Modern history

American Industry in the Age of Organization

1877-1900

AMERICAN HISTORIES

In 1848 Will and Margaret Carnegie left Scotland and sailed to America, hoping to find a better life for themselves and their two children. Once settled in Pittsburgh, Pennsylvania, the family went to work, including thirteen-year-old Andrew, who found a job in a textile mill. For $1.25 per week, he dipped spools into an oil bath and fired the factory furnace—tasks that left him nauseated by the smell of oil and frightened by the boiler. Nevertheless, like the hero of the rags-to-riches stories that were so popular in his era, Andrew Carnegie persevered, rising from poverty to great wealth through a series of jobs and clever investments. As a teenager, he worked as a messenger in a telegraph office and was soon promoted to telegraph operator. A superintendent of the Pennsylvania Railroad Company noticed Andrew's aptitude and made him his personal assistant and telegrapher. While in this position, Carnegie learned about the fast-developing railroad industry and purchased stock in a sleeping car company; the returns from that investment tripled his annual salary. Carnegie then became a railroad superintendent in western Pennsylvania, and by the time he was thirty-five, he had earned handsome returns on his investments in various industrial companies, as well as from oil investments he made just as that industry was emerging.

Andrew Carnegie eventually founded the greatest steel company in the world and became one of the wealthiest men of his time. In an era before personal and corporate income taxes, Carnegie earned hundreds of millions of dollars. He also became one of the era's greatest philanthropists, fulfilling his sense of community obligation by giving away a great deal of his fortune.

John Sherman also believed in public service, but for him it would come through politics. Sherman was born in Lancaster, Ohio, in 1823, a quarter of a century before the Carnegies set sail for the United States. Sherman became a lawyer like his father, an Ohio Supreme Court judge, and in 1844 he set up a practice with his older brother, William Tecumseh Sherman, the future Civil War general and Indian fighter (see chapter 15). Like Carnegie, Sherman made shrewd investments that made him a wealthy man, although not on the same scale as Carnegie.

Sherman decided to enter politics and in 1854 won election from Ohio to the House of Representatives as a member of the newly created Republican Party. He rose up the leadership ranks as Republicans came to national power with the election of Abraham Lincoln to the presidency in 1860. From 1861 to 1896, Sherman held a variety of major political positions, including U.S. senator from Ohio and secretary of the treasury under President Rutherford B. Hayes. After his term as treasury secretary ended, he returned to the Senate and wielded power as one of the top Republican Party leaders. Sherman, who had joined the Radical Republicans during Reconstruction (see chapter 14), did not hesitate to move with the Republican Party as its interests shifted from racial equality to promoting business and industry.

With his background as chair of the Senate Finance Committee and as secretary of the treasury, Sherman was the most respected Republican of his time in dealing with monetary and financial affairs. Marcus Alonzo Hanna, a wealthy industrialist, considered the Ohio senator "our main dependence in the Senate for the protection of our business interests." Like Hanna, Sherman believed that government should serve business. His most famous accomplishment, the Sherman Antitrust Act, which authorized the government to break up organizations that restrained competition, embodied this belief. It enacted limited reforms without harming powerful business interests.

WHILE THE AMERICAN HISTORIES of Andrew Carnegie and John Sherman began very differently, both men played a prominent role in developing the governmentbusiness partnership that was crucial to the rapid industrialization of the United States. Carnegie’s organization and management skills helped shape the formation of large-scale business. At the same time, Sherman and his fellow lawmakers provided support for

that enterprise, using the power of government to reduce risks for businessmen and to increase incentives for economic expansion. In the view of men like Carnegie and Sherman, government’s primary purpose was, in fact, to advance the agenda and interests of the business community—an agenda they were certain was in the best interests of the country as a whole.

