[May 23, 2018 Update]


I made the generalization last time that, while the blessings and problems of American industrial growth are often attributed to free enterprise, it’s not completely accurate to describe the economic system of the 1865-1900 period as truly one of free enterprise.  In fact, it seems to me that one of the most important things going on in the last part of the 19th century is that Americans were losing a great deal of their economic freedom.  The eight million Americans who worked in factories, in construction, and in transportation often had considerably less freedom than American workers of earlier times.

Early America as Land of Economic Freedom

One of the great attractions of early American is that it had indeed been a land of economic freedom, a place where a man could own his own farm or business, could work his own hours, and choose his own work pace, and whose success or failure depended mostly on his own efforts and ingenuity.  In 1859, Abraham Lincoln described the ideal this way:

The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires a new beginner to help him.  If any continue through life in the condition of the hired laborer, it is not the fault of the system, but because of either a dependent nature which prefers it, or improvidence, folly, or singular misfortune (Abraham Lincoln, 1859).

[This comes from a speech at a Wisconsin fair. It isn't generally considered on of Lincoln's "great" speeches, but even Lincoln's lesser speeches have some really memorable passages and ideas worth considering.  I like this passage in particular:

By the "mud-sill" theory it is assumed that labor and education are incompatible; and any practical combination of them impossible. According to that theory, a blind horse upon a tread-mill, is a perfect illustration of what a laborer should be -- all the better for being blind, that he could not tread out of place, or kick understandingly. According to that theory, the education of laborers, is not only useless, but pernicious, and dangerous. In fact, it is, in some sort, deemed a misfortune that laborers should have heads at all. Those same heads are regarded as explosive materials, only to be safely kept in damp places, as far as possible from that peculiar sort of fire which ignites them. A Yankee who could invent strong handed man without a head would receive the everlasting gratitude of the "mud-sill" advocates.

But Free Labor says "no!" Free Labor argues that, as the Author of man makes every individual with one head and one pair of hands, it was probably intended that heads and hands should cooperate as friends; and that that particular head, should direct and control that particular pair of hands. As each man has one mouth to be fed, and one pair of hands to furnish food, it was probably intended that that particular pair of hands should feed that particular mouth -- that each head is the natural guardian, director, and protector of the hands and mouth inseparably connected with it; and that being so, every head should be cultivated, and improved, by whatever will add to its capacity for performing its charge. In one word Free Labor insists on universal education.

I wish I could write like that!]

Note that the ideal here is to be independent, not an employee of someone else.  Here, it seems to me, is *free* enterprise, true economic freedom.

In the late 19th century, though, Lincoln’s ideal route to success was less and less available, and everywhere except the farms, working for wages began to replace working for oneself.

Working conditions

Working conditions and wages varied quite a bit from place to place and industry to industry, but, in general, conditions were none too good.  Despite the tremendous growth of the American economy and the tremendous increase in productivity, wages remained static at $1.25 to $1.50 per day.  Because mass production reduced the price of goods, real wages (the amount a worker could buy with his day’s pay) went up during this period about 20%, so workers were just slightly better off, but workers were seeing only a fraction of the value of the goods their labor was producing.

It wasn’t just low wages that were a problem for workers.  Other problems included:
•    A loss of pride in workmanship
•    The loss of the clean air and water and the wholesome food of the rural communities
•    Long hours (60-80 hours a week)
•    Unsafe conditions
•    A slave-driving foreman and a distant boss rather than the “family” style of business
•    Wages drained by having to live in company housing and buy at the company store
•    Competition from women and children who earned even less

Attempts to improve working conditions

One attempt to improve things for workers was the creation of the Knights of Labor, a secret organization formed to unite *all* workers except liquor dealers, lawyers, gamblers, and bankers.  To join, one had to swear to one’s belief in God and to take a loyalty oath in a secret ceremony.  Members addressed each other by titles (master workman, venerable sage, inspired esquire) rather than by name so that they could avoid blacklists.

In 1885, the Knights organized a successful strike against Jay Gould’s Missouri Pacific railroad.  Gould had cut wages and fired union members.  When the strike worked, membership in the Knights expanded dramatically, and the organization grew from 100,000 to 700,000 members.  But the success didn’t last.

Haymarket Riot and its Results

In 1886, labor organizations nation-wide called for a national strike to gain an 8 hour working day.  In Chicago, workers at the McCormick Harvester factory walked off the job.  McCormick brought in scabs, and a fight broke out.  The police came in, firing on the strikers and killing one.  The next day, workers held a protest in Haymarket Square.  The police immediately came in, ignoring the strikers’ rights to free speech and free assembly.  They ordered the strikers to disperse—and someone threw a bomb.  A policeman was killed, and six more policeman died in the fight that followed.

