Topics in the News
Big Business: The Modern Corporation
In the early 1910s the United States remained relatively isolated and in the midst of a recession. The majority of Americans still lived in rural areas, and many worked for themselves or in small enterprises. The world of big business, revolving around trusts and holding companies, seemed far removed from the average citizen, but large conglomerates controlled railroads, banks, insurance companies, steel, meatpacking, and oil refining. Despite the federal government's antitrust laws and attempts at regulating large corporations, the government played a relatively small role in the economy.
The rise of big business and the triumph of industrial civilization changed the country economically and socially. The United States used its vast resources and technical expertise to become a dominant power in this age. Officials in both business and government realized that to advance their related interests, the ties between corporations and government had to be strengthened and institutionalized. Without great economic power the United States would falter, and this power was increasingly concentrated in the hands of large corporations. In 1913 the country was the leading debtor in the world, but by 1917 it had become the largest creditor. The partnership between large corporations and the federal government served an...
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Creating the Federal Reserve System
The fulfillment of many progressive reform goals came after the Democratic Party won both the presidential and congressional elections of 1912, President Woodrow Wilson's "New Freedom" agenda included provisions designed to reshape the nation's financial system, which had long been characterized by instability and occasional chaos, and the government's fiscal policies as well. Wilson immediately began to implement his domestic program by calling a special session of Congress to address the tariff. After successfully rallying the legislature and the public, Wilson signed the Underwood Tariff Act on 3 October 1913, reducing tariffs and opening trade. Tariff reform, however, was only one part of Wilson's overall plan. The president then turned his attention to the nation's banking system, whose structure had not been altered since the Civil War.
Federal Reserve System.
The Federal Reserve Act, signed into law on 23 December 1913, established twelve regional Federal Reserve banks, which held the reserves of member banks throughout the country. The Federal Reserve Board (FRB) oversaw the entire system. The
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Economic Diplomacy in the 1910s
The New Internationalism.
By 1910 the traditional American policies of isolationism and noninterference in foreign affairs had clearly ended. The United States protected the Philippines and warded off Japanese aggressions in China, tried to mediate old-world rivalries in Europe, and asserted military and economic dominance in the Caribbean. William Howard Taft and Woodrow Wilson each placed his individual stamp on world affairs, but both operated within the broad policy outlines established by Theodore Roosevelt.
President Taft and his secretary of state, Philander C. Knox, tried to overturn many of Roosevelt's diplomatic policies. They abandoned Europe and did not actively pursue goodwill with Japan, but the administration could not reverse Roosevelt's most lasting policy—protecting American interests in the Caribbean. Taft and Knox went beyond the former president's intervention and devised their own strategy called "dollar diplomacy." Dollar diplomacy involved using private American banking resources to displace European creditors and strengthen American influence. When Nicaraguan dictator José Zelaya threatened to take over American mining concessions and made overtures to Japan regarding an alternative to the Panama Canal, the American government helped to overthrow him and install a pro-American president,...
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The Five-Dollar Day
In 1903 Henry Ford, who had started out in his career as a skilled mechanic, founded the Ford Motor Company, and in 1908 he introduced the Model T automobile. From 1910 to 1914 Ford developed the idea of mass production and made the assembly line the symbol of the automobile age. By 1914, six hundred cars a day were rolling off Ford's assembly line, and 90 percent of them were shipped immediately to dealers. Spurred on by the technological superiority of the Highland Park factory, the Ford Motor Company was a remarkable industrial and financial success. The company's net income soared from $25 million in 1914 to $78 million in 1921. Ford was an early exponent of the move toward scientific management, and his company succeeded in part by embracing modern management practices. Ford and his managers experimented with scientific management, worker welfare, and personnel management in an attempt to maximize production. They thought that increased social controls over workers would increase profits. The conscious control of labor and labor processes was an essential feature of Ford's new industrial technology and established practices that other firms would emulate.
The Ford Motor Company created the most sophisticated and efficient industrial technology of the period, but there were serious social...
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Labor in the 1910s
Servant to the Machine.