The emphasis Carnegie and Sherman placed on the government-business alliance was, in part, a reaction to the extreme economic volatility of the late nineteenth century. The economy experienced painful depressions in the 1870s, 1880s, and 1890s, each accompanied by business failures and mass unemployment. Though recovery came in every instance and industrial output continued to soar, these financial fluctuations left businessmen ever more intent on stabilizing profits, wages, and prices. When faced with harsh economic realities and swift change, businessmen chose organization, cooperation, and government support as strategies to deal with the challenges they confronted.

America Industrializes

In this Age of Organization between 1870 and 1900, the United States grew into a global industrial power. Transcontinental railroads spurred this breathtaking transformation, linking regional markets into a national market for manufactured goods; at the same time, railroads themselves served as a massive new market for raw materials, new technologies, and, perhaps most important, steel. Building on advantages developed over the course of the nineteenth century, the Northeast and the Midwest led the way in the new economy, while efforts to industrialize the South met with uneven success. Men like Andrew Carnegie became both the heroes and the villains of their age. They engaged in ruthless practices that would lead some to label the new industrialists “robber barons,” but they also created ingenious systems ofindustrial organization and corporate management that altered the economic landscape of the country and changed the place of the United States in the world.

The New Industrial Economy

The industrial revolution of the late nineteenth century originated in Europe. Great Britain was the world’s first industrial power, but by the 1870s Germany had emerged as a major challenger for industrial dominance, increasing its steel production at a rapid rate and leading the way in the chemical and electrical industries. The dynamic economic growth stimulated by industrial competition quickly crossed the Atlantic. Eager and ambitious American entrepreneurs and engineers soon began applying the latest industrial innovations to U.S. enterprises.

Industrialization transformed the American economy. As industrialization took hold, the U.S. gross domestic product, the output of all goods and services produced annually, quadrupled—from $9 billion in I860 to $37 billion in 1890. During this same period, the number of Americans employed by industry doubled, as American workers moved from farms to factories and immigrants flooded in from overseas to fill newly created industrial jobs. Moreover, the nature of industry itself changed, as small factories catering to local markets were displaced by large-scale firms producing for national and international markets. The midwestern cities of Chicago, Cincinnati, and St. Louis joined Boston, New York, and Philadelphia as centers of factory production, while the exploitation of the natural resources in the West took on an increasingly industrial character. Trains, telegraphs, and telephones connected the country in ways never before possible. In 1889 the respected economist David A. Wells marveled at what had occurred over the past two decades: “An almost total revolution has taken place, and is yet in progress, in every branch and in every relation of the world’s industrial and commercial system.”

Shoe-factory worker in Lynn, Massachusetts, 1895. The Granger Collection, New York

Wells did not exaggerate. From 1870 to 1913, the United States experienced an extraordinary rate of growth in industrial output: In 1870 American industries turned out 23.3 percent of the world’s manufacturing production; by 1913 this figure had jumped to 35.8 percent. In fact, U.S. output in 1913 almost equaled the combined total for Europe’s three leading industrial powers: Germany, the United Kingdom, and France. Of these European countries, only Germany experienced a slight rise in output from 1870 to 1913 (2.5 percent), while Britain’s output dropped a precipitous 17.8 percent and France’s declined 3.9 percent. By the end of the nineteenth century, the United States was surging ahead of northern Europe as the manufacturing center of the world.

FIGURE 16.1

Expansion of the Railroad System, 1870-1900 The great expansion of the railroads in the late nineteenth century fueled the industrial revolution and the growth of big business. Connecting the nation from East Coast to West Coast, transcontinental railroads created a national market for natural resources and manufactured goods. The biggest surge in railroad construction occurred west of the Mississippi River and in the South.

At the heart of the American industrial transformation was the railroad. Large-scale business enterprises would not have developed without a national market for raw materials and finished products. A consolidated system of railroads crisscrossing the nation facilitated the creation of such a market (Figure 16.1). In addition, railroads were direct consumers of industrial products, stimulating the growth of a number of industries through their consumption of steel, wood, coal, glass, rubber, brass, and iron. For example, late-nineteenth-century railroads purchased more than 90 percent of the steel produced in U.S. factories. Finally, railroads contributed to economic growth by increasing the speed and efficiency with which products and materials were transported. One observer guessed that in 1890 if the country had to rely only on roads and waterways instead of trains to ship agricultural and industrial goods, the nation would have lost approximately $560 million, or 5 percent, of its gross national product.

