Day 8: The Perils of Capitalism

Focus:   What were the downsides to a rapidly industrializing economy?

Task One: Discuss the first two chapters of How and Economy Grows and Why it Crashes.

1. How can underconsumption and risk lead to an improved quality of life? (Chapter 1: "An Idea Is 

    Born")

2. What is capital? (Chapter 1: "An Idea Is Born")

3. Why are people unlikely to lend without interest payments? (Chapter 2: "Sharing the Wealth")

4. What is the difference between saving and investing? (Chapter 2: "Sharing the Wealth")

5. Do lenders exploit borrowers? (Chapter 2: "Sharing the Wealth")

Task Two: Child Labor
Though children have always participated in economic activity, industrialization, the tumultuous economy, and the influx of poor immigrants at the turn of the century made cheap child labor an institution in all kinds of industries and occupations. Historians estimate that up to 25% of children were employed in manufacturing by 1910. As the Progressive Era dawned, many reformers began addressing the issue.

Reformer Lewis Hine captured thousands of arresting images of child workers in the early 20th century while on behalf of the advocacy group The National Child Labor Committee.
This 1908 report on child labor in New York City tenements illustrates the weakness of the state's child labor restrictions in a system where manufacturers give laborers work to do at home.

Questions to consider:
1. According to the report, how did the home work system conflict with the intent of New York's compulsory education requirements?
2. What, according to the report, are the "evils" of the sweat shop system?
3. What advantages did manufacturers gain by allowing home work?
Citations:  
Link to Report: http://www.tenant.net/Community/LES/kleeck9.html  

Task Three:  The Knights of Labor

As corporations gained more power and specialization and mechanization of labor undermined the status of the skilled laborer, American workers sought to organize themselves into unions that could collectively bargain with employers. The most important of these early labor organizations was the Knights of Labor, founded as a secret organization in 1869. The Knights garnered opposition from the more prevalent craft unions because they included almost anyone from any industry, including African Americans and women. The Knights espoused a utopian vision for the future of the American labor force, in which workers owned the means of production. The Knights also advocated social reforms such as women's suffrage and temperance. Their membership peaked in the mid-1880's. Some historians attribute the organization's decline to the opposition of the union's leading figure, Terrance Powderly, to strikes and the extremely broad goals and membership. Many members deserted the Knights simply because they felt they could get more done in a more narrowly focused, aggressive organization.

The seal of the Knights of Labor carries the motto, "That is the most perfect government in which an injury to one is the concern of all." This image is found below.

Questions to consider:
1. Summarize the goals of the Knights of Labor Organization as presented in their constitution.
2. Contrast the philosophy of the Knights regarding capital and wealth with that of Andrew Carnegie in The Gospel of Wealth.
3. Discuss the differences between craft and industrial unions (see "Some Useful Definitions). Why would craft unions be threatened by more broad-based, industrial unions like the Knights of Labor?

Citations:  
The 1878 Constitution of the Knights of Labor appears at: http://darkwing.uoregon.edu/~dreiling/kolconstit.htm 


Task Three:  The Haymarket Affair
Many labor groups rallied around the idea of an 8-hour workday as they tried to regain control of work. On May 1, 1886, mass strikes and the largest spontaneous labor demonstration in the nation's history occurred in Chicago. Among the 100,000 demonstrators were anarchists that alarmed police. Although the demonstration passed calmly, violence ensued two days later when police shot and killed 2 unionists demonstrating against "scabs" at McCormick Reaper Works. The next day, a bomb exploded at Haymarket Square as police tried to break up a demonstration against the shooting of the unionists. Mass arrests of radicals followed and 8 anarchists were convicted of the bombing under somewhat questionable circumstances. The Haymarket affair renewed fears of radicalism and led some employers to develop blacklists of unionists and strengthen their resolve against strikers' demands. The incidents also precipitated the decline of the Knights of Labor, whose disillusioned members defected as anti-labor sentiment swelled.

This detailed chronology of the Haymarket Affair and Trials appears below.

The colorful account of the violence at McCormick Reaper Works cast the demonstrators as drunken anarchists is provided below.

This version of the "Attention Workingmen!" announcement was used by the prosecution in the subsequent trial. The circled inflammatory line was cut from the final version of the flyer, but not before a few hundred of the original went into circulation.

The following circular was distributed by anarchists on the night of May 3rd in response to the killing of workers at the McCormick Reapers Works by police.

In "Effect of the Haymarket Bombing on the Knights of Labor," labor organizer Oscar Ameringer describes his naivete as a young man in the midst of the heated demonstrations.

Questions to consider:
1. What does the Haymarket Affair demonstrate about the anxieties of workers? What effect do you think this incident had on labor-management relations?
2. After the Haymarket Affair, how do you think citizens and law enforcement reacted against radicals and labor?
Citations:   
Link to Haymarket Chronicles: http://www.law.umkc.edu/faculty/projects/ftrials/haymarket/haymarketchrono.html
"Bloodshed in Chicago" Document: http://www.law.umkc.edu/faculty/projects/ftrials/haymarket/news5-4.html
Link to Flyer One: http://www.law.umkc.edu/faculty/projects/ftrials/haymarket/attention.html
Link to Circular: http://www.law.umkc.edu/faculty/projects/ftrials/haymarket/attention.html
Link to "Effect of the Haymarket Bombing on the Knights of Labor": http://historymatters.gmu.edu/d/98/