Chapter 24: American Pageant

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Industry Comes of Age: 1865-1900

The Iron Colt Becomes an Iron Horse

Due to the expansion of the country, many new railroads were built. Congress began to advance liberal money loans to 2 favored cross-continent companies in 1862 in response to the fact that transcontinental railroad construction was so costly and risky.
Growing railroads took up more land than they were allotted because their land grants were given over a broad path through the proposed route. The railroad owners would then choose the route to build on. President Grover Cleveland ended the land dispute in 1887 when he opened up all the unclaimed public portions of the grants to the public.

Spanning the Continent with Rails

The Union Pacific Railroad was commissioned by Congress in 1862 to build a transcontinental railroad starting in Omaha, Nebraska.
Many railroad workers, including Irish "Paddies", were forced to pick up their rifles and fight when Indians attempted to defend their lands.
Rail-lying at the California end of the railroad was taken up by the Central Pacific Railroad. The 4 chief financial backers of the enterprise (the Big Four) included Leland Stanford and Collis P. Huntington. They operated through 2 construction companies.
The Union Pacific Railroad and the Central Pacific Railroad companies both received monetary aid from the government.
The transcontinental railroad was completed in 1869, increasing trade with Asia and opening up the West for expansion.

Binding the Continent with Railroad Ties

There was a total of 5 transcontinental railroads built: The Northern Pacific Railroad, running from Lake Superior to Puget Sound, was completed in 1883; the Atchison, running from Topeka to California, was completed in 1884; the Southern Pacific, stretching from New Orleans to San Francisco, was also completed in 1884; and the Great Northern, running from Duluth to Seattle, was completed in 1893 by James J. Hill.

Railroad Consolidation and Mechanization

The railroad was Cornelius Vanderbilt's enterprise.
2 significant improvements benefited the railroads; the steel rail and a standard gauge of track width. Steel rails were much stronger and safer than the traditional iron rails.

Revolution by Railways

The railroad stimulated the industrialization of the country in the post-Civil War years. It created an enormous domestic market for American raw materials and manufactured goods. Railroad companies also stimulated immigration.
At this time, every town in the United States had its own local time. In order to keep schedules and avoid wrecks, the major rail lines stated, on November 18, 1883, that the continent would be divided into 4 times zones - most towns accepted the new time method.

Wrongdoing in Railroading

With great wealth and prosperity came much corruption.
In order to increase the weight of cows, "stock watering" was employed. It entailed forcing a cow to bloat itself with water before it was weighed for sale. This technique enabled railroad stock promoters to inflate their claims about a given line's assets and profitability and sell stocks and bonds in excess of the railroad's actual value.
Railroaders, feeling they were above the law, abused the public by bribing judges and legislatures.
Railroad kings were manipulators of a huge natural monopoly and exercised too much direct control over the lives of people.
Many rail barons granted rebates or kickbacks (bribes) to powerful shippers in return for steady traffic.
Railroad companies combined with other companies in order to protect their profits. "Pools", agreements to divide the business in a given area and share the profits, were the earliest form of combinations.

Government Bridles the Iron Horse

With the onset of the depression of the 1870s, came protests from farmers against railroaders who ran the farmers into bankruptcy.
Many Midwestern legislatures tried to regulate the railroad monopoly, but in 1886, the Supreme Court ruled in the Wabash case that individual states had no power to regulate interstate commerce.
In 1887, Congress passed the Interstate Commerce Act. It prohibited rebates and pools, required the railroads to publish their rates openly, forbade unfair discrimination against shippers, and outlawed charging more for a short trip than for a long one over the same line. It also created the Interstate Commerce Commission (ICC) to administer and enforce the new legislation. The new laws provided an orderly forum where competing business interests could resolve their conflicts in peaceful ways. The laws tended to stabilize the existing railroad business.

Miracles of Mechanization

The telephone was created in 1876 by Alexander Graham Bell. This invention revolutionized the way Americans communicated. Thomas Alva Edison invented numerous devices; the most well-known is his perfection of the electric light bulb in 1879.

The Trust Titan Emerges

Tycoons like Andrew Carnegie, the steel king; John D. Rockefeller, the oil baron; and J. Pierpont Morgan, the bankers' banker, circumvented their competition. Carnegie used the tactic of "vertical integration" to combine all phases of manufacturing into one organization. He and his business controlled every aspect of production, from mining to marketing. His goal was to improve efficiency.
"Horizontal integration" entailed allying with competitors to monopolize a given market. This tactic of creating trusts was used by Rockefeller.

The Supremacy of Steel

Steel was "king" during the industrialization era. Nearly every aspect of society used it.
The United States soon outdistanced all foreign competitors and was producing 1/3 of the world's steel supply. The Bessemer process allowed for the price of steel to drop dramatically and for its production to be done with relative ease. The process involved blowing cold air on red-hot iron in order to ignite the carbon and eliminate impurities.

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