Strikes convulsed towns and cities across Pennsylvania. In Baltimore, the militia fired into a crowd of striking workers, killing eleven and wounding many more. The governor of Maryland deployed the state’s militia. Many striking workers destroyed rail property rather than allow militias to reopen the rails. When local police forces would not or could not suppress the strikes, governors called on state militias or even federal troops to break them and restore rail service. Panicked business leaders and their political allies reacted quickly. Louis, shutting down railroad traffic-the nation’s economic lifeblood-across the country. Rail lines slashed wages although, workers complained, they continued to reap enormous government subsidies and pay shareholders lucrative stock dividends. ![]() The United States government’s decision to stop coining silver dollars in 1873 and return to the gold standard in 1875 exacerbated the financial distress, and lower wages and deflation led to labor disputes like the Great Railroad Strike of 1877. The Panic began with the failure of the largest bank in America, owned by railroad speculator Jay Cooke. The speculative bubble created by railroad financing burst in the Panic of 1873, which began a period called the Long Depression that lasted until nearly the end of the century and before the Great Depression of the 1930s was known simply as “The Depression”. Note time zones, introduced in 1883 to standardize rail scheduling and American commerce. Railroad map of the United States, showing the through lines of communication from the Atlantic to the Pacific, and steamship lines along the seaboard, in 1886. Politicians and railroad executives watch the driving of the “Last Spike” at Promontory Summit, Utah, on May 10, 1869, joining the rails of the Central Pacific Railroad and the Union Pacific Railroad. But neither government nor big business were able to tame the boom-and-bust business cycles that continued to plague the American economy. ![]() Federal control and concentrated economic power seemed to promise a new era of rational economic management for the newly reunified, continental nation. And government spending and tax policy during and after the war helped create new industries such as Standard Oil, which benefited from a prohibitive tax that made grain alcohol uncompetitive with kerosene as a fuel. ![]() Its elimination of state banking in favor of a system of national banks consolidated credit in eastern financial centers, primarily in New York City. The Lincoln administration’s Pacific Railroad Act created a new transcontinental rail industry. Financial InstabilityĪlthough the Civil War was about slavery and not states’ rights, as many revisionists have claimed, it is true that the war and its aftermath catalyzed a widespread increase in federal power at the expense of state and local control. An audio podcast version of this chapter is available here to listen along while reading or download. There will be questions along the way to verify you’re getting the main ideas and to suggest points you may want to consider for discussion and exams. In this chapter we will focus on the changing American economy in the period between the end or Reconstruction in 1876 and the First World War, and how people responded to this challenge. Army soldiers firing on strikers during the Great Railroad Strike of 1877
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