the power to obtain a court order postponing a strike for eighty days if it threatened the national health or safety. The Act also barred unions from contributing money to political campaigns.

Roosevelt's programs would do little to end the Great Depression. The United States only recovered after World War II broke out in Europe in 1939, when Germany declared war on Poland and eventually drew most of Europe into the fray. With the hostilities came a need for weapons, and lots of them. In 1940 Roosevelt volunteered to produce military supplies and lend them to Britain in its struggle against Germany. In 1941 the United States entered the war, after the Japanese navy attacked the American naval base at Pearl Harbor, Hawaii. The United States geared up in an unprecedented burst of industrial activity, producing ships, planes, tanks, rifles, ammunition, and every other conceivable tool of war. Unemployment was a thing of the past; the gears of industry were humming along.

The second world war in some ways marks the end of the period called the Industrial Revolution. Of course, the industrial economy did not disappear, and the complex process of industrialization continued to spread throughout the world (see Chapter 8). But the revolutionary aspect of the constant stream of new inventions that fundamentally changed people's lives was over in Western Europe, where it was born, and in the United States, where it thrived.

For More Information


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Social and Political Impact of the Second Phase of the Industrial Revolution

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