Monday, December 15, 2008
Saturday, December 6, 2008
The World of Jacob Riis
When Jacob A. Riis, a police reporter in New York, began his personal campaign to expose the misery of the underprivileged living in the crime-infested slums of the lower East side, he soon found that the printed word was not sufficiently convincing, and so he turned to photography by flashlight.
Because it burned instantaneously - in a flash - it was an improvement over the magnesium flare, with its several seconds duration, which O'Sullivan had used in the Comstock Lode mines. Riis succeeded in its use; the blinding flash reveals with pitiless detail the sordid interiors, but deals almost tenderly with the faces of those whose lot it was to live within them.
In 1888 the New York Sun published twelve drawings from his photographs with an article headlined "Flashes from the Slums" and told how "a mysterious party has lately been startling the town o' nights. Somnolent policemen on the street, denizens of the dives in their dens, tramps and bummers in their so-called lodgings, and all the people of the wild and wonderful variety of New York night life have in their turn marvelled at and been frightened by the phenomenon." What they saw was three or four figures in the gloom, a ghostly tripod, some weird and uncanny movements, the blinding flash, and then they heard the patter of retreating footsteps and the mysterious visitors were gone before they could collect their scattered thoughts and try to find out what it was all about.
The intruders were Riis, two amateur photographers, Henry G. Piffard and Richard Hoe Lawrence (members, be it noted, of the Society of Amateur Photographers of New York), and Dr. John T. Nagle of the Health Board. Their purpose, Riis stated, was to make a collection of views for lantern slides to show "as no mere description could, the misery and vice that he had noticed in his ten years of experience ... and suggest the direction in which good might be done."
The result was that the photographic work of Jacob Riis was overlooked until 1947, when Alexander Alland, himself a photographer, made excellent enlargements from the original glass negatives that the Museum of the City of New York, through his efforts, had acquired. The exhibition held by the Museum, and the subsequent publication of some of the best of the prints in U,S. Camera 1948, revealed Riis as a photographer of importance.
Yet even from Hell's Kitchen had I not long before been driven forth with my camera by a band of angry women, who pelted me with brickbats and stones on my retreat, shouting at me never to come back.... The children know generally what they want and they go for it by the shortest cut. I found that out, whether I had flowers to give or pictures to take. . . Their determination to be "took" the moment the camera hove into sight, in the most striking pose they could hastily devise, was always the most formidable bar to success I met."
Because it burned instantaneously - in a flash - it was an improvement over the magnesium flare, with its several seconds duration, which O'Sullivan had used in the Comstock Lode mines. Riis succeeded in its use; the blinding flash reveals with pitiless detail the sordid interiors, but deals almost tenderly with the faces of those whose lot it was to live within them.
He was always sympathetic to people, whether he was photographing street Arabs stealing in the street from a handcart, or the inhabitants of the alley known as Bandits' Roost peering unself consciously at the camera from doorways and stoops and windows. The importance of these photographs lies in their power not only to inform, but to move us. They are at once interpretations and records; although they are no longer topical, they contain qualities that will last as long as man is concerned with his brother.
Thursday, December 4, 2008
Growth of Industry: Seleted Topics
The Triangle Shirtwaist Factory FireBefore the Fire:
A Description of the Triangle Shirtwaist Factory and Fire
Like many other factories in the beginning of the twentieth century, the Triangle Shirtwaist Factory was a loft factory. This means that the factory was not in a separate building, but in the top three floors of an office building. The Triangle Factory was on the eighth, ninth, and tenth floors of a building called the Asch Building. The factory produced shirtwaists, a woman's blouse. Shirtwaists were in great demand for the growing number of women office workers during that time, and the Triangle Factory was one of the most successful garment factories in New York City. It employed one thousand workers, mostly immigrant women who knew little or no English. They worked long hours in hazardous and unhealthful conditions for very low wages.
Workers were crowded elbow-to-elbow and back-to-back at rows of tables. Pieces of fabric were scattered on the floor or stored tightly in bins. Cutting machines ran on gasoline. Smoking was not allowed, but workers often smoked while the bosses looked the other way. Water barrels with buckets for putting out fires were not always full. There was one rotting fire hose, attached to a rusted valve.
There was only one exit from the workroom and it was down a hall so narrow that people had to walk one by one. There were four elevators but only was working. The stairway was as narrow as the hall. There were two doors leading from the building; one was closed or locked from the outside and the other opened inward.
The Fire Starts
On March 25, 1911, the day of the fire, the offices below the factory were closed for the weekend. About half of the workers were in the factory on that Saturday. The fire spread too quickly to be extinguished by the small water supply and the fire hose did not work. In the rush to get down the narrow hall and stairways to the doors, people were trampled. Some tried to break through the locked door. Others rushed to the other door and were crushed as they tried to pull it inward to open it. As people crowded into the elevator, others tried to ride down on the tops of the cars, hanging on the cables. Soon there were so many bodies in the shafts that the one working elevator could no longer be used. Women, girls, and men trapped in the workroom threw themselves out of the windows and fell to their death on the street. Others tried to use the fire escape, but it was too weak to hold so many people and soon melted in the heat.
Firefighters from Engine Companies 72 and 33 were first on the scene. Once they arrived, they had several problems. The ladders only reached to between the sixth and seventh floors. Water from the hoses only reached to the seventh floor. The nets and blankets that the firefighters spread to catch the jumping workers tore and the people crashed through to die on the street.
The number of people who died was 146, including 13 men. Nineteen bodies were found against the locked door. Twenty-five bodies were found in the cloakroom. Some bodies were so badly charred that they could not be identified, even as to sex. Sixty-two jumped nine stories to their deaths. The bodies were taken to the Bellevue Morgue or lined up along the Green Street for parents and family member to come and identify their lost loved ones.
Stories of Survivors, Witnesses and Rescuers
1. Max Rother, a tailor, was on the Washington Place side of the building on the eighth floor when he heard the cry of "fire" coming from the Greene Street side of the loft. Hanging over the heads of the sewers at the machines in the room was a line of clothes in flames. With the manager, Max Burnstein, he tried to put the fire out with pails of water. While doing this, the rope on which the clothes were hung burned in half and the burning clothes fell over their heads. Soon the room was in flames. Rother ran for the stairs on the Greene Street side of the building and escaped. He does not know what happened to Burnstein, the manager.
2. Cecilia Walker, 20 years old, who lives at 29 Stanton Street, slid down the cable at the Washington Place elevator and escaped with burned hands and body bruises. She was on the eighth floor of the building when the fire started. Running over to the elevator shaft she rang for the car, but it did not come. As she passed the sixth floor sliding on the cable she became unconscious, she said, and does not know what happened until she reached St. Vincent's Hospital, where she is now. "A girl and I," she told the doctors at the hospital, "were on the eighth floor, and when I ran for the elevator shaft my girl friend started for the window on the Washington Street side. I looked around to call her but she had gone."
3. Benjamin Levy of 995 Freeman Street, the Bronx, one of the first men to arrive at the burning building, says that it was ten minutes after the fire started before the first fire engine arrived. Mr. Levy is the junior member of the firm of 1. Levy & Son wholesale clothing manufactures just around the corner, at 3 and 5 Waverley Place.
"I was upstairs in our work-room," said he, "when one of the employees who happened to be looking out of the window cried that there was a fire around the corner. I rushed downstairs, and when I reached the sidewalk the girls were already jumping from the windows. None of them moved after they struck the sidewalk. Several men ran up with a net, which they got somewhere, and I seized one side of it to help them hold it.
"It was about ten feet square and we managed to catch about fifteen girls. I don't believe we saved over one or two however. The fall was so great that they bounced to the sidewalk after striking the net. Bodies were falling all around us, and two or three of the men with me were knocked down. The girls just leaped wildly out of the windows and turned over and over before reaching the sidewalk.
"I only saw one man jump. All the rest were girls. They stood on the windowsills tearing their hair out in the handfuls and then they jumped. One girl held back after all the rest and clung to the window casing until the flames from the window below crept up to her and set her clothing on fire. Then she jumped far over the net and was killed instantly, like all the rest."
One of the policemen who were checking up on the bodies as they were being shipped to the Morgue told of one heap of bodies in which a girl was found still alive when the others were taken off her. She died before an ambulance doctor could reach her.
4. Samuel Levine, a machine operator on the ninth floor, who lives at 1982 Atlantic Avenue, Brooklyn, told this story when he had recovered from his injuries at the New York Hospital: "I was at work when I heard the shout of 'Fire!' The girls on the floor dropped everything and rushed wildly around, some in the direction of windows and others toward the elevator door. I saw the elevator go down past our floor once. It was crowded to the limit and no one could have got on. It did not stop. Not another trip was made.
