Reformers Take on Industry: The Progressive Era

views updated

Reformers Take on Industry: The Progressive Era

Throughout the rapid U.S. industrialization, or development of industry, during the nineteenth century, the government had maintained a laissez-faire, or hands-off, attitude toward the economy, allowing the big corporations to do more or less as they pleased. The top leaders of the nation's industries became so powerful most people felt they controlled the nation's economy and even the state and federal governments. To those who viewed them as crooked manipulators, the top industrial leaders were known as robber barons. To others, who credited them for the nation's prosperity and technological advances, they were the captains of industry. In the last three decades of the nineteenth century, these industrialists had succeeded in creating huge monopolies (the exclusive right to produce a particular product), often by destroying their competition. Economic power was solidly in the hands of trusts—a few large corporations and business firms joined together to reduce competition and control prices. These trusts had formed through the merging of competing companies. Between 1898 and 1904, 5,300 individual companies had combined into just 318 trusts. (For more information on trusts, see Chapter 7.) Most of these large corporations were in the habit of giving gifts, usually of company stock, to key politicians in Washington, D.C., and in state governments. In exchange they expected favorable legislation for business and for the government to look the other way when their business dealings were questionable.

Words to Know

capital:: Accumulated wealth or goods devoted to the production of other goods.
conservation:: Planned management of natural resources to prevent their misuse or loss.
depression:: A period of drastic decline in the economy.
directorates:: Boards of directors of different companies that have at least one director in common.
holding company:: A company that is formed to own stocks and bonds in other companies, usually for the purpose of controlling them.
laissez-faire:: An economic doctrine that opposes government regulation of commerce and industry beyond the minimum necessary.
mediation:: Intervention to help two opposing sides of a dispute reach an agreement.
monopoly:: The exclusive possession of, or right to produce, a particular good or service.
muckrakers:: Journalists who search for and expose corruption in public affairs.
public domain:: Land held by the federal government.
strike:: A work stoppage by employees to protest conditions or make demands of their employer.
trusts:: A group of companies, joined for the purpose of reducing competition and controlling prices.
Wall Street:: Financial district and home of the nation's major stock exchanges in New York, New York.
workers' compensation:: Payments made to an employee who is injured at work.

At the end of the nineteenth century the nation was recovering from a severe economic depression, or a period of drastic decline in the economy, that had followed the financial panic of 1893 (see Chapter 12). In its recovery, the nation's productivity increased, mass-produced goods were more widely available, prices went down, and profits went up. Along with new industries there were many fresh job opportunities, increases in educational and leisure activities, and a growing middle class to enjoy it all. But the wealth and income from this economic growth remained unevenly distributed.

For the first time since the beginning of U.S. industrialization people from all walks of life joined together to demand government regulation of business and industry and other moderate political reforms. This was the beginning of the Progressive Era, the period of the Industrial Revolution that spanned roughly from the 1890s to about 1920. These reformers became known as the Progressives. They differed from earlier political reform groups such as the Populists mainly in their inclusive membership. While the Populists had consisted of laborers, small business owners, and the farmers of the West, the Progressives were made up of middle and even the upper class reformers as well as laborers and farmers. (For more information about the Populists, see Chapter 12.) All worked together in the interest of distributing political power and wealth more equally in the United States.

The drive to regulate big business

When the Progressive Era began two measures had already been initiated to regulate the trusts. In 1887 Congress passed the Interstate Commerce Act, which empowered the federal government to oversee the railroads and any organizations that traded in more than one state and established the Interstate Commerce Commission (ICC). In 1890 Congress passed the Sherman Antitrust Act. It barred any "contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade" and made it a federal crime "to monopolize or attempt to monopolize, or combine or conspire … to monopolize any part of the trade or commerce among the several states." Neither of these acts made an impact on the railroad companies or the trusts in the decades following their passage. In fact, more combinations and trusts were formed between 1897 and 1901 than at any other time in American history.

The ICC and the courts seemed to favor the interests of the railroads. From 1887 to 1911, the ICC brought railroads to court on only sixteen occasions. The railroads won fifteen out of those sixteen court cases. The Sherman Act placed the nation's attorneys general (chief law officers of the nation) in charge of its execution, and at the end of the century the attorneys general tended to be pro-trust, while the courts were not disposed to rule against private industry. From 1890 to 1901 only eighteen antitrust suits were filed; four of them were actually against labor unions, which were accused of conspiring to thwart free competition.

