THE 1900s: BUSINESS AND THE ECONOMY: OVERVIEW

Portrait of America

The first decade of the twentieth-century saw profound change in the makeup of America. According to the twelfth decennial census in 1900, the population was more than seventy-six million, an increase of nearly 21 percent from the 1890 census. The population continued to grow rapidly throughout the decade as nearly nine million immigrants entered the country, with most arrivals coming from Italy, Austria-Hungary, and Russia. The record year for immigrants was 1907, when 1.29 million people entered the United States. By the end of the decade the U.S. population had risen to ninety-one million. One-third of the populace lived in an urban area by the beginning of the century, mostly in the eastern United States, the center of industrialism; New York was the largest city, followed by Chicago and Philadelphia. Agriculture, which had employed the majority of American workers in the nineteenth century, was slowly being replaced by industrial occupations.

Women, Immigrants, and Children

Men and women rarely competed for jobs, primarily because of the sexual division of labor in the workplace. In the industrial sector, for example, men had various opportunities and could claim the jobs that required physical strength while women were confined to low-paying jobs using light machinery. Although by 1910 one-third of the workforce was female, half of women workers were involved in agriculture or in domestic service, leaving little female representation in burgeoning industries. Such white-collar positions open to women—teaching, clerical work, nursing, and retail sales—paid little and carried little prestige. Immigrants were also faced with an uphill climb. But while most immigrants started out in low-ranking and poorly paid jobs, many immigrant men were able to find well-paying craft or union positions by the end of the decade. Children were perhaps the most exploited workers. Until regulation curtailed the practice, child labor was common. In 1900 more than 250,000 children under the age of fifteen worked in factories for minimal pay.

Union and Nonunion Labor

Union wages outpaced nonunion wages by 65 percent in 1900, and this lead was maintained throughout the decade. Average union pay in 1900 was thirty-four cents per hour, compared to non-union, unskilled pay of fifteen cents per hour. By 1909 the average union pay rose to thirty-nine cents per hour, and nonunion pay was nearly eighteen cents an hour. The average workweek in the decade was fifty-three hours. Unskilled laborers faced especially severe hardships, for their income would not support a family of five even if they toiled twelve hours a day, every day of the year.

Home Ownership

Unskilled laborers had little chance of home ownership. They often settled in innercity tenements or cheap wood-frame homes near the industrial sector and took in boarders for additional income. Semiskilled and skilled laborers could afford modest homes in residential areas, away from the industrial sector and inner city. Mass-manufactured homes became increasingly popular because of their affordability compared to custom-built homes. The entry of Sears Roe-buck into the ready-made home market in 1908 made home ownership a viable possibility for many more Americans. Modern Home Number 167, a three-story structure with more than twenty-five hundred feet of living space, cost $754 for the materials and approximately __BODY__,000 more for construction. Heating and plumbing were extra, adding an additional $300 and bringing the total cost to about $2,000. The cost of constructing a home rose only 11 percent throughout the decade, while wages rose 17 percent on average. However, the size of the average home began to decrease dramatically as housing costs escalated in the next decade and wages failed to keep pace with that increase. By 1913 a popular seller was "The Heather," a 320-square-foot home (costing $250 for the materials) that was marketed as a "cozy cottage."

Social Life

Although most cultural activities in the United States were divided along class lines, Americans of all classes were drawn to new diversions. Among the working class, activities such as amusement parks, movie theaters, dance halls, fraternal orders, skating rinks, and spectator sports became popular. With leisure time increasing, the working class also began to take a greater interest in fashion. While the middle and upper classes were enticed by new amusements, they continued to patronize museums, plays, restaurants, university speeches, and other more genteel activities. For all Americans the first decade of the century brought an increasing commercialism of cultural activities as leisure became a marketable commodity.

New Industry

At the beginning of the century the United States had turned away from the isolationism which preceded the Spanish-American War. Now a world power with quickly expanding foreign markets, the United States was considered a major industrial nation. Global expansion meant increased wealth as raw materials became cheaper to acquire, driving prices down and consumption up. The decade saw business prospering in many sectors, including oil, steel, textiles, railroads, and food products. The unprecedented technological progress in the decade was marked by the birth of the automobile and aviation industries as Americans who began the century riding horse-drawn buggies could at the end of its first decade drive cars and begin to dream of someday flying in a plane.