"There were flames all around in no time. Three girls, I think from the floor below, came rushing past me. Their clothes were on fire. I grabbed the fire pails and tried to pour the water on them, but they did not stop. They ran screaming toward the windows. I knew there was no hope there, so I stayed where I was, hoping that the elevator would come up again.
"I finally smashed open the doors to the elevator. I guess I must have done it with my hands. I reached out and grabbed the cables, wrapped my legs around them, and started to slide down. I can remember getting to the sixth floor. While on my way down, as slow as I could let myself drop, the bodies of six girls went falling past me. One of them struck me and I fell to the top of the elevator. I fell on the dead body of a girl. My back hit the beam that runs across the top of the car.
"Finally I heard the firemen cutting their way into the elevator shaft, and they came and let us out. I think others were taken out alive with me."
5. M. Samillson of the firm of Samilson & Co., on the second floor of the building, was standing at one of the windows of his office just after the fire was discovered, In the next few minutes, he said, he saw several bodies shoot past the window from above, most of the girls. When the firemen reached him at nearly 6 o'clock, he was still standing there horrified. He says he could not tear himself away.
Few of the girls that fell from the windows on the ninth floor, it was learned, jumped of their own accord. They were pushed forward by the frightened crowd in the room behind them.
6. One of the bookkeepers, Morris Lewine, said he was on the top floor. He threw the books into a safe when the cry of fire was raised. He then made his way to the roof, followed by two girls. He found a ladder and made his way with one of the girls to the roof of the next building. He did not know what became of the second girl.
7. Thomas Gregory, an elevator man, who works at 103 Bleecker Street, said he was going home when he came to the fire. He says he ran into the building and made three trips in the elevator, taking down about fifteen persons at each trip. He said he left the hallways of the upper floors crowded with frenzied men and women, who fought to get into the elevator and clawed his face and neck. After the third trip the machinery broke down, he said. He said there were two elevators when he went into the building. One was on the ground floor, and one was on one of the upper floors. He saw no operator.
8. A man who said he was Samuel Tauber and that he had been employed as a foreman in the Triangle Company shops told about a fire on the eighth floor which happened two years ago. He said that on this occasion the motor, which supplies power for the two hundred sewing and cutting machines on that floor, had emitted a flame, which set fire to some cuttings nearby. He said that this fire had not been serious, but that it had thrown the girls working there into a panic. Tauber said that he believed yesterday's fire might have been caused in the same way.
9. Frank Fingerman, employed by the firm of M. S. Work & Co., in Washington Place East, turned in a fire alarm from a Broadway box when he heard the cries of the women in the factory building.
"I saw as I ran," he said, "a boy and a girl standing together at a Greene Street window. He was holding her, and she seemed to be trying to jump. They were still there when I came back from the firebox. As the smoke began to come out of the window above them the boy let the girl go, and she jumped. He followed her before she struck the ground.
"Four more came out of the same window immediately. The crowds were jamming our own door until I could not pass out and the street was packed right up to the fire trucks."
10. Frederick Newman, the New York University law student who with Charles P. Kramer, had charge of the rescue party of the New York University students up on the roof of their institution, said this after the work was done:
"We were in the library of the building in the top floor when we noticed a gust of smoke coming from the building across the courtyard. Sparks drifted in at the open library window and as we jumped from our seats we saw the girls workers crowding at the windows. We saw a man leap out and then the girls began to follow him."
11. 0. S. Smith, another student, was on his way from the Astor Place Subway station to the law library when he first caught sight of the fire. "I was stopped by police at Waverley Place and Greene Street," he said. "Across the street we could see the bodies of five women. As I looked I saw an arm raised and I knew that one of the women was alive. I called out to a policeman standing near. His only answer was, 'Get back there and mind your own business.' I pointed out the woman to him and told him something ought to be done, as the water was pouring down upon her. He didn't understand me, perhaps for nothing was done."
12. Alfred K. Schwach, a student, saw girls rushing to the rear factory windows, their hair on fire, to pause at the window for a moment and then jump out. "I saw four men," he said, "who tried to catch the girls. They seized horse blanket from a truck horse in Waverley Place and held it out. It gave way like paper as the girls struck it."
13. Pauline Grossman, 18 years old, who was injured by leaping from a window of the factory as the fire was growing on the eighth floor, says three male employees of the factory made a human chain of their bodies and swung across a narrow alleyway to the building fronting in Greene Street. She declares a number of person's passed across the men's bodies and escaped from the burning building by entering a window of the building opposite.
"As the people crossing upon the human bridge crowded more and more over the men's bodies the weight upon the body of the center man became too great and his back was broken. She said he fell to the passageway below and the other two men lost their holds upon the windowsills and fell. Persons who were crossing upon the human bridge dropped with them to the passageway."
14. Celia Saltz was working at her sewing machine when the fire started. She raced to the door and the force of the crowd pushed her into the elevator as soon as the doors opened. She said, "I even forgot that I had a younger sister working with me ... I began to scream for my sister. I had lost her, I had lost my sister." Celia fainted in the elevator but woke up on the floor of the store across the street. I opened my eyes and I saw my sister bending over me. I began to cry. I couldn't help it. My sister, Minnie, was only fourteen."
Adapted from MuseumNetwork. com
15. Pauline Cuoio Pepe was a nineteen-year-old sewing machine worker at the Triangle Shirtwaist Factory. "It was all nice young Jewish girls who were engaged to be married. You should see the diamonds and everything. Those were the ones who threw themselves from the window. What the hell did they close the door for? What did they think we were going to steal? What are we gonna do, steal a shirtwaist? Who the heck wanted a shirtwaist?" asked Pepe. " We never went out the front door. We always went one by one out the back. There was a man there searching, because the people were afraid we would take something, so that door was always locked.
A Description of the Triangle Shirtwaist Factory and Fire
Like many other factories in the beginning of the twentieth century, the Triangle Shirtwaist Factory was a loft factory. This means that the factory was not in a separate building, but in the top three floors of an office building. The Triangle Factory was on the eighth, ninth, and tenth floors of a building called the Asch Building. The factory produced shirtwaists, a woman's blouse. Shirtwaists were in great demand for the growing number of women office workers during that time, and the Triangle Factory was one of the most successful garment factories in New York City. It employed one thousand workers, mostly immigrant women who knew little or no English. They worked long hours in hazardous and unhealthful conditions for very low wages.
Workers were crowded elbow-to-elbow and back-to-back at rows of tables. Pieces of fabric were scattered on the floor or stored tightly in bins. Cutting machines ran on gasoline. Smoking was not allowed, but workers often smoked while the bosses looked the other way. Water barrels with buckets for putting out fires were not always full. There was one rotting fire hose, attached to a rusted valve.
There was only one exit from the workroom and it was down a hall so narrow that people had to walk one by one. There were four elevators but only was working. The stairway was as narrow as the hall. There were two doors leading from the building; one was closed or locked from the outside and the other opened inward.
The Fire Starts
On March 25, 1911, the day of the fire, the offices below the factory were closed for the weekend. About half of the workers were in the factory on that Saturday. The fire spread too quickly to be extinguished by the small water supply and the fire hose did not work. In the rush to get down the narrow hall and stairways to the doors, people were trampled. Some tried to break through the locked door. Others rushed to the other door and were crushed as they tried to pull it inward to open it. As people crowded into the elevator, others tried to ride down on the tops of the cars, hanging on the cables. Soon there were so many bodies in the shafts that the one working elevator could no longer be used. Women, girls, and men trapped in the workroom threw themselves out of the windows and fell to their death on the street. Others tried to use the fire escape, but it was too weak to hold so many people and soon melted in the heat.
Firefighters from Engine Companies 72 and 33 were first on the scene. Once they arrived, they had several problems. The ladders only reached to between the sixth and seventh floors. Water from the hoses only reached to the seventh floor. The nets and blankets that the firefighters spread to catch the jumping workers tore and the people crashed through to die on the street.
The number of people who died was 146, including 13 men. Nineteen bodies were found against the locked door. Twenty-five bodies were found in the cloakroom. Some bodies were so badly charred that they could not be identified, even as to sex. Sixty-two jumped nine stories to their deaths. The bodies were taken to the Bellevue Morgue or lined up along the Green Street for parents and family member to come and identify their lost loved ones.
Stories of Survivors, Witnesses and Rescuers
1. Max Rother, a tailor, was on the Washington Place side of the building on the eighth floor when he heard the cry of "fire" coming from the Greene Street side of the loft. Hanging over the heads of the sewers at the machines in the room was a line of clothes in flames. With the manager, Max Burnstein, he tried to put the fire out with pails of water. While doing this, the rope on which the clothes were hung burned in half and the burning clothes fell over their heads. Soon the room was in flames. Rother ran for the stairs on the Greene Street side of the building and escaped. He does not know what happened to Burnstein, the manager.
