Period 6: 1865-1898

Key Concept 6.1 - Technological advances, large-scale production methods, and the opening of new markets encouraged the rise of industrial capitalism in the United States.

Why did the United States economy experience so much industrial growth?

One way the United States looked to expand their economy was in government subsidies to transportation. This can be seen with the funds for the Union Pacific Railroad and the Central Pacific Railroad. The resources required for these railroads led to an increasing demand for steel and oil, which both became booming markets in the United States. Another way expansion of the economy through connectivity was the creation of the Telephone by Alexander Graham Bell. This had opened up the telephone market, one which would give birth to the company AT&T.

With increased connectivity and technologies, new businesses came to dominate the American economy. Carnegie Steel had dominated the Steel and railroad industry, using a corporate consolidation technique called vertical integration, an attempt to control the manufacturing of a product from start to finish. Standard Oil by Rockefeller had dominated the oil businesses, and they mainly used the technique of horizontal integration, an attempt to buy out all competitors in a specific industry. Both of these companies had used trusts, an amalgamation of many similar-interested corporations to increase their collective power. With massive corporations becoming monopolistic, they sought mass amounts of labor to help with production. They had utilized an idea called Taylorism, which was to divide the creation of a product into smaller simple steps and distribute these jobs to workers. This greatly inproved efficiency in factories.

Increased production brought multiple changes to American lifestyles. Many goods were produced for cheaper due to increased efficiency and wages for many workers increased. America's overall standard of living improved especially with new technologies like the light bulb. With new products flooding the market, department stores were created, the first of which was Sears. These stores gave Americans greatly increased access to products, especially those that were not made locally and shipped in. There was an emergence of a consumer culture, especially in the middle class, which had bought items like sporting equipment that where not necessary, but were for entertainment. One negative impact of this industrial economic growth was the increasing wage gap between the rich and the poor.

The expanding economy also looked overseas for new markets or resources. This can be seen with the want to annex Hawaii for sugar. In Latin America, they had created a "Big Brother" policy to open their markets to American goods. This opening of markets internationally had also contributed to the large American economic growth.

Why did people react differently to the economy?

During this time, many Americans had looked at the economy as a byproduct of Laissez-Faire policies, and continued supporting it. This was the idea that the government should play a minimal, if not nonexistant, role in the economy. This is extremely influential and created the basis for the capitalist society that American became. In the future, especially in the 1920s, this ideology was one that many had looked to fall back on.

With the North booming in industrialization, Southern farmers had moved to the cities in the North for labor work. Besides farmers, international migrants had filled the labor market, known as "new immigrants" which consisted of the Chinese, Southern Europeans, and Eastern Europeans. Many poor families had also relied on children for an income and child labor grew during this time. These groups already had lower pays than American born adult workers, and the influx of more of them had lowered the wages for mostly everyone.

Due to these newfound labor conditions, labor unions became a prominent response to the economy. This can be seen with the Knights of Labor formed by Terence Powderly, which included skilled laborers, unskilled laborers, women, and African Americans. Another was the American Federation of Labor under Samuel Gompers, which consisted of only skilled laborers. Labor Unions had organized their powers through strikes, such as the Pullman Strike, Homestead Strike, and the Haymarket Strike. These movements by these labor unions had established a standardized 8-hour working days and compensation for injury but failed to create other improvements. An example of their shortcomings was the fact that these strikes were stopped by government supported strike breaker campaigns and that after the Haymarket Strike, fears of anarchy had crumbled the Knights of Labor.

While the Northern factory societies were caught in a limbo between wanting Laissez-Faire policies and labor unions calling for government protections and regulations to benefit and protect workers, the South had a different reaction. Some in the South had argued for a "New South," which had industrialization in its future. This was seen in the appearance of textile factories, however most of the Southern economy still revolved around agriculture, particularly tenant farming taking the forms of sharecropping and the crop lien system.

How did industrial growth impact farmers?

Industrial technologies had greatly improved the productivity. These technologies included tractors, reapers, and grain elevators all increased production and transportation of crops. This led to dropping prices of crops and an increased dependence on the railroads to transport the mass amounts of produce. Due to this, farmers had attacked the consolidation of railroads and created their own organizations. The Grange was one influential organization at the local level that had tried to elect representatives that supported the farmer's ideals and establish restrictions on the railroad monopolies. Besides that, the Southern Farmer's Alliance was formed to also create local resistances to the economy.

These local impacts on farmers culminated into the national effort by the Populist Party. Farmers were the main demographic that supported this party which was mostly led by William Jennings Bryan. They advocated for more government control over the railroads due to the monopolies that existed, income tax that increased for the wealthy, direct election of senators, and the concept of bimedalism. Combined with the economic panics of 1873 and 1893, many farmers had increasingly rejected the Gold Standard and wanted to inflate the economy by introducing silver to reduce their struggles with debt.