Chapter Overview

The new industrial order began with the railroads. They were America's first big business as well as the catalyst to the industrial transformations. As of 1866, rail travel was difficult. A scant 20 years later, a more ambitious "scamper" by rail could take place in relative comfort. "What made America in the 1880s so different," the authors stress, "was a new industrial order." The changes involved not just comfort and efficiency but interconnections. A complex system of transportation moved people and goods, just as a complex network of industrial systems created the new industrial order, and a system of organized labor tried to counteract the immense power of big business.

The Development of Industrial Systems

The rail transportation network was just one example of the emergence of interlocking industrial systems. Improving communication, harnessing natural resources, systematizing invention, organizing large corporations, raising capital, and recruiting labor -- these systems undergirded the new industrial order.

Railroads: America's First Big Business

At the core of the new industrial order were the railroads.

Because they brought together shorter branch or "feeder" lines, "trunk" lines were forced to devise new managerial strategies to control their growing operations. "Central offices" served as corporate nerve centers, while a new class of "middle managers" supervised separate functional divisions. Huge fixed costs, coupled with massive overexpansion, bred fierce competition, leading to rate wars and many bankruptcies. Consolidation became the ultimate solution to the problems of overcapacity and ruinous competition. These consolidations were often the work of investment bankers, who raised large amounts of capital or helped to reorganize troubled firms.

The Growth of Big Business

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

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

Some Americans defended the new corporate order; others lashed out at its excesses. Corporate apologists justified the system by applying Darwin's theories of evolution to society at large, claiming that "Social Darwinism" dictated the survival of the fittest. Critics attacked corporate capitalism as a greedy promoter of poverty and class exploitation. Socialists tried to incite a radical response among working-class Americans. On balance, big business brought both positive gains and wrenching disruptions, especially the roller-coaster cycles of economic boom and bust.

The Workers' World

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

Workers struggled to maintain control of their lives and work, believing themselves worthy citizens of a democratic republic and holding the traditional belief in the American dream of success. Women and children joined the work force, generally earning less than men; blacks found few opportunities except as strike breakers.

The Systems of Labor

In their own interests, workers had to imitate business by organizing and integrating. A minority tried to create unions. Some sought radical societal changes; others accepted the wage system and tried to improve conditions within it, especially for the most skilled workers. As of 1900, however, less than one worker in ten belonged to a union; individualism still reigned.

Yet discontent boiled over in the 1880s and 1890s as a wave of strikes crippled industry. Violence provoked sharp reactions. Managers fought back with no-strike contracts and strikebreakers. Government joined in suppressing worker resistance.