Before railroads could create a national market, they had to overcome several critical problems. In 1877 railroad lines dotted the country in haphazard fashion. They primarily served local markets and remained unconnected at key points. This lack of coordination stemmed mainly from the fact that each railroad had its own track gauge (the width between the tracks), making shared track use impossible and long-distance travel extremely difficult.

The consolidation of railroads solved many of these problems. In 1886 railroad companies finally agreed to adopt a standard gauge. Railroads also standardized time zones, thus eliminating confusion in train schedules. During the 1870s, towns and cities each set their own time zone, a practice that created discrepancies among them. In 1882 the time in New York City and in Boston varied by 11 minutes and 45 seconds. The following year, railroads agreed to coordinate times and divided the country into four standard time zones. Most cities soon cooperated, but not until 1918 did the federal government legislate the standard time zones that the railroads had first adopted.

Innovation and inventions

As important as railroads were, they were not the only engine of industrialization. American technological innovation created new industries, while expanding the efficiency and productivity of old ones. Inventor Thomas Alva Edison began his career by devising ways to improve the telegraph and expand its uses. In 1866 a transatlantic telegraph cable connected the United States and Europe, allowing businessmen on both sides of the ocean to pursue profitable commercial ventures. New inventions also allowed business offices to run more smoothly: Typewriters were invented in 1868, carbon paper in 1872, adding machines in 1891, and mimeograph machines in 1892. As businesses grew, they needed more space for their operations. The construction of towering skyscrapers in the 1880s in cities such as Chicago and New York was made possible by two innovations: structural steel, which had the strength to support tall buildings; and elevators, equipped with a safety device invented by Elisha Graves Otis in the 1850s.

Among the thousands of patents filed each year, Alexander Graham Bell’s telephone revolutionized communications. By 1880 fifty-five cities offered local service and catered to a total of 50,000 subscribers, most of them business customers. A decade later, longdistance service connected New York, Boston, and Chicago, and by 1900 around 1.5 million telephones were in operation. Bell profited handsomely from his invention, created his own firm, and in 1885 established the giant American Telephone and Telegraph Company (AT&T).

Perhaps the greatest technological innovations that advanced industrial development in the late nineteenth century came in steel manufacturing. In 1859 Henry Bessemer, a British inventor, designed a furnace that burned the impurities out of melted iron and converted it into steel. The open-hearth process, devised by another Englishman, William Siemens, further improved the quality of steel by removing additional impurities from the iron. Railroads replaced iron rails with steel because it was lighter, stronger, and more durable than iron. Steel became the major building block of industry, furnishing girders and cables to construct manufacturing plants and office structures. As production became cheaper and more efficient, steel output soared from 13,000 tons in 1860 to 28 million tons in the first decade of the twentieth century.

Factory machinery needed constant lubrication, and the growing petroleum industry made this possible. A new drilling technique devised in 1859 tapped into pools of petroleum located deep below the earth’s surface. In the post—Civil War era, new distilling techniques transformed this thick, smelly liquid into lubricating oil for factory machinery. This process of “cracking” crude oil also generated lucrative by-products for the home, such as kerosene and paraffin for heating and lighting. Robert A. Chesebrough discovered that a sticky oil residue could soothe cuts and burns, and in 1870 he began manufacturing a product he would soon trademark as Vaseline Petroleum Jelly. After 1900, the development of the gasoline-powered, internal combustion engine for automobiles opened up an even richer market for the oil industry.

Railroads also benefited from innovations in technology. Improvements included air brakes and automatic coupling devices to attach train cars to each other. Elijah McCoy, a trained engineer and the son of former slaves, was forced because of racial discrimination to work at menial railroad jobs shoveling coal and lubricating train parts every few miles to keep the gears from overheating. This grueling experience encouraged him to invent and patent an automatic lubricating device to improve efficiency.

