The Industrial Economy: Crash Course US History #23 episode transcript - U.S. History by Crash Course

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The Industrial Economy: Crash Course US History #23

From: U.S. History by Crash Course

In which John Green teaches you about the Industrial Economy that arose in the United States after the Civil War. You know how when you're studying history, and you're reading along and everything seems safely in the past, and then BOOM you think, "Man, this suddenly seems very modern." For me, that moment in US History is the post-Reconstruction expansion of industrialism in America. After the Civil War, many of the changes in technology and ideas gave rise to this new industrialism. You'll learn about the rise of Captains of Industry (or Robber Barons) like Cornelius Vanderbilt, Andrew Carnegie, John D Rockefeller, and JP Morgan. You'll learn about trusts, combinations, and how the government responded to these new business practices. All this, plus John will cover how workers reacted to the changes in society and the early days of the labor movement. You'll learn about the Knights of Labor and Terence Powderly, and Samuel Gompers and the AFL. As a special bonus, someone gets beaten with a cane. AGAIN. What is it with American History and people getting beaten with canes?

Full Transcript

The Industrial Economy Crash Course US History 23

speaker01 00:00:00

Hi I'm John Green, this is Crash Course us history and today we're going to discuss economics and how a generation of Mr Green. Mr Green, is this gonna be one of those boring ones with no wars or generals who had cool last words or anything? All me from the past, I will give you a smidge of great man history, but only a smid. So today we're going to discuss American industrialization in the decades after the Civil War, during which time the us went from having per capita about a third of Great Britain's industrial output to becoming the richest and most industrialized nation on earth. You might want to hold off on that liberto stand because this happened mostly thanks to the not particularly awesome Civil War, which improved the finance system by forcing the introduction of a national currency and spurred industrialization by giving massive contracts to arms and clothing manufacturers. The Civil War also boosted the telegraph, which improved communication and gave birth to the transcontinental Railway by the Pacific Railway Act of 1862, all of which increased efficiency and productivity. So thanks Civil War.

speaker01 01:04:00

If you want to explain America's economic growth in a nutshell, chalk it up to GD and L Gerard depardo and no geography, demography and law. However, while we're on the topic, when was Gerard depardo and Lindsay Lohan have a baby step? And can I see it? Yes, yes, geographically the us was a huge country with all the resources necessary for an industrial boom. Like we had coal and iron and later oil. Initially, we had water to power our factories, later replaced by coal, amber waves of grain to feed our growing population, which leads to the demography.

speaker01 01:36:00

America's population grew from 40 million in 1870 to 76 million in 1900, and a third of that growth was due to immigration, which is good for economy. Many of these immigrants flooded the burgeoning cities as America shifted from being an agrarian, rural nation to being an industrial, urban one. Like New York City became the center of commerce and finance, and by 1898, it had a population of 3.4 million people and the industrial heartland was in the Great Lakes region. Chicago became the second largest city. By 1900, Cleveland became a leader in oil refining, and Pittsburgh was the center of iron and steel production. And even today, the great city of Pittsburgh still employs 53 steel.

speaker01 02:14:00

Last but not least was the law, the Constitution, and its Commerce Clause made the us a single area of commerce, like a giant customs union. And as we'll see in a bit, the Supreme Court interpreted the laws in a very business friendly the way also the American Constitution patents, which encourages invention and innovation, or at least it used to. And despite what Ayn Rand would tell you, the American government played a role in American economic growth by putting up high tariffs, especially on steel, giving massive land grants to railroads, and by putting Native Americans on reservations. Also, foreigners played an important role. They invested their capital and involved Americans in their economic scandals, like the one that led to a depression in 1000 and 893. The us was at the time seen by Europeans as a developing economy, and investments in America offered much higher returns than those available in Europe. And the changes we're about here were massive. In 1880, for the first time, a majority of the workforce worked in non-sf ourmine jobs by 1992 thirds of Americans worked for wages rather than farming or owning their own businesses, and by 1900, the United States produced one of the world's total industrial output, now bring out the liberto stand.

speaker01 03:22:00

Awesome, and even better, we now get to talk about perennially underrated railroads. Let's go to the Thought Bubble. Although we tend to forget about them here in the us because our passenger rail system sucks.