2. Cecilia Walker, 20 years old, who lives at 29 Stanton Street, slid down the cable at the Washington Place elevator and escaped with burned hands and body bruises. She was on the eighth floor of the building when the fire started. Running over to the elevator shaft she rang for the car, but it did not come. As she passed the sixth floor sliding on the cable she became unconscious, she said, and does not know what happened until she reached St. Vincent's Hospital, where she is now. "A girl and I," she told the doctors at the hospital, "were on the eighth floor, and when I ran for the elevator shaft my girl friend started for the window on the Washington Street side. I looked around to call her but she had gone."
3. Benjamin Levy of 995 Freeman Street, the Bronx, one of the first men to arrive at the burning building, says that it was ten minutes after the fire started before the first fire engine arrived. Mr. Levy is the junior member of the firm of 1. Levy & Son wholesale clothing manufactures just around the corner, at 3 and 5 Waverley Place.
"I was upstairs in our work-room," said he, "when one of the employees who happened to be looking out of the window cried that there was a fire around the corner. I rushed downstairs, and when I reached the sidewalk the girls were already jumping from the windows. None of them moved after they struck the sidewalk. Several men ran up with a net, which they got somewhere, and I seized one side of it to help them hold it.
"It was about ten feet square and we managed to catch about fifteen girls. I don't believe we saved over one or two however. The fall was so great that they bounced to the sidewalk after striking the net. Bodies were falling all around us, and two or three of the men with me were knocked down. The girls just leaped wildly out of the windows and turned over and over before reaching the sidewalk.
"I only saw one man jump. All the rest were girls. They stood on the windowsills tearing their hair out in the handfuls and then they jumped. One girl held back after all the rest and clung to the window casing until the flames from the window below crept up to her and set her clothing on fire. Then she jumped far over the net and was killed instantly, like all the rest."
One of the policemen who were checking up on the bodies as they were being shipped to the Morgue told of one heap of bodies in which a girl was found still alive when the others were taken off her. She died before an ambulance doctor could reach her.
4. Samuel Levine, a machine operator on the ninth floor, who lives at 1982 Atlantic Avenue, Brooklyn, told this story when he had recovered from his injuries at the New York Hospital: "I was at work when I heard the shout of 'Fire!' The girls on the floor dropped everything and rushed wildly around, some in the direction of windows and others toward the elevator door. I saw the elevator go down past our floor once. It was crowded to the limit and no one could have got on. It did not stop. Not another trip was made.
"There were flames all around in no time. Three girls, I think from the floor below, came rushing past me. Their clothes were on fire. I grabbed the fire pails and tried to pour the water on them, but they did not stop. They ran screaming toward the windows. I knew there was no hope there, so I stayed where I was, hoping that the elevator would come up again.
"I finally smashed open the doors to the elevator. I guess I must have done it with my hands. I reached out and grabbed the cables, wrapped my legs around them, and started to slide down. I can remember getting to the sixth floor. While on my way down, as slow as I could let myself drop, the bodies of six girls went falling past me. One of them struck me and I fell to the top of the elevator. I fell on the dead body of a girl. My back hit the beam that runs across the top of the car.
"Finally I heard the firemen cutting their way into the elevator shaft, and they came and let us out. I think others were taken out alive with me."
5. M. Samillson of the firm of Samilson & Co., on the second floor of the building, was standing at one of the windows of his office just after the fire was discovered, In the next few minutes, he said, he saw several bodies shoot past the window from above, most of the girls. When the firemen reached him at nearly 6 o'clock, he was still standing there horrified. He says he could not tear himself away.
Few of the girls that fell from the windows on the ninth floor, it was learned, jumped of their own accord. They were pushed forward by the frightened crowd in the room behind them.
6. One of the bookkeepers, Morris Lewine, said he was on the top floor. He threw the books into a safe when the cry of fire was raised. He then made his way to the roof, followed by two girls. He found a ladder and made his way with one of the girls to the roof of the next building. He did not know what became of the second girl.
7. Thomas Gregory, an elevator man, who works at 103 Bleecker Street, said he was going home when he came to the fire. He says he ran into the building and made three trips in the elevator, taking down about fifteen persons at each trip. He said he left the hallways of the upper floors crowded with frenzied men and women, who fought to get into the elevator and clawed his face and neck. After the third trip the machinery broke down, he said. He said there were two elevators when he went into the building. One was on the ground floor, and one was on one of the upper floors. He saw no operator.
8. A man who said he was Samuel Tauber and that he had been employed as a foreman in the Triangle Company shops told about a fire on the eighth floor which happened two years ago. He said that on this occasion the motor, which supplies power for the two hundred sewing and cutting machines on that floor, had emitted a flame, which set fire to some cuttings nearby. He said that this fire had not been serious, but that it had thrown the girls working there into a panic. Tauber said that he believed yesterday's fire might have been caused in the same way.
9. Frank Fingerman, employed by the firm of M. S. Work & Co., in Washington Place East, turned in a fire alarm from a Broadway box when he heard the cries of the women in the factory building.
"I saw as I ran," he said, "a boy and a girl standing together at a Greene Street window. He was holding her, and she seemed to be trying to jump. They were still there when I came back from the firebox. As the smoke began to come out of the window above them the boy let the girl go, and she jumped. He followed her before she struck the ground.
"Four more came out of the same window immediately. The crowds were jamming our own door until I could not pass out and the street was packed right up to the fire trucks."
10. Frederick Newman, the New York University law student who with Charles P. Kramer, had charge of the rescue party of the New York University students up on the roof of their institution, said this after the work was done:
"We were in the library of the building in the top floor when we noticed a gust of smoke coming from the building across the courtyard. Sparks drifted in at the open library window and as we jumped from our seats we saw the girls workers crowding at the windows. We saw a man leap out and then the girls began to follow him."
11. 0. S. Smith, another student, was on his way from the Astor Place Subway station to the law library when he first caught sight of the fire. "I was stopped by police at Waverley Place and Greene Street," he said. "Across the street we could see the bodies of five women. As I looked I saw an arm raised and I knew that one of the women was alive. I called out to a policeman standing near. His only answer was, 'Get back there and mind your own business.' I pointed out the woman to him and told him something ought to be done, as the water was pouring down upon her. He didn't understand me, perhaps for nothing was done."
12. Alfred K. Schwach, a student, saw girls rushing to the rear factory windows, their hair on fire, to pause at the window for a moment and then jump out. "I saw four men," he said, "who tried to catch the girls. They seized horse blanket from a truck horse in Waverley Place and held it out. It gave way like paper as the girls struck it."
13. Pauline Grossman, 18 years old, who was injured by leaping from a window of the factory as the fire was growing on the eighth floor, says three male employees of the factory made a human chain of their bodies and swung across a narrow alleyway to the building fronting in Greene Street. She declares a number of person's passed across the men's bodies and escaped from the burning building by entering a window of the building opposite.
"As the people crossing upon the human bridge crowded more and more over the men's bodies the weight upon the body of the center man became too great and his back was broken. She said he fell to the passageway below and the other two men lost their holds upon the windowsills and fell. Persons who were crossing upon the human bridge dropped with them to the passageway."
14. Celia Saltz was working at her sewing machine when the fire started. She raced to the door and the force of the crowd pushed her into the elevator as soon as the doors opened. She said, "I even forgot that I had a younger sister working with me ... I began to scream for my sister. I had lost her, I had lost my sister." Celia fainted in the elevator but woke up on the floor of the store across the street. I opened my eyes and I saw my sister bending over me. I began to cry. I couldn't help it. My sister, Minnie, was only fourteen."
Adapted from MuseumNetwork. com
15. Pauline Cuoio Pepe was a nineteen-year-old sewing machine worker at the Triangle Shirtwaist Factory. "It was all nice young Jewish girls who were engaged to be married. You should see the diamonds and everything. Those were the ones who threw themselves from the window. What the hell did they close the door for? What did they think we were going to steal? What are we gonna do, steal a shirtwaist? Who the heck wanted a shirtwaist?" asked Pepe. " We never went out the front door. We always went one by one out the back. There was a man there searching, because the people were afraid we would take something, so that door was always locked.
Friday, November 28, 2008
The Era of Big Business
The Rise of Big Business
Period: 1880-1920
Between 1869 and 1910, the value of American manufacturing rose from $3 billion to $13 billion. The steel industry produced just 68,000 tons in 1870, but 4.2 million tons in 1890. The central vehicle of this surge in economic productivity was the modern corporation.
In recent years, Americans have often been told that we have entered a "new economy." The older industrial economy, it is said, is giving way to a new global economy based on computers, the Internet, telecommunications, and entertainment. This is not the first new economy in American history. Following the Civil War, a new economy emerged in the United States resting on steam-powered manufacturing, the railroad, the electric motor, the internal combustion engine, and the practical application of chemistry. Unlike the pre-Civil War economy, this new one was dependent on raw materials from around the world and it sold goods in global markets.
