On the Need for Regulations on Capitalism

Terrible Things Happen When Capitalism is Not Regulated, as Witnessed During the Late 19th and early 20th Centuries

After the Civil War, the corporation increasingly became the basic unit of business organization. The goal of a corporation was to create a monopoly in a particular industry, ridding themselves of competition and allowing them to make ever greater profits at the expense of everyone else.1 There were benefits to central control over a particular industry– it enabled standards of quality and manufacture to be set, and stabilized the market by controlling the price and supply of goods manufactured.2 Industry grew increasingly political, recognizing the power that they held. Lobbyists in 1864 succeeded in convincing Congress to pass a law permitting the advance of passage money to prospective immigrants in exchange for a portion of their wages upon arrival. The American Emigrant Company was born, financed by the business community and supported by a Chief Justice, a senator, and the Secretary of the Navy. The American Emigrant Company sent recruiters to Europe to recruit skilled workers to emigrate as contract-labour. It was effectively an anti-labour company, as one labour convention noted: “These men, when they arrive, as a general rule, have but little money; consequently they are compelled to work at starvation prices… We stand no chance of competing with these men.” Though immigration had slowed during the Civil War, the flow slowly increased to a flood by the 1880s, with nearly half a million European immigrants entering the country in 1880 alone. Contract labour did not have a significant effect on midwest and east coast factories, but it did cause competition in certain skilled trades such as flint glass, and brought large numbers of East Asians to the west coast to work on the railways and in construction and other trades.3 When Congress banned Chinese immigrants, west coast employers turned to Japan and the Philippines as sources of labour. American society as a whole had a difficult time adjusting to the influx– while the Irish and German immigrants of the 1840s had increasingly become American in most ways, the newcomers of the 1880s came largely from Southern and Eastern Europe, and included not only Catholics (who were still frequently seen as suspect and exotic) but also large numbers of Jews, who were not Christian at all and had absolutely no interest in becoming so.4 Language and cultural barriers, plus the animosity born of competition, kept workers from organizing across ethnic divisions.

Ruthless business leaders were thus able to accumulate a concentration of wealth never before seen in the US, enough to gamble on new ventures by providing capital. Railroads were one such venture, and a particularly risky one at first. Though built by private companies– the California-based Central Pacific Railroad and the Nebraska-based Union Pacific Railroad– the Union and Central Pacific Railroad was federally subsidized through a combination of government contracts, federal loans and bonuses, right to land-sale along the route, and sale of stock to private investors. The government promised to provide $16,000 per mile of flat track, $48,000 per mile of mountainous track, and $32,000 per mile of other track.5 Another rush of railroad-building in the 1880s rush was funded by Eastern investment bankers, emboldened by the success of the Union and Central Pacific.6 The government, complacent in its faith in laissez faire capitalism, allowed the free market to regulate itself without interference.

An immediate result of the growth in railroad infrastructure was an increased demand for coal and timber. One fifth to one half of timber production between 1870 and 1900 was purchased by railroad companies for ties, bridges, stations, and fences. Coal-mining increased, transportation time and shipping costs went down.7 Coal-mining was dangerous work, with a high risk of explosions and cave-ins. Long-term exposure to coal dust caused lung disease. 1890 saw nearly 500,000 people working in coal mines, many of them children and recent immigrants. Boys up to age 12 worked as “breakers”, separating the coal from the rock that was brought up, mostly slate. During the 1890s, between 2,000 and 3,000 people per year died working in mines.8 It also, frequently, didn’t pay. At the end of the 1880s, supporting a family of five in a mid-sized industrial town could be expected to cost around $500 per year.9 Skilled workers such as glass blowers and iron-workers, around 15% of the work-force, made $800-1,100 per year, enough for the basics, some extras, and some to put away in savings. Less-skilled workers such as carpenters and machinists, were able to make the bare minimum. A good 40% of the workforce, however, was unable to earn even $500 per year, lived in crowded and unsanitary conditions, and were forced to rely on their children’s income to bridge the gap. A minimum age of twelve years old was set for mill-work in Pennsylvania in 1848, though it was poorly enforced. Most child labour opposition was due to it interfering with education, seen as necessary for citizenship.10 Immigrant children frequently worked alongside their parents in factories and sweatshops. In the South, mill owners replaced enslaved labour with child labour. 25,000 children aged 15 and under were found to be working in southern factories in 1900. In many factory towns, companies paid their employees in company scrip instead of cash, which forced them to buy groceries and supplies from the price-controlled company store rather than elsewhere. Company housing would deduce rent and utilities from employees’ pay. Many workers thus found themselves in debt to their employer at the end of the year. Ten percent of the workforce at the end of the 1880s were destitute, with many turning to begging and crime.11

The first industry to develop factory mass production had been the New England textile industry. Under the Lowell system, young women workers were housed in company-managed dormitories, and were paid roughly $3.25 per week in the mid-1830s. Charges that the crowded dormitories were leading to illness and “debauchery” led to an investigation by the Massachusetts legislature, which found the dormitories to be safe and clean and the workers healthy, though the women, most of them from farming families, complained that they had little opportunity for exercise while going between looms. The Fall River system, in contrast, did not provide housing, and entire families were hired under a set rate paid to the husband, with more money paid for bigger families. Wages were lower, ranging from 33 cents to a few dollars per week. The Fall River system was more likely to give rise to factory villages, which tended to be poverty-stricken and unhealthy, and the work itself regularly included sixteen hour days and corporal punishment.12 Regardless of the system of management, textile mills were noisy, stressful, and dangerous places to work.13

