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The Progressive Era: Crash Course US History #27

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"For those in the industrial sector, organized labor unions fought for better wages, reasonable hours and safer working conditions. The labor movement led efforts to stop child labor, give health benefits and provide aid to workers who were injured or retired."

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Origins of The Labor Movement

The origins of the labor movement lay in the formative years of the American nation, when a free wage-labor market emerged in the artisan trades late in the colonial period. The earliest recorded strike occurred in 1768 when New York journeymen tailors protested a wage reduction. The formation of the Federal Society of Journeymen Cordwainers (shoemakers) in Philadelphia in 1794 marks the beginning of sustained trade union organization among American workers.
WATCH: The Labor Movement
From that time on, local craft unions proliferated in the cities, publishing lists of "prices" for their work, defending their trades against diluted and cheap labor and, increasingly, demanding a shorter workday in the face of the Industrial Revolution. Thus a job-conscious orientation was quick to emerge, and in its wake there followed the key structural elements characterizing American trade unionism. First, with the formation in 1827 of the Mechanics' Union of Trade Associations in Philadelphia, central labor bodies began uniting craft unions within a single city, and then, with the creation of the International Typographical Union in 1852, national unions began bringing together local unions of the same trade from across the United States and Canada (hence the frequent union designation "international"). Although the factory system was springing up during these years, industrial workers played little part in the early trade union development. In the 19th century, trade unionism was mainly a movement of skilled workers.

Did you know? In 2009, 12 percent of American workers belonged to unions.

Early Labor Unions

The early labor movement was, however, inspired by more than the immediate job interest of its craft members. It harbored a conception of the just society, deriving from the Ricardian labor theory of value and from the republican ideals of the American Revolution, which fostered social equality, celebrated honest labor, and relied on an independent, virtuous citizenship. The transforming economic changes of industrial capitalism ran counter to labor's vision. The result, as early labor leaders saw it, was to raise up "two distinct classes, the rich and the poor." Beginning with the workingmen's parties of the 1830s, the advocates of equal rights mounted a series of reform efforts that spanned the nineteenth century. Most notable were the National Labor Union, launched in 1866, and the Knights of Labor, which reached its zenith in the mid-1880s.

On their face, these reform movements might have seemed at odds with trade unionism, aiming as they did at the cooperative commonwealth rather than a higher wage, appealing broadly to all "producers" rather than strictly to wageworkers, and eschewing the trade union reliance on the strike and boycott. But contemporaries saw no contradiction: trade unionism tended to the workers' immediate needs, labor reform to their higher hopes. The two were held to be strands of a single movement, rooted in a common working-class constituency and to some degree sharing a common leadership. But equally important, they were strands that had to be kept operationally separate and functionally distinct.
PHOTOS: These Appalling Images Exposed Child Labor in America
American Federation of Labor

During the 1880s, that division fatally eroded. Despite its labor reform rhetoric, the Knights of Labor attracted large numbers of workers hoping to improve their immediate conditions. As the Knights carried on strikes and organized along industrial lines, the threatened national trade unions demanded that the group confine itself to its professed labor reform purposes. When it refused, they joined in December 1886 to form the American Federation of Labor (AFL). The new federation marked a break with the past, for it denied to labor reform any further role in the struggles of American workers. In part, the assertion of trade union supremacy stemmed from an undeniable reality. As industrialism matured, labor reform lost its meaning-hence the confusion and ultimate failure of the Knights of Labor. Marxism taught Samuel Gompers and his fellow socialists that trade unionism was the indispensable instrument for preparing the working class for revolution. The founders of theAFL translated this notion into the principle of "pure and simple" unionism: only by self-organization along occupational lines and by a concentration on job-conscious goals would the worker be "furnished with the weapons which shall secure his industrial emancipation."

That class formulation necessarily defined trade unionism as the movement of the entire working class. The AFL asserted as a formal policy that it represented all workers, irrespective of skill, race, religion, nationality or gender. But the national unions that had created the AFL in fact comprised only the skilled trades. Almost at once, therefore, the trade union movement encountered a dilemma: How to square ideological aspirations against contrary institutional realities?

Discrimination in The Labor Movement

As sweeping technological change began to undermine the craft system of production, some national unions did move toward an industrial structure, most notably in coal mining and the garment trades. But most craft unions either refused or, as in iron and steel and in meat-packing, failed to organize the less skilled. And since skill lines tended to conform to racial, ethnic and gender divisions, the trade union movement took on a racist and sexist coloration as well. For a short period, the AFL resisted that tendency. But in 1895, unable to launch an interracial machinists' union of its own, the Federation reversed an earlier principled decision and chartered the whites-only International Association of Machinists. Formally or informally, the color bar thereafter spread throughout the trade union movement. In 1902, blacks made up scarcely 3 percent of total membership, most of them segregated in Jim Crow locals. In the case of women and eastern European immigrants, a similar devolution occurred-welcomed as equals in theory, excluded or segregated in practice. (Only the fate of Asian workers was unproblematic; their rights had never been asserted by the AFLin the first place.)

Samuel Gompers

Gompers justified the subordination of principle to organizational reality on the constitutional grounds of "trade autonomy," by which each national union was assured the right to regulate its own internal affairs. But the organizational dynamism of the labor movement was in fact located in the national unions. Only as they experienced inner change might the labor movement expand beyond the narrow limits-roughly 10 percent of the labor force-at which it stabilized before World War I.

In the political realm, the founding doctrine of pure-and-simple unionism meant an arm's-length relationship to the state and the least possible entanglement in partisan politics. A total separation had, of course, never been seriously contemplated; some objectives, such as immigration restriction, could be achieved only through state action, and the predecessor to the AFL, the Federation of Organized Trades and Labor Unions (1881), had in fact been created to serve as labor's lobbying arm in Washington. Partly because of the lure of progressive labor legislation, even more in response to increasingly damaging court attacks on the trade unions, political activity quickened after 1900. With the enunciation of Labor's Bill of Grievances (1906), the AFL laid down a challenge to the major parties. Henceforth it would campaign for its friends and seek the defeat of its enemies.