The transformations that took place in American business following the Civil War involved far more than a change in industrial techniques or productivity. Business organization expanded in size and scale. There was an unparalleled increase in factory production and mechanization. By the beginning of the 20th century, the major sectors of the nation's economy--banking, manufacturing, meat packing, oil refining, railroads, and steel--were dominated by a small number of giant corporations.
The rise of big business was accompanied by the emergence of a new class of millionaires. At the beginning of the Civil War, there were only 400 millionaires in the United States. By 1892, the number had risen to 4,047.The emergence of the modern corporation was accompanied by many positive developments. Through mechanization, standardization, and economies of scale, economic productivity soared. Between 1890 and 1929, the average urban worker put in one less day of work a week and brought home three times as much in pay. The proportion of families confined to the drudgery of farm life declined by half. Families enjoyed comforts and conveniences that were unimaginable before 1890. By 1929, nine out of ten Americans had electricity and indoor plumbing; four-fifths had automobiles; two-thirds had radios; and nearly half refrigerators and phonographs. At the same time, infant mortality fell by two-thirds, and life expectancy increased by 20 years. Said the president of the Chicago, Burlington, and Quincy Railroad:
Have not the great merchants, great manufacturers, great inventors, done more for the world than preachers and philanthropists? Can there be any doubt that cheapening the cost of necessaries and conveniences of life is the most powerful agent of civilization and progress?
Yet the rise of the big business also produced many anxieties. Corporations were accused of abusing workers, corrupting the political process, and producing shoddy, unsafe products. Many feared that corporate power allowed companies to fix prices and influence government decision-making.
J.P. Morgan
Period: 1880-1920
During the Gilded Age, J.P. Morgan stood astride the nation's financial world like a colossus. His banking house erected the structure of the most prominent American industries in the Gilded Age beginning with the railroad. Convinced that cutthroat competition had to give way to order, he consolidated competing railroad lines and many other industries. He organized syndicates to float bond and stock issues that gave birth to such companies as AT&T (which dominated the nation's telephone industry for decades), General Electric, and U.S. Steel (the world's largest steel manufacturer). A voracious collector, he also spent $60 million on paintings, sculptures, rare books, and manuscripts.
His critics considered him a ruthless capitalist pirate, the personification of the oppressive power of Wall Street that would crucify mankind on a cross of gold. But his goal was to replace cutthroat competition with economic stability. Morgan was instrumental in helping to create the modern American economy. After the Panic of 1893, he reorganized many bankrupt railroads and industrial companies. He assembled U.S. Steel, the world's first billion-dollar corporation, and helped establish International Harvester and General Electric. He believed that the combination of rival interests into rational systems was necessary to stabilize the U.S. economy and to prevent harmful price wars.
During a financial panic in 1907, which threatened to trigger a run on the nation's banks, Morgan took charge. He assembled the leading bank presidents in his library and locked the door. At 4 a.m., his lawyer read them an agreement stipulating how much each must pledge to the bailout package. "There the place..." Morgan told one banker, "and here's the pen."
When he decided to buy the Carnegie Steel Company on the way to forming United States Steel, he asked Andrew Carnegie to name his price. Carnegie wrote $480 million on a sheet of paper. Morgan glanced at the paper and said, "I accept this price."
The Corporate Revolution
Period: 1880-1920
During the late 19th century, a radical transformation took place in the way in which American business was structured and operated. The most obvious contrast involved the corporation's larger size and capitalization. The typical business establishment before the 1870s was financed by a single person or by several people bound together in a partnership. As a result, most businesses represented the wealth of only a few individuals. As late as 1880, the average factory had less than $1,800 in investment. Even the largest textile factories represented less than a million dollars in investment. In contrast, John D. Rockefeller's Standard Oil Company was worth $600 million and U.S. Steel was valued at $1 billion.
Another contrast between the new corporate enterprises of the late 19th century and earlier businesses lies in the systems of ownership and management. Before the Civil War, almost all businesses were owned and managed by the same people. In the modern corporation, actual management was increased turned over to professional managers. Within corporations, a management revolution took place.
In the days before big business, business operations required little in the way of management and administration. Companies usually involved only a few partners and clerks. Usually, an owner oversaw all of a business' operations. To insure honesty in a distant office, a merchant might staff it with a relative.
As businesses grew larger, new bureaucratic hierarchies were necessary. A business' success increasingly depended on central coordination. To address this challenge, businesses created formal administrative structures, such as purchasing and accounting departments. Various levels of managers were established, clear lines of authority were devised, and formal rules were created to govern the company's operations. The managerial revolution helped to create a "new" middle class. Unlike the older middle class, which consisted of farmers, shopkeepers, and independent professionals, the new middle class was made up of white collar employees of corporations.
Yet another sweeping change in business operation was the corporation's increased size and geographical scale. Before the 1880s, most firms operated in a single town from a single office or factory. Most sales were made to customers in the immediate area. But the new corporate enterprises carried out their functions in widely scattered locations. As early as 1900, General Electric had plants in 23 cities.
In addition to carrying out business in an increasing number of locations, the new corporations also engaged in more kinds of business operations. Prior to the Civil War, merchants, wholesalers, and manufacturers tended to specialize in a single operation. But the late 19th century, greatly expanded their range of operations.
During the late 19th century, businesses typically grew as a result of vertical and horizontal integration. When a company integrated vertically, it brings together various phases in the process of production and distribution. Thus U.S. Steel took iron ore from the ground, transported it to its mills, turned it into steel and manufactured finished products, and shipped the products to wholesalers. Somewhat similarly, the great meat packing houses like Swift, which had 4,000 employees, and Armour, with 6,000, combined the business of raising, slaughtering, transporting, and wholesaling meat. Swift developed a fleet of refrigerator railroad cars, which allowed it to bring cattle and hogs to a central packing house in Chicago, where the company could make use of every part of the animal "except the squeal."
When a company integrated horizontally, it expanded into related fields of business. In the 1850s, an iron furnace might produce a single product such as cast iron or nails. But U.S. Steel produced a vast array of metal goods.
During the last third of the 19th century, the American economy was dramatically transformed. After 30 years of periodic economic crises marked by high unemployment and large numbers of business failures, business began to consolidate into progressively larger economic units.
Mythmakers sometimes look back on the late 19th century as the golden age of free enterprise. But it is important to emphasize that the rise of a new economy did not take place easily. Working conditions in many factories were appalling. Labor conflict was intense. Businesses were accused of price fixing, stock watering, and other abuses.
In the end, these abuses would bring about a political reaction. To address the problems of corporate power, the federal government instituted new forms of regulation in the late 19th and early 20th centuries.
Why Business Grew
Period: 1880-1920
By 1906, six large railroad systems controlled 95 percent of the nation's mileage. As early as 1904, the 2,000 largest firms in the United States made up less than one percent of the country's businesses. Yet they produced 40 percent of the nation's goods. By the early 20th century, many important sectors of the American economy were dominated by a handful of firms, a condition that economists call "oligopoly."
Why did business grow bigger? The classic explanation stresses such factors as:
the shift from water-powered to coal-powered factories, which freed manufacturers to locate their plants nearer to markets and suppliers.
transportation improvements that meant that firms could distribute their products to regional or national markets.
the development of new financial institutions--such as the stock market, commercial banks, and investment houses--that increased the availability of investment capital.
One of the pacesetters of the "new economy" was Montgomery Ward, the nation's first mail-order business. From its founding until 1926, Montgomery Ward owned no stories. It operated strictly on a mail order basis. Through its catalog, Ward brought consumer goods to a largely rural clientele.
To list these factors makes business growth seem like an orderly process. But this was not the way the process was experienced. The emergence of the modern corporation came largely as a response to economic instability.
During the late 19th century, business competition was cutthroat. In 1907, there were 1,564 separate railroad companies in the United States, and two years later there were 446 companies manufacturing steel. The challenges of competition were compounded by frequent economic contractions, or panics as they were known. Violent contractions gripped the country from 1873 to 1878 and from 1893 to 1897. There were briefer contractions in 1884, 1888, 1903, 1907, and 1911. During the panic of the mid-1870s, 47,000 businesses went bankrupt. In hard times, the competitive marketplace became a jungle and businessmen sought to find ways to overcome the rigors of competition.
Faced with recurring business slumps, mounting competition, and declining profits, the boldest businessmen experimented with new ways of creating financial stability. The first attempt to overcome destructive competition was the formation of pools or cartels. These were agreements among competitors to divide markets and forbid price cutting. As early as the 1870s, pools were formed to divide markets, fix production quotas, and set prices. Over the years, pools became trade associations, which devised methods for dividing markets and assisting failing firms.
The problem with pools was that they rarely survived an economic contraction. Financial depressions tempted some firms to cut prices and seek a larger share of the market.
