This chapter begins, appropriately enough, with railroads. They were America's first big business and a key to the new nationwide industrial order. An example of an abortive journey along the "Great Southern Mail Route" from the Mississippi River to Washington, D.C. provides a sense of just how difficult rail travel was in 1866. A scant 20 years later, a more ambitious "scamper across America" took place in relative comfort from one end of the country to the other. The world of difference between the two trips reflected the changes brought on by a maturing industrial economy. The changes involved not just the comfort afforded passengers. The new industrial order required a complex system of transportation to carry people and goods quickly and efficiently across the country. It also needed an equally complicated network of industrial systems to support the enormous production and distribution needs of the exploding American economy.

The Development of Industrial Systems

Transportation by rail was only one dimension of the new industrial order, which involved the emergence of interlocking industrial systems. Communication by telegraph and other devices, resource development and new industrial technologies, systematic invention, finance capital, the rise of the corporation, and an expanding pool of labor slowly grew together into a national network of commerce. Many processes, all linked, all acting together, forged an industrial nation.

Such development came at a price. Smokestack industries began to foul the environment. The competition for raw materials intensified. More and more workers found themselves in monotonous, alienating, and sometimes deadly jobs.

Railroads: America's First Big Business

The railroads were the core of the new industrial order. They moved people and freight, stimulated economic growth, and, just as importantly, sparked a managerial revolution that would be copied by other big businesses.

Because they generally expanded by combining shorter branch, or "feeder," lines, owners of the main or "trunk" lines had to pioneer new techniques of management to control their growing operations. "Central offices" served as corporate nerve centers, with a new class of "middle managers" heading divisions responsible for purchases, production, transportation, sales, and accounting. Even so, huge fixed costs, together with massive overexpansion and savage competition, led to rate wars and consolidation in the form of cooperative pools, purchases, leases, and outright mergers. Investment bankers such as J. P. Morgan played a prominent role in raising the large amounts of capital required to build and run railroads and in helping to reorganize troubled firms.

The Growth of Big Business

The process of system-building continued to spread as businesses grew bigger and bigger through combination— a loose affiliation of enterprises—and consolidation— a blending of companies into a single corporate entity. Some companies, such as the major salt producers in Michigan, adopted a horizontal strategy for growth by allying with competitors. Other industrialists, such as meatpacker Gustavus Swift, adopted a vertical strategy, acquiring both outlets to consumers and sources of raw materials.

Andrew Carnegie moved both horizontally and vertically in building a fully-integrated steel empire, while oil magnate John D. Rockefeller moved beyond integration to develop the trust, a quasi-legal arrangement in which stockholders surrendered 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 during the 1890s as a wave of mergers swept through American industry in the wake of the depression of 1893. Greater size helped to reduce competition and bring down prices as "economies of scale" (the reduced price of each item that resulted from the production of many) increased profits. Competition diminished, though scarcely disappeared.

Industrialization helped to create a visible new class of multi-millionaires and subjected the economy to enormous disruptions. A vicious cycle of booms and busts developed, with precipitous declines followed by slow recoveries. 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 such as Henry George and Edward Bellamy, however, attacked corporate capitalism as a greedy promoter of poverty and class exploitation. Radicals such as Daniel De Leon and the Socialist Labor party tried unsuccessfully to win a sizable political following among working-class Americans.

The Workers' World

The new industrial order created a new culture of work. Factories required people to work in novel ways. Unlike farms, factories did not operate according to the changing seasons or the movement of the sun. Instead, the harsh discipline of productivity dictated the rhythm of work. Wage earners often stayed on the job 6 days a week for 10 hours a day. The use of heavy machinery increased the dangers as well as the tedium of factory work. The Taylor system of scientific management, which emphasized discovering the most efficient ways to get work done, boosted output but added to a growing sense that workers were merely cogs in the vast industrial system.

Workers struggled to maintain control of their lives and work. They took unauthorized days off, limited their output, or simply quit. Through these and other methods, they strained to balance their obligations as wage earners, family members, and citizens. Women and children worked at countless factory jobs, generally earning less than men. Overall, however, workers enjoyed modest gains in real wages. Most believed in the American dream of success. Yet it was they who bore the brunt of the new industrial order. Most workers suffered through the ravages of unemployment and industrial accidents without the benefits of welfare or disability insurance.

The Systems of Labor

Workers slowly responded to the obstacles of industrial culture as more and more of them found employment in industry. A minority of workers attempted to organize by creating unions, but these efforts often divided along race, gender, and ethnic lines. Some unions, such as the Knights of Labor, offered radical solutions such as abolishing the wage system. Others, such as the American Federation of Labor, accepted the wage system and tried to improve conditions within it. At the turn of the century, however, less than one worker in ten belonged to a union.

Despite this lack of widespread organization by workers, discontent boiled over in the 1880s and 1890s as a wave of strikes crippled industry. Managers fought back with blacklists, "yellow dog" contracts, strikebreakers, and Pinkerton police. When all else failed, they relied on court injunctions and federal troops to crush strikes and keep order. By 1900, employers generally had weathered the disruptions and emerged as the masters of the mightiest industrial economy on earth.