The Progressive Era

The Progressive Era began with Theodore Roosevelt's presidency in 1901 and lasted until the entry of the United States into World War I in 1917. During this period, a prosperous United States witnessed reforms that transformed its economic, social, and political life. Economic reformers sought to regulate trusts and big business, reduce the domination of government by the elite, and reform the fiscal system. The business climate was also affected by social and political reformers, who were concerned with such issues as poverty, health, working conditions, women's rights, the conservation of national resources, election abuses, the power of urban political bosses, and governmental fraud. The spirit of reform gave rise to a separate Progressive Party in 1912 when a split developed within the Republican Party. Led by Roosevelt—who claimed after surviving an assassination attempt that he felt like a "bull moose"—the Bull Moose ticket sustained Roosevelt's advocacy for farmers and industrial workers into the second decade of the century.

The Advent of Professional Managers

With global expansion and increased markets, big business grew, creating a new profession of management, separate from the owners of the business. Thus, the age of the robber baron came to an end as the age of the manager and stockholder took over. The importance of the managerial profession became more recognized in the next decade with the spread of "scientific management" and the publication of the landmark book Industrial and General Administration in 1916 by French industrialist Henri Fayol, which laid the foundation of management into the components of planning, organizing, staffing, directing, and controlling. By the 1920s many corporations were requiring professional managers to have college degrees and to go through specialized training programs.

The Rise of Big Business

The first decade of the century saw businesses continue to expand through merging with similar companies (horizontal integration) and taking on additional functions in the production and sale of their products, such as a manufacturer of raw materials becoming involved in marketing the product to consumers (vertical integration). The result was an elimination of competition and a stratification of business enterprises into those that were capital-intensive, such as manufacturers, and those that were not, such as service industries. The overriding concern of the public was that the continued rise of big business through trusts, trade associations, cartels, or pools would destroy America's image as the land of opportunity where success as a self-made business owner was possible. As public unrest grew, the government began to intervene to regulate the proliferation of big business.

Incorporation

With new inventions and discoveries as well as emerging national markets for an array of goods and services, the early 1900s saw the founding of major corporations that have become fixtures of American life: Firestone Tire and Rubber Company (1900), Sylvania Electric Company (1901), United States Steel Company (1901), the American Can Company (1901), the Quaker Oats Company (1901), Monsanto Chemical Company (1901), Philip Morris Corporation (1902), J. C. Penney Company (1902), United States Shipbuilding Company (1902), International Harvester Company (1902), the Pepsi-Cola Company (1902), Texaco, Inc. (1903), the Ford Motor Company (1903), Continental Can Company (1904), Bethlehem Steel Company (1905), Mead Pulp and Paper (1905), Spiegel Catalog (1905), Planters Nut and Chocolate Company (1906), Gulf Oil (1907), American Cyanamid Company (1907), Harley-Davidson (1907), Hershey (1908), AC Spark Plug Company (1908), General Motors Company (1908), and McGraw-Hill Book Company (1909). The overall prosperity of the decade made Americans eager to try new products, especially as companies began to spend more money to advertise their products.

Capital, Labor, and the Public

The century began with a continuing attempt at conciliation between labor and management interests in the spreading of the National Civic Federation, founded in 1898. The goal of the federation was to merge the interests of capital, labor, and the public in working out industrial issues. The federation was run by an executive committee with representatives for all three constituencies. The first president of the federation was an Ohio industrialist and prominent Republican party boss, "Dollar Mark" Hanna. Business representatives included Henry Phipps of U.S. Steel, Francis Robbins of Pittsburgh Coal Company, Frederick Fish of American Bell Telephone Company, and Lucius Tuttle of Boston and Maine Railroad. Union representatives included Samuel Gompers of the American Federation of Labor, John Mitchell of the United Mine Workers, John Tobin of the Boot and Shoe Workers Union, William Mahon of the Amalgamated Association of Street Railway Employees, and Warren Stone of the International Brotherhood of Engineers. The "public" was represented by steel magnate Andrew Carnegie, former U.S. president Grover Cleveland, and banker Isaac Seligman. One major area the federation addressed was wage disputes. However, the success of the federation was short-lived, as interests collided. Many labor members felt their representatives had sold them out on important issues.

Rising Tensions

While the federation made some progress on labor issues, such as the forming of the National Child Labor Committee in 1904 to limit the use of child labor, organized labor grew increasingly uneasy with pay and working conditions as big business grew despite governmental regulation. Throughout the decade the number of organized workers increased, but their progress in gaining concessions was uneven. Business owners, though, became increasingly alarmed at the gains in power made by labor. Many capitalists struck back at the union movement through such owner-operator organizations as the Citizens' Industrial Alliance, the National Council of Industrial Defense, and the American Anti-Boycott Association. The prominent National Association of Manufacturers, founded in 1895, adopted a "Declaration of Labor Principles" at its 1903 convention, designed to weaken the unions. One of the association's strategies was to push for the open shop, meaning that union membership was not required of employees, which was seen by labor as the first step in banning unions from the workplace. The growing tensions in labor relations brought calls for the disputing parties to recognize their mutual interests. The cover of the 1 June 1901 Harper's Weekly depicted three figures representing capital, labor, and American commerce and proclaimed, "Come, brothers, you have grown so big that you cannot afford to quarrel."