The muckrakers

As the twentieth century began, the younger generation was more educated and had more access to news and current political thought than their parents. The growing professional class had more time to devote to learning about the economy and social change. Thus, the news media expanded greatly. The number of daily newspapers being published in the nation increased from 1,650 to 2,250 in the twelve-year period from 1892 to 1914. Monthly magazines were especially popular. Atlantic Monthly, Harper's Weekly, and Collier's published high-quality literature and articles, but these magazines were considered expensive at thirty-five cents an issue. In 1900 a new kind of magazine arose, costing only ten to fifteen cents an issue and full of timely reporting.

The most famous of the cheaper monthlies was McClure's Magazine, founded in 1893 by Samuel S. McClure (1857–1949). McClure recruited some of the most talented young journalists of the time, including Ida M. Tarbell (1857–1944) and Lincoln Steffens (1866–1936). McClure's established itself at the head of "muckraking" journalism. Muckrakers were journalists who searched for and exposed corruption in public affairs. The term "muckrakers" was coined by President Theodore Roosevelt (1858–1919; served 1901–9) in a speech in 1906, when he referred to a literary character whose job was to rake up dirt and filth and who could look no way but downwards. Roosevelt felt that the muckrakers' investigations emphasized the negative side of things, particularly with regard to big business, while ignoring the positive.

Early in her career, Ida Tarbell's biographies of French emperor Napoleon Bonaparte (1769–1821; ruled 1804–15) and American president Abraham Lincoln (1809–1865; served 1861–65) captivated McClure's readers. She went on to write one of the classic muckraking works, History of the Standard Oil Company, published in book form in 1904. The book went into great detail about the questionable tactics of the dominant oil-refining company in the country and its owner, John D. Rockefeller (1839–1937). Some critics felt that Tarbell's views were biased (prejudiced), especially since she believed her father's oil business had been damaged by Standard Oil's practices. But most agreed that her work was exceptionally well researched and accurate. (For more information on the Standard Oil Company, see Chapter 7.)

In 1900 McClure hired Lincoln Steffens to serve as a reporter and later managing editor of the magazine. For his first project, Steffens conducted a lengthy study of the corruption in the city of St. Louis, Missouri's, political and corporate circles. These reports were published in 1902. He went on to expose the corruption in the Minneapolis, Minnesota, police department. His stories, like those of Tarbell, increased sales of the magazine. Americans were fascinated by the corruption the muckrakers uncovered. As other magazines rushed to imitate McClure's, a wave of muckraking journalism energized Progressive reformers across the country.

Novelist Upton Sinclair (1878–1968) joined the Progressive writers when he began a now-famous investigation of the meatpacking business in Chicago, Illinois. In the city he witnessed miserable working conditions, poor wages, crowded immigrant housing, and unsanitary food processing, all of which became the basis of his 1906 novel The Jungle. In the novel an immigrant tries to pursue the American dream of acquiring a home and living a comfortable life. He eagerly takes a job in the meatpacking industry, but his optimism soon dissolves under the tough slaughterhouse work. He witnesses the greed and corruption in the industry and the deterioration of the lives of many workers. He is also shocked by the unhealthy handling of the meat. The novel presents graphic descriptions of diseased animals and rotting meat being sold to the American public. The Jungledisgusted many readers. Under public pressure, President Theodore Roosevelt appointed a commission to investigate the industry. The book thus played a large role in bringing about the passage of the Pure Food and Drug Act of 1906, which prohibited shipment of impure foods and drugs in interstate commerce and required honest labeling. The Meat Inspection Act was passed in the same year. Government was beginning to take a role in regulating big business.

Theodore Roosevelt's reforms

In September 1901 Republican president William McKinley (1843–1901; served 1897–1901) was assassinated and Vice President Theodore Roosevelt became the nation's new leader. Though Roosevelt supported big business, he quickly identified himself with the reform movement. He was concerned that the government's favoritism toward corporations might push unions and labor parties to extreme actions, hurting business. He therefore believed that the federal government should have the power to control corporations through regulatory boards. Many businessmen agreed with him, believing that such regulation could stabilize the market and stimulate profits.

