While the first American industrial revolution occurred primarily in the manufacture of textiles, the second, or new, industrial revolution occurred in steel, petroleum, and electrical industries. The revolution in textiles began in the late 18th century and made Great Britain the manufacturing center of the world; the second revolution began roughly about 1870 and resulted in American primacy among industrial powers. Indeed, during the Gilded Age the United States experienced the greatest surge of increased productivity the world has ever witnessed. American success resulted in part from American advantages. The United States was a huge country with abundant raw materials. It possessed the most extensive railroad network in the world, one that moved raw materials and finished products at high speeds and low costs, allowing a quick return on invested capital. Its relatively prosperous population, growing from natural increase and immigration, provided both an adequate labor supply and an expanding home market. Capital was in short supply, but Europeans—especially the British—invested heavily in the United States. Finally, the American government was stable and encouraged industry with a protective tariff (see TARIFF issue).
No matter what index of production is used, industry’s rate of growth in the Gilded Age was prodigious. Robert E. Gallman has calculated that the value added by manufacturing multiplied almost six times from 1869, when it was $1,078 million, to $6,252 million in 1899, while Edwin Frickey’s index of manufacturing production multiplied four times from 1870 to 1900. Rapid growth also resulted from American ingenuity. Manufacturers were quick to adopt technological innovations because labor was expensive and labor-saving devices cut costs significantly. Some of the largest companies established laboratories and employed scientists, especially chemists, to improve processes. Americans were inventive, but the concepts of interchangeable parts and the division of labor were basic to American productivity. In addition, manufacturers began to embrace the “scientific management” advocated by Frederick W. Taylor, who made time and motion studies of workers and instituted piecework to induce them to move faster and more efficiently. Perhaps the entrepreneurs themselves were the most important factor in the surge of American production; both John D. Rockefeller and Andrew Carnegie, for example, were talented organizers and administrators, picked able associates, and worked hard. Rockefeller’s attention to detail down to the minuscule cost of barrel bungs and Carnegie’s obsession with efficiency were legendary.
Virtually all industries experienced rapid growth in the Gilded Age, but the most spectacular developments were in steel, oil, and electricity. With the introduction of the Bessemer process, the steel industry took off and with it the mining of the iron ore and bituminous coal necessary for its production. Steel (an alloy of iron and carbon that is strong and malleable) had been produced in small quantities for swords and armor for centuries and, since the 18th century, in slightly larger amounts in crucibles. The Bessemer converter, which made steel quickly and in large batches, was invented in Great Britain in the 1850s, but large-scale production of American steel began in the 1870s. In 1870 only 68,750 long tons were produced; by 1880 1.2 million; by 1890 4.3 million; by 1900 10.2 million; and in 1913, on the eve of World War I, 31.3 million long tons of American steel were manufactured. By then the United States produced more steel than Germany, Britain, and France combined.
The production of nonferrous metals, although only a fraction of steel output, was significant and grew rapidly in the Gilded Age. Copper production in 1870 was 14,112 tons, doubled to 30,240 tons in 1880. It took off to 129,882 tons in 1890 and 303,059 tons in 1900. Lead production rose steadily from 17,830 tons in 1870 to 367,773 tons in 1900, while zinc went from 5,400 tons in 1870 to 123,886 tons in 1900. Aluminum production, beginning with minuscule amounts in 1886, reached 23,000 long tons in 1900, but its importance would grow in the 20th century.
Unlike railroading, coal mining, and steelmaking, the petroleum industry began in America. Edwin L. Drake drilled the first successful oil well in 1859 near Titusville, Pennsylvania. Drake invented, but failed to patent, the drive pipe that essentially is still used in drilling wells and made little money from his discovery. The impact of his discovery was instantaneous, since petroleum could be refined (distilled) inexpensively into superior lubricants and kerosene, which provided excellent lamplight. In 1861, two years after Drake’s discovery, more than 2 million barrels of crude oil were produced, and by 1870 production had increased to 5.3 million barrels and continued to grow to 63.6 million barrels in 1900.