This nonpartisan entry into electoral politics, paradoxically, undercut the left-wing advocates of an independent working-class politics. That question had been repeatedly debated within theAFL, first in 1890 over Socialist Labor party representation, then in 1893-1894 over an alliance with the Populist Party and after 1901 over affiliation with the Socialist party of America. Although Gompers prevailed each time, he never found it easy. Now, as labor's leverage with the major parties began to pay off, Gompers had an effective answer to his critics on the left: the labor movement could not afford to waste its political capital on socialist parties or independent politics. When that nonpartisan strategy failed, as it did in the reaction following World War I, an independent political strategy took hold, first through the robust campaigning of the Conference for Progressive Political Action in 1922, and in 1924 through labor's endorsement of Robert La Follette on the Progressive ticket. By then, however, the Republican administration was moderating its hard line, evident especially in Herbert Hoover's efforts to resolve the simmering crises in mining and on the railroads. In response, the trade unions abandoned the Progressive party, retreated to nonpartisanship, and, as their power waned, lapsed into inactivity.

The Labor Movement and The Great Depression
WATCH: Franklin D. Roosevelt's New Deal
It took the Great Depression to knock the labor movement off dead center. The discontent of industrial workers, combined with New Deal collective bargaining legislation, at last brought the great mass production industries within striking distance. When the craft unions stymied the ALF's organizing efforts, John L. Lewis of the United Mine Workers and his followers broke away in 1935 and formed the Committee for Industrial Organization (CIO), which crucially aided the emerging unions in auto, rubber, steel and other basic industries. In 1938 the CIO was formally established as the Congress of Industrial Organizations. By the end of World War II, more than 12 million workers belonged to unions and collective bargaining had taken hold throughout the industrial economy.

In politics, its enhanced power led the union movement not to a new departure but to a variant on the policy of nonpartisanship. As far back as the Progressive Era, organized labor had been drifting toward the Democratic party, partly because of the latter's greater programmatic appeal, perhaps even more because of its ethno-cultural basis of support within an increasingly "new" immigrant working class. With the coming of Roosevelt's New Deal, this incipient alliance solidified, and from 1936 onward the Democratic Party could count on-and came to rely on-the campaigning resources of the labor movement.

Collective Bargaining

That this alliance partook of the nonpartisan logic of Gompers's authorship-too much was at stake for organized labor to waste its political capital on third parties-became clear in the unsettled period of the early cold war. Not only did theCIO oppose the Progressive party of 1948, but it expelled the left-wing unions that broke ranks and supported Henry Wallace for the presidency that year.

The formation of the AFL-CIOin 1955 visibly testified to the powerful continuities persisting through the age of industrial unionism. Above all, the central purpose remained what it had always been-to advance the economic and job interests of the union membership. Collective bargaining performed impressively after World War II, more than tripling weekly earnings in manufacturing between 1945 and 1970, gaining for union workers an unprecedented measure of security against old age, illness and unemployment, and, through contractual protections, greatly strengthening their right to fair treatment at the workplace. But if the benefits were greater and if they went to more people, the basic job-conscious thrust remained intact. Organized labor was still a sectional movement, covering at most only a third of America's wage earners and inaccessible to those cut off in the low-wage secondary labor market.

Women and Minorities in the Labor Movement

Nothing better captures the uneasy amalgam of old and new in the postwar labor movement than the treatment of minorities and women who flocked in, initially from the mass production industries, but after 1960 from the public and service sectors as well. Labor's historic commitment to racial and gender equality was thereby much strengthened, but not to the point of challenging the status quo within the labor movement itself. Thus the leadership structure remained largely closed to minorities-as did the skilled jobs that were historically the preserve of white male workers-notoriously so in the construction trades but in the industrial unions as well. Yet the AFL-CIOplayed a crucial role in the battle for civil rights legislation in 1964-1965. That this legislation might be directed against discriminatory trade union practices was anticipated (and quietly welcomed) by the more progressive labor leaders. But more significant was the meaning they found in championing this kind of reform: the chance to act on the broad ideals of the labor movement. And, so motivated, they deployed labor's power with great effect in the achievement of John F. Kennedy's and Lyndon B. Johnson 's domestic programs during the 1960s.

Decline in Unions

This was ultimately economic, not political power, however, and as organized labor's grip on the industrial sector began to weaken, so did its political capability. From the early 1970s onward, new competitive forces swept through the heavily unionized industries, set off by deregulation in communications and transportation, by industrial restructuring and by an unprecedented onslaught of foreign goods. As oligopolistic and regulated market structures broke down, nonunion competition spurted, concession bargaining became widespread and plant closings decimated union memberships. The once-celebrated National Labor Relations Act increasingly hamstrung the labor movement; an all-out reform campaign to get the law amended failed in 1978. And with the election of Ronald Reagan in 1980, there came to power an anti-union administration the likes of which had not been seen since the Harding era.

Between 1975 and 1985, union membership fell by 5 million. In manufacturing, the unionized portion of the labor force dropped below 25 percent, while mining and construction, once labor's flagship industries, were decimated. Only in the public sector did the unions hold their own. By the end of the 1980s, less than 17 percent of American workers were organized, half the proportion of the early 1950s.

The labor movement has never been swift to change. But if the new high-tech and service sectors seemed beyond its reach in 1989, so did the mass production industries in 1929. There is a silver lining: Compared to the old AFL, organized labor is today much more diverse and broadly based: In 2018, of the 14.7 million wage and salary workers who were part of a union (compared to 17.7 million in 1983), 25 percent are women and 28 percent are Black.

Sources

TED: The Economics Daily. Bureau of Labor Statistics.

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The origins of the labor movement lay in the formative years of the American nation, when a free wage-labor market emerged in the artisan trades late in the colonial period. The earliest recorded strike occurred in 1768 when New York journeymen tailors protested a wage reduction.

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"Grand Master Workman Terence V. Powderly took office in 1879, and under his leadership the Knights flourished; by 1886 the group had 700,000 members. Powderly dispensed with the earlier rules of secrecy and committed the organization to seeking the eight-hour day, abolition of child labor, equal pay for equal work, and political reforms including the graduated income tax."

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"The Knights of Labor began as a secret society of tailors in Philadelphia in 1869. The organization grew slowly during the hard years of the 1870s, but worker militancy rose toward the end of the decade, especially after the great railroad strike of 1877, and the Knights’ membership rose with it."