Pools were too weak to solve the problem of competition because they were voluntary agreements. An alternative was the trust, under which owners of rival firms assigned their stock to a single board of trustees in return for non-voting, interest-bearing certificates. The trustees then fixed prices and marketing policies for all the companies. John D. Rockefeller's Standard Oil Company was the first trust. Half a dozen industries followed, including alcohol distilling and sugar refining.
Trusts faced intense legal challenges on the grounds that they illegal restrained trade and violated the corporate charters of the participating firms. In 1890, Congress adopted the Sherman Anti-Trust Act, which declared trusts illegal. Trusts were then supplanted by a new legal entity, the holding company. This was a company with the power to purchase other companies. Perhaps the most famous holding company was General Motors, which purchased a number of automobile manufacturers.
A great surge in mergers took place in the American economy after 1897, when many of the largest corporations in such industries as steel and railroads were created. The number of mergers rose from 69 in 1897 to 303 in 1898 and 1,208 in 1899. By 1900, there were 73 combinations worth more than $10 million. Two thirds had been established in the previous three years.
Corporations and the Law
Period: 1880-1920
Earlier in American history, states attempted to keep tight reins over corporations. Corporations had to apply to a state legislature for a charter, which restricted the scope of the company's operations, limited the amount of investment, and even specified how long the charter would be in effect. But as the pace of economic activity quickened, it proved cumbersome for legislatures to grant individual charters. As a result, state legislatures adopted general incorporation acts which allowed any business to incorporate and removed limits on capitalization. Even in the 19th century, states, seeking revenue, competed with one another to get businesses to incorporate within their boundaries.
One source of public anxiety over corporations is summed up by a legal maxim, that "a corporation has no pants to kick or soul to damn." It was unclear what powers states had to regulate big business or who should be held responsible if a corporation committed a legal offense, such as fixing prices or polluting the environment.
In an 1877 case, Munn v. Illinois, which is also known as the "Granger Cases," the Supreme Court had ruled that a state law setting maximum rates for grain storage was constitutional, establishing the principle that states have the power to regulate businesses with "a public interest." In subsequent cases, the court retreated from this ruling. In an 1886 decision, Santa Clara v. Southern Pacific Railroad Company, the court held that the 14th Amendment's guarantee of due process applies to corporations. In another decision that same year, in the case of Wabash, St. Louis & Pacific Railroad v. Illinois, the court ruled that Congress has an exclusive right to regulate interstate commerce. The court subsequently invalidated a number of state attempts to regulate business operations.
In 1895, in the case of U.S. v. E.C. Knight, the court held that the Sherman Antitrust Act, adopted five years earlier, did not apply to companies located within a single state. This decision severely weakened the ability of the federal government to enforce antitrust laws.
The Debate Over Big Business
Period: 1880-1920
A great debate over big business took place during late 19th century. Among the issues that Americans debated was:
whether wealth came from exploitation or from patience, frugality, and virtue;
whether bigness was the result of conspiracy or of pressures of blind economic forces;
whether men of wealth and power were free to use their riches as they wish or whether they should be taxed to support the public good.
Henry Demarest Lloyd, a precursor for the muckraking journalists of the Progressive Era, considered the lords of industry monopolists and profiteers, who monopolized blocked the road to success for those who tried to compete with them. Others, like Edward Atkinson, a successful investor and businessman, asserted that the great business titans made all Americans better off through their innovations in management, finance, and production. Lloyd and Atkinson helped set the terms for a long lasting public debate: Were the business leaders of the Gilded Age robber barons or creative industrial pioneers?
There can be no doubt that the late 19th century business titans were business innovators, who, through their technical, administrative, and financial skills, achieved economies of scale, eliminated waste, and brought order and stability to large sectors of the American economy. In large part, their wealth was the product of innovations that transformed business practice. Rockefeller developed the oil tank-car; Swift the refrigerated rail car; and Montgomery Ward the mail-order catalogue. As philanthropists in later life, some also served important welfare and educational functions.
But big business' critics accused the captains of industry of financial trickery, such as cornering and watering stock, and of political corruption and the bribing of legislatures. They attacked them for the inhumane treatment of labor--including the imposition of heavy hours, wage cuts, lockouts and the suppression of trade unions. They also condemned them for using cheap immigrant contract labor to undercut wage rates and defeat strikes and the imposing monopoly prices. Above all, they were condemned as sinister monopolists who engaged in ruthless competition--choking off rivals by use of railroad rebates and drawbacks, control of raw material supplies, industrial espionage, and the forced purchase of competing firms.
Many people likened J.P. Morgan, Jay Gould, and other business leaders to the "robber barons" of the Middle Ages, who set up barriers across rivers and forced boats to pay a toll in order to navigate the waterways. A U.S. Senator described Morgan as a "thick-necked financial bully, drunk with wealth and power, [who] bawls his orders to stock markets, Directors, courts, Governments, and Nations."
The Gospel of Wealth
Period: 1880-1920
Andrew Carnegie did not believe that men of great wealth were robber barons, but trustees whose duty it was to devote their talents to the common good. This, he wrote, is "the true Gospel concerning Wealth, obedience to which is destined some day to solve the problem of the Rich and the Poor, and to bring 'Peace on earth, among men of Good-Will.'"
Drawing on the doctrine of St. Paul, that the rich had to be stewards of wealth, defenders of the Gospel of Wealth, like the Episcopal Bishop of Massachusetts, argued that it was God's will that some men attained great wealth, and "in the long run, it is only to the man of morality that wealth comes." He concluded: "Material prosperity is helping to make the national character sweeter, more joyous, more unselfish, more Christ like."
In an 1889 essay, steel magnate Carnegie told his fellow business leaders, "The man who dies thus rich dies disgraced." Carnegie believed that the wealthy should repay their debt to society. True to his beliefs, by his death in 1919 he had divested himself of more than 95 percent of his fortune. He built a library building for any town that would provide a site, stock the building with books, and guarantee maintenance expenses. He provided pensions for professors at universities that agreed to meet strict academic standards. In addition to funding music halls, outdoor swimming pools, and church organs, he also set up endowments to promote teaching and world peace.
Social Darwinism
Period: 1880-1920
In 1895, an attorney named Joseph H. Choate persuaded the U.S. Supreme Court to declare an income tax approved by Congress unconstitutional. Choate told the court that:
The act of Congress which we are impugning before you is communist in its purposes and tendencies and is defended here upon principles as communistic, as socialistic, what shall I call them, as populistic as ever have been addressed to any political assembly in the world.
As a result of the court decision in the case of Pollock v. Farmers' Loan and Trust Co., the United States did not institute an income tax until the 16th Amendment was ratified in 1913.
Choate rested his arguments partly on ideas associated with Charles Darwin, who published his theory of evolution in 1859. Darwin had argued that within nature, there was a process of competition within and between species, and that, through a process of natural selection, the fittest organisms prevail. Social Darwinists believed that this theory of evolution gave scientific validity to the notion that government should keep its hands off the economy.
Jay Gould
Period: 1880-1920
He was the prototype for the "Robber Baron" and the corrupt railroad king. The railroad "pirate" Jay Gould stirred up the most enmity. He was painted as an unscrupulous pirate who manipulated and watered stock, deliberately running businesses down and building them up again to his own advantage.
Jay Gould considered himself to be the most hated man in late-19th century America. He was vilified by the press as a reckless speculator and brutal strikebreaker. To many late 19th century Americans, he personified the unscrupulous, greedy robber baron.
In an age of scandal and corruption, Jay Gould was regarded as a master of bribery and insider stock manipulation. He paid off President Grant's brother-in-law to learn the president's intentions about government gold sales; he bribed members of New York's legislature; and he tried to corner the gold market. But Gould was much more than a robber baron. At a time when the rules of modern American business were just being written, he was one of the architects of a consolidated national railroad and communication system. One of his major achievements was to lead Western Union to a place of dominance in the telegraph industry.
Born into poverty on an upstate New York in 1836, Gould was too sickly to go into farming. Instead, he went into surveying and then into tanning animal hides. He speculated first in hides and then in railroad stocks, engaging in one of the most colorful struggles in American business history: a fight with Commodore Vanderbilt for control of the Erie Railroad. To prevent gangs of toughs sent by Vanderbilt from gaining access to his records, Gould placed cannons on the Jersey City waterfront and launched a flotilla of four vessels of armed gunmen. As quickly as Vanderbilt bought stock in the railroad, Gould illegally issued more. When Gould was placed under the custody of a court officer for this illegal act, he bribed members of New York's legislature to change the law.
He reduced the wages of imported Chinese laborers in his mines to just $27 a month. He was damned as a speculator, rigging markets for short-term gains. But in fact he had a number of actual achievements to his name. He was actually an empire builder who sought to create railroad and communication systems capable of meeting the needs of an expanding nation. He operated New York City's elevated railroad and led Western Union to victory in its battle for control of the telegraph industry.
