Transcript
Three O'Clock
Sept. 4, 1882
Lower Manhattan. Two fifty-nine on a Monday afternoon. In a brick building on Pearl Street, six steam-driven dynamos wait.
Twenty-seven tons each. Edison's crew calls them Jumbos, after P. T. Barnum's elephant. One minute to three. Your turn.
Three o'clock. Edison tells a reporter the dynamos will run forever, unless an earthquake stops them. It's broad daylight. Nobody can tell.
Evening comes. A lamplighter starts his round.
New York Times reporter It was not till about 7 o'clock, when it began to grow dark,
New York Times reporter that the electric light really made itself known and showed how bright and steady it is.
Now the gas lamps look yellow, and a few windows burn white. Find three places the new light reached.
About eighty-five customers. Four hundred lamps. The bankers who financed the light got it first: Drexel, Morgan and Company, at 23 Wall Street.
Over the next sixteen years, light got cheap. So did steel, kerosene and beef. A few men got richer than any Americans before them.
Were they captains of industry, or robber barons? And who paid the price of light?
The Invention Factory
1840–1886
Invention was about to get a payroll.
In 1840, Samuel Morse's telegraph got patent number 1,647. By the end of 1898, the Patent Office had passed 616,000.
In 1858, Queen Victoria greeted President Buchanan by Atlantic cable. Her ninety-eight words took sixteen and a half hours. Within a month, the cable was dead.
In 1866, the Great Eastern, the biggest ship afloat, laid a new cable. This one held.
By 1900, a web of cables linked every inhabited continent.
Boston, March 10, 1876. Alexander Graham Bell, twenty-nine, spoke into a machine.
Alexander Graham Bell Mr. Watson—Come here—I want to see you.
Alexander Graham Bell To my delight he came and declared that he had heard and understood what I said.
Bell's patent had been granted three days earlier. The working call came second.
Edison's biggest invention was a place: a New Jersey lab where a team invented to order.
Thomas A. Edison Can build anything from a lady's watch to a Locomotive
…so as to allow of the practical subdivision of the electric light. Translation: one generator, many small lamps.
Arc lights glared over a few streets. Edison wanted small, gentle lamps, one for every desk. But a bulb alone was useless. He had to build the whole system.
In October 1878, Vanderbilt money and Drexel, Morgan money formed the Edison Electric Light Company. Wall Street knew him already. By his own account, a ticker company once paid him $40,000.
In 1882, banker J. P. Morgan wired his house for Edison light. The generator sat under the stable. A neighbor said her house shook. In 1883, a fault burned his library desk. Morgan kept backing Edison.
One problem remained: Edison's direct current reached about a mile. In 1886, Westinghouse's alternating current lit Great Barrington, Massachusetts. By the 1890s, AC was winning.
The First Big Business
1855–1883
The biggest projects now cost more than any family had. The railroads found that out first.
Track grew from 35,000 miles in 1865 to about 193,000 by 1900. Thousands of owners, many in Europe, bought railroad stock. Washington added land grants and loans.
In 1855, the Erie drew one of the first organization charts. The board at the roots. Hired managers on the branches. Station agents at the leaves.
In 1868, Jay Gould, Jim Fisk and Daniel Drew fought Cornelius Vanderbilt for the Erie. Vanderbilt kept buying shares. They kept printing new ones.
Then they fled to a Jersey City hotel with about six million dollars in greenbacks.
Too many lines chased the same freight, and rate wars followed. Big shippers got secret rebates. Rival railroads formed pools. Farmers paid the full rate.
October 8, 1882. Two reporters board William Vanderbilt's private car outside Chicago. They ask if his fast train serves the public. A Chicago paper prints the answer:
William H. Vanderbilt The public be damned.
Four days later he told The New York Times the report was wrong:
William H. Vanderbilt …both my words and ideas are misreported and misrepresented in the report.
The reporter stood by his story. The phrase stuck anyway.
Every town set noon by the sun. Railroads ran on about fifty different times.