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Knights of Labor - Definition, Goals & Leader

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The Knights of Labor, founded in 1869, was a prominent national labor organization that advocated for the eight-hour day, a graduated federal income tax, as well as other worker protections.

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"A theory of management intended to maximize labor productivity and economic efficiency. Also known as “Taylorism,” it was developed by Frederick Winslow Taylor in the 1880s and 1890s, and involved the rational analysis of workflows."

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Democracy

Progressives sought to enable the citizenry to rule more directly.

Learning Objectives

Describe the ways the Progressives increased democratic representation

Key Takeaways

Key Points

The Progressive Era saw reforms in U.S. citizens ' democratic representation.

Many states created laws that allowed for direct voting on legislation, open primary elections, and greater citizen influence on the political process.

The Seventeenth Amendment to the Constitution established the direct election of U.S. senators by popular vote.

Robert M. La Follette Sr. was a Progressive politician who, as governor of Wisconsin and a U.S. congressman, led many initiatives that expanded the democratic participation of citizens.

Key Terms

recall election: A procedure by which voters can remove an elected official from office through a direct vote before his or her term has ended.

referendum: A direct vote in which an entire electorate is asked to vote on a particular proposal.

initiative: A means by which a petition signed by a certain minimum number of registered voters can force a public vote.

Seventeenth Amendment: This amendment to the U.S. Constitution established the popular election of U.S. senators by the people of the states.

The Wisconsin Idea: A policy developed in the state of Wisconsin that fosters public universities' contributions to the state, grounding legislation in thorough research and expert involvement.

Initiative, Referendum, and Recall

Progressives sought to enable the citizenry to rule more directly and circumvent political bosses. Thanks to the efforts of Oregon Populist Party State Representative William S. U'Ren and his Direct Legislation League, voters in Oregon overwhelmingly approved a ballot measure in 1902 that created the initiative and referendum processes for citizens to directly introduce or approve proposed laws or amendments to the state constitution, making Oregon the first state to adopt such a system.

An initiative (also known as a "popular" or "citizens'" initiative) is a means by which a petition signed by a certain minimum number of registered voters can force a public vote (plebiscite).

The initiative may take the form of a direct initiative or an indirect initiative. In a direct initiative, a measure is put directly to a vote after being submitted by a petition. In an indirect initiative, a measure is first referred to the legislature, and then put to a popular vote only if not enacted by the legislature.

A referendum is a direct vote in which an entire electorate is asked to vote on a particular proposal, which is the result of a successful initiative. This may result in the adoption of a new law.

The vote may be on a proposed statute, constitutional amendment, charter amendment, or local ordinance, or to simply oblige the executive or legislature to consider the subject by submitting it to the order of the day. It is a form of direct democracy.

U'Ren also helped in the passage of an amendment in 1908 that gave voters power to recall elected officials. A recall election (also called a "recall referendum" or "representative recall") is a procedure by which voters can remove an elected official from office through a direct vote before his or her term has ended. Recalls are initiated when sufficient voters sign a petition.

U'Ren would also go on to establish, at the state level, popular election of U.S. senators and the first presidential primary in the United States.

In 1911, California governor Hiram Johnson established the Oregon system of "Initiative, Referendum, and Recall" in his state, viewing them as good influences for citizen participation against the historic influence of large corporations on state lawmakers. These Progressive reforms were soon replicated in other states, including in Idaho, Washington, and Wisconsin, and today, roughly half of the states have initiative, referendum, and recall provisions in their state constitutions.

Direct Election of Senators

About 16 states began using primary elections to reduce the power of bosses and machines. The Seventeenth Amendment was ratified in 1913, requiring that all senators be elected by the people (instead of by state legislatures). The main motivation was to reduce the power of political bosses who controlled the Senate seats by virtue of their control of state legislatures. The result, according to political scientist Henry Ford Jones, was that the U.S. Senate had become a, "Diet of party lords, wielding their power without scruple or restraint, in behalf of those particular interests" that put them in office.

Reformers worked toward a constitutional amendment, which was strongly supported in the House of Representatives but initially opposed by the Senate. Bybee notes that the state legislatures, which would lose power if the reforms went through, were supportive of the campaign. By 1910, 31 state legislatures had passed resolutions calling for a constitutional amendment allowing direct election, and in the same year, 10 Republican senators who were opposed to reform were forced out of their seats, acting as a, "wake-up call to the Senate."

Reformers included William Jennings Bryan. Bryan and the reformers argued for popular election by highlighting perceived flaws with the existing system, specifically corruption and electoral deadlocks, and by arousing populist sentiment. Most important was the Populist argument: that there was a need to, "Awaken, in the senators... a more acute sense of responsibility to the people." Election through state legislatures was seen as an anachronism that was out of step with the wishes of the American people, and one that had led to the Senate becoming, "a sort of aristocratic body-too far removed from the people, beyond their reach, and with no special interest in their welfare." The settlement of the West and continuing absorption of hundreds of thousands of immigrants expanded the sense of "the people."

Robert M. La Follette Sr.

Robert M. La Follette Sr. (June 14, 1855-June 18, 1925) was an American Republican (and later a Progressive) politician. He served as a member of the U.S. House of Representatives, was the governor of Wisconsin, and was a U.S. Senator from Wisconsin from 1906 to 1925. He ran for president of the United States as the nominee of his own Progressive Party in 1924, carrying Wisconsin and winning 17 percent of the national popular vote. La Follette has been called, "arguably the most important and recognized leader of the opposition to the growing dominance of corporations over the Government," and is one of the key figures pointed to in Wisconsin's long history of political liberalism. He is best remembered as a proponent of Progressivism and a vocal opponent of railroad trusts, bossism, World War I, and the League of Nations.

As governor of Wisconsin, La Follette championed numerous Progressive reforms, including the first workers' compensation system, railroad rate reform, direct legislation, municipal home rule, open government, the minimum wage, non-partisan elections, the open primary system, direct election of U.S. Senators, women's suffrage, and Progressive taxation. He created an atmosphere of close cooperation between the state government and the University of Wisconsin in the development of Progressive policy, which became known as the "Wisconsin Idea." The goals of his policy included establishing the recall, referendum, direct primary, and initiative. All of these were aimed at giving citizens a more direct role in government.