Although virtually all factories were powered by steam engines in the Gilded Age, electricity was of great importance. Instantaneous communication—by the telegraph and the telephone—over great distances were made possible by electrical devices. Illumination by the electric lightbulb invented by Thomas A. Edison in 1879 was superior to that given off by a kerosene lamp and demand for it led to the development of a central power station on Pearl Street in New York in 1882 and to the rise of electric utilities. By 1889 electric power stations were producing 260,000 horsepower, which by 1900 increased to 2.4 million horsepower. The early Edison power stations generated direct current, which could be transmitted only short distances, but George Westinghouse (who in 1869 invented the railroad air brake) utilized a transformer in 1885 to raise the voltage of an alternating current (AC) and succeeded in transmitting it a significant distance. Although AC could light bulbs, there was no AC motor. Nikola Tesla, an independent electrical inventor who associated briefly with both Edison and Westinghouse, developed AC generators, transformers, and—most important—motors. Tesla sold his patents to Westinghouse in 1888. to Tesla’s inventions and despite Edison’s opposition, AC triumphed, especially after Westinghouse put on a spectacular exhibit at the 1893 World’s Columbian Exposition at Chicago. Tesla’s motors installed on trolley cars and elevated railroads (els) revolutionized urban transport and enabled cities to add an outer ring heretofore unreachable by horsecar. Tesla’s work also had a great impact on industry. The electric motor, powering individual machines, provided flexibility and was particularly advantageous for the small factory. Although only 2 percent of factories in 1900 were powered by electric motors, they were clearly the wave of the future.
The spectacular economic development of the late 19th century was largely accomplished by corporations. The corporation, consisting of many shareholders, had great advantages over individual ownership or partnerships: The liability of investors in a corporation is limited to the shares owned, shares can easily be sold, the corporation has a life of its own, and large amounts of capital can be raised by a corporation through the sale of stocks and bonds. To function—to acquire a life of its own—a corporation required a charter that, in the early years of the republic, required a special act of incorporation, but by the 1870s usually were acquired through general incorporation laws.
Gilded Age corporations, to eliminate competition (which their managers abhorred while praising it in public), combined with one another to form what became known as trusts. Initially pools, or informal agreements, were used to eliminate competition. Railroads used pools to set rates, divide freight, and apportion receipts until the Interstate Commerce Act made them illegal. The chaotic oil industry and competition by railroads for its freight led to the notorious but short-lived South Improvement Company pool. The carriers divided freight on a percentage basis, and refiners—among which Rockefeller’s Standard Oil Company was the most prominent—apportioned their shipments, on which they received a rebate, among the railroads. Pools functioned best in flush times but easily collapsed when business fell off and cheating increased. In addition to their generally short duration, pools could not be enforced.
Although Rockefeller and other refiners organized a subsequent pool, an association, that allotted crude oil to its members, he and his associates (who refined 90 percent of the nation’s oil) were unhappy with pooling arrangements. His lawyer, S. C. T. Dodd, suggested that a trust agreement among the associates would provide order and authority. Accordingly, 41 stockholders of Standard Oil of Ohio signed a trust agreement that gave them trust certificates for their property, which they turned over to a board of nine trustees. The trust was so obviously monopolistic that the Ohio courts dissolved it in 1892.
The Standard Oil trustees had already incorporated the Standard Oil Company of New Jersey. That state’s incorporation laws did not prevent the creation of a holding company, which in effect was the corporation that combined the individual corporations. In 1899 Standard Oil of New Jersey became a true holding company by increasing its stock from $10 million to $110 million and exchanging that stock for the stock of 40 companies in the Standard group.