Early innovations resulted from the genius of individual inventors, but by the late nineteenth century technological progress was increasingly an organized, collaborative effort. Thomas Edison and his team served as the model. In 1876 Edison set up a research laboratory in Menlo Park, New Jersey. Housed in a two-story, white frame building, Edison’s “invention factory” was staffed by a team of inventors and craftsmen. Edison believed that “genius was 1 percent inspiration and 99 percent perspiration,” and he devoted nearly every waking hour, often ignoring his family, to coordinating the invention process. In 1887 Edison opened another laboratory, ten times bigger than the one at Menlo Park, in nearby Orange, New Jersey. These facilities pioneered the research laboratories that would become a standard feature of American industrial development in the twentieth century.

Edison expected his research factories to produce “a minor invention every ten days and a big thing every six months or so.” Edison and his crew largely succeeded. During his lifetime, Edison filed 1,093 U.S. patents; although he has received most of the credit, a good number of his inventions were the result of collaborative research. Out of his laboratory flowed inventions that revolutionized American business and culture. The phonograph and motion pictures changed the way people spent their leisure time. The electric lightbulb illuminated people’s homes and made them safer by eliminating the need for candles and gas lamps, which were fire hazards. It also brightened city streets, making them available for outdoor evening activities, and lit up factories so that they could operate all night long.

Like his contemporaries who were building America’s huge industrial empires, Edison cashed in on his workers’ inventions. He joined forces with the Wall Street banker J. P. Morgan to finance the Edison Electric Illuminating Company, which in 1882 provided lighting to customers in New York City. Goods produced by electric equipment jumped in value from $1.9 million in 1879 to $21.8 million in 1890. In 1892, Morgan helped Edison merge his companies with several competitors and reorganized them as the General Electric Corporation, which became the industry leader.

Building a New South

Although the largely rural South lagged behind the North and the Midwest in manufacturing, industrial expansion did not bypass the region. Well aware of global economic trends and eager for the South to achieve its economic potential, southern business leaders and newspaper editors, especially the Atlanta Constitutions editor Henry Grady, saw industrial development as the key to the creation of a New South. Attributing the Confederate defeat in the Civil War to the North’s superior manufacturing output and railroad supply lines, New South proponents hoped to modernize their economy in a similar fashion. One of those boosters was Richard H. Edmonds, the Virginia-born editor of the Manufacturers’ Record. He extolled the virtues of the “real South” of the 1880s, characterized by “the music of progress—the whirr of the spindle, the buzz of the saw, the roar of the furnace, the throb of the locomotive.” The South of Edmonds’s vision would move beyond the regional separatism of the past and become fully integrated into the national economy.

Railroads were the key to achieving such economic integration, so after the Civil War new railroad tracks were laid throughout the South. Not only did this expanded railroad system create direct connections between the North and the South, but it also facilitated the growth of the southern textile industry. Seeking to take advantage of plentiful cotton, cheap labor, and the improved transportation system, investors built textile mills throughout the South, especially in the Carolinas and Georgia. Victims of falling prices and saddled with debt, sharecroppers and tenant farmers moved into mill towns in search of better employment. Mill owners preferred to hire girls and young women, who worked for low wages, to spin cotton and weave it on the looms. To do so, however, owners had to employ their entire family, for mothers and fathers would not let their daughters relocate without their supervision. Whatever attraction the mills offered applied only to whites. The pattern of white supremacy emerging in the postReconstruction South kept African Americans out of all but the most menial jobs.

Blacks contributed greatly to the construction of railroads in the New South, but they did not do so as free men. Convicts, most of whom were African American, performed the exhausting work of laying tracks through hills and swamps. Southern states used the convict lease system, in which blacks, usually imprisoned for minor offenses, were hired out to private companies to serve their time or pay off their fine. The convict lease system brought additional income to the state and supplied cheap labor to the railroads and planters, but it left African American convict laborers impoverished and virtually enslaved.