The Wisconsin Idea promoted the idea of grounding legislation in thorough research and expert involvement. To implement this program, La Follette began working with University of Wisconsin-Madison faculty. This made Wisconsin a, "laboratory for democracy" and, "the most important state for the development of Progressive legislation." As governor, La Follette signed legislation that created the Wisconsin Legislative Reference Library (now Bureau) to ensure that a research agency would be available for the development of legislation.

Efficiency

Progressive reformers tried to apply scientific principles and rational problem-solving to social problems.

Learning Objectives

Describe how Progressives applied scientific reasoning to social and economic problems

Key Takeaways

Key Points

Progressives believed that applying scientific principles allowed for governments to institute bureaucracies that could analyze data and then distribute materials to its constituents based on that data.

One example of Progressive reform was the rise of the city-manager system, in which paid, professional engineers ran the day-to-day affairs of city governments under guidelines established by elected city councils.

Influences on this form of governing included " scientific management " developed by Frederick Winslow Taylor and Fordism, modeled on the factory system of Henry Ford and Ford Motors.

Key Terms

Fordism: A production system that involved synchronization, precision, and specialization within a company; it took the form of breaking down complex tasks into simpler ones along an assembly line.

Scientific Management: A theory of management intended to maximize labor productivity and economic efficiency. Also known as "Taylorism," it was developed by Frederick Winslow Taylor in the 1880s and 1890s, and involved the rational analysis of workflows. It attempted to adjust the time and motion of workers' activities so as to maximize their efficiency. This theory was one of the earliest attempts to apply science to the engineering of processes and to management.

council-manager style of government: A system in which the elected governing body (commonly called a "city council," "city commission," "board of aldermen," or "board of selectmen") is responsible for the legislative function of the municipality.

Many Progressives such as Louis Brandeis hoped to make American governments better able to serve the people's needs by making governmental operations and services more efficient and rational. Rather than making legal arguments against 10-hour workdays for women, he used "scientific principles" and data produced by social scientists documenting the high costs of long working hours for both individuals and society.

The Progressives' quest for efficiency was sometimes at odds with their quest for democracy. Taking power out of the hands of elected officials, and placing it in the hands of professional administrators reduced the voice of the politicians, and in turn reduced the voice of the people. Centralized decision-making by trained experts and reduced power for local wards made government less corrupt but more distant and isolated from the people it served. Progressives who emphasized the need for efficiency typically argued that trained independent experts could make better decisions than local politicians. Thus, Walter Lippmann in his influential Drift and Mastery (1914), which stressed the "scientific spirit" the "discipline of democracy," called for a strong central government guided by experts rather than by public opinion.

Examples

One example of Progressive reform was the rise of the city-manager system, in which paid, professional engineers ran the day-to-day affairs of city governments under guidelines established by elected city councils. Many cities created municipal "reference bureaus," which did expert surveys of government departments looking for waste and inefficiency. After in-depth surveys, local and even state governments were reorganized to reduce the number of officials and to eliminate overlapping areas of authority among departments. City governments were reorganized to reduce the power of local ward bosses, and to increase the powers of the city council. Governments at every level began developing budgets to help them plan their expenditures (rather than spending money haphazardly as needs arose and revenue became available). Governor Frank Lowden of Illinois showed a, "passion for efficiency" as he streamlined state government.

This system is part of the council-manager style of government. Under the council-manager form of government for municipalities, the elected governing body (commonly called a "city council," "city commission," "board of aldermen," or "board of selectmen") is responsible for the legislative function of the municipality such as establishing policy, passing local ordinances, determining voting appropriations, and developing an overall vision. County and other types of local government follow the same pattern, with governing body members receiving a title that matches the title of the body.

The legislative body, which is voted into office by public elections, appoints a professional manager to oversee the administrative operations, implement its policies, and advise it. The position of "mayor" present in this type of legislative body is a largely ceremonial title, and may be selected by the council from among its members or elected as an at-large council member with no executive functions.

Corruption also represented a source of waste and inefficiency in government. William U'Ren in Oregon and Robert M. La Follette in Wisconsin, as well as others, worked to clean up state and local governments by passing laws to weaken the power of machine politicians and political bosses. The Oregon System, which included a "Corrupt Practices Act," a public referendum, and a state-funded voter's pamphlet among other reforms, was exported to other states in the Northwest and Midwest. Its high point was in 1912, after which they detoured into a disastrous third party status.

Influences

A major influence on this efficient style of governing was the "Scientific Management" movement. The focus of this movement was to run organizations in an objective, scientific fashion to maximize efficiency, among other things. Scientific management, also called "Taylorism," was a theory of management that analyzed and synthesized workflows. Its main objective was improving economic efficiency, especially labor productivity. It was one of the earliest attempts to apply science to the engineering of processes and to management. Its development began with Frederick Winslow Taylor in the 1880s and 1890s within the manufacturing industries. Its peak of influence occurred in the 1910s; by the 1920s, it was still influential but had begun an era of competition and syncretism with opposing or complementary ideas.

Another system of efficiency during the Progressive Era was Fordism, "the eponymous manufacturing system designed to spew out standardized, low-cost goods and afford its workers decent enough wages to buy them." It has also been described as, "a model of economic expansion and technological progress based on mass production: the manufacture of standardized products in huge volumes using special purpose machinery and unskilled labor." Although Fordism was a method used to improve productivity in the automotive industry, the principle could be applied to any kind of manufacturing process. Henry Ford and his senior managers did not use the word "Fordism" themselves to describe their motivations or worldview; however, many contemporaries framed their worldview as an "ism" and applied that name to it. Fordism's major success stemmed from the following three principles:

1. The standardization of the product (nothing is handmade: everything is made through machines and molds by unskilled workers)

2. The employment of assembly lines, which use special-purpose tools and/or equipment to allow unskilled workers to contribute to the finished product

3. The payment of higher "living" wages to workers, so they can afford to purchase the products they make

These principles, coupled with a technological revolution during Henry Ford's time, allowed for this form of labor to flourish. It is true that his assembly line was revolutionary, but it was in no way original. His most original contribution to the modern world was breaking down complex tasks into simpler ones with the help of specialized tools. Simpler tasks created interchangeable parts that could be used the same way every time. This allowed for flexibility and created a very adaptable assembly line that could change its constituent components to meet the needs of the product being assembled.

Regulation

Progressive reformers regarded regulation as a cure for all sorts of socioeconomic and political problems.

