AP U.S. History · Lesson 1

Industry, big business and labor

Know Know it

After the Civil War the United States became the world's leading industrial power. The transcontinental railroad (1869) and tens of thousands of miles of new track created a national market. New technology, such as the Bessemer process for steel, electric power and the telephone, drove growth, and the federal government helped with land grants to railroads and high tariffs that protected American industry.

Business leaders built giant firms. Andrew Carnegie used vertical integration in steel, and John D. Rockefeller used horizontal integration and the trust to control oil refining. Supporters praised these men as builders; critics called them robber barons. Ideas such as Social Darwinism defended great wealth, and Carnegie's Gospel of Wealth said the rich owed society philanthropy, not higher wages.

Factory work was long, dangerous and poorly paid, and owners cut wages in hard times. Workers organized. The Knights of Labor welcomed nearly all workers but faded after the Haymarket bombing in Chicago (1886) was blamed on labor radicals. The American Federation of Labor organized skilled crafts. Large strikes often ended in defeat: the Great Railroad Strike (1877), the Homestead strike at Carnegie's steel works (1892) and the Pullman strike (1894), which federal troops and a court order helped break.

Government mostly favored business. Congress passed the Sherman Antitrust Act (1890) against trusts, but in United States v. E. C. Knight (1895) the Supreme Court ruled that it did not reach manufacturing, and the law was used against unions in the 1890s.

Three big strikes
StrikeYearWhat happened
Great Railroad Strike1877Wage cuts set off strikes across many states; federal troops helped end them
Homestead strike1892Steelworkers fought Pinkerton guards near Pittsburgh; the state militia arrived and the union was broken
Pullman strike1894A railway union boycott spread nationwide; a federal court order and federal troops ended it

Trap An antitrust law did not mean antitrust enforcement

The Sherman Antitrust Act of 1890 outlawed combinations in restraint of trade, but for its first decade it did little to big business. The Court narrowed it in the E. C. Knight case, and the government used it against the Pullman strikers. On a question about its early effect, do not say it broke up the trusts; serious trust busting came later.

Worked example Easy

Andrew Carnegie bought iron mines, coal fields and ore ships to supply his steel mills. What is this strategy called?

  1. Horizontal integration
  2. Vertical integrationAnswer
  3. Collective bargaining
  4. Laissez-faire

How to solve it

  1. Carnegie bought firms that supplied his mills, at earlier stages of production.
  2. Controlling every stage is vertical integration; buying competitors would be horizontal.

Why each choice is right or wrong

  • A. Incorrect. Horizontal integration means buying rivals in the same business, like Rockefeller buying other refineries, not buying suppliers.
  • B. Correct. Owning each stage of production, from raw materials to the finished steel, is vertical integration.
  • C. Incorrect. Collective bargaining is how unions negotiate with employers, not how a company buys its suppliers.
  • D. Incorrect. Laissez-faire is the idea that government should not regulate business, not a way of organizing a company.

Explain Explain it

Task verbs: explain, compare

To compare two developments, choose one feature and say how each stands on it, with a specific detail for each. Carnegie and Rockefeller, compared on how they grew: Carnegie bought the mines and ships that supplied his mills, while Rockefeller bought out rival refiners.

To explain a cause, link a specific event to its effect with a because or so. "In 1877 the Baltimore and Ohio Railroad cut its workers' wages for the second time in a year, so its workers walked off the job, and the strike spread along rail lines to other states."

Worked example Medium

Why did most large strikes of the late 1800s, such as those in 1877 and 1894, fail?

  1. Most workers refused to join unions of any kind
  2. Federal law already guaranteed workers an eight-hour day
  3. Courts, militias and troops sided with employersAnswer
  4. The strikers demanded government ownership of all factories

How to solve it

  1. Look at how the 1877 and 1894 strikes ended.
  2. Both were broken with the help of troops, and the 1894 strike also by a court order, showing government siding with owners.

Why each choice is right or wrong

  • A. Incorrect. Hundreds of thousands of workers did join unions and strikes; the strikes failed despite that support.
  • B. Incorrect. No federal law gave private workers an eight-hour day in this period, which is why unions demanded one.
  • C. Correct. Owners won court orders, and state militias and federal troops were sent in, as in 1877 and in the Pullman strike of 1894.
  • D. Incorrect. Most strikes were about wage cuts and conditions, not government ownership of factories.

Compare Your turn

Compare the Knights of Labor and the American Federation of Labor: give one way they differed, with an accurate detail about each.

Write it, then compare. Nothing you type here is saved or graded.

Compare with a model answer

A full answer does this

  • States an accurate feature of the Knights of Labor that differs from the AFL
  • States an accurate, contrasting feature of the AFL

Model answer

They differed in who could join. The Knights of Labor admitted skilled and unskilled workers, women and Black workers in one big organization. The American Federation of Labor, led by Samuel Gompers, organized only skilled workers in separate craft unions such as carpenters and cigar makers.

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