Lecture 5, 6: The Labor and Populist Movements
I. We discussed earlier the idea that there were costs involved with the rapid industrialization the US experienced in the decades following the Civil War—the environment suffered, the cities became crowded, dirty, and difficult to manage. Corruption was rampant in city level politics as political “machines” traded public services and assistance for votes, and there developed an ideology that argued that the government should do nothing to help the hungry and poor—it was just “survival of the fittest.”
A. Moreover, as this was happening, a small number of men—Andrew Carnegie, John D. Rockefeller, and J.P. Morgan most notably, were getting wealthy beyond description. These “robber barons” were using horizontal and vertical integration of corporations to gain control of huge sectors of the economy—steel production, the railroads, mining, and oil among them.[i] The consolidation of industry in America gave these men huge amounts of power, threatening to undermine the idea of democracy itself.
B. The rise of the corporation also owed a great deal to the US government’s decision to put the US on the Gold Standard in 1873. This greatly increased the value of the dollar and led to a long-term deflationary trend that hurt farmers and workers.
1. Think of it this way: say, for example, that before 1873, $1.00 could buy 3 kilos of potatoes. By the 1880s, $1.00 could buy perhaps 6 kilos of potatoes. Overall, prices had to come down (deflate). Wages came down too. Hit worse were American’s farmers and its working class poor.
C. Though for a time, Americans in general accepted the “survival of the fittest” view of Social Darwinism, the two social groups who suffered greatly as industrialization began fighting against the new economic realities. Coming from very different starting positions, the two groups eventually converged to pose one of the greatest political challenges to the two-party system.
A. The organization of labor unions in the US was made easier because in the new, industrial era work place, there were larger numbers of workers working close together—that meant they were able to discuss their problems and grievances much more easily. In addition to this, the relationship between workers and their bosses became more distant—the close personal relationships of earlier times could not be maintained as the number of workers increased. The industrial workplace was also a very dangerous place and many workers believed that unions would help them to get compensation for injuries they suffered on the job.
B. There were two basic types of unions—Industrial unions which tried to organize all the workers in a particular industry regardless of their jobs or skill level and Craft Unions which tried to organize people based on their particular skills.
1. One of the earliest craft unions was the Molly Maquires. They were coal miners (mostly Irish immigrants) who used violence to try to improve their situation. They were infiltrated by Pinkerton Agency detectives and destroyed.
a. The NLU was the first union that was national in scope—it had around 650,000 members at its peak.
b. Though the NLU used some violent tactics, the usefulness of the strike was limited because much of the 1870s were years of depression and striking would not have been effective.
c. Many think that the NLU’s decision to get involved in politics resulted in its collapse. The NLU lobbied Congress for a Chinese Exclusion Act and for the 8-hour workday. They didn’t get what they wanted, so they formed their own political party. Poor political decisions and bad timing caused a lot of in-fighting, and the union collapsed.
a. The Knights of Labor began as a secret organization of skilled workers in 1869 under the leadership of Uriah Stephens.
b. Like the NLU, the Knights of Labor got involved in politics, advocating the 8 hour day, an end to child labor, public ownership of the railroads and telegraph system.
c. In 1879, Terrence Powderly took over the union and ended the secret character of the group. Membership in the union grew to around 700,000. However, the union eventually collapsed due to poor financial management and the bad publicity that resulted from violent strike actions.
i. It was the Knights of Labor that struck the McCormick Harvester Co. (Chicago) in 1886. The Haymarket strike turned violent when some anarchists blew up a large bomb and killed 7 police officers, wounding many others.
ii. As a result of this, the Knights of Labor came to associated in everyone’s mind with anarchism and membership declined quickly.
4. The American Federation of Labor was founded in 1886. It was established as a clearinghouse for craft unions—that is, it tried to organize only skilled workers, but sought to organize all the different crafts into one big union.
a. The AFL, led for more than 30 years by its first leader (Samuel Gompers) tried hard to stay out of politics altogether, focusing on improving wages, hours, and working conditions for its members.
b. Though the AFL was prejudiced against women, blacks, and recent immigrants, it grew quickly—with 1.75 million members by 1902.
c. The focus on workplace issues paid off—the AFL was instrumental in getting the 8 hour day, improving workplace conditions, reducing reliance on women and children workers, and establishing the power of unions to bargain on behalf of workers with large companies.
d. Of course, the AFL is still around today, though it merged with another union, the Congress of Industrial Organizations (CIO) in 1955. It is now the AFL-CIO.