Learning Objectives

Examine how Progressives argued for increased government regulation of big businesses as a means of protecting free enterprise

Key Takeaways

Key Points

Progressive reformers successfully lobbied for restrictions on immigration, limits on corporate monopolies, and laws ensuring pure or safe food and drugs, among other goals.

Regulations were passed in every aspect of society during the Progressive Era. Most notably, big businesses-especially the oil and railroad industries-were regulated.

The Sherman Act of 1890 attempted to outlaw the restriction of competition by large companies that cooperated with rivals to fix outputs, prices, and market shares, initially through pools and later through trusts.

President Theodore Roosevelt sued 45 companies under the Sherman Act; William Howard Taft sued 75.

American hostility toward big business began to decrease after the Progressive Era.

Progressives also sought labor reforms to protect workers, and passed laws that restricted child labor, established an eight-hour work day, and improved safety and health conditions in factories.

Key Terms

Federal Reserve: The central banking system of the United States.

regulation: A law or administrative rule, issued by an organization, used to guide or prescribe the conduct of members of that organization.

trust: A group of businessmen or traders organized for mutual benefit to produce and distribute specific commodities or services, and managed by a central body of trustees.

Sherman Antitrust Act: A law passed in 1914 that prohibits certain business activities that federal government regulators deem to be anticompetitive, and that requires the federal government to investigate and pursue trusts.

Progressive Reform

By the turn of the century, a middle class had developed that was leery of both the business elite and the radical political movements of farmers and laborers in the Midwest and West. The Progressives argued for the need for government regulation of business practices to ensure competition and free enterprise. Congress enacted a law regulating railroads in 1887 (the Interstate Commerce Act), and one preventing large firms from controlling a single industry in 1890 (the Sherman Antitrust Act ). These laws were not rigorously enforced, however, until the years between 1900 and 1920, when Republican President Theodore Roosevelt (1901-1909), Democratic President Woodrow Wilson (1913-1921), and others sympathetic to the views of the Progressives came to power. Many of today's U.S. regulatory agencies, including the Interstate Commerce Commission and the Federal Trade Commission, were created during these years

Many Progressives hoped that by regulating large corporations, they could liberate human energies from the restrictions imposed by industrial capitalism. Pro-labor Progressives, such as Samuel Gompers, argued that industrial monopolies were unnatural economic institutions that suppressed the competition that was necessary for progress and improvement. United States antitrust law is the body of laws that prohibits anticompetitive behavior (monopolies) and unfair business practices. Presidents Theodore Roosevelt and William Howard Taft supported trust-busting.

Progressives, such as Benjamin Parke De Witt, argued that in a modern economy, large corporations, and even monopolies, were both inevitable and desirable. With their massive resources and economies of scale, large corporations offered the United States advantages that smaller companies could not offer. Yet, these large corporations might abuse their great power. The federal government should allow these companies to exist but should regulate them for the public interest. President Theodore Roosevelt generally supported this idea.

Sherman Act

The Sherman Antitrust Act is a landmark federal statute in the history of U.S. antitrust law passed by Congress in 1890. Passed under the presidency of Benjamin Harrison, the act prohibits certain business activities that federal government regulators deem to be anticompetitive, and requires the federal government to investigate and pursue trusts.

In the general sense, a trust is a centuries-old form of a contract in which one party entrusts its property to a second party. These are commonly used to hold inheritances for the benefit of children, for example. "Trust" in relation to the Sherman Act refers to a type of contract that combines several large businesses for monopolistic purposes (to exert complete control over a market), though the act addresses monopolistic practices even if they have nothing to do with this specific legal arrangement.

The law attempts to prevent the artificial raising of prices by restriction of trade or supply. "Innocent monopoly," or monopoly achieved solely by merit, is perfectly legal, but acts by a monopolist to artificially preserve that status, or nefarious dealings to create a monopoly, are not. The purpose of the Sherman Act is not to protect competitors from harm from legitimately successful businesses, nor to prevent businesses from gaining honest profits from consumers, but rather to preserve a competitive marketplace to protect consumers from abuses.

Trust-busting

Public officials during the Progressive Era put passing and enforcing strong antitrust policies high on their agenda. President Theodore Roosevelt sued 45 companies under the Sherman Act, and William Howard Taft sued 75. In 1902, Roosevelt stopped the formation of the Northern Securities Company, which threatened to monopolize transportation in the Northwest (see No rthern Securities Co. v. United States).

One of the most well-known trusts was the Standard Oil Company; John D. Rockefeller in the 1870s and 1880s had used economic threats against competitors and secret rebate deals with railroads to build a monopoly in the oil business, though some minor competitors remained in business. In 1911, the Supreme Court agreed that in recent years (1900-1904) Standard had violated the Sherman Act. It broke the monopoly into three dozen separate competing companies, including Standard Oil of New Jersey (later known as Exxon and now ExxonMobil), Standard Oil of Indiana (Amoco), Standard Oil Company of New York (Mobil, which later merged with Exxon to form ExxonMobil), and so on. In approving the breakup, the Supreme Court added the "rule of reason." Not all big companies, and not all monopolies, are evil; and the courts (not the executive branch) are to make that decision. To be harmful, a trust had to somehow damage the economic environment of its competitors.

Labor Reform

Progressives also enacted laws that regulated businesses to protect workers.

Child-labor laws were designed to prevent the overworking of children in the newly emerging industries. The goal of these laws was to give working-class children the opportunity to go to school and to mature more naturally, thereby liberating the potential and encouraging the advancement of humanity.

After 1907, the American Federation of Labor, under Samuel Gompers, moved to demand legal reforms that would support labor unions. Most of the support came from Democrats, but Theodore Roosevelt and his third party, the Bull Moose Party, also supported such goals as the eight-hour work day, improved safety and health conditions in factories, workers' compensation laws, and minimum-wage laws for women.

In the years between 1889 and 1920, railroad use in the United States expanded sixfold. With this expansion, the dangers to the railroad worker increased. Congress passed the Federal Employers Liability Act ( FELA ) in response to the high number of railroad deaths in the late nineteenth century and early twentieth century. Under FELA, railroad workers who are not covered by regular workers' compensation laws are able to sue companies over their injury claims. FELA allows monetary payouts for pain and suffering, decided by juries based on comparative negligence rather than pursuant to a predetermined benefits schedule under workers' compensation.