The South attracted a number of industries besides textile manufacturing. In the 1880s, James B. Duke established a cigarette manufacturing empire in Durham, North Carolina. Nearby tobacco fields provided the raw material that black workers prepared for white workers, who then rolled the cigarettes by machine. Acres of timber pines in the Carolinas, Florida, and Alabama sustained a lucrative lumber industry, one of the few to employ whites and blacks equally. Rich supplies of coal and iron in Alabama fostered the growth of the steel industry in Birmingham, which produced more than a million tons of steel at the turn of the twentieth century (Map 16.1).

Despite this frenzy of industrial activity, the New South in many ways resembled the Old South. Southern entrepreneurs still depended on northern investors to supply much of the capital for investment. Investors were attracted by the low wages that prevailed in the South, but low wages also meant that southern workers remained poor and, in many cases, unable to buy the manufactured goods produced by industry. Efforts to diversify agriculture beyond tobacco and cotton were constrained by a sharecropping system based on small, inefficient plots. In fact, even though industrialization did make considerable headway in the South, the economy remained overwhelmingly agricultural. This suited many white southerners who wanted to hold on to the individualistic, agrarian values they associated with the Old South. In this way, they sought to remain distinct from what they considered the acquisitive North. Yoked to old ideologies and a system of forced labor, modernization in the South could go only so far.

Industrial Consolidation

In both the North and the South, nineteenth-century industrialists strove to minimize or eliminate competition. To gain competitive advantages and increase profits, industrial entrepreneurs concentrated on reducing production costs, charging lower prices, and outselling the competition. Successful firms could then acquire rival companies that could no longer afford to compete, creating an industrial empire in the process.

MAP 16.1

The New South, 1900 Although the South remained largely agricultural by 1900, it had made great strides toward building industries in the region. This so-called New South boasted an extensive railway network that provided a national market for its raw materials and manufactured goods, including coal, iron, steel, and textiles. Still, the southern economy in 1900 depended primarily on raising cotton and tobacco.

Building such industrial empires was not easy, however, and posed creative challenges for business ventures. Heavy investment in machinery resulted in very high fixed costs (or overhead) that did not change much over time. Because overhead costs remained stable, manufacturers could reduce the per-unit cost of production by increasing the output of a product—what economists call “economy of scale.” Manufacturers thus aimed to raise the volume of production and find ways to cut variable costs—for labor and materials, for example. Shaving off even a few pennies from the cost of making each unit could save millions of dollars on the total cost of production. Through such savings, a factory owner could sell his product more cheaply than his competitors and gain a larger share of the market.

A major organizational technique for reducing costs and underselling the competition was vertical integration. “Captains of industry,” as their admirers called them, did not just build a business; they created a system—a network of firms, each contributing to the final product. Men like Andrew Carnegie controlled the various phases of production from top to bottom (vertical), extracting the raw materials, transporting them to the factories, manufacturing the finished products, and shipping them to market. In 1881, when Carnegie combined his operations with those of Henry Clay Frick of Pennsylvania, he gained not only a talented factory manager but also access to Frick’s coal business. By using vertical integration, Carnegie eliminated middlemen and guaranteed regular and cheap access to supplies. He also avoided duplications in machinery, lowered inventories, and gained increased flexibility by shifting segments of the labor force to areas where they were most needed. This integrated system demanded close and careful management of the overall operation, which Carnegie provided. He manufactured steel with improved efficiency and cut costs. His credo became “Watch the costs and the profits will take care of themselves.”

Businessmen also employed another type of integration—horizontal integration. This approach focused on gaining greater control over the market by acquiring firms that sold the same products. John D. Rockefeller, the founder of the mammoth Standard Oil Company, specialized in this technique. In the mid-1870s, he brought a number of key oil refiners into an alliance with Standard Oil to control four-fifths of the industry. At the same time, the oil baron ruthlessly drove out or bought up marginal firms that could not afford to compete with him. One such competitor testified to a congressional committee in 1879 about how Standard Oil had squeezed him out: “[Rockefeller] said that he had facilities for freighting and that the coal-oil business belonged to them; and any concern that would start in that business, they had sufficient money to lay aside a fund and wipe them out.”