At noon on Sunday, November 18, 1883, the railroads swapped those for four time zones. Congress waited until 1918 to make it law.
Bessemer
1848–1898
In 1848, a thirteen-year-old Scot went to work in a cotton mill near Pittsburgh.
Andrew Carnegie My first work was done there at one dollar and twenty cents per week.
Like the youngest hands at Lowell, he spent his days changing bobbins.
Then telegraph boy. Then a rising man at the Pennsylvania Railroad, learning what railroads buy most: iron.
In the 1850s, Bessemer in England and Kelly in Kentucky found a shortcut. Blow air through molten iron and the carbon burns away. Twenty minutes, and it's steel.
Andrew Carnegie There, on the very field of Braddock's defeat, we began the erection of our steel-rail mills.
He named the works for J. Edgar Thomson, the Pennsylvania Railroad's president. Two rival railroads and a river had to compete for his freight.
At night, the converters lit up the Monongahela.
The blower read the flame. When it dropped, the carbon was gone.
The men who worked that heat, and the hours they worked it, are the next film's story.
Carnegie chased costs. Steel rails fell from about $166 a ton in 1867 to $17.62 in 1898.
In 1885, Carnegie gave business students this advice.
Andrew Carnegie I tell you “put all your eggs in one basket, and then watch that basket.”
Andrew Carnegie Beyond this never earn.
He wrote that to himself at thirty-three. He kept earning until 1901.
Washington helped. From 1870, a tariff added $28 to every ton of foreign steel rails.
Steel went into rails, then bridges, then the frames of the first skyscrapers.
Time to open the ledger. Captain of industry on the left. Robber baron on the right.
Cheaper Than Water
1859–1872
In 1859, Edwin Drake struck oil near Titusville, Pennsylvania. Thousands rushed in. Wells came in faster than anyone could find barrels.
By December 1861, crude had fallen to ten cents a barrel. A barrel could cost more than the oil in it.
The money was in kerosene. It lit farm kitchens that once went dark at sundown.
Henry Demarest Lloyd, in 1881:
Henry Demarest Lloyd We use more kerosene lamps than Bibles.
In 1855, sixteen-year-old John D. Rockefeller became a Cleveland bookkeeper.
John D. Rockefeller This was September 26, 1855. I joyfully went to work.
He marked that date every year, more cheerfully than his birthday. He called it Job Day.
In 1863, he invested in a Cleveland oil refinery. By 1870, his Standard Oil Company was the city's biggest.
Oil was chaos: gushers, fires, gluts, and dozens of small refiners undercutting one another. To Rockefeller, that was waste.
In early 1872, Rockefeller joined big refiners in a secret deal with the railroads: the South Improvement Company.
Members got a rebate on their own barrels. And a payment on every barrel their rivals shipped. Forty cents each way, to Cleveland.
When the secret leaked, the oil towns erupted. Three thousand men packed a Titusville opera house. Within weeks, Pennsylvania revoked the company's charter.
One of Titusville's watchers was fourteen: Ida Tarbell, an oil man's daughter. She'll be back. But Rockefeller had already moved on Cleveland.
Two Ways to Own an Industry
1872 / 1896–1899
There are two ways to own an industry. Own every step, from the mine to the customer.
Vertical integration. Own a link, and you keep the middleman's profit. Even Carnegie's ore rode Rockefeller's boats until 1899.
The other way is older. Cleveland, 1872. Own every company doing the same step.
Horizontal integration. Twenty-two of twenty-six rivals, in about six weeks. By 1879, Standard refined about ninety percent of America's oil.
Both ways cut costs. Both ways cut out competitors. Prices fell for families. Two fortunes rose to roughly two hundred million dollars each.
Paper
1872–1906
Not every big invention of the age had gears. Some were made of paper.
Rockefeller hunted waste. Each can took forty drops of solder. Thirty-eight leaked. Thirty-nine held.
John D. Rockefeller That one drop of solder … saved $2,500 the first year.
Standard made its own barrels. It bought pipelines and tank cars. By 1879 it refined about ninety percent of America's oil. Kerosene fell from 26 cents to 5.