The United States Employees' Compensation Act is a federal law enacted on September 7, 1916. Sponsored by Senator John W. Kern (D) of Indiana and Representative Daniel J. McGillicuddy (D) of Maine, the act established the distribution of compensation to federal civil-service employees for wages lost due to job-related injuries. This act became the precedent for disability insurance across the country and the precursor to broad-coverage health insurance.

The Prohibition Movement

Prohibition was a major reform movement from the 1840s into the 1920s. Its goal was to prohibit the manufacture or sale of alcohol.

Learning Objectives

Analyze Prohibition and its effect on American society

Key Takeaways

Key Points

Prohibition was promoted by the "dry" crusaders, a movement led by rural Protestants and social Progressives in the Democratic and Republican parties, and was coordinated by the Anti-Saloon League and the Woman's Christian Temperance Union. Prohibition was instituted with the ratification of the Eighteenth Amendment to the U.S. Constitution on January 16, 1919. It prohibited the, "manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States."

Congress passed the Volstead Act on October 28, 1919, to enforce the law, but most large cities were uninterested in enforcing the legislation, which left an understaffed federal service to go after bootleggers.

The sale of alcohol was illegal, but alcoholic drinks were still widely available.

Prohibition was repealed during the Depression in order to collect taxes on liquor sales.

Many deem Prohibition a failure, although it has an important legacy in the United States and reflected changing social attitudes.

Key Terms

Volstead Act: A law that set down the rules for enforcing the ban on alcohol and defined the types of alcoholic beverages that were prohibited during Prohibition.

Prohibition: A law forbidding the manufacture, sale, or transportation of alcohol.

Prohibition

Prohibition in the United States was a nationwide constitutional ban on the production, importation, transportation, or sale of alcoholic beverages that remained in place from 1920 to 1933. It was promoted by the "dry" crusaders, a movement led by rural Protestants and social Progressives in the Democratic and Republican parties, and was coordinated by the Anti-Saloon League, and the Woman's Christian Temperance Union.

The Woman's Christian Temperance Union (WCTU) was the first mass organization among women devoted to social reform with a program that, "linked the religious and the secular through concerted and far-reaching reform strategies based on applied Christianity." The purpose of the WCTU was to further the temperance movement and to create a, "sober and pure world" through abstinence, purity, and evangelical Christianity.

Frances Elizabeth Caroline Willard, who became the national president of the World Woman's Christian Temperance Union in 1879, and remained president for 19 years, was an American educator, temperance reformer, and women's suffragist. Her influence was instrumental in the passage of the Eighteenth (Prohibition) and Nineteenth (Women Suffrage) Amendments to the U.S. Constitution.

Prohibition was mandated under the Eighteenth Amendment to the U.S. Constitution. The Volstead Act set the rules for enforcing the ban and defined the types of alcoholic beverages that were prohibited. For example, religious uses of wine were allowed. Private ownership and consumption of alcohol were not made illegal under federal law; however, in many areas, local laws were stricter, with some states banning possession outright.

Although alcohol consumption did decline as a whole, there was a rise in alcohol consumption in many cities along with significant increases in organized crime related to its production and distribution. The sale of alcohol was illegal, but alcoholic drinks were still widely available. People also kept private bars to serve their guests. Large quantities of alcohol were smuggled in from Canada overland, by sea along both ocean coasts, and via the Great Lakes. The government cracked down on alcohol consumption on land within the United States. It was a different story on the water, where vessels outside of the three-mile limit were exempt. Legal and illegal home brewing was popular during Prohibition. "Malt and hop" stores popped up across the country and some former breweries turned to selling malt extract syrup, ostensibly for baking and "beverage" purposes.

Repeal

Economic urgency played no small part in accelerating the advocacy for repeal. The number of conservatives who pushed for prohibition in the beginning decreased. Many farmers who fought for prohibition now fought for repeal because of the negative effects it had on the agriculture business. Prior to the 1920 implementation of the Volstead Act, approximately 14 percent of federal, state, and local tax revenues were derived from alcohol commerce. When the Great Depression hit and tax revenues plunged, the governments needed this revenue stream. Millions could be made by taxing beer. There was controversy about whether the repeal should be a state or nationwide decision. On March 22, 1933, President Franklin Roosevelt signed an amendment to the Volstead Act, known as the "Cullen-Harrison Act," allowing the manufacture and sale of 3.2 percent beer and light wines. The Volstead Act previously defined an intoxicating beverage as one with greater than 0.5 percent alcohol. Upon signing the Cullen-Harrison Act, Roosevelt made his famous remark: "I think this would be a good time for a beer."

The Eighteenth Amendment was repealed on December 5, 1933, with ratification of the Twenty-first Amendment to the U.S. Constitution.

Legacy

Prohibition marked one of the last stages of the Progressive Era. During the nineteenth century, alcoholism, drug abuse, gambling addiction, and a variety of other social ills and abuses led to activism targeted at curing the perceived problems in society. Among other things, this led many communities in the late nineteenth and early twentieth century to introduce alcohol prohibition, with the subsequent enforcement in law becoming a hotly debated issue. Prohibition supporters, called "drys," presented the ban as a victory for public morals and health. Anti-prohibitionists, known as "wets," criticized the alcohol ban as an intrusion of mainly rural Protestant ideals on a central aspect of urban, immigrant, and Catholic life.

Although popular opinion is that Prohibition failed, it succeeded in cutting overall alcohol consumption in half during the 1920s, and consumption remained below pre-Prohibition levels until the 1940s, suggesting that Prohibition did socialize a significant proportion of the population in temperate habits, at least temporarily. Some researchers contend that its political failure is attributable more to a changing historical context than to characteristics of the law itself. A persistent criticism is that Prohibition led to unintended consequences such as the growth of urban crime organizations and a century of Prohibition-influenced legislation. As an experiment, it lost supporters every year, and lost tax revenue that governments needed when the Great Depression began in 1929.

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Progressives sought to enable the citizenry to rule more directly. Describe the ways the Progressives increased democratic representation Key Points The Progressive Era saw reforms in U.S. citizens ' democratic representation. Many states created laws that allowed for direct voting on legislation, open primary elections, and greater citizen influence on the political process.