In the early years of the twentieth century, American industrial workers were confronted with incredible technological advances. The autonomous craftsmen of earlier times were replaced by less-skilled workers who depended on advanced machinery to increase productivity. The assembly line, coupled with the time-motion studies of efficiency experts, allowed manufacturers to increase production by subdividing tasks and making work as mindless, repetitive, and routine as possible. The machinery provided the skill in the new system, not the worker. Henry Ford's rentroduction of the Model T in 1913 remains the shining example of this movement toward greater industrial efficiency. In this era the worker became the servant of the machine that performed the actual work. The American worker was dehumanized in the process and exerted little control over his job. The employee simply carried out the simple, yet endless, tasks assigned to his particular station on the line. In the words of labor historian David Brody, "The workplace dwarfed the workingman." Workers turned to unions in an attempt to regain some of the humanity that modern machinery threatened to destroy.
Unions Shaped Workers' Lives.
People joined unions for a variety of reasons in the 1910s. Many expected economic gain through collective action, while others...
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The New Freedom and the Trusts
In 1913 Woodrow Wilson came to office in the midst of the Progressive Era, a time in which a general liberal spirit swept through the nation. Both parties felt a renewed sense of social responsibility and a need for the government to address the problems of industrialization and urban growth. The period facing Wilson was tumultuous, as he had to deal with the trusts, labor disturbances, and the arrival of more than twelve million immigrants since 1900. The election of 1912, furthermore, was a bitter contest pitting these forces against one another. Once elected, President Wilson initiated his "New Freedom" legislation and steered the country along with policies influenced by the reform movement. He exercised a charismatic and principled leadership, often guiding the nation down a middle path that carefully balanced government intervention with controlled reform.
Reform Crawls Forward.
Reform came slowly in anti-trust legislation because of political cowardice and in-fighting that allowed a small but vocal minority of conservative Republicans to dominate the issue. These critics had courage in their convictions and stymied the majority in Congress that actually favored reform. President Wilson, on the other hand, pressed for legislation that would improve workers' lives, improve working and living conditions, and...
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Organized Labor and the Wilson Administration
The second decade of the twentieth century was a tumultuous time for organized labor. The labor issue frequently divided American society because trade unionism challenged the dominance of traditional economic and political institutions in the nation. Also, the unions contained numerous radical and socialist elements that frightened business owners and a sometimes timid middle class. Big business never willingly conceded to the demands of unions because the companies had consolidated their power under conservative principles, and unionism in any form threatened those values. Unions, however, were growing in the 1910s, and as the industrial conflict intensified, the battles spread into the larger national arena. Organized labor gained an avenue into nationwide political participation, thus forcing candidates at all levels to recognize their existence. Woodrow Wilson initially distrusted union activity but later became one of the first presidents to court the vote of labor actively. When they backed his candidacy he reciprocated by giving union leaders a voice in national labor policy. Because of political restraints, however, Wilson eventually rescinded his support. The relationship between the president and organized labor began on rocky ground, then blossomed into a close bond, and later fell apart. The interaction between Wilson and the labor movement broke important ground...
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Postwar Labor Distress
The end of World War I meant many things to different groups within American society. Some eagerly anticipated the return of loved ones from the European front, while others simply rejoiced in the nation's victory in "the war for democracy." Organized labor looked to the future with a great deal of optimism. Federal wartime labor policies allowed the labor movement to achieve tremendous gains. Labor leaders thought that the vast increase in union membership, more than five million members in 1920, as well as labor's growing influence on federal policy, meant the beginning of a better day for American workers. Unions sought to solidify and extend wartime gains but were met head-on by businessmen and employers who had a completely different agenda. They sought to roll back the gains and return to the prewar status quo. The resulting clash between labor and capital led to violence and bloodshed that repulsed the American public and renewed the traditional battle between employers and employees.
Corporations Gain Advantage.
The scales tipped back in favor of big business after the war. The Republican Party won control of Congress in the 1918 midterm elections and brought with it a new antiunion mandate that threatened labor. The Wilson administration was forced to moderate Wilson's own prolabor stance in hopes of placating...
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The Retail Industry
The United States was the first country in the world to have an economy devoted to mass production. It was also the first to create advertising and marketing industries, in order to market and sell mass-produced goods. The most prominent symbol of the new consumerism was the department store. Although the department store existed in the nineteenth century, the early decades of the twentieth century witnessed a phenomenal growth in the retail industry that mirrored the trends shaping more-traditional manufacturing industries. The myth of America as the "land of plenty" captured the imagination of people as the economy produced a dazzling array of new consumer products each year. Consumption was everywhere touted as a means to reach personal satisfaction. Millions of dollars were being spent to institutionalize consumerism through advertising and public relations, indoctrinating the idea in the minds of citizens hungry for goods.
