I) Homestead
A) Iron and Steel Industry – by the late 1880s and early 1890s, the iron and steel industry had overtaken railroads as the premier industry in the United States. Millions of tons of steel and steel products – rails, armor for railroad cars and locomotives, machines, machine tools (machines that made other machines), as well as for structural support for new high-rise buildings in the larger cities (which we know as skyscrapers).
1) Andrew Carnegie – former railroad executive secretary, Carnegie took the advice of his boss, Pennsylvania Railroad president Thomas A. Scott, and took the opportunity that presented itself to invest in the iron industry.
(a) Carnegie was already a wealth investor when he became involved in the iron and steel industry. Carnegie applied many of the techniques in business management that he learned in the railroad industry (particularly cost-accounting and business coordination, which helped keep his costs well below that of his competitors); he also retained control of the stock of his company, which allowed him to reinvest the profits back into the company, and therefore buy the latest equipment, and hire the best and brightest technical people.
(b) Vertical integration – Carnegie owned not only the steel mills that produced steel, but he also bought the mines that produced the iron ore and coal need for production, the coking plants that produced the needed coke (processed coal), and the railroad cars and shipping fleet needed to bring in the raw materials and distribute the finished product.
(c) Philanthropy – Carnegie used the wealth he helped create to greatly strengthen the public library system in the United States; he also endowed universities, built Carnegie Hall in NYC—and he advocated that other men of wealth follow his lead.
2) The drive to economize – the “secret” of Carnegie’s business success was that his management team was as driven to cut the costs of business as he was (in part because their reward system depended upon it—managers received a substantial portion of the savings they created for the company due to increased productivity; this same opportunity was denied workers who also contributed to this effort by working harder and longer).
(a) Productivity – defined as manufacturing, or making, more of an object at the same or less cost as compared with an earlier time period. Productivity is the basis for capitalist profit, which in theory allows them to “share” their decreased cost with the consumer, so “all” benefit.
(i) Business competition – Carnegie’s compatriots drive to decrease costs tended to drive out of the business those manufacturers who could not keep pace; because of the capital investment to get started in the business, however, a buyer (quite often Carnegie) could be found for the property. With more and more manufacturing capacity being held by fewer and fewer companies, the tendency of capitalist enterprises towards monopoly becomes more pronounced.
(ii) Business cycle – also known as the “boom and bust” cycle; businesses run like crazy to produce goods to sell, the market for a particular good becomes saturated, causing a glut, and then follows a time of little production, until demand picks up again.
(iii) Taylorism – Frederick Winslow Taylor was convinced that he could find the “one best way” to accomplish any job. Taylor himself came from an upper middle class background, but he became a machinist. “Soldiering” and what he perceived as inefficiencies of his fellow workers led him to develop time and motion studies, and to outline management practices devoted to prodding workers to put in 60-minute hours at work.
(b) Technology – this drive for greater levels of productivity also led American industrialists to use more machines than capitalists in other countries
(i) Lack of skilled workers? – Some historians and economists have argued in the past that because the United States allegedly lacked skilled workers, that industrialists relied more on the development of machines and machine tools to compensate. Today this reliance seems to have come about for other reasons
(ii) Labor costs – the increased level of machine use helped capitalists keep down the cost of labor, because the capitalist was able to replace skilled workers (who would have cost him more) with unskilled workers to tend the machines (who cost much less, and were easily replaced should they become recalcitrant.
(iii) This also undermined the position of the union worker, obviously, especially the skilled worker, who made up most of the ranks of the unions belonging to the AFL. Union members within the AFL umbrella fight battles to retain the benefits of the knowledge they had gained from working a particular job.
(i) “Featherbedding” – some AFL unions were successful for a time in keeping workers whose jobs had become technologically obsolete.
(c) Profits – by the early 1890s, the Carnegie Steel Company was making profits of more than $40,000,000 a year
3) Amalgamated Association of Iron, Steel, and Tin Workers (AA) – in 1892, the AA was the largest and strongest union within the AFL, with approximately 24,000 members. The members of the union included only the skilled workers in iron, steel, and tin foundries; not considered for membership was a much larger contingent of unskilled workers, many of whom were new immigrants from Eastern Europe.
B) Homestead and the strike
1) City of Homestead – named after the nearby iron mill, Homestead was located several miles from Pittsburgh, up the Monongahela River. The town was completely dominated by the Carnegie mill—but the town leaders and townspeople identified with the workers more than Carnegie or his managers.
2) Homestead works – Ford C. Frick was hired by Carnegie to rid Homestead of the AA. After putting Frick in charge, Carnegie left for an extended stay in his castle in Scotland, but communicated in secret with Frick.
(a) “Negotiations” – Frick made demands upon the AA which he knew would be unacceptable, and then locked out union members when negotiations broke down in late June. Before the lockout, Frick had an eight-foot steel fence erected around the entire works
(b) Pinkertons – on July 6, a bargeful of 300 Pinkerton agents was discovered motoring up the Monongahela by union lookouts, who quickly notified union members in Homestead. Union members quickly occupied the Homestead works, and a fierce gun battle raged along the riverfront for most of the day, when finally the Pinkerton agents were forced to surrender; agents were forced to run a gauntlet in town, and many were severely injured as a result
(c) Won the battle, lost the war – the Allegheny sheriff was unable to recruit locals to “establish order,” and appealed to the governor for mobilization of the militia, and eight thousand troops arrived shortly to protect strikebreakers
(i) The Carnegie Company had the strike and union leaders arrested, some of who were charged with murder; after trials, all were found not guilty, but the defense efforts depleted the union treasury
III. 1894 Pullman Strike.
B. Town of Pullman – as the company grew, Pullman became concerned about the effect the radicals in Chicago were having upon his workers, so several miles south of the city he built a town (housing, stores, public buildings, a hotel he named after his daughter Florence, even churches) which he rented to workers, but which he retained title.
1) “Model” town – Pullman the town was a great example of welfare capitalism—that is, subsidizing certain amenities for workers so they remain satisfied on the job.
2) Depression of 1893 – the economic depression of 1893 cut deeply into the profits of the Pullman Company, and Pullman responded by cutting wages and laying off workers, as any good capitalist would do.
(b) Pullman workers respond by going on strike in the spring of 1894.
1) Railway “Brotherhoods” – each specialty in the railroad industry had its own union, The Brotherhood of Railway Engineers, Brakemen, Conductors, Firemen; problems arose when railway companies settled with one of the brotherhoods, and they crossed the picket line while others were still on strike. The ARU is meant to be a solution to this problem.
2) 1894 ARU convention – was held in Chicago; a delegation of workers from Pullman, who plead for the assistance of the ARU. Despite Debs opposition, convention delegates vote to assist Pullman workers, and vote to boycott all trains with Pullman cars. Despite the fact that the ARU represents a relatively small number of workers, traffic all over the country is interrupted.
3) Government response – because there was little violence accompanying the strike the federal government was hamstrung; with a sympathetic John Peter Altgeld as Illinois governor, there was little chance that federal aid would be requested.
(b) Troops from Fort Sheridan (and the Dakotas) are called in “to keep the peace,” which allowed the strike to be broken.
(c) Debs and other union leaders were arrested and held incommunicado, which also helped break the strike; Debs spent a year in jail in Woodstock, Illinois, which he spent reading socialist tracts; he becomes the Socialist Party candidate for president in 1900, 1904, 1908, and 1912, when he polled the largest number of votes to that time in history for a third party candidate.
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