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"he Panic of 1873 was blamed for setting off the economic depression that lasted from 1873 to 1879. This period was called the Great Depression, until the even greater depression of 1893 received that label, which it held until the even greater contraction in the 1930s -- now known as the Great Depression."

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The Gilded Age in US history spans from roughly the end of the Civil War through the very early 1900s. Mark Twain and Charles Dudley Warner popularized the term, using it as the title of their novel The Gilded Age: A Tale of Today, which satirized an era when economic progress masked social problems and when the siren of financial speculation lured sensible people into financial foolishness. In financial history, the term refers to the era between the passage of the National Banking Acts in 1863-64 and the formation of the Federal Reserve in 1913. In this period, the US monetary and banking system expanded swiftly and seemed set on solid foundations but was repeatedly beset by banking crises.

At the time, like today, New York City was the center of the financial system. Between 1863 and 1913, eight banking panics occurred in the money center of Manhattan. The panics in 1884, 1890, 1899, 1901, and 1908 were confined to New York and nearby cities and states. The panics in 1873, 1893, and 1907 spread throughout the nation. Regional panics also struck the midwestern states of Illinois, Minnesota, and Wisconsin in 1896; the mid-Atlantic states of Pennsylvania and Maryland in 1903; and Chicago in 1905. This essay details the crises in 1873, 1884, 1890, and 1893; this set includes all of the crises that disrupted or threatened to disrupt the national banking and payments system. A companion essay discusses the Panic of 1907, the shock that finally spurred financial and political leaders to consider reforming the monetary system and eventually establish the Federal Reserve.

The Panic of 1873 arose from investments in railroads. Railroads had expanded rapidly in the nineteenth century, and investors in many early projects had earned high returns. As the Gilded Age progressed, investment in railroads continued, but new projects outpaced demand for new capacity, and returns on railroad investments declined. In May and September 1873, stock market crashes in Vienna, Austria, prompted European investors to divest their holdings of American securities, particularly railroad bonds. Their divestment depressed the market, lowered prices on stocks and bonds, and impeded financing for railroad firms. Without cash to finance operations and refinance debts that came due, many railroad firms failed. Others defaulted on payments due to banks. This turmoil forced Jay Cooke and Co., a notable merchant bank, into bankruptcy on September 18. The bank was heavily invested in railroads, particularly Northern Pacific Railway.

"Panic" clearing garbage on Wall Street, 1873 (Library of Congress Prints and Photographs Division, LC-DIG-ds-04513)

Cooke's failure changed expectations. Creditors lost confidence in railroads and in the banks that financed them. Stock markets collapsed. On September 20, for the first time in its history, the New York Stock Exchange closed. Trading did not resume for ten days. The panic spread to financial institutions in Washington, DC, Pennsylvania, New York, Virginia, and Georgia, as well as to banks in the Midwest, including Indiana, Illinois, and Ohio. Nationwide, at least one-hundred banks failed.

Initially, the New York Clearing House mobilized member reserves to meet demands for cash. On September 24, however, it suspended cash payments in New York. New York's money center banks continued to supply cash to country banks. Those banks fulfilled withdrawal requests by drawing down reserves at banks in New York and in other reserve cities, which were municipalities whose banks could hold as deposits the legally required cash reserves of banks in other locations. The crisis subsided in mid-October.

The Panic of 1884, by contrast, had a more limited impact. It began with a small number of financial firms in New York City. In May 1884, two firms - the Marine National Bank and the brokerage firm Grant and Ward - failed when their owners' speculative investments lost value. Soon after, the Second National Bank suffered a run after it was revealed that the president had embezzled $3 million and fled to Canada. Then, the Metropolitan National Bank was forced to close after a run was sparked by rumors that its president was speculating on railroad securities with money borrowed from the bank (those allegations later proved to be untrue).

New York Clearing House, 1913. (Licensed under attribution via Wikimedia Commons)

The latter institution had financial ties to numerous banks in neighboring states, and its closure raised doubts about the banks to which it was linked. The crisis spread through Metropolitan's network to institutions in New Jersey and Pennsylvania, but the crisis was quickly contained. The New York Clearing House audited Metropolitan, determined it was solvent, advertised this fact, and loaned Metropolitan $3 million so that it could withstand the run. These actions reassured the public, and the panic subsided.

The Panic of 1890 was also limited in scope. In November, after the failure of the brokerage firm Decker, Howell and Co., securities' prices plunged. The firm's failure threatened its bank, the Bank of North America. Depositors feared the bank would fail and began withdrawing substantial sums. Troubles began to spread to other institutions, including brokerage firms in Philadelphia and Richmond. Financier J.P. Morgan then convinced a consortium of nine New York City banks to extend aid to the Bank of North America. This action restored faith in the bank and the market, and the crisis abated.

The Panic of 1893 was one of the most severe financial crises in the history of the United States. The crisis started with banks in the interior of the country. Instability arose for two key reasons. First, gold reserves maintained by the US Treasury fell to about $100 million from $190 million in 1890. At the time, the United States was on the gold standard, which meant that notes issued by the Treasury could be redeemed for a fixed amount of gold. The falling gold reserves raised concerns at home and abroad that the United States might be forced to suspend the convertibility of notes, which may have prompted depositors to withdraw bank notes and convert their wealth into gold. The second source of this instability was that economic activity slowed prior to the panic. The recession raised rates of defaults on loans, which weakened banks' balance sheets. Fearing for the safety of their deposits, men and women began to withdraw funds from banks. Fear spread and withdrawals accelerated, leading to widespread runs on banks.

Uncle Sam points a gun at "hard times," 1893 (Library of Congress Prints and Photographs Division, LC-DIG-ppmsca-29097)

In June, bank runs swept through midwestern and western cities such as Chicago and Los Angeles. More than one-hundred banks suspended operations. From mid-July to mid-August, the panic intensified, with 340 banks suspending operations. As these banks came under pressure, they withdrew funds that they kept on deposit in banks in New York City. Those banks soon felt strained. To satisfy withdrawal requests, money center banks began selling assets. During the fire sale, asset prices plummeted, which threatened the solvency of the entire banking system. In early August, New York banks sought to save themselves by slowing the outflow of currency to the rest of the country. The result was that in the interior local banks were unable to meet currency demand, and many failed. Commerce and industry contracted. In many places, individuals, firms, and financial institutions began to use temporary expediencies, such as scrip or clearing-house certificates, to make payments when the banking system failed to function effectively.