Consolidation also characterized the iron and steel industry. Almost 1,000 iron companies were combined in the late 19th century into a few large companies, of which Carnegie Steel was the largest. Since the early 1870s with the opening of his J. Edgar Thompson Steel Works, Carnegie had dominated the steel industry. He assembled a vertical combination controlling iron ore and coal mines, transport facilities, steel mills, and fabrication plants. Carnegie Steel, however, was a limited partnership, not a corporation, for much of its existence. Yet disputes with partners, especially Henry Clay Frick, and Carnegie’s desire to retire required that he convert his partnership into a corporation, which he did in 1900. Unlike the oil business where virtually no competition existed, there were other formidable steel combinations, especially Elbert H. Gary’s Federal Steel, a holding company established in 1898 with which Carnegie was willing to compete. Gary did not wish to compete and with the blessing of J. P. Morgan asked Carnegie to name his price. The $480 million asked was immediately accepted, and in 1901 U. S. Steel became a bil-lion-dollar holding company controlling 60 percent of the industry, with Carnegie Steel as its largest component.
Consolidations occurred in electrical industries. Western Union had long dominated the telegraph business. American Telephone & Telegraph (AT&T) was established in 1885 by American Bell to institute long-distance service, and in 1907, following its reorganization by J. P. Morgan, AT&T began aggressively acquiring independent telephone companies in its quest for one nationwide system. Morgan also supported Henry Villard’s consolidation in 1892 of Edison and other electrical companies into the General Electric Company. Four years later Westing-house and General Electric, the only major manufacturers of electrical equipment, agreed to pool their patents covering light bulbs, motors, dynamos, and street railway equipment. Despite the pooling of information, the two electrical giants remained surprisingly competitive. Nevertheless, the overall trend of mergers and consolidations was the elimination of competition, the adjustment of supply to match demand, and a certain rigidity in price that repealed the law of supply and demand.
Further reading: Alfred D. Chandler, Jr., The Visible Hand: The Managerial Resolution in American Business (Cambridge, Mass.: Harvard University Press, 1977); Samuel Haber, Efficiency and Uplift: Scientific Management in the Progressive Era, 1890-1920 (Chicago: University of Chicago Press, 1964); Edward C. Kirkland, Industry Comes of Age: Business, Labor, and Public Policy, 18601897 (New York: Holt, Rinehart and Winston, 1961).
Ingersoll, Robert Green (1833-1899) lawyer, orator Robert G. Ingersoll was born in Dresden, New York, on August 11, 1833. His father, a Presbyterian minister too steeped in Calvinism for the taste of his congregations, frequently moved in a westerly direction, limiting Ingersoll’s formal schooling. But he read widely and was well versed in the classics. For two years Ingersoll taught school in Illinois and in Tennessee and then, with his brother Ebon Clark Ingersoll, studied law with a Democratic congressman in Marion, Illinois. In 1854 the brothers were both admitted to the bar. Together, they practiced in Shawneetown, in southern Illinois, and in 1857 moved north to Peoria, where they prospered.
Although he was antislavery, Ingersoll in 1860 ran unsuccessfully for Congress as a Stephen A. Douglas Democrat. With the onset of the Civil War in 1861, Ingersoll helped raise the 11th Illinois Cavalry regiment and was appointed its colonel. Before leaving for war he married Eva Amelia Parker on February 13, 1862. They would have two daughters. Less than two months after his marriage Ingersoll participated in the Battle of Shiloh (April 6-7), and on December 18 he and part of his command were captured at Lexington, Tennessee. Although he was paroled in March 1863, Ingersoll’s hope of being exchanged was not realized, so he resigned his commission on June 30, 1863, and resumed the practice of law in Peoria. Possessing a superb courtroom manner, he excelled as a defense attorney and numbered RAILROADS among his clients.
Never a firm Democrat, Ingersoll emerged from the war a Radical Republican. An effective campaign speaker and a good lawyer, Ingersoll served as attorney general of Illinois from 1867 to 1869. He sought the Republican gubernatorial nomination in 1868 but was defeated by the popular and powerful general John M. Palmer. Remaining a tireless campaigner for the Republican Party from the 1860s to the 1890s, Ingersoll never again held public office. In an era of gifted political speakers, he was arguably the greatest. On the campaign trail he would alter his set speeches to suit his immediate audience sufficiently to be quoted by newspapers.