The Trust-buster

In 1901 James J. Hill (1838–1916), the head of the Great Northern Railroad, and Edward H. Harriman (1848–1909), the head of the Union Pacific Railroad, engaged in a competition to purchase controlling stock in the Northern Pacific Railroad. That railroad company in turn held a controlling interest in the Chicago, Burlington, & Quincy Railroad, the tracks of which provided a highly desirable line into Chicago and ran throughout the northern Midwest region. As Hill and Harriman fought for control of Northern Pacific, the price of its stock soared to $1,000 per share. In their efforts to obtain capital (accumulated wealth or goods devoted to the production of other goods) to purchase Northern Pacific shares, Hill and Harriman dumped other holdings at very low prices. These actions caused stock prices to fluctuate wildly, generally disrupting the stock market, but neither Hill nor Harriman was able to gain a controlling interest in Northern Pacific. They decided to cooperate with each other. They contacted the powerful financier J. P. Morgan (1837–1913), who arranged for the incorporation of the Northern Securities Company, a $400 million holding company (a company that is formed to own stocks and bonds in other companies, usually for the purpose of controlling them) that would, they hoped, bring order and efficiency to the northwestern railroad market by bringing their combined interests—the Great Northern Railroad, the Northern Pacific Railroad, and the Chicago, Burlington, & Quincy Railroad—under the control of one board of directors. The consolidation resulted in one of the largest holding companies formed up to that point.

Morgan was already famous for "Morganization," or buying up small rival railroads and merging them into one big company that then had little or no competition. In the last decades of the century, Morgan had made thousands of miles of railroads throughout the East more efficient by stabilizing prices. To the public and much of the rest of the business world, however, Hill, Harriman, and Morgan were robber barons carrying out disruptive, careless, and crude abuses of power. In March 1902 President Roosevelt instructed the U.S. attorney general to file a lawsuit against the Northern Securities Company. The federal court ruled against the company in 1903, and in 1904 the Supreme Court upheld the decision, ruling that the company should be dissolved in accord with the Sherman Antitrust Act. The decision demonstrated to the business world that the Sherman Antitrust Act could be an effective tool to combat monopolies and trusts that attempted to restrict trade. Roosevelt, who stunned the business world by enforcing the act, became known as the "Trust-buster."

During the Roosevelt administration twenty-four trusts were indicted (formally accused of a crime) under the Sherman Antitrust Act. In a 1905 court decision, the member firms of the giant beef trust were prohibited from engaging in practices designed to restrain competition. This important judicial decision would lead to the dissolution in 1911 of the Standard Oil Company of New Jersey (which at one point controlled more than 90 percent of the oil refinery business) and the American Tobacco Company. In deciding these cases the Supreme Court formulated what became known as the "rule of reason," which stated that only "unreasonable" combinations that unfairly limited competition should be prohibited. Like Roosevelt, the courts seemed to believe that trusts were a permanent fixture in the economic world and that one could differentiate between good and bad trusts.

Roosevelt and labor unions

On May 12, 1902, 150,000 mine workers in Pennsylvania went on strike for better wages and working conditions. A strike is a work stoppage by employees to protest conditions or make demands of their employer. Unlike earlier strikes, this time the public sympathized with the strikers. Most Americans had read articles about the terrible conditions in the mines and many believed the workers should be given power to negotiate with the mine owners for better treatment. The media mocked the arrogant mine operators, who seemed intent, one newspaper asserted, upon being "managing directors" of the entire earth, allowing no one to interfere with their business.

Roosevelt was concerned about the strike for another reason. The strike caused the price of coal to increase and as it rose, businesses and schools could no longer afford to buy coal and were forced to close. Public sympathy for the strikers and the looming threat of a winter without coal prompted Roosevelt to try to hasten a compromise. In early October he invited representatives from both sides of the strike to Washington. Roosevelt's plan was to offer both the strikers and mine operators an equal voice in the settlement.

Roosevelt and the Conservation Movement

In 1890 the U.S. Census reported that what had once been the American frontier had become settled. The country had previously seemed so vast that its natural deposits could never be depleted, but tremendous economic development after 1865 had resulted in the reckless misuse of the nation's resources. By the turn of the century, logging was the second largest industry in the country, and vast forest areas had been cleared. The many cattle grazing on the Great Plains had stripped the surface growth on the plains and prairies, severely damaging the ecology (the community of living things and their environment). The buffalo on the Great Plains were nearly extinct. Water shortages affected many western areas.

Roosevelt believed that, through scientific planning, natural resources could be used wisely and would remain available to help the greatest number of people, not only in his time but in future times. (Other conservationists believed that the resources should be left alone, or preserved, rather than being exploited for human use). In 1902 Roosevelt gave his support to the Newlands National Reclamation Act, which provided that proceeds from the sale of public lands in the West be used for large-scale water-use projects, which distributed the nation's water to its users. The construction of the great dams of the West came about as a result of the act.