Impact on Culture.
In 1910 John Wanamaker opened a twelve-story department store in the heart of Philadelphia. It was the most monumental commercial structure in the world and served as a fitting headquarters for the leading merchant in the United States and one who revolutionized the retail business. Even Wanamaker, how-ever, probably did not realize the lasting impact that he and his fellow retail...
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Seamstresses and Strikes: Women Organizers and the Garment Industry
In 1914 Samuel Gompers, president of the American Federation of Labor (AFL), expressed his regret that women had not joined men in a concerted effort to improve standards in the nation's factories. Gompers's observation, however, was at least partially based in his own bias against women factory workers. If he had looked more closely he would have seen that women were taking important steps toward unionization. Militant women garment workers entered the labor movement in large numbers as organizers, picketers, and negotiators in the 1910s. These brave women willingly met the threats a strike imposed on their livelihood and faced the reality of social ostracism because striking violated the norms of respectability and femininity. Women organizers had to deal with problems that male union organizers did not understand or would not acknowledge.
Near the end of the decade the International Ladies' Garment Workers' Union (ILGWU) had eighty-two thousand members and was one of the five largest AFL affiliates. Women comprised more than half of the membership list. This was a remarkable figure considering men did not really want to include women in unions. Male members were intent on monopolizing the industry's best jobs and viewed women as competitors for those jobs. It was a grudging acceptance, at best,...
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Taxation, Tariffs, and the National Economy
Few issues were discussed, dissected, or dramatized in the Progressive Era more than taxation and tariffs. The questions surrounding taxes and tariffs were highly charged politically and divided people along class, sectional, and partisan lines. The tariff debate enabled insurgent Democrats to rise up and capture the House of Representatives in the 1910 midterm election. After 1910 many Republicans then crossed to vote with the Democrats on several issues. The coalition helped generate a groundswell of support at the state level for the Sixteenth Amendment to the Constitution, which established a federal income tax. The new graduated tax on personal incomes provided the federal government with new income to replace the money it had lost by reducing the tariff on goods. The tariff and taxes on consumption generated most of the revenue for the federal government in the early 1910s, but the income tax amendment began revolutionary changes in federal fiscal policy, especially with the expansion of government during World War I.
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The War Industries Board
One of the goals of the progressive movement was to create an administrative state capable of regulating business and industry and controlling the business cycles that pitched the country into recessions or depressions with unsettling regularity. But it took a world war to make this goal even a temporary reality. One of the earliest and most ambitious attempts to create an institutional order was the War Industries Board (WIB). The WIB, created in July 1917, was established to mobilize the nation's resources for war while protecting the economy's basic structure and character for the peace that was to follow. The WIB continues to spark debate among historians and economists as a model of the proper relationship between government and the economy. It often elicited both extravagant hopes and exaggerated fears during the war even though it had little formal authority. Social and economic functions that had traditionally been left to private control were suddenly taken up by the government. But fears that the WIB represented a frightening usurpation of private functions by a government bureaucracy proved to be unfounded.
The Wilson administration realized that the military bureaus were too fragmented to achieve the type of coordination required to mobilize the country for war. Congress, in its preparedness...
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World War I and the Economy
Mobilizing the Economy.
The United States officially participated in World War I for only nineteen months, but the war had a tremendous impact on domestic America. President Wilson declared that belligerency would require "the organization and mobilization of all the material resources of the country." Indeed, the government worked hard to get both the hearts and minds of the American public behind the war effort.
Benefits of Belligerency.
The United States sent a much-needed influx of men and materiel to Europe and insured the defeat of the Central Powers. The war initially cost the U.S. government about $33 billion plus interest, and veterans' benefits would later bring the total to $112 billion. However, this figure hides the great profitability of the war for the nation. Instead of hurting the domestic economy, the war effort strengthened and improved America's competitive position in the world. Farmers enjoyed boom years as agricultural prices rose and the international market for their products expanded. Farmers also used new technological advances that helped them modernize. Real wages for blue-collar workers increased modestly, and all sectors profited from the war. Wartime demands for industrial products raised profits for many companies. The DuPont Company's stock multiplied by 1,600 percent between 1914 and 1918, and DuPont...