Labor Strife

Not surprisingly, the first decade was marked by a great deal of labor unrest, including several long and deadly strikes, and government intervention was required in many industries. Several landmark Supreme Court decisions concerning the roles of owners and labor were also handed down. In one ruling, unions became subject to the monopoly provisions of the Sherman Anti-trust Act of 1890 and lost many potential gains as a result. An important concession not gained during this era was the legal recognition of unions, thus denying their legal authority to represent workers. While the disparity in lifestyles between owners and workers became publicized through several strikes, notably the Anthracite Coal Strike, and gained some public sympathy for union organizers, union power became increasingly fragmented as worker unity was lost because of factional divisions based on race, nationality, sex, skill, and political ideology

Legislating Business

While distrustful of organized labor, Americans were also concerned about the proliferation of trusts, agreements made by large corporations for the purpose of controlling the marketplace, which threatened competition. Though the Sherman Antitrust Act had been on the books for nearly a decade, it was not until the Roosevelt administration that cases were pursued against business owners and labor unions. The 1904 Northern Securities case involving the dissolution of the Hill-Harriman Railroad established President Roosevelt as a trustbuster, ready to challenge previously unregulated business owners who had accumulated a great deal of economic, social, and political power. Additional legislation came in the regulation of business practices in the areas of transportation, consumer protection, and federal monetary practices.

Panic

The generally optimistic economic tenor of the decade was threatened when the stock market precipitously dropped in 1907. The first overt sign of financial panic was a run on the Knickerbocker Trust Company of New York, which collapsed the bank, but the root causes of the panic ran much deeper, to the weak federal banking and credit system. Confidence was restored because of the intervention of the U.S. Treasury and capitalists under the leadership of J. P. Morgan, who stabilized banks and corporations with an infusion of funds. The panic resulted in legislation to boost the federal fiscal system.

The Horseless Carriage

One of the greatest achievements of this decade was made in the transportation industry, which ultimately built a powerful infrastructure critical to the development of the United States as a world power. By 1900 there were more than fifty manufacturers of self-propelled vehicles, which were known by such names as the horseless carriage, gasoline buggy, locomobiles, motor files, autokinetics, mocóles, and motorrigs. Although automobiles captured the popular imagination, they were handcrafted and expensive, a product for the elite until Henry Ford introduced the concept of mass production. Progress on mass production began with the Model N car and was perfected on the Model T in 1908, leading to the incorporation of the assembly line by 1913, which dramatically revolutionized the car industry—and subsequently American culture—as the car became a symbol of freedom. Detroit became the center of the car industry early on, and the "Big Three" auto companies—Ford, General Motors, and Chrysler—were all established by the end of the decade. The first car shows and races were held in 1900. As America's fascination with the car grew, so did the number of accidents with pedestrians, carriages, and even trolleys. Legislative acts followed quickly, with the first driving laws and the requirement for automobile plates being passed as early as 1901. By 1903 New York City published the first set of driving regulations, "Rules for Driving." Though by 1900 there were only 144 miles of highway laid in the United States as opposed to 15,000 miles of trolley tracks and 193,000 miles of railroad tracks, the decade belonged to the automobile. The automobile would soon be considered one of the greatest social forces of the century, similar in stature to electricity and the telephone.

The Subway System

The early years of the century also saw the development of the first underground rapid transit system, as excavation began in New York in March 1900 for a subway. Completed in 1904, the subway was the largest in the world and changed the transportation habits of New York City's citizens. Eventually the subway replaced the trolley in the largest metropolitan areas as similar subway systems were planned.

The Airplane

The birth of the airline industry occurred with the Wright brothers' historic flight at Kitty Hawk, North Carolina, in December 1903. The former bicycle mechanics used a twelve-horsepower, chain-driven motorcycle engine to fly 852 feet. By 1905 the Wright brothers had constructed planes capable of flights up to twenty-five miles. A patent on their machine was obtained in 1906. By 1908 the Wright brothers were manufacturing planes for the War Department on government contracts. The airplanes delivered to the U.S. Army in 1909 could fly for an hour at speeds up to 40 MPH with two persons. These continued advancements revolutionized equipment for military combat forces and, later, for domestic transportation. As with automobiles in the early part of the decade, the latter part of the decade was marked by aviation races, tragic accidents, and subsequent legislation to regulate this new and burgeoning transportation sector.