In 1876 his speech at the Republican National Convention nominating for president JAMES GILLESPIE Blaine, whom he likened to “a plumed knight,” moved the delegates to a near frenzy. Ingersoll was a genius at arousing the emotions of a crowd. The correspondent of the Chicago Tribune marveled at his “wizard power. . . . He swayed and moved and impelled and restrained and worked in all ways with the mass before him as if he possessed some key to the innermost mechanism that moves the human heart.” Blaine would have been nominated by acclamation the moment Ingersoll finished had his opponents not secured an adjournment until the next day, when they agreed on RuTHEREORD B. Hayes and defeated Blaine.
Although disappointed, Ingersoll campaigned for Hayes. Adept at “waving the bloody shirt” (keeping alive the passions of the Civil War and Reconstruction), Ingersoll delivered a classic of that genre before Union veterans. Beginning with “Every State that seceded from the United States was a Democratic State,” he cataloged the sins of Democrats. After stating “Every man that shot Union soldiers was a Democrat” and “The man who shot Abraham Lincoln was a Democrat,” he climaxed with “Soldiers, every scar you have on your heroic bodies was given you by a Democrat.” Hayes won the disputed election of 1876 in part because the Grand Army OE the Republic remained loyal to the Grand Old Republican Party. Hayes was grateful and planned to appoint Ingersoll minister to Germany but gave up when religious groups protested.
Ingersoll was an agnostic, believing the existence of God is unknowable, and made no secret of his religious views. He was such a good political speaker that no candidate would turn down his support, and audiences, whether God-fearing or not, loved to hear him lecture on politics, literature, and religion. His political speeches, especially the nomination of Blaine, made him famous and attractive on the lyceum circuit and enabled him to present his religious views to a wide audience. Reversing Alexander Pope’s statement, Ingersoll believed that “An honest God is the noblest work of man,” but that most gods man has created are “revengeful, savage, lustful, and ignorant,” including the Judeo-Christian God. Ingersoll dismissed the Bible as a collection of “ignorant legends of the barbaric past,” a source of persecution that “burned heretics, built dungeons, founded the Inquisition, and trampled upon the liberties of men.” He regarded the dogmas of all Christian denominations about salvation and damnation as vicious and illogical and contrary to the love and mercy Jesus advocated. Ingersoll enjoyed playing the role of heretic and infidel, and his auditors enjoyed the show. Reverend Henry Ward Beecher, whose notions of an evolving God were not far from Ingersoll’s ideas, called him the greatest speaker in the English language and became a personal friend. Ingersoll did believe “in the gospel of liberty. . . the gospel of Intelligence. . . in this great gospel of Humanity.”
When not on the lecture circuit or on the political stump, Ingersoll defended some high-profile people. In 1876 he won the acquittal of Daniel W. Munn, a member of the notorious Whiskey Ring. The next year, as befitting one with a national reputation, Ingersoll moved to Lafayette Square (opposite the White House). His most famous case involved Republican officeholders involved in the STAR ROUTE ERAUDS. In two trials (1882-83) he succeeded in getting the chief defendants acquitted. With his dramatic summations Ingersoll was clearly the star of these proceedings. In 1885 he moved to New York, and there in 1887 secured a judgment for a client against Jay Gould’s Western Union Telegraph Company for $1.5 million. More than a great lawyer, Ingersoll was a great pleader. He died on July 21, 1899, in Dobbs Ferry, New York.
Further reading: David D. Anderson, Robert Ingersoll (New York: Twayne Publishers, 1972); Mark A. Plummer, Robert G. Ingersoll: Peoria’s Pagan Politician (Macomb: Western Illinois University, 1984).
World History