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Baruch, Bernard M. 1870-1965
FINANCIER, CHAIRMAN OF THE WAR INDUSTRIES BOARD
Image Pop-UpThe members of the 1917 War Industries Board include: (standing) Adm. F. F. Fletcher, Hugh Frayne, Col. Palmer E. Pierce, H. P. Ingels; (seated) Daniel Willard, Robert S. Brookings, Robert S. Lovett, and Bernard M. Baruch.
Bernard M. Baruch began his career as a Wall Street gambler and evolved into one of the nation's most respected elder statesmen. His skill at predicting stock market fluctuations made him untold millions, but he transcended the financial world using his money and personality to gain political favor with a string of presidents. At the end of his career Baruch gained notoriety for setting up his "office" on a park bench in Lafayette Square across the street from the White House. Baruch's political reputation was solidified in the 1910s when President Woodrow Wilson named him chairman of the War Industries Board (WIB). The speculator's skill at organizing and coordinating the nation's businesses for the First World War won him national acclaim. He parlayed the early success into a cherished position among the country's political elite.
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Coffin, Howard E. 1873-1937
Howard Coffin was born on 6 September 1873 in the small town of West Milton, Ohio. He attended the University of Michigan, majoring in mechanical engineering, and used his proximity to Detroit to get involved in the burgeoning auto industry. From 1902 to 1906 Coffin worked for the Olds Motor Works in Detroit and Lansing, advancing to the position of chief engineer. From 1908 to 1910 Coffin was employed by Chalmers Detroit Motor Company where he served as vice president. At the beginning of the new decade Coffin was named vice president at the Hudson Motor Car Company and spent the next twenty years of his career there. While at Hudson, Coffin worked to standardize parts in the auto industry and became the president of the Society of Automobile Engineers. He was one of the earliest proponents of standardization. Coffin's experience in industry prepared him for his work during World War I, where he helped to lead the effort to gear the national economy for war by spreading the gospel of standardization.
Coffin was the most prominent member of a small group of American engineers who pushed for industrial preparedness. Coffin's system centered on gathering data, centralizing administration, and gaining publicity. President Woodrow Wilson appointed Coffin to the Naval...
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Durant, William C. 1861-1947
FOUNDER OF GENERAL MOTORS
William C. "Billy" Durant was not the typical automotive executive of the 1910s—an engineer or designer who liked to tinker with cars. Durant, rather, was a man of big dreams, a master stock market manipulator, charmer, and intense individual. He was a wealthy entrepreneur and salesman who fell in love with a Buick in 1904 and decided that he wanted to become a car baron. Fortunately, he had the initiative and access to money to pursue his dream. Durant wanted to create a group of independent car companies that cooperated with one another and could take control of the industry, following the pattern of consolidation in railroads and banking. Durant's greatest trait was as an empire builder. If he did not have the resources to achieve his goals, he would engage the imaginations of others who were powerful and wealthy.
On 16 September 1908 Durant incorporated General Motors (GM) with only $2,000. He then quickly used the profits from GM to acquire Buick, Oldsmobile, Cadillac, and Oakland (later renamed Pontiac). His...
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Gilbreth, Frank B. 1868-1924
PIONEER OF SCIENTIFIC MANAGEMENT
Frank B. Gilbreth put the "scientific" in Frederick W. Taylor's theories of scientific management in the 1910s. Gilbreth began as a Taylor disciple, but after Taylor died he took up the mantle as one of the leaders in the growing field of industrial engineering. Gilbreth, born in the small town of Fairfield, Maine, in 1868, used his background in bricklaying, a flair for inventions, and a businessman's savvy to build a national reputation and gain the public's acceptance of his work. Gilbreath pioneered the effort to eliminate wasted movements from factory work by studying a worker's movements with special machinery and using the information gained to devise the most efficient means to do the job. Gilbreth advanced the notion that industrial organizations should be built on interchangeable parts and speed work. He developed his ideas independently of Taylor (in part through his experience in construction), but Taylor's methods had a tremendous impact on him. Gilbreth believed that Taylor was the greatest man he had ever met and said that scientific management was the most important thing that had happened in his life.