Controlling the Shop Floor
Period: 1880-1920
He revolutionized manufacturing by insisting that managers should eliminate unnecessary motions in order to increase output by workers. He gained national visibility in 1910 when Louis Brandeis, the future Supreme Court justice, said that his notions of scientific management could save railroad companies $300 million a year.
Frederick Winslow Taylor (1856-1915) was the first efficiency expert. Using slow-motion photography and stop watches, he broke down the production process into separate movements, then he redesigned the work process to make it more efficient. His advocacy of scientific management earned the admiration of Henry Ford, Benito Mussolini, and Vladimir Lenin. But many workers condemned his time-and-motion studies because his system sought to remove decision making from labor and hand it over to management.
Before Taylor introduced scientific management onto the factory floor, production was largely in the hands of skilled craftsmen, who followed their own routines and worked at their own pace. In the interest of increasing productivity, Taylor advised managers to study, reorganize, and control the work process. The success of his system, he wrote a Bethlehem Steel manager in 1906, required that absolute control must reside in management. Each worker, he said, must receive "clear-cut, definite instructions as to just what he is to do and how he is to do it." His obsession with efficiency spilled over into his family life, where he regimented the lives of his adopted children. He convinced professional baseball that pitching overhand was more efficient than throwing underhand.
Born into a wealthy Philadelphia Quaker family, he attended the prestigious Phillips Exeter Academy, and, after passing Harvard's admission examination with distinction, apprenticed himself as a pattern maker and machinist to a company that made hydraulic pumps. He subsequently became a machinist at a steel company. Soon, he became obsessed by the idea that management, applying the principles of scientific management could organize the productive process more efficiently, identify the one, best way to perform a job, and increase workers' output. Factories, he believed, should be organized like the military, with directions flowing from superiors to subordinates. He recommended that bonuses go to workers who exceed quotas.
Industry considered him a visionary who made factories more productive by eliminating wasteful motion and therefore allowed companies to cut prices and raise wages. Management argued that Taylor's emphasis on simplified production methods was essential in dealing with a labor force that consisted of unskilled immigrant workers with proficiency in English. But his time-and-motion studies enraged labor leaders who condemned him as a monster who valued machine-like efficiency more than the health and well being of labor. Trade unionists charged that his system reduced workers to robots. Said one labor leader:
No tyrant or slave driver in the ecstasy of his most delirious dream ever sought to place upon abject slaves a condition more repugnant.
In 1910, a strike broke out at the Waterford Arsenal near Boston, when a manager stood behind a worker with a stopwatch. Two years later, a hostile Congressional committee held hearings about Taylorism. The committee's chair condemned scientific management as undemocratic and dehumanizing.
Although few companies used Taylor's ideas in their pure form, the principles of scientific management were applied on assembly lines, factory floors, secretarial pools, and housework. The relentless quest for efficiency helped to fuel American industries great gains in productivity during the 20th century. During World War II, Taylor's principles of scientific management held American industry convert unskilled workers into welders and shipbuilders in 60 to 90 days. But Taylor's techniques also exacted a cost, increasing stress in the workplace, "de-skilling" manual labor, and widening the gap between technical and manual work, even as it made labor better off.
As early as the late 1920s, Taylorism had begun to provoke a counter-reaction. Between 1927 and 1933, studies were conducted of factory workers at Western Electric's Hawthorne plant in Illinois. The Hawthorne studies showed that regardless of the changes made in working conditions--increasing or reducing the number and length of breaks or tinkering with lighting--productivity increased. By paying attention to workers and treating their jobs as important, productivity rose. The results of these studies encouraged business managers to adjust workplace conditions and improve interpersonal relations in order to improve worker morale in order to bolster productivity.
Period: 1880-1920
Between 1869 and 1910, the value of American manufacturing rose from $3 billion to $13 billion. The steel industry produced just 68,000 tons in 1870, but 4.2 million tons in 1890. The central vehicle of this surge in economic productivity was the modern corporation.
In recent years, Americans have often been told that we have entered a "new economy." The older industrial economy, it is said, is giving way to a new global economy based on computers, the Internet, telecommunications, and entertainment. This is not the first new economy in American history. Following the Civil War, a new economy emerged in the United States resting on steam-powered manufacturing, the railroad, the electric motor, the internal combustion engine, and the practical application of chemistry. Unlike the pre-Civil War economy, this new one was dependent on raw materials from around the world and it sold goods in global markets.
The transformations that took place in American business following the Civil War involved far more than a change in industrial techniques or productivity. Business organization expanded in size and scale. There was an unparalleled increase in factory production and mechanization. By the beginning of the 20th century, the major sectors of the nation's economy--banking, manufacturing, meat packing, oil refining, railroads, and steel--were dominated by a small number of giant corporations.
The rise of big business was accompanied by the emergence of a new class of millionaires. At the beginning of the Civil War, there were only 400 millionaires in the United States. By 1892, the number had risen to 4,047.The emergence of the modern corporation was accompanied by many positive developments. Through mechanization, standardization, and economies of scale, economic productivity soared. Between 1890 and 1929, the average urban worker put in one less day of work a week and brought home three times as much in pay. The proportion of families confined to the drudgery of farm life declined by half. Families enjoyed comforts and conveniences that were unimaginable before 1890. By 1929, nine out of ten Americans had electricity and indoor plumbing; four-fifths had automobiles; two-thirds had radios; and nearly half refrigerators and phonographs. At the same time, infant mortality fell by two-thirds, and life expectancy increased by 20 years. Said the president of the Chicago, Burlington, and Quincy Railroad:
Have not the great merchants, great manufacturers, great inventors, done more for the world than preachers and philanthropists? Can there be any doubt that cheapening the cost of necessaries and conveniences of life is the most powerful agent of civilization and progress?
Yet the rise of the big business also produced many anxieties. Corporations were accused of abusing workers, corrupting the political process, and producing shoddy, unsafe products. Many feared that corporate power allowed companies to fix prices and influence government decision-making.
J.P. Morgan
Period: 1880-1920
During the Gilded Age, J.P. Morgan stood astride the nation's financial world like a colossus. His banking house erected the structure of the most prominent American industries in the Gilded Age beginning with the railroad. Convinced that cutthroat competition had to give way to order, he consolidated competing railroad lines and many other industries. He organized syndicates to float bond and stock issues that gave birth to such companies as AT&T (which dominated the nation's telephone industry for decades), General Electric, and U.S. Steel (the world's largest steel manufacturer). A voracious collector, he also spent $60 million on paintings, sculptures, rare books, and manuscripts.
His critics considered him a ruthless capitalist pirate, the personification of the oppressive power of Wall Street that would crucify mankind on a cross of gold. But his goal was to replace cutthroat competition with economic stability. Morgan was instrumental in helping to create the modern American economy. After the Panic of 1893, he reorganized many bankrupt railroads and industrial companies. He assembled U.S. Steel, the world's first billion-dollar corporation, and helped establish International Harvester and General Electric. He believed that the combination of rival interests into rational systems was necessary to stabilize the U.S. economy and to prevent harmful price wars.
During a financial panic in 1907, which threatened to trigger a run on the nation's banks, Morgan took charge. He assembled the leading bank presidents in his library and locked the door. At 4 a.m., his lawyer read them an agreement stipulating how much each must pledge to the bailout package. "There the place..." Morgan told one banker, "and here's the pen."
When he decided to buy the Carnegie Steel Company on the way to forming United States Steel, he asked Andrew Carnegie to name his price. Carnegie wrote $480 million on a sheet of paper. Morgan glanced at the paper and said, "I accept this price."
The Corporate Revolution
Period: 1880-1920
During the late 19th century, a radical transformation took place in the way in which American business was structured and operated. The most obvious contrast involved the corporation's larger size and capitalization. The typical business establishment before the 1870s was financed by a single person or by several people bound together in a partnership. As a result, most businesses represented the wealth of only a few individuals. As late as 1880, the average factory had less than $1,800 in investment. Even the largest textile factories represented less than a million dollars in investment. In contrast, John D. Rockefeller's Standard Oil Company was worth $600 million and U.S. Steel was valued at $1 billion.
Another contrast between the new corporate enterprises of the late 19th century and earlier businesses lies in the systems of ownership and management. Before the Civil War, almost all businesses were owned and managed by the same people. In the modern corporation, actual management was increased turned over to professional managers. Within corporations, a management revolution took place.
In the days before big business, business operations required little in the way of management and administration. Companies usually involved only a few partners and clerks. Usually, an owner oversaw all of a business' operations. To insure honesty in a distant office, a merchant might staff it with a relative.
