Aug 26, 2007

History 1890-1915

From the middle 1890s to the early 1900s the melting pot of America was wincing under its huge infrastructure investments and was suffering the pains of a new frontier -an industrial economy. Shrewd but well positioned businessmen exploited the opportunity, masses of immigrants came from foreign and the farm lands converging for their opportunity. The supply on either side was great, but the demands, were greater.

In August I traveled to the San Juan Islands on the Washington coast. After two days by car and boat we landed at Rosario Resort, the early 1900’s home of ship builder Robert Moran (1863-1943). Built between 1906 and1909, Rosario Resort is a mansion of concrete and steel in the style of a nautical fortress.

Moran has a common middle class “rags to riches” story. One of eight siblings, Robert started in New York as a young machinist like his father, and then left the east coast in 1875 for Seattle. Arriving to a laborer’s job, he eventually found work as a ship’s engineer; his two brothers followed and together brought his mother and remaining five siblings.

Robert, Edward and Peter Moran established Moran Bros. Marine and Sawmill Machinery Co. in 1882 and renamed it The Moran Bros. Co. in 1890, a ship and engine business . By 1902 Moran Bros. Co. had evolved into a ship building empire and employed 1000 workers. . The Moran Brothers Company was the biggest employer in Seattle at that time. Just 27 years from landing in Seattle with 10 cents in his pocket, Robert Moran had founded a ship building business, been twice elected mayor of Seattle (one year terms), and awarded Navy contracts leading to his company building the Battleship USS Nebraska. 2

Concerning graft and aggressive business tactics, it should be noted that Navy contracts were repeatedly awarded to Moran’s company with the influence of friend Senator Watson Squire. However it would be unfair to assume unprincipled actions. While the details, if any, of the relationship or arrangement made with the Senator are unknown. Moran greatly profited from their friendship. However, supplying the Alaska Gold Rush shipping fleet, a reputation for hard work, low steel prices, and the substantial support of his brothers were more likely instrumental in his success. He had been in the right place at the right time.

At the peak of his career, Moran sold the company at forty-two years old, retired on the advice of his physician due to life threatening stress (and a life expectancy of six months). Moran purchased a parcel of land on Orcas Island in the San Juan chain and built his Rosario retreat. Ironically, he lived another 44 years and died at 86.

Moran’s is a story indicative of many people during his time. Although history seems to focus on the highest and most prolific characters, many similar stories of a lesser extreme, like Moran’s, are mostly known regionally and have their historical place in states, cities and counties. From 1860 to 1890 manufacturing replaced agriculture as the leading source of economic growth. Railroads, steel mills, mines and oil companies needed expansive infrastructures to transport, process the natural resources being extracted and then deliver raw materials or finished goods to other industries. For these large projects, modern technologies and machines were unavailable or yet to be invented. However, muscle and sweat was in good supply from immigrants and a growing urban population. Masses of unskilled immigrant laborers were eager for jobs. Soon that eagerness and labor supply was clouded by insufficient pay and dangerous working conditions. All this while so called business moguls, robber barons and tycoons of the “ Gilded Age” (1878-1889) were criticized for their lavish living as the masses suffered a meager existence. The conflict between business, labor interests and burgeoning economic development had begun.

Workers attempting to organize to improve their working conditions and wages faced many challenges. Illiteracy, language barriers and cultural suspicions kept the underemployed hordes from organizing with any momentum. Add to this collusion between elected officials and large employers; the collective protests were met with sanctioned violence and the hiring of replacement workers. With economic depressions in 1873 to 1879 and 1893 to 1897, scrambling employers and employees reorganized the work force and, as a result, deflating the labor movement’s fledgling membership.

The great demand for labor included minor children, which was a common practice carried over from agriculture; it had become accepted practice in manufacturing with the lowest wages paid to this sector of the workforce. Child labor used in factories, canneries and mines, with children as young as six years old saw a massive increase from 1840 to 1870. In 1907, Congress chartered the National Child labor committee to investigate child labor practices. It was not until 1938 that Congress passed the Fair Labor Standards Act regulating some aspects of child labor. However, even this legislation failed to carry an age minimum.

With little government regulation, businesses were as much at odds with each other as with their workforce. The industrial revolution and its converging elements of oil, hardened steel and venture capitalists made for great opportunity and corresponding risk. For example, the rise of Standard Oil and its associated combination companies made deals forcing railroads to make rate concessions and rebate payments. Before the Sherman Anti-Trust legislation of 1890 and the National Conference of Commissioners on Uniform State Laws (NCUSL) of 1892 (Uniform Commercial Code), predatory deals were devised as a modern business practice. It was an unregulated environment with new ideas and never before seen schemes to defeat, if not consume, the competition.
Without government oversight and regulation, the “rules of the game” came from within the industries in forms of efficiency, accounting practices and creative management. A short list of these is:
· Temporarily undercutting the prices of competitors until they either went out of business or sold out.
· Buying up the components in order to prevent competitors from getting their needed materials.
· Using clout to negotiate an alliance with railroads that gave secret rebates.
· Secretly buying up or creating new companies that appeared to be independent operators.
· Dispatching thugs who used threats and physical violence.
With the exception of threats and violence many of these listed tactics are prominent in today’s business climate.

Fortunes were won and lost during this formative period, the standard of living rose and fell, but the infrastructure of a nation was inevitably secured. Perhaps with the longer-term benefits in mind, this period is another where we should thank the laborers and craftsmen for enduring their hardship. As for the “robber barons”, they too brought this nation steaming into the 20th Century and while more consideration for the working class would have been appreciated, it was a harsh environment for entrepreneurs also. We cannot base our judgments by today’s standards since the business environment in the late 1800s was ruthless and unforgiving to say the least. As we focus on the easy marks, let us not forget Andrew Carnegie, Carnegie Steel, and the Carnegie Libraries. Between 1883 and 1929 Andrew Carnegie built 1689 public libraries across the nation and more than 2000 across the world. Many are still in use servicing the descendents of those who worked in his steel mills.
Standard Oil’s John D. Rockefeller noted to be a cruel and calculating bully, rightfully accused of numerous business indiscretions, also spent his later years in philanthropy, retiring in 1910 to devote his time to charitable causes. (It was 1911 that the Supreme Court ruled his company was a monopoly to be broken up into 38 separate companies. ) In stark contrast to his early years Rockefeller donated nearly $500,000 to support and start organizations and institutions, the University of Chicago for one. (Many others bear his name. The Rockefeller Institute for Medical Research, the Rockefeller Sanitary Commission and The Rockefeller Foundation)

Philanthropic action does little to right the deeds against the victims of larcenous activities and decades of abuse. Perhaps a conscience showed up in later years in these men as a result of deep reflection or persuasion, we see the deeds of a only few pinnacle tycoons of the gilded age, however we must remember that they were assisted by a cascade of like-minded individuals who also benefited. With each generation benefiting from the labor and capital investments of the previous generation, gradually times changed. Market forces came into balance, government began supporting and protecting workers, and the standard of living began to improve across the country.

References:
Sophie Frye, Museum of History & Industry, Bass Library
Rosario Resort.com
The American People, Nash Jeffery
iii The American People, Nash Jeffery
Jayashree Pakhare; History of Child Labor
Madaras and SoRelle, Taking Sides, American History Vol.2, Issue 1,
Cornell Law Library http://www.law.cornell.edu/ucc/uniform.html
Ida M. Tarbell, The History of the Standard Oil Company
Theodore Jones (1997). Carnegie Libraries Across America: A Public Legacy.

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