Mass-production eliminated the need for many skills, putting craftsmen at risk of unemployment and frequently forcing them to take on factory jobs where their skills were not necessary. An 1885 survey in Topeka, Kansas found that one-fifth of all workers skilled and unskilled were unemployed for at least part of the year due to market shifts. Improvements in technology also reduced the demand for labour. Spinning and weaving mills required only one-tenth the number of workers they had earlier in the century, flour mills one-fourth.14

Sweatshops were a common source of cheap labour. Largely paid by the piece rather than by the day or by the hour, entire families would crowd into run-down buildings or work in their tenement homes, making clothing, jewelry, and artificial flowers. Wages were dismal, sanitation nonexistent. Some sweatshop work was food preparation such as shelling nuts, commonly with the teeth since metal picks were more likely to break the nuts and make them unsalable.15 A Miss Watson of the National Child Labour Committee in 1912 reported that men, women, and children receiving treatment at a tuberculosis clinic were at work shelling nuts for a processor while ill.16 Workers in textile factories were at risk for lung disease from the damp lint-filled air. Accidents were frequent due to a lack of safety features on factory machinery, and exposure to toxic chemicals was common. Garment factories frequently locked seamstresses in during their shifts as standard procedure. This standard practice was to prove tragic at the Triangle Shirtwaist Company in NYC when a fire broke out on the afternoon of March 25, 1911. Though there was no damage to the structure, 146 workers, mostly young immigrant women, died in the space of a few hours, either from the fire itself or from jumping out the 8th story window when the fire escape proved damaged due to lack of maintenance. My grandmother told me how her mother, then a teenager recently arrived from Ukraine, had been one of the many young women who lived in the neighbourhood and worked at the factory, often with their mothers, grandmothers, and young children. She had been given Saturdays off as a reward for being a quick worker, and was to carry the pain of loss and guilt for the rest of her life. Like many survivors, Pauline Schaefer joined the International Ladies’ Garment Workers Union to protest the conditions that had led to the deaths of her friends and neighbours. In a larger sense, the public nature of the horrors of the Triangle Shirtwaist Fire (it being a Saturday and fine weather meant there were crowds of people out on the street to witness the workers burning alive in windows or plummeting to their deaths on the pavement) were to bring home to the general public the need for regulation of factories and working conditions.

As early as 1866, the Working Man’s Advocate of Chicago declared that the concept of a self-made man was disappearing along with individual workers’ chances at becoming entrepreneurs: “The hope that the workingmen may enter this circle is a glittering delusion held up before him to distract his attention from the real object of his interests.”17 Where previously workers had been able to use their skills as a bargaining chip with employers who were not so far removed from themselves, the new system of unskilled labour necessitated organization. While industry and the nation grew wealthy and living standards improved as a whole, the percentage of the nation living day-to-day in poverty-stricken slums grew as well, with many workers unable to afford the very comforts and conveniences that their work provided to the rest of the country.

The Knights of Labour was formed in 1869 as a secret society, going public in 1881. It differed from earlier trade unions in that it accepted those of any trade apart from bankers, lawyers, professional gamblers, and those who sold liquor, and allowed both women and blacks. An international organization, the mixed assemblies in the US totalled roughly 15,000 between 1869 and 1895, and included important reform leaders such as Susan B Anthony, Elizabeth Cady Stanton, and Frances Willard. Their goals were both immediate and long-term– an eight hour workday, equal wages for women, and an end to child labour, with the ultimate goal being the end of capitalism and the establishment of a system that put a high value on labour and workers. The Knights of Labour preferred to educate the public and campaign for public opinion rather than rely on strikes and violence, though they did authorize strikes as a last resort.18 Unions had gotten a bad reputation as a result of widespread strike violence in the 1870s. The Molly Maguires were a secret society among the anthracite coal miners in Eastern Pennsylvania who struck first in 1870 and again in 1871 to protest wage cuts. When they went on strike again in January of 1875, they were accused of destroying mine property, derailing coal cars, terrorizing foremen and superintendents, chasing the Italian immigrants brought in as strikebreakers away from the mines, sniping at officials, and killing sixteen people. Called the Long Strike, the miners were able to hold out until May when sympathetic shop owners stopped extending credit for groceries. Meanwhile, Pinkerton detective James McParlan had been hired by the owner of the mine to infiltrate the Mollies and bring them down on criminal charges. Ten Mollies hanged for murder, others jailterms from two to seven years, 24 convictions based on McParlan’s sometimes questionable testimony.19 Ironworker strikes in Pittsburgh saw ironworkers and other labourers fight off federal troops sent from Philadelphia to take control of the city. Other strikes caused a general halting of industrial production in various towns in Ohio and Indiana. When workers in St Louis caused industry to grind to a halt, city officials left town in fear. Most strikes ended in defeat, however.

Dubofsky, Melvyn and Foster Rhea Dulles. Labor in America: A history. Wheeling, Illinois: Harlan Davidson, Inc. 1999.

Reel, Catherine.Working in America: an Eyewitness History. New York: Facts on File, Inc. 2000.

1Melvyn Dubofsky, Labor in America: a History, 87-88.

2Catherine Reel, Working in America, 113.

3Dubofsky, Labor in America, 89.

4Dubofsky, Labor in America, 90.

5Reel, Working in America, 70.

6Reel, Working in America, 70.

7Reel, Working in America, 76.

8Reel, Working in America, 89-90.

9Reel, Working in America, 116.

10Reel, Working in America, 52.

11Reel, Working in America, 117.

12Reel, Working in America, 51.

13Reel, Working in America, 64.

14Reel, Working in America, 117.

15Reel, Working in America, 118.

16Reel, Working in America, 129.

17Dubofsky, Labor in America, 90.

18Reel, Working in America, 137-38.

19Reel, Working in America, 138.


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