speaker01 03:31:00

Railroads were one of the keys to America's 19th century industrial success. Railroads increased calm and integrated the American market, which allowed national brands to emerge like Ivory Soap and A and P grocery stores. But railroads changed and improved our economy in less obvious ways To, for instance, they gave us time zones which were created by the major railroad companies to make shipping and passenger transport more standard, also because he recognized the importance of telling time, a railroad agent named Richard Warren Sears turned a $50 investment in watches into an enormous mail order empire and railroads made it possible for him and his eventual partner robuck to ship watches and then jewelry, and then pretty much everything, including unconstructed freaking houses throughout the country.

speaker01 04:11:00

Railroads were also the first modern corporations. Companies were large, they had many employees they span the country, and that meant they needed to invent organizational methods, including the middle managers, supervisors to supervised supervisors. And for the first time, the owners of a company were not always day to day managers because railroads were among the first publicly traded corporations, they needed a lot of capital to build tracks and stations, so they sold shares in the company in order to raise that money, which shares could then be bought and sold by the public. And that is how railroads created the first captains of industry. Cornelius, they named a university after me, Vanderbilt, and Andrew, me too, Carnegie, Mellon, and Leland. I named the university after my son Stanford.

speaker01 04:50:00

The railroad business was also emblematic of the partnership between the national and government and industry The Transcontinental railroad, after all, wouldn't have existed without congressional legislation, federal land grants, and government sponsored bondage.

speaker01 05:03:00

Apparently, it's time for the mystery document. The rules here are simple, I guess the author of the mystery document, and if I'm wrong, which I usually am, I get shocked. All right, the belief is common in America that the day is at hand when corporations far greater than the Erie swaying such powers have never in world's history been trusted in the hands of mere private citizens controlled by single men like Vanderbilt will ultimately succeed in directing government itself under the American form of society. There is now no authority capable of effective resistance.

speaker01 05:36:00

Corporations directing government, that's ridiculous, so grateful for federal ethanol subsidies brought to you by delicious diet Dr Pepper. I can taste all 23 of the chemicals anyway. I'm pretty sure that is noted muckraker Ida Tarbell. Henry Adams. How are they? Still, Adams is an American history that makes me, we never escape the Clintons. It should have been Ida Tar Bell, she has a great opponent of capitalism, whatever.

speaker01 06:02:00

Indeed, industrial capitalists are considered both the greatest heroes and the greatest villains of the era, which is why they are known both as captains of industry and as robber barons, depending on whether we are mad at them. While they often came from humble origins, took risks, and became very wealthy, their methods were frequently unscrupulous. I mean, they often drove competitors out of business and generally cared very little for their workers.

speaker01 06:23:00

The first of the great robber barons and or captains of industry was the aforementioned Cornelius Vanderbilt, who rose from humble beginnings in Staten Island to make a fortune in transportation through ferries and shipping, and then eventually through railroads. Although he once referred to trains as them, things that go on land. But the poster boy of the era was John D Rockefeller, who started out as a clerk for a Cleveland merchant and eventually became the richest man in the world ever. Yes, including Bill Gates. The key to Rockefeller success was ruthlessly buying up so many rivals that by the late 18880 S Standard Oil controlled 90 of the U, which lack of competition drove the price of gasoline up to like 12. And so if you had one of the 20 cars in the world, then you were mad.

speaker01 07:03:00

The period also saw innovation in terms of the way industries were organized. Many of the robber barons formed pools and trusts to control prices and limit the negative effects of competition. The problem with competition is that over time, it reduces both prices and profit margins, which makes it difficult to become super rich.

speaker01 07:19:00

Vertical integration was another innovation. Firms bought up all aspects of the production process, from raw materials to production to transport and distribution. Meat company bought its own rail cars to ship meat, for instance. It also bought things like conveyor belts, and when he found out that animal parts could be used to make glue, he got into the glue making business. It was Armor who once proclaimed to use everything but the squeal. Horizontal integration was when big firms bought up small ones. The best example of this was Rockefeller Standard Oil, which eventually became so big, incidentally, that the Supreme Court for Standard Oil to be broken up into more than a dozen smaller oil companies, which by the way, over time have slowly reunited to become the company known as ExxonMobil. So that worked out.

speaker01 07:58:00

Us deal was put together by the era's giant of finance, JP Morgan, who at his death left a fortune of only 68 million, not counting the art that became the backbone of the Metropolitan Museum of art, leading Andrew Carnegie to remark in surprise and to think he was not a rich man.