As businesses grew larger, new bureaucratic hierarchies were necessary. A business' success increasingly depended on central coordination. To address this challenge, businesses created formal administrative structures, such as purchasing and accounting departments. Various levels of managers were established, clear lines of authority were devised, and formal rules were created to govern the company's operations. The managerial revolution helped to create a "new" middle class. Unlike the older middle class, which consisted of farmers, shopkeepers, and independent professionals, the new middle class was made up of white collar employees of corporations.
Yet another sweeping change in business operation was the corporation's increased size and geographical scale. Before the 1880s, most firms operated in a single town from a single office or factory. Most sales were made to customers in the immediate area. But the new corporate enterprises carried out their functions in widely scattered locations. As early as 1900, General Electric had plants in 23 cities.
In addition to carrying out business in an increasing number of locations, the new corporations also engaged in more kinds of business operations. Prior to the Civil War, merchants, wholesalers, and manufacturers tended to specialize in a single operation. But the late 19th century, greatly expanded their range of operations.
During the late 19th century, businesses typically grew as a result of vertical and horizontal integration. When a company integrated vertically, it brings together various phases in the process of production and distribution. Thus U.S. Steel took iron ore from the ground, transported it to its mills, turned it into steel and manufactured finished products, and shipped the products to wholesalers. Somewhat similarly, the great meat packing houses like Swift, which had 4,000 employees, and Armour, with 6,000, combined the business of raising, slaughtering, transporting, and wholesaling meat. Swift developed a fleet of refrigerator railroad cars, which allowed it to bring cattle and hogs to a central packing house in Chicago, where the company could make use of every part of the animal "except the squeal."
When a company integrated horizontally, it expanded into related fields of business. In the 1850s, an iron furnace might produce a single product such as cast iron or nails. But U.S. Steel produced a vast array of metal goods.
During the last third of the 19th century, the American economy was dramatically transformed. After 30 years of periodic economic crises marked by high unemployment and large numbers of business failures, business began to consolidate into progressively larger economic units.
Mythmakers sometimes look back on the late 19th century as the golden age of free enterprise. But it is important to emphasize that the rise of a new economy did not take place easily. Working conditions in many factories were appalling. Labor conflict was intense. Businesses were accused of price fixing, stock watering, and other abuses.
In the end, these abuses would bring about a political reaction. To address the problems of corporate power, the federal government instituted new forms of regulation in the late 19th and early 20th centuries.
Why Business Grew
Period: 1880-1920
By 1906, six large railroad systems controlled 95 percent of the nation's mileage. As early as 1904, the 2,000 largest firms in the United States made up less than one percent of the country's businesses. Yet they produced 40 percent of the nation's goods. By the early 20th century, many important sectors of the American economy were dominated by a handful of firms, a condition that economists call "oligopoly."
Why did business grow bigger? The classic explanation stresses such factors as:
the shift from water-powered to coal-powered factories, which freed manufacturers to locate their plants nearer to markets and suppliers.
transportation improvements that meant that firms could distribute their products to regional or national markets.
the development of new financial institutions--such as the stock market, commercial banks, and investment houses--that increased the availability of investment capital.
One of the pacesetters of the "new economy" was Montgomery Ward, the nation's first mail-order business. From its founding until 1926, Montgomery Ward owned no stories. It operated strictly on a mail order basis. Through its catalog, Ward brought consumer goods to a largely rural clientele.
To list these factors makes business growth seem like an orderly process. But this was not the way the process was experienced. The emergence of the modern corporation came largely as a response to economic instability.
During the late 19th century, business competition was cutthroat. In 1907, there were 1,564 separate railroad companies in the United States, and two years later there were 446 companies manufacturing steel. The challenges of competition were compounded by frequent economic contractions, or panics as they were known. Violent contractions gripped the country from 1873 to 1878 and from 1893 to 1897. There were briefer contractions in 1884, 1888, 1903, 1907, and 1911. During the panic of the mid-1870s, 47,000 businesses went bankrupt. In hard times, the competitive marketplace became a jungle and businessmen sought to find ways to overcome the rigors of competition.
Faced with recurring business slumps, mounting competition, and declining profits, the boldest businessmen experimented with new ways of creating financial stability. The first attempt to overcome destructive competition was the formation of pools or cartels. These were agreements among competitors to divide markets and forbid price cutting. As early as the 1870s, pools were formed to divide markets, fix production quotas, and set prices. Over the years, pools became trade associations, which devised methods for dividing markets and assisting failing firms.
The problem with pools was that they rarely survived an economic contraction. Financial depressions tempted some firms to cut prices and seek a larger share of the market.
Pools were too weak to solve the problem of competition because they were voluntary agreements. An alternative was the trust, under which owners of rival firms assigned their stock to a single board of trustees in return for non-voting, interest-bearing certificates. The trustees then fixed prices and marketing policies for all the companies. John D. Rockefeller's Standard Oil Company was the first trust. Half a dozen industries followed, including alcohol distilling and sugar refining.
Trusts faced intense legal challenges on the grounds that they illegal restrained trade and violated the corporate charters of the participating firms. In 1890, Congress adopted the Sherman Anti-Trust Act, which declared trusts illegal. Trusts were then supplanted by a new legal entity, the holding company. This was a company with the power to purchase other companies. Perhaps the most famous holding company was General Motors, which purchased a number of automobile manufacturers.
A great surge in mergers took place in the American economy after 1897, when many of the largest corporations in such industries as steel and railroads were created. The number of mergers rose from 69 in 1897 to 303 in 1898 and 1,208 in 1899. By 1900, there were 73 combinations worth more than $10 million. Two thirds had been established in the previous three years.
Corporations and the Law
Period: 1880-1920
Earlier in American history, states attempted to keep tight reins over corporations. Corporations had to apply to a state legislature for a charter, which restricted the scope of the company's operations, limited the amount of investment, and even specified how long the charter would be in effect. But as the pace of economic activity quickened, it proved cumbersome for legislatures to grant individual charters. As a result, state legislatures adopted general incorporation acts which allowed any business to incorporate and removed limits on capitalization. Even in the 19th century, states, seeking revenue, competed with one another to get businesses to incorporate within their boundaries.
One source of public anxiety over corporations is summed up by a legal maxim, that "a corporation has no pants to kick or soul to damn." It was unclear what powers states had to regulate big business or who should be held responsible if a corporation committed a legal offense, such as fixing prices or polluting the environment.
In an 1877 case, Munn v. Illinois, which is also known as the "Granger Cases," the Supreme Court had ruled that a state law setting maximum rates for grain storage was constitutional, establishing the principle that states have the power to regulate businesses with "a public interest." In subsequent cases, the court retreated from this ruling. In an 1886 decision, Santa Clara v. Southern Pacific Railroad Company, the court held that the 14th Amendment's guarantee of due process applies to corporations. In another decision that same year, in the case of Wabash, St. Louis & Pacific Railroad v. Illinois, the court ruled that Congress has an exclusive right to regulate interstate commerce. The court subsequently invalidated a number of state attempts to regulate business operations.
In 1895, in the case of U.S. v. E.C. Knight, the court held that the Sherman Antitrust Act, adopted five years earlier, did not apply to companies located within a single state. This decision severely weakened the ability of the federal government to enforce antitrust laws.
The Debate Over Big Business
Period: 1880-1920
A great debate over big business took place during late 19th century. Among the issues that Americans debated was:
whether wealth came from exploitation or from patience, frugality, and virtue;
whether bigness was the result of conspiracy or of pressures of blind economic forces;
whether men of wealth and power were free to use their riches as they wish or whether they should be taxed to support the public good.
Henry Demarest Lloyd, a precursor for the muckraking journalists of the Progressive Era, considered the lords of industry monopolists and profiteers, who monopolized blocked the road to success for those who tried to compete with them. Others, like Edward Atkinson, a successful investor and businessman, asserted that the great business titans made all Americans better off through their innovations in management, finance, and production. Lloyd and Atkinson helped set the terms for a long lasting public debate: Were the business leaders of the Gilded Age robber barons or creative industrial pioneers?
There can be no doubt that the late 19th century business titans were business innovators, who, through their technical, administrative, and financial skills, achieved economies of scale, eliminated waste, and brought order and stability to large sectors of the American economy. In large part, their wealth was the product of innovations that transformed business practice. Rockefeller developed the oil tank-car; Swift the refrigerated rail car; and Montgomery Ward the mail-order catalogue. As philanthropists in later life, some also served important welfare and educational functions.
But big business' critics accused the captains of industry of financial trickery, such as cornering and watering stock, and of political corruption and the bribing of legislatures. They attacked them for the inhumane treatment of labor--including the imposition of heavy hours, wage cuts, lockouts and the suppression of trade unions. They also condemned them for using cheap immigrant contract labor to undercut wage rates and defeat strikes and the imposing monopoly prices. Above all, they were condemned as sinister monopolists who engaged in ruthless competition--choking off rivals by use of railroad rebates and drawbacks, control of raw material supplies, industrial espionage, and the forced purchase of competing firms.