Roosevelt was responsible for the preservation of vast areas of land. He created five national parks and supported the National Monuments Act of 1906, which allows the president to protect scientifically or historically important areas such as the Grand Canyon. He also created fifty-one wildlife refuges. Not everyone agreed with his environmental plans, particularly the agricultural and lumber industrialists, and Roosevelt fought Congress over this issue. Nevertheless, by some estimates Roosevelt placed about 230 million acres of U.S. land under public protection as national parks, national forests, and game and bird preserves.

In June 1908 Roosevelt established the Federal Commission on the Conservation of Natural Resources, which was headed by the chief force in his conservation crusade, American conservationist and politician Gifford Pinchot (1865–1946). The federal commission had four divisions that oversaw water, forest, land, and mineral resources. Within a year, it was joined by forty-one state conservation commissions.

Roosevelt persuaded the public to become aware of environmental conservation by informing them. He and Pinchot wrote many articles about conservation that were published in popular magazines so the public would have access to the information. Pinchot also designed teaching materials about the environment for schoolchildren.

By the end of Roosevelt's term in office federal agencies oversaw 200 million acres of federal land, and many individual states copied the federal model, establishing state forests, forest services, and conservation boards. Roosevelt's conservation crusade had a tremendous impact on the nation.

John Mitchell (1870–1919), president of the United Mine Workers (UMW), asked the president to appoint a commission to settle the matter. He agreed to accept whatever decision the commission made, as long as the owners also agreed to accept it. But the mine owners refused to negotiate. Their lack of sympathy for the mine workers infuriated Roosevelt. A week after the meeting, the president announced that he intended to send the army in to run the mines, in effect dislodging the owners from their own businesses. The threat worked; the owners agreed to mediation (intervention to help the opposing sides of a dispute reach an agreement), and the strike was called off. Mediation lasted for five months. Though the strikers had initially requested a 20 percent pay raise and an eight-hour day, in the end they accepted a 10 percent pay increase and a nine-hour day.

The Department of Commerce and Labor is established

The mine workers' strike convinced Roosevelt of the need for a federal agency to prevent or help resolve any future national economic crises. In January 1903 he called for the creation of a Department of Commerce and Labor, to include a Bureau of Labor and a Bureau of Corporations. The function of these agencies would be to investigate the operations and conduct of corporations and to provide information about business structure, operations, and working conditions. Roosevelt was able to obtain overwhelming congressional backing for this measure. The Department of Commerce and Labor divided into two separate departments—the Department of Labor and the Department of Commerce—in 1913. These departments filed a few antitrust suits and functioned primarily to help business and commerce in the United States by collecting nationwide data that would help them in their trade.

The election of 1912

Theodore Roosevelt did not seek reelection in 1908. His chosen successor in the Republican Party was William Howard Taft (1857–1930), who won the election. Once in office, however, Taft did not aggressively pursue Roosevelt's policies. Roosevelt decided to run in the election of 1912 but quickly found that he had angered many conservative Republicans. When they gave the Republican nomination to Taft, Roosevelt formed a new political party, the Progressive Party, named after the popular reform movement with which he was already associated. (After winning the Progressive nomination in the primaries, Roosevelt said he felt like a "bull moose," and so the party was nicknamed the Bull Moose Party).

The Democrats nominated Woodrow Wilson (1856–1924), then governor of New Jersey. Also running in this unusual campaign was the Socialist Party candidate Eugene Debs (1855–1926). In his efforts to reach the progressive reformers, Roosevelt often sounded more like a Socialist than like a Republican. Wilson won with less than 42 percent of the popular vote. Roosevelt ran second with 27 percent, and Taft was third with 23 percent. It was the only time in the twentieth century that a third-party candidate got more votes than a Democratic or Republican nominee.

President Wilson's reforms

Once elected, Wilson, who remained in office until 1921, adopted many Progressive reforms, such as the initiation of the nation's first income tax and the establishment of the Federal Reserve, the government organization that still regulated banking at the beginning of the twenty-first century. He also continued the trust-breaking work started by Roosevelt, though progress in this area was slow. In 1914 Progressives in Congress were intent on establishing an industrial trade commission to oversee business activities and suppress unfair labor practices. Wilson, on the other hand, wanted limited government intervention. Eventually they arrived at a compromise with the Clayton Antitrust Act. This act outlawed monopolistic practices such as price discrimination and allowing executives to sit on the boards of two or more competing companies. A Federal Trade Commission (FTC) was created to investigate corporations and issue cease-and-desist orders against unfair trade practices.