Horizontal integration was also a major feature in the telegraph industry. By 1861 Western Union had strung 76,000 miles of telegraph line throughout the nation. Founded in 1851, the company had thrived during the Civil War by obtaining most of the federal governments telegraph business. The firm had 12,600 offices housed in railroad depots throughout the country and strung its lines adjacent to the railroads. In the eight years before Cornelius Vanderbilt bought Western Union in 1869, the value of its stock jumped from $3 million to $41 million. Seeing an opportunity to make money, Wall Street tycoon Jay Gould set out to acquire Western Union. In the mid-1870s, Gould, who had obtained control over the Union Pacific Railway, financed companies to compete with the giant telegraph outfit. Gould did not succeed until 1881, when he engineered a takeover of Western Union by combining it with his American Union Telegraph Company. Gould made a profit of $30 million on the deal. On February 15, the day after the agreement, the New York Herald Tribune reported: “The country finds itself this morning at the feet of a telegraphic monopoly,” a business that controlled the market and destroyed competition.

Bankers played a huge role in engineering industrial consolidation. No one did it more skillfully than John Pierpont Morgan. In the 1850s, Morgan started his career working for a prominent American-owned banking firm in London, and in 1861 he created his own investment company in New York City. Unlike the United States, Great Britain had a surplus of capital that bankers sought to invest abroad. Morgan played the central role in channeling funds from Britain to support the construction of major American railroads. During the 1880s and 1890s, Morgan orchestrated the refinancing of several ailing railroads, including the Baltimore & Ohio and the Southern Railroad. To maintain control over these enterprises, the Wall Street financier placed his allies on their boards of directors and selected the companies’ chief operating officers. Morgan then turned his talents for organization to the steel industry. In 1901 he was instrumental in merging Carnegie’s company with several competitors in which he had a financial interest. United States Steel, Morgan’s creation, became the world’s largest industrial corporation, worth $1.4 billion. By the end of the first decade of the twentieth century, Morgan’s investment house held more than 340 directorships in 112 corporations, amounting to more than $22 billion in assets, the equivalent of $608 billion in 2012, all at a time when there was no income tax.

The Growth of Corporations

With economic consolidation came the expansion of corporations. Before the age of large-scale enterprise, the predominant form of business ownership was the partnership. Unlike partnerships, corporations provided investors with “limited liability.” This meant that if the corporation went bankrupt, shareholders could not lose more than they had invested. Limited liability encouraged investment by keeping the shareholders’ investment in the corporation separate from their other assets. In addition, corporations provided “perpetual life.” Partnerships dissolved on the death of a partner, whereas corporations continued to function despite the death of any single owner. This form of ownership brought stability and order to financing, building, and perpetuating what was otherwise a highly volatile and complex business endeavor.

Capitalists devised new corporate structures to gain greater control over their industries. Rockefeller’s Standard Oil Company led the way by creating the trust, a monopoly formed through consolidation. To evade state laws against monopolies, Rockefeller created a petroleum trust. He combined other oil firms across the country with Standard Oil and placed their owners on a nine-member board of trustees that ran the company. Subsequently, Rockefeller fashioned another method of bringing rival businesses together. Through a holding company, he obtained stock in a number of other oil companies and held them under his control.

The movement to create trusts, Rockefeller boasted, “was the origin of the whole system of modern economic administration.” Statistics backed up his assessment. Between 1880 and 1905, more than three hundred mergers occurred in 80 percent of the nation’s manufacturing firms. Great wealth became heavily concentrated in the hands of a relatively small number of businessmen. Around two thousand businesses, a tiny fraction of the total number, dominated 40 percent of the nation’s economy.

