thoroughly edited, February 2010]
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
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
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).
Note that the ideal here is to be independent, not an employee of
someone else. Here, it seems to me, is *free* enterprise, true
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 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
• 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
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
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
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
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
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.