The newspapers blamed the violence on the strikers, anarchists, and socialists, and this led to the rounding up of a number of anarchists who then faced trial for incitement to riot.  Seven of them were condemned to death, with four actually hanged.  None of these men were the actual bomb-throwers, though incitement to certainly is a serious offense.  As it turned out, one of those convicted was a member of the Knights of Labor—as well as being a socialist and a confederate veteran!  The papers played up the Knights tenuous connection to the riot, and in a nation *rightly* worried about socialism and anarchy, this connection hurt the Knights a lot.  What hurt even more was the failure of a 2nd strike against Gould.  Membership plummeted in 1887, and the Knights ceased to be any kind of major force.


A more lasting labor organization was the American Federation of Labor started by Samuel Gompers.  Gompers decided (rightly) that the best strategy for labor was to avoid any connection with radical socialist/anarchist movements, and to make it clear that all workers were after were better wages and working conditions.
In 1892, the AFL led a strike at Carnegie Steel’s Homestead facility near Pittsburg.   The manager of the facility, Henry Clay Frick, wanted to break the local union, so when union leaders tried to negotiate for a better contract, Frick decided instead to give them a worse contract with lower wages.  This led to a strike.  Frick hired 800 Pinkerton agents, essentially a private army, to keep the mine open, and a minor war broke out between Pinkertons and striking workers. The state militia came in to stop the conflict, which they did—but they also forced an end to the strike.  In the midst of the confrontation, an anarchist not connected directly to the strike tried to assassinate Frick.

Again, the newspapers blamed the striking workers, and the general public, rightfully fearful of socialists and anarchists, wasn’t going to be very sympathetic to the strikers or the AFL.

The strike at this point wasn’t going to be an effective tool anyway, and a strike often did more harm than good.  As an example…

The Pullman Strike and Boycott

In 1894, the Chicago-based Pullman Company laid 1/3 of its work force and cut wages by 40% for the remaining workers.  At the same time, they kept up the prices in the company stores and the rent for company housing.   Naturally enough, the workers went on strike.

Eugene Debs, head of the American Railway Workers Union, did what he could to help.  His union launched a boycott of all Pullman-made cars, refusing to operate a train with Pullman cars until the Pullman company reached an agreement with striking workers.  The railroads responding by firing the boycotters, and this led to a walk-out by all railroad workers. The trains in Chicago came to a halt.  Hoodlums (not strikers) derailed and looted the trains.  

The railroads should have negotiated in good faith with the unions, but giving in to strikers wasn’t the tool-of-choice for American big business.  Time to call in the state militia—except for one inconvenient fact.   Illinois Governor Altgeld sympathized with the strikers and refused to call out the militia.  So what next?

Well, the railroads now called on President Cleveland to intervene.  But did Cleveland have the authority?  It didn’t seem so.  But wait!  Yes!!!  Some of the trains carried mail.  And so Cleveland ordered in the troops “to protect the U.S. Mail.”  Well, the troops protected the mail—and broke the strike.

Debs protested in vain—and he and other strike leaders got thrown in jail.  Debs served six months for contempt of court—and, during his jail time, read radical literature and emerged a socialist—eventually the socialist party presidential candidate as we will see later.

One of the most interesting aspects of the breaking of the Pullman strike is the excuse the railroads used for putting strike leaders on trial.

In 1890, Congress had passed the Sherman Anti-Trust Act, an act designed to deal with men like Rockefeller and J.P. Morgan, to prevent groups like the oil, railroad, and tobacco trusts from forming monopolies and preventing competition.  It condemned pools and trusts, calling them “conspiracies in restraint of interstate commerce.” The Sherman Act had proved ineffective, though.  It had too many loopholes, and big business, with its army of hotshot lawyers, could get around any restrictions it might have placed on their corrupt practices.

But the labor leaders had no big lawyers working for them.  And now they found themselves accused of violating the Sherman Act.  Yes!  Strikes were “conspiracies in restraint of interstate commerce”—and, therefore, illegal!

But strikes weren’t effective at this point anyway.  They were far too easy to break.  When Frick fired his striking workers, he simply sent his agents abroad to hire replacements.  Poor Irishmen, Italians, Hungarians, Lithuanians, etc. jumped at the chance to come to America.  Blacks from the south too were available to bring in as strike-breakers.

This, of course, created a great deal of anti-immigrant and anti-Black sentiment among American workers.  Organized labor began to lobby for immigration restrictions rather than business reform…not at all a healthy development.  The labor movement wasn’t dead, but it certainly hadn’t made much headway.