III. Early consequences of American Union organization.
A. First it is important to note that while union activities, such as strikes, often dominated to newspapers in the America of the 1890s, only 2% of American workers actually joined a union.
1. They were very controversial because the very idea of unions seemed to most Americans to be very “un-American.” Indeed, most early union leaders were European immigrants who hoped to follow the model of unionism there and who were in fact, socialists politically.
2. Most ordinary Americans agreed with the leaders of big business that a strike went against the principle of free enterprise. They also agreed that wages should be set by supply and demand, not by negotiations with an organized union.
4. The US government was also on the side of big business during this period—the right of unions to bargain on behalf of workers was acknowledged by the US Supreme Court, but it was still resisted by the President and Congress. Most local and state law enforcement agents sided with business owners when violence was required to deal with union workers.
5. In view of these attitudes, it is not surprising that big business did everything it could to destroy unions—it used violence in the form of “Pinkerton men,” it created “blacklists” of people who were considered troublemakers, it used “lockouts” to keep union members outside its factories and used “strike breakers” to work when union members went on strike.
a. Frankly speaking, it is amazing that unions survived at all.
1. Henry Frick, the manager of the Carnegie Steel plant at Homestead, Pennsylvania, decided to try to destroy union that had organized some of his workers. He cut their wages, and in sympathy, all of the workers at the factory went on strike.
2. Frick hired 300 Pinkerton men to protect the plant, and a confrontation between the workers and the Pinkertons ensued. The workers took over the plant and in the process, 9 workers were killed along with 7 of the guards.
3. Frick asked for help from the Pennsylvania governor, who sent 8000 state militiamen to re-take the plant.
4. The union at the plant was destroyed, of course, and only 20% of the workers were rehired. There wasn’t another union formed at that plant for 45 years.
1. George Pullman, maker of luxurious passenger cars for trains built a model town for his workers—it included modern housing, a new factory, a library, enclosed shopping, and even recreational facilities. His workers were very well treated and very happy.
2. Because of the Panic of 1893, Pullman was forced to fire half of his 6000 workers and to reduce the wages of the rest. However, he did not reduce the rent for workers living in company owned housing.
3. In mid-1894, Pullman rehired 2,000 workers, but the reduced wages were not increased to earlier levels.
4. Eugene V. Debs, founder of the American Railway Union in 1893 tried to organize Pullman’s workers. In 1894, Pullman fired all the ARU representatives working for him and the workers went on strike. Pullman fired them all and shut down the factory.
5. Railroad workers across America were asked by Debs to support the strikers by refusing to connect Pullman cars to their trains—they cooperated, and were fired for refusing to handle Pullman cars. Most of America’s railroads were shut down.
6. In an effort to force railroad workers to handle the Pullman cars, railroads would attach mail cars to each Pullman car—this made it a federal crime to refuse to handle the car—interfering with the delivery of the mail is a serious crime in the US.
7. Eventually, federal army troops were brought in to run America’s trains and the strike was broken.
8. It was also the first time the Sherman Anti-Trust Act was used to stop a strike—this law was originally intended to control big business, but its first use was to prevent a union from interfering with inter-state commerce.
IV. Though the union movement remained relatively weak during these years, with big business, the government, and popular opinion arrayed against it, it survive and would play a significant role in improving the lot of workers everywhere during the next century. Union membership in the US reached a peak of around 36% of the workforce in the 1940s and stands at around 18% today.
Lecture 6: Populism
I. Populism was a movement that grew out of the dissatisfaction of farmers with their declining position in American society. However, it went far beyond agricultural issues to offer a wide range of proposals designed to solve many of the ills of late 19th Century American society.
1. Starting just after the Civil War, American farmers began to suffer a long-term decline in their purchasing power.
a. Many people moved West, starting farms—there was an oversupply of agricultural products and prices dropped.
b. There was at the same time a technological revolution taking place in agriculture, as modern equipment began to be used to farm and farming became more “scientific.” This added to the problem of oversupply.
c. As mentioned above, government policy also hurt farmers, especially the decision to base the US Dollar on gold alone, rather than both gold and silver. This contributed to even greater deflation—i.e. even lower prices.