speaker01 08:13:00

Speaking of people who weren't rich, let us now praise the unsung heroes of industrialization workers. Well, I guess you can't really call them unsung because Woody Guthrie. Oh, your guitar and my computer, I never made that connection before anyway, then as now the benefits of economic growth were shared, shall we say smidge unevenly prices did drop due to industrial competition, which raised the standard of living for the average American worker. In fact, it was among the highest in the world, but due to a growing population, particularly of immigrant workers, there was job insecurity and also booms and busts meant depressions in the 1870s and 18 890 S, which hit the working poor the hardest, also laborers commonly worked 60 hours per week with no pensions or injury compensation, and the us had the highest rate of industrial injuries in the world, an average of over 35000 people per year died on the job.

speaker01 09:02:00

These conditions, and the uncertainty of labor markets led to unions, which were mostly local, but occasionally national. The first national union was the knights of labor headed by Terence D Powderly, which grew from 9 members in 1870 to 720 five-eight 0 by 1000 and 880 two-four. The Knights of Labor admitted unskilled workers, black workers, and women, but it was irreparably damaged by the Haymarket Riot in 1000 and 880 two-six during a strike against McCormick Harvesting Company, a policeman killed one of the strikers and in response, there was a rally in Chicago's Haymarket Square at which a bomb killed seven police officers. Then firing upon the crowd, the police killed four people. Seven anarchists were eventually convicted of the bombing, and, although powdery, denounced anarchism, the public still associated the Knights of labor with violence, and by 1902 its membership had shrunk considerably to 0.

speaker01 09:48:00

The banner of organized labor, however, was picked up by the American Federation of Labor under Samuel L Gompers. Do all of these guys have great last? They were more moderate than the anarchists and the Socialist international workers of the world, focused on bread and butter issues like pay hours and safety founded in 1886, the same year the Haymarket Riot, the AFL had about 250000 members. By 1892, almost 10% of whom were iron and steel workers.

speaker01 10:12:00

And now we have to pause to briefly one of the most pernicious innovations of the era, social Darwinism, a perversion of Darwin's theory that would have made him throw up, Although, to be fair, almost everything made him throw up. Social Darwinists argued that the theory of survival of the fittest should be applied to people, and also that corporations were people. Companies were big because they were fitter, and we had nothing to fear from monopolies. The pseudoscience was used to argue that government shouldn't regulate business or pass laws to help poor people. It assured the rich that the poor were poor because of some inherent evolutionary flaw, thus enabling tycoons to sleep at night, you know, on a big pile of money surrounded by beautiful women. But despite the apparent inborn unfitness of workers, unions continued to grow and fight for better conditions, sometimes violently. There was violence at the Homestead steel strike of 18000 hundred and 92 and the Pullman Rail Strike of 1892 when strikers were killed and great deal of property was destroyed, to quote the historian Michael Lin, in the late 1870s and early 1880s, the United States had five times as many unionized workers as Germany at a time when the two nations had similar populations, unions wanted the United States and its citizens to imagine freedom more broadly, arguing that without a more equal economic system, America was becoming less, not more free, even as it became more prosperous.

speaker01 11:22:00

If you're thinking that this freewheeling age of fast growth, uneven gains in prosperity and corporate heroes, villains resembles the early 20 two-one century, you aren't alone, and it's worth remembering that it was only 150 years ago that modern corporations began to form and that American industry became the leading driver in the global economy. That's a blink of an eye in world history terms and technologies of post civil war. America gave us the ideas that still define how we all of us, not just Americans think about opposites like success and failure or wealth and poverty. It's also when people began to discuss the ways in which inequality could be the opposite of freedom. Thanks for watching I'll see you next week.

speaker01 12:00:00

Crash Course is produced and directed by Stan Mueller, our script supervisor is Meredith Danko, the associate producer is Danica Johnson, the show is written by my high school history teacher, Raul Meer, rosiana Hols Rojas and myself, and our graphics team is Thought Cafe. Each week there's a new caption for the Libertas. You can suggest captions, comments, where you can also ask questions about today's video that will be answered by our team historian. Thanks for watching Crash Course, make sure you're subscribed and as we say in my hometown, don't forget to be awesome.