In the fall, the banking panic ended. Gold inflows from Europe lowered interest rates. Banks resumed operations. Cash and credit resumed lubricating the wheels of commerce and industry. Nevertheless, the economy remained in recession until the following summer. According to estimates by Andrew Jalil and Charles Hoffman, industrial production fell by 15.3 percent between 1892 and 1894, and unemployment rose to between 17 and 19 percent.¹ After a brief pause, the economy slumped into recession again in late 1895 and did not fully recover until mid-1897.

While the narrative of each panic revolves around unique individuals and firms, the panics had common causes and similar consequences. Panics tended to occur in the fall, when the banking system was under the greatest strain. Farmers needed currency to bring their crops to market, and the holiday season increased demands for currency and credit. Under the National Banking System, the supply of currency could not respond quickly to an increase in demand, so the price of currency rose instead. That price is known as the interest rate. Increasing interest rates lowered the value of banks' assets, making it more difficult for them to repay depositors and pushing them toward insolvency. At these times, uncertainty about banks' health and fear that other depositors might withdraw first sometimes triggered panics, when large numbers of depositors simultaneously ran to their banks and withdrew their deposits. A wave of panics could force banks to sell even more assets, further depressing asset prices, further weakening banks' balance sheets, and further increasing the public's unease about banks. This dynamic could, in turn, trigger more runs in a chain reaction that threatened the entire financial system.

In 1884 and 1890, the New York Clearing House stopped the chain reaction by pooling the reserves of its member banks and providing credit to institutions beset by runs, effectively acting as "a central bank with reserve power greater than that of any European central bank,"2 in the words of scholar Elmus Wicker.

A common result of all of these panics was that they severely disrupted industry and commerce, even after they ended. The Panic of 1873 was blamed for setting off the economic depression that lasted from 1873 to 1879. This period was called the Great Depression, until the even greater depression of 1893 received that label, which it held until the even greater contraction in the 1930s -- now known as the Great Depression.

Another common result of these panics was soul searching about ways to reform the financial system. Rumination regarding reform was particularly prolific during the last two decades of the Gilded Age, which coincided with the Progressive Era of American politics. Following the Panic of 1893, for example, the American Bankers Association, secretary of Treasury, and comptroller of currency all proposed reform legislation. Congress held hearings on these proposals but took no action. Over the next fourteen years, politicians, bureaucrats, bankers, and businessmen repeatedly proposed additional reforms (see Wicker, 2005, for a summary), but prior to the Panic of 1907, no substantial reforms occurred.

The adjective "gilded" means covered with a thin gold veneer on the outside but not golden on the inside. In some ways, this definition fits the nineteenth century banking and monetary system. The gold standard and other institutions of that system promised efficiency and stability. The American economy grew rapidly. The United States experienced among the world's fastest growth rates of income per capita. But, the growth of the nation's wealth obscured to some extent social and financial problems, such as periodic panics and depressions. At the time, academics, businessmen, policymakers, and politicians debated the benefits and costs of our banking system and how it contributed to national prosperity and instability. Those debates culminated in the Aldrich-Vreeland Act of 1908, which established the National Monetary Commission and tasked it to study these issues and recommend reforms. The commission's recommendations led to the creation of the Federal Reserve System in 1913.

Bibliography

Calomiris, Charles W., and Gary Gorton. "The Origins of Banking Panics: Models, Facts, and Bank Regulation." In Financial Markets and Financial Crises, 109-74. ed. R. Glenn Hubbard, Chicago: University of Chicago Press, 1991.

Carlson, Mark, "Causes of Bank Suspensions in the Panic of 1893," Federal Reserve Board of Governors, 2011. http://www.federalreserve.gov/pubs/feds/2002/200211/200211pap.pdf.

Grossman, Richard S. "The Macroeconomic Consequences of Bank Failures under the National Banking System." Explorations in Economic History 30, no. 3 (1993): 294-320.

Jalil, Andrew J. "A New History of Banking Panics in the United States, 1825-1929: Construction and Implications." American Economic Journal: Macroeconomics 7, no. 3 (July 2015): 295-330.

Kemmerer, E. W. "Seasonal Variations in the Relative Demand for Money and Capital in the United States." National Monetary Commission Doc. 588, 1910. https://fraser.stlouisfed.org/title/633

Sprague, O. M. W. "History of Crises under the National Banking System." National Monetary Commission Doc. 538, 1910. https://fraser.stlouisfed.org/title/653

Twain, Mark, and Charles Dudley Warner. The Gilded Age: A Tale of Today. Hartford, Conn.: American Publishing Company, 1873. [Online at Project Gutenberg: http://www.gutenberg.org/files/3178/3178-h/3178-h.htm]

Wicker, Elmus. Banking Panics of the Gilded Age. New York: Cambridge University Press, 2000.

Wicker, Elmus. The Great Debate on Banking Reform: Nelson Aldrich and the Origins of the Fed. Columbus, Ohio: Ohio State University Press, 2005.

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The Gilded Age in US history spans from roughly the end of the Civil War through the very early 1900s. Mark Twain and Charles Dudley Warner popularized the term, using it as the title of their novel The Gilded Age: A Tale of Today, which satirized an era when economic progress masked social problems and when the siren of financial speculation lured sensible people into financial foolishness.

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Woman in Red Cross Nurse's Uniform, between 1900 and 1915.

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Woman in Red Cross Nurse's Uniform, between 1900 and 1915.

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"The early 20th century was an era of business expansion and progressive reform in the United States. The progressives, as they called themselves, worked to make American society a better and safer place in which to live. They tried to make big business more responsible through regulations of various kinds. They worked to clean up corrupt city governments, to improve working conditions in factories, and to better living conditions for those who lived in slum areas, a large number of whom were recent immigrants from Southern and Eastern Europe. Many progressives were also concerned with the environment and conservation of resources."

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Progressive Era to New Era - American Memory Timeline- Classroom Presentation | Teacher Resources - Library of Congress

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The Progressive Era to New Era timeline (1900-1929) timeline covers the automobiles, urbanization, conservation, immigration, prohibition, World War I and women's suffrage with primary sources from American Memory.