In 1881, Chicago journalist Henry Demarest Lloyd made the case against it.
Henry Demarest Lloyd The Standard has done everything with the Pennsylvania legislature, except refine it.
Decades later, Rockefeller answered critics like Lloyd.
John D. Rockefeller The day of combination is here to stay. Individualism has gone, never to return.
State law made it hard for one company to own another. So in 1882, shareholders of Standard and forty others handed their stock to nine trustees.
By 1887, sugar, whiskey and lead had trusts too. In 1889, New Jersey allowed the holding company: one corporation owning others' stock.
J. Pierpont Morgan made nothing at all. He was a banker who rarely explained himself in public.
Henry Clews He has the driving powers of a locomotive.
When Clews asked for Morgan's portrait, Morgan recommended his handsome partner instead.
In 1892, Morgan's bank merged Edison General Electric with its rival, Thomson-Houston. The new name left Edison out: General Electric.
After the Panic of 1893 sank a quarter of the railroads, Morgan's bank reorganized many. His partners sat on the boards of rival lines. By 1906, seven systems ran about two-thirds of the track.
New ledger entries: cheaper kerosene, one drop of solder, rescued railroads. Then rivals' freight payments, that legislature, and trusts built around state law.
Ice, Sugar and Guano
1878–1898
Beef had a distance problem. The cattle were in the West. The customers were in the East.
Railroads hauled the animals alive, nearly a thousand miles, and charged freight on the parts nobody would eat.
Gustavus Swift, a Chicago packer, shipped meat instead: slaughtered in Chicago, chilled in iced cars.
Eastern railroads lived on live cattle and refused him a fair rate. So he shipped through Canada, on the Grand Trunk, which had almost no cattle business to protect.
Local butchers refused his beef. Swift opened his own branch houses, and families bought it because it was cheaper.
By 1899 his cars were rolling billboards. This one advertises breakfast bacon, cured just right.
American business kept going past the water's edge. In the 1870s and 1880s, kerosene exports alone equaled over half of America's oil output.
An 1875 treaty let Hawaii's sugar into the United States duty-free. Castle & Cooke, founded by two missionaries in 1851, was one of five firms that controlled the trade.
The workers came on contracts from China, Japan and Portugal. The land had belonged to Native Hawaiians. What happened to their kingdom is Unit 7's story.
On Navassa, a Caribbean island, a Baltimore company dug guano, hardened bird droppings, for fertilizer. Its workers were about 140 Black men, paid eight dollars a month.
They dug from dawn to dusk under armed white overseers. Men who refused were hung up by their wrists.
September 14, 1889
On September 14, 1889, the workers rose up. Five overseers were killed.
Black Baltimoreans raised money and hired lawyers for the defense. Three men were sentenced to hang.
The Supreme Court ruled that the United States could try crimes on such islands. In May 1891, President Harrison commuted the death sentences.
Harrison's message to Congress quoted a naval board: the discipline maintained on the island seems to be that of a convict establishment without its comforts and cleanliness.
Captains or Robber Barons?
1843–1901
Both names were arguments.
Thomas Carlyle coined 'captains of industry' in 1843. In 1870, the Atlantic Monthly said medieval robber barons were more honest than the new millionaires.
In 1883, the magazine Puck drew four millionaires on money bags, carried by workers. Its readers remembered the railroad strikes of 1877 and knew Gould from the stock pages.
In 1896, the economist Charles Spahr estimated who owned what:
Charles B. Spahr …one per cent of the families hold more than the remaining ninety-nine.
So which were they? The evidence fills both columns. They built a national economy, and made light, steel, kerosene and beef cheap.
They also used secret deals, tariffs and friendly lawmakers to crush rivals. The context: a national market, almost no rules, and governments that helped business and rarely checked it.
Carnegie really was a bobbin boy. Most of the era's business leaders grew up comfortable.
At Braddock, the night shift walks out at dawn. The day shift walks in, for twelve hours. Light got cheap. The people who paid for it are next.