The Clayton Antitrust Act included clauses allowing workers to unionize and strike. With its declaration that "the labor of a human being is not a commodity or article of commerce," the Clayton Act for the first time legitimized the existence of unions. Its critics, however, pointed to the cautious wording of the act, which could lead to a variety of interpretations. Their concerns soon were proved correct. The courts had long been opposed to government interference in private industry, and their interpretations of the act weakened its labor provisions.

Reforms at the state level

Even with high popular support for laborers in the Progressive Era, attempts by the states to regulate working hours and conditions were resisted as fiercely by the courts as they were by employers. Under the Fourteenth Amendment to the U.S. Constitution, states could not deprive any person of life, liberty, or property without due process of law. In case after case the courts interpreted this to mean that states could not limit an individual's liberty to make a contract, and that when a state tried to set limits to the number of hours a person worked in a day or a week, the state was infringing on his or her liberty.

Working hours

Workers had been seeking a shorter workday since the early nineteenth century. By 1900 many industries and occupations had achieved a ten-hour day and a sixty-hour week. Cigar makers, in fact, had gotten their workweek below fifty hours in some states. Workers in other occupations were less fortunate. They were required by their employers to work eleven- to thirteen-hour days and sixty-five or more hours per week. Those who refused to work long hours were often fired. Bakers were one group that worked long hours in unhealthy and uncomfortable conditions. In 1895 the reform-minded New York State legislature passed the Bakeshop Act, limiting the bakers' workweek to sixty hours. When a bakeshop owner was charged with violating the act, he took his case to the Supreme Court. In the case of Lochner v. New York (1905) the Supreme Court held the maximum hours provisions in the Bakeshop Act to be in conflict with the Fourteenth Amendment. The Lochner decision continued to halt legislation to improve the conditions of American labor until it was finally overruled in 1937. There were some exceptions, however, such as the 1908 court ruling that found that Oregon could limit the working hours of women to ten each day. This ruling was based on the belief that women occupied a special place in society and needed the law to protect them.

Child labor

The employment of children as a ready and cheap source of labor continued well into the twentieth century. Exhausting and dangerous conditions in the canning industry, the glass industry (where boys were hired to mold glass for hours on end in front of blistering-hot furnaces), the coal mining industry, and the textile industry began to attract considerable attention from reformers after 1900. (For more information on child labor, see Chapter 9.) Most legislation against child labor took place at the state level, but in 1904 the National Child Labor Committee was formed by Congress to promote the welfare of America's working children and investigate conditions in a number of states. The committee was not authorized to act against the abusive situations it found, and its efforts to improve conditions on a state-by-state basis were not effective. In 1910 it was estimated that there were still more than two million U.S. children employed in industrial settings.

Congress passed the law establishing the Children's Bureau as an agency in the Department of Commerce and Labor in 1912, but the bureau had no power to enact or enforce legislation. Then, in 1916, Congress passed the Keating-Owen Child Labor Act. The act barred the interstate shipment of goods made in whole or in part by children and prohibited children under sixteen from working in dangerous locations such as mines and quarries (open excavations), from working longer than eight hours a day, and from working at night. It also set the minimum age for other types of work at fourteen. In 1918 the Supreme Court, citing states' rights, declared the law unconstitutional. It was not until 1938 that Congress passed the Fair Labor Standards Act (FLSA), which set a minimum wage for all workers, set a maximum workweek of forty-four hours, and prohibited interstate shipment of goods produced by children under the age of sixteen. After decades of ruling against attempts to regulate child labor, the Supreme Court allowed this act to stand.

Minimum wage

In 1912 Massachusetts became the first U.S. state to pass a minimum wage law, and in 1918 Congress authorized minimum wage levels for female workers in the District of Columbia. Five years later, however, the U.S. Supreme Court ruled that minimum wage laws infringed on the freedom of businesses and workers to form contracts as they saw fit. In 1938 the Supreme Court changed its views and the FLSA soon followed, setting the first minimum wage at twenty-five cents an hour.

Workers' compensation

By 1900 industrial accidents killed thirty-five thousand workers each year and maimed five hundred thousand others. In the nineteenth century, workers injured on the job had little choice but to sue their employers in court. Courts often ruled against workers, declaring that they had assumed the risk of injury by taking the job. Workers' compensation laws, by awarding set amounts of monetary compensation for various injuries, brought relief to workers and employers. Workers received money for injuries, and employers no longer needed to worry about being sued for work-related accidents. By 1916 thirty-five states had passed workers' compensation laws, but there was no law for federal workers. The 1916 Kern-McGillicuddy Act filled this gap by establishing a system of compensation for federal workers.