2. By the 1880s, farmers were in a sustained period of depression, with real income declining and costs (machinery, transportation, labor) increasing. By the early 1880’s farmers had to grow twice as much corn as they did in the 1860’s to earn the same amount of money—and that money could buy less.
i. The Grange started in 1867 as primarily a social organization, providing isolated farmers with ways to stay in touch with each other and society.
ii. The Panic of 1873, which resulted from the shift to the Gold Standard, hurt farmers bad, and the Grange grew rapidly.
b. They also began to develop into a more political organization, looking after farmers’ interests.
i. The Grange developed the idea of Farmer Cooperatives, with groups of farmers banding together to purchase supplies in bulk quantities, build their own grain storage facilities, packing houses, and even insurance companies.
ii. Cooperatives also allowed farmers to sell products directly to buyers, rather than through a middle man.
iii. Most cooperatives failed due to poor organization and planning, lack of experience, lack of money, and/or the spirit of independence of the farmers. However, those that succeeded demonstrated what farmers could do if they worked together.
iv. The Grange had some success politically at the state level. However, they were not able to change much at the national level.
i. Farmer Alliances were regionally organized and were much more political than the Grange.
ii. They wanted lower taxes on farmers and higher taxes on Railroads.
iii. They also wanted the federal govt. to set up a series of govt.-owned warehouses around the country so farmers could store their products while waiting for better prices.
iv. Also wanted a federal loan program.
d. The Farmer Alliances had divisions which prevented them from becoming a major political force:
i. The Southern Alliance backed the Democratic Party and included many blacks. This group insisted on segregation.
ii. The Northern Alliance backed the Republicans and insisted on integration.
1. Direct Election of Senators;
2. Tariff Reduction;
3. A New federal banking system that pursued inflationary policies, allowed fee coinage of silver, and debt reduction for farmers;
4. The creation of sub treasuries (federal grain storage facilities);
5. A graduated income tax (make more money>pay higher taxes);
6. Regulation of Railroads—if necessary, nationalization of Railroads.
f. The Alliance took control of 12 state legislatures in 1890, elected 6 governors, sent 50 representatives to Congress.
1. Term limits for President and VP
2. Direct Primaries
3. Initiative and Referendum
4. Power of Recall
5.8 hour workday
6. Restrictions on immigration
7. Restrictions on Strike-breaking police
8. Government Ownership of banks, railroads, telegraph, public utilities (only partially endorsed at Omaha gathering)
3. The most important issue for the Populists was “cheap money.” They wanted the govt. to return to money based on both gold and silver.
a. The change to currency backed only by gold had caused great deflation, hurting farmers.
b. Backing money with both gold and silver, farmers thought would result in an increase in the money supply, making money less valuable, and causing inflation. This was good for farmers because most were in debt and could pay back debts with devalued money.
i. Congress decided to back currency with only gold—1873
ii. Because of Protests from Silver Producers and farmers, Congress mandated the purchase of silver to make coins (1878, 1890).
iii. It was not enough for pro-silver advocates, and too much for pro-gold advocates.
iv. Ironically, because of the strong Populist showing in the election of 1892 (1 million votes), the Republican candidate defeated the Democratic—and when the Panic of 1893 struck, President Cleveland blamed it on the governments silver purchase program. He asked Congress to repeal it and they did.
v. JP Morgan almost single-handedly saved the US economy by buying huge chunks of government bonds with gold—which returned him a huge profit.
a. Bryan got 6.75 million votes, but lost to William McKinley, a conservative Republican who favored big business and the gold standard.
5. Following the election of 1896, the Populist Party disintegrated rapidly. But most of their ideas were adopted by the Democrats, and with the rise of Progressivism among both Republicans and Democrats in the ensuing decade, most of the Populist agenda became law.
[i] Horizontal integration is the purchase of companies at a certain stage of production in an attempt to gain market share—and ideally, total control—over that stage. For example, if Hyundai Motors were to buy Kia, and then Daewoo, and all the other Korean automobile manufacturers, that would be horizontal integration. Vertical integration, on the other hand, is when a company tries to gain control over all of the things that go into the production and sale of a product. For example, John D. Rockefeller’s Standard Oil gained a remarkable deal of control over the oil industry because he bought oil exploration and drilling companies, built and owned the pipelines that delivered the oil to the oil refineries, owned the oil refineries that produced oil for heating homes and powering automobiles, and set up oil delivery companies to deliver oil to homes and industry as well as gasoline stations to sell oil to drivers. This is an example of vertical integration. Generally, vertical integration creates greater efficiency and can lead to reduced costs, while horizontal integration leads to inefficiency and gives one company the power to set prices. Still, in some cases vertical integration is also very bad because the increased efficiency of one firm might allow it to set prices so low that other firms can’t compete. If they go out of business, a monopoly with the same power of a horizontally integrated firm is the result. Indeed, this is what happened with Standard Oil, which became so powerful that the US government was eventually forced to break it up into 7 companies to re-introduce competition into the oil industry.)