Many people likened J.P. Morgan, Jay Gould, and other business leaders to the "robber barons" of the Middle Ages, who set up barriers across rivers and forced boats to pay a toll in order to navigate the waterways. A U.S. Senator described Morgan as a "thick-necked financial bully, drunk with wealth and power, [who] bawls his orders to stock markets, Directors, courts, Governments, and Nations."
The Gospel of Wealth
Period: 1880-1920
Andrew Carnegie did not believe that men of great wealth were robber barons, but trustees whose duty it was to devote their talents to the common good. This, he wrote, is "the true Gospel concerning Wealth, obedience to which is destined some day to solve the problem of the Rich and the Poor, and to bring 'Peace on earth, among men of Good-Will.'"
Drawing on the doctrine of St. Paul, that the rich had to be stewards of wealth, defenders of the Gospel of Wealth, like the Episcopal Bishop of Massachusetts, argued that it was God's will that some men attained great wealth, and "in the long run, it is only to the man of morality that wealth comes." He concluded: "Material prosperity is helping to make the national character sweeter, more joyous, more unselfish, more Christ like."
In an 1889 essay, steel magnate Carnegie told his fellow business leaders, "The man who dies thus rich dies disgraced." Carnegie believed that the wealthy should repay their debt to society. True to his beliefs, by his death in 1919 he had divested himself of more than 95 percent of his fortune. He built a library building for any town that would provide a site, stock the building with books, and guarantee maintenance expenses. He provided pensions for professors at universities that agreed to meet strict academic standards. In addition to funding music halls, outdoor swimming pools, and church organs, he also set up endowments to promote teaching and world peace.
Social Darwinism
Period: 1880-1920
In 1895, an attorney named Joseph H. Choate persuaded the U.S. Supreme Court to declare an income tax approved by Congress unconstitutional. Choate told the court that:
The act of Congress which we are impugning before you is communist in its purposes and tendencies and is defended here upon principles as communistic, as socialistic, what shall I call them, as populistic as ever have been addressed to any political assembly in the world.
As a result of the court decision in the case of Pollock v. Farmers' Loan and Trust Co., the United States did not institute an income tax until the 16th Amendment was ratified in 1913.
Choate rested his arguments partly on ideas associated with Charles Darwin, who published his theory of evolution in 1859. Darwin had argued that within nature, there was a process of competition within and between species, and that, through a process of natural selection, the fittest organisms prevail. Social Darwinists believed that this theory of evolution gave scientific validity to the notion that government should keep its hands off the economy.
Jay Gould
Period: 1880-1920
He was the prototype for the "Robber Baron" and the corrupt railroad king. The railroad "pirate" Jay Gould stirred up the most enmity. He was painted as an unscrupulous pirate who manipulated and watered stock, deliberately running businesses down and building them up again to his own advantage.
Jay Gould considered himself to be the most hated man in late-19th century America. He was vilified by the press as a reckless speculator and brutal strikebreaker. To many late 19th century Americans, he personified the unscrupulous, greedy robber baron.
In an age of scandal and corruption, Jay Gould was regarded as a master of bribery and insider stock manipulation. He paid off President Grant's brother-in-law to learn the president's intentions about government gold sales; he bribed members of New York's legislature; and he tried to corner the gold market. But Gould was much more than a robber baron. At a time when the rules of modern American business were just being written, he was one of the architects of a consolidated national railroad and communication system. One of his major achievements was to lead Western Union to a place of dominance in the telegraph industry.
Born into poverty on an upstate New York in 1836, Gould was too sickly to go into farming. Instead, he went into surveying and then into tanning animal hides. He speculated first in hides and then in railroad stocks, engaging in one of the most colorful struggles in American business history: a fight with Commodore Vanderbilt for control of the Erie Railroad. To prevent gangs of toughs sent by Vanderbilt from gaining access to his records, Gould placed cannons on the Jersey City waterfront and launched a flotilla of four vessels of armed gunmen. As quickly as Vanderbilt bought stock in the railroad, Gould illegally issued more. When Gould was placed under the custody of a court officer for this illegal act, he bribed members of New York's legislature to change the law.
He reduced the wages of imported Chinese laborers in his mines to just $27 a month. He was damned as a speculator, rigging markets for short-term gains. But in fact he had a number of actual achievements to his name. He was actually an empire builder who sought to create railroad and communication systems capable of meeting the needs of an expanding nation. He operated New York City's elevated railroad and led Western Union to victory in its battle for control of the telegraph industry.
Controlling the Shop Floor
Period: 1880-1920
He revolutionized manufacturing by insisting that managers should eliminate unnecessary motions in order to increase output by workers. He gained national visibility in 1910 when Louis Brandeis, the future Supreme Court justice, said that his notions of scientific management could save railroad companies $300 million a year.
Frederick Winslow Taylor (1856-1915) was the first efficiency expert. Using slow-motion photography and stop watches, he broke down the production process into separate movements, then he redesigned the work process to make it more efficient. His advocacy of scientific management earned the admiration of Henry Ford, Benito Mussolini, and Vladimir Lenin. But many workers condemned his time-and-motion studies because his system sought to remove decision making from labor and hand it over to management.
Before Taylor introduced scientific management onto the factory floor, production was largely in the hands of skilled craftsmen, who followed their own routines and worked at their own pace. In the interest of increasing productivity, Taylor advised managers to study, reorganize, and control the work process. The success of his system, he wrote a Bethlehem Steel manager in 1906, required that absolute control must reside in management. Each worker, he said, must receive "clear-cut, definite instructions as to just what he is to do and how he is to do it." His obsession with efficiency spilled over into his family life, where he regimented the lives of his adopted children. He convinced professional baseball that pitching overhand was more efficient than throwing underhand.
Born into a wealthy Philadelphia Quaker family, he attended the prestigious Phillips Exeter Academy, and, after passing Harvard's admission examination with distinction, apprenticed himself as a pattern maker and machinist to a company that made hydraulic pumps. He subsequently became a machinist at a steel company. Soon, he became obsessed by the idea that management, applying the principles of scientific management could organize the productive process more efficiently, identify the one, best way to perform a job, and increase workers' output. Factories, he believed, should be organized like the military, with directions flowing from superiors to subordinates. He recommended that bonuses go to workers who exceed quotas.
Industry considered him a visionary who made factories more productive by eliminating wasteful motion and therefore allowed companies to cut prices and raise wages. Management argued that Taylor's emphasis on simplified production methods was essential in dealing with a labor force that consisted of unskilled immigrant workers with proficiency in English. But his time-and-motion studies enraged labor leaders who condemned him as a monster who valued machine-like efficiency more than the health and well being of labor. Trade unionists charged that his system reduced workers to robots. Said one labor leader:
No tyrant or slave driver in the ecstasy of his most delirious dream ever sought to place upon abject slaves a condition more repugnant.
In 1910, a strike broke out at the Waterford Arsenal near Boston, when a manager stood behind a worker with a stopwatch. Two years later, a hostile Congressional committee held hearings about Taylorism. The committee's chair condemned scientific management as undemocratic and dehumanizing.
Although few companies used Taylor's ideas in their pure form, the principles of scientific management were applied on assembly lines, factory floors, secretarial pools, and housework. The relentless quest for efficiency helped to fuel American industries great gains in productivity during the 20th century. During World War II, Taylor's principles of scientific management held American industry convert unskilled workers into welders and shipbuilders in 60 to 90 days. But Taylor's techniques also exacted a cost, increasing stress in the workplace, "de-skilling" manual labor, and widening the gap between technical and manual work, even as it made labor better off.
As early as the late 1920s, Taylorism had begun to provoke a counter-reaction. Between 1927 and 1933, studies were conducted of factory workers at Western Electric's Hawthorne plant in Illinois. The Hawthorne studies showed that regardless of the changes made in working conditions--increasing or reducing the number and length of breaks or tinkering with lighting--productivity increased. By paying attention to workers and treating their jobs as important, productivity rose. The results of these studies encouraged business managers to adjust workplace conditions and improve interpersonal relations in order to improve worker morale in order to bolster productivity.
Friday, November 14, 2008
Farming, the Railroad and Populism
For tables Red, Yellow, Silver and Blue: 
In this poster how is the railroad trying to convince you to move west?
For tables Orange, Green, Bronze and Gold:
Which words or images would farmers find appealing in this poster?
For tables Red, Yellow, Silver and Blue:
Who would this land appeal to?
How do you know this?
For tables Orange, Green, Bronze and Gold:
How do you think Native Americans felt about this poster?
All Tables: Would showing the plans of a home encourage a person to move west or encourage a person to stay home? Why?
In what ways is the image below similar to or different from the image above?
In what ways is the image below similar to or different from the image above?
Create a Venn Diagram Comparing these two poster.
Sunday, August 31, 2008
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