In their drive to consolidate economic power and shield themselves from risk, corporate titans generally had the courts on their side. In Santa Clara County v. Southern Pacific Railroad Company (1886), the Supreme Court decided that under the Fourteenth Amendment, which originally dealt with the issue of federal protection of African Americans’ civil rights, a corporation was considered a “person.” In effect, this ruling gave corporations the same right of due process that the framers of the amendment had meant to give to former slaves. In the 1890s, a majority of the Supreme Court embraced this interpretation. The right of due process shielded corporations from prohibitive government regulation of the workplace, including the passage of legislation reducing the number of hours in the workday.

Yet trusts did not go unopposed. In 1890 Congress passed Senator Sherman’s Antitrust Act, which outlawed monopolies that prevented free competition in interstate commerce. The bill passed easily with bipartisan support because it merely codified legal principles that already existed. Sherman and his colleagues never intended to stifle large corporations, which through efficient business practices came to dominate the market. Rather, the lawmakers attempted to limit underhanded actions that destroyed competition. The judicial system further bailed out corporate leaders. In United States v. E.C. Knight Company (1895), a case against the “sugar trust,” the Supreme Court rendered the Sherman Act virtually toothless by ruling that manufacturing was a local activity within a state and that, even if it was a monopoly, it was not subject to congressional regulation. This ruling left most trusts in the manufacturing sector beyond the jurisdiction of the Sherman Antitrust Act.

The introduction of managerial specialists, already present in European firms, proved the most critical innovation for integrating industry. With many operations controlled under one roof, large-scale businesses required a corps of experts to oversee and coordinate the various steps of production. Comptrollers and accountants pored over financial records to keep track of every penny spent and dollar earned. Traffic managers directed the movement of raw materials into plants and finished products out for distribution. Marketing executives were in charge of advertising goods and finding new markets. Efficiency experts sought to cut labor costs and make the production process operate more smoothly. Frederick W. Taylor, a Philadelphia engineer and businessman, developed the principles of scientific management. Based on his concept of reducing manual labor to its simplest components and eliminating independent action on the part of workers, managers introduced time-and-motion studies. Using a stopwatch, they calculated how to break down a job into simple tasks that could be performed in the least amount of time. From this perspective, workers were no different from the machines they operated.

Another vital factor in creating large-scale industry was the establishment of retail outlets that could sell the enormous volume of goods pouring out of factories. As consumer goods became less expensive, retail outlets sprang up to serve the growing market for household items, including watches, jewelry, sewing machines, cameras, and an assortment of rugs and furniture. Customers could shop at department stores—such as Macy’s in New York City, Filene’s in Boston, Marshall Field’s in Chicago, Nordstrom’s in Seattle, Gump’s in San Francisco, Nieman Marcus in Dallas, Jacome’s in Tucson, Rich’s in Atlanta, and Burdine’s in Miami—where they were waited on by a growing army of salesclerks. Or they could buy the cheaper items in Frank W. Woolworth’s five and ten cent stores, which opened in towns and cities nationwide. Chain supermarkets—such as the Great Atlantic and Pacific Tea Company (A&P), founded in 1869— sold fruits and vegetables packed in tin cans. They also sold foods from the meatpacking firms of Gustavus Swift and Philip Armour, which shipped them on refrigerated railroad cars. Mail-order catalogs allowed Americans in all parts of the country to buy consumer goods without leaving their home. The catalogs of Montgomery Ward (established in 1872) and Sears, Roebuck (founded in 1886) offered tens of thousands of items. Rural free delivery (RFD), instituted by the U.S. Post Office in 1891, made it even easier for farmers and others living in the countryside to obtain these catalogs and buy their merchandise without having to travel miles to the nearest post office. By the end of the nineteenth century, the industrial economy had left its mark on almost all aspects of life in almost every corner of America.

REVIEW & RELATE

• What were the key factors behind the acceleration of industrial development in late-nineteenth- century America?

• How did industrialization change the way American businessmen thought about their companies and the people who worked for them?

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