Gilbreth married Lillian Moller, who held a Ph.D. from Brown University, in 1904, and they began a journey together that Lillian...
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Gompers, Samuel 1850-1924
PRESIDENT OF THE AMERICAN FEDERATION OF LABOR
Samuel Gompers was the most important labor leader in American history prior to the epic labor struggles of the 1930s. He guided the American Federation of Labor (AFL) through a period in which labor's most fundamental rights were questioned. In an era of intense struggle between labor and capital, Gompers steered a moderate course for the skilled workers in trade unions and helped establish ties between labor and the federal government through his support of the Wilson administration during World War I. He rose from meager beginnings to become a confidant of presidents, politicians, and businessmen. As president of the AFL from 1886 to 1924 Gompers loaded the AFL and the cause of organized labor on his back and carried them into the center of American political and economic thought. His brand of pragmatic unionization appealed to workers because it was not theoretical or difficult to understand. Gompers's "pure and simple" unionism focused on advancing the immediate economic interests of workers in terms of wages, hours, and working conditions.
Gompers was born in London's East End in 1850. He was forced to...
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Mitchell, John 1870-1919
John Mitchell, a driving force behind the organization of America's coal miners, endured a difficult childhood that included being orphaned at age six and that mixed hard work with irregular schooling. Mitchell was born in Briadwood, Illinois, in 1870. He never finished school; instead he entered the mines at the age of twelve in 1882. For the next several years Mitchell traveled around the West and Midwest from mine to mine. At age fifteen Mitchell joined the Knights of Labor, which was attempting to organize both skilled and unskilled workers in industry, mining, and railroads. The young miner returned to Illinois in 1888, where he found the mining towns filled with immigrants and wages down by 20 percent. Mitchell felt the working conditions in the mines were equal to slavery. After a prolonged but futile strike in 1891, Mitchell returned to the West but only stayed one year. He returned to his home state to marry Catherine O'Rourke and settle in Spring Valley. Mitchell had grown into a sensitive and introspective man by his late twenties, and he often brooded over the conditions miners were forced to endure. His...
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Ross, Edward Alsworth 1866 - 1951
PROFESSOR AND SOCIAL ACTIVIST
The progressive movement found one of its greatest proponents in Edward Alsworth Ross, a gargantuan man with what contemporaries referred to as a "magnificent" head. He stood six feet six inches tall, and his size mimicked the way the professor loomed over the Progressive Era, always willing to contribute a juicy quote for newspapermen or another article outlining his positions. Professor Ross was a genuinely decent and thoughtful man. He was extremely loyal and generous with his graduate students and colleagues. For years he counseled and gave financial assistance to a worthy scholar who lost his post at a university because of his outspokenly radical views. Ross grew up in the Midwest as an orphan and was raised by many concerned groups. He attended Coe College, a small school where he emerged as a natural leader. He graduated in 1886 and was noted for his intellectual prowess and contagious exuberance. Ross left Iowa in 1888 for graduate study in Germany but returned to the United States and received a Ph.D. in political economy with minors in history and philosophy from Johns Hopkins University in Baltimore.
Spread of Democracy.
Ross was an outstanding teacher and held several high-profile posts at universities, including Stanford, the University of Nebraska, and,...
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People in the News
Emily Greene Balch wrote Our Slavic Fellow Citizens(1910), the classic study of Slavic immigration; helped found the National Women's Trade Union League; and campaigned for minimum wage legislation.
Historian Charles A. Beard published two influential books, An Economic Interpretation of the Constitution of the United States (1913) and Economic Origins of Jeffersonian Democracy (1915). Beard emphasized an economic interpretation of history and the need to use historical research as a means of reform. He resigned from Columbia University in 1917 in protest over the dismissal of three faculty members who opposed America's involvement in World War I. He later helped found the New School for Social Research in 1919.
On 25 January 1915 the first transcontinental telephone call was made by Alexander Graham Bell in New York to Dr. Thomas A. Watson in San Francisco. Bell said, "Mr. Watson, come here, I want you."
In 1914 Jacqueline Cochrane, the inventor of the dish-washer, introduced a home model. The home dish-washer did not catch on immediately because of the lack of enough hot water in most homes, but Cochrane's company later merged with another to form the successful Kitchenaid Company.
Mary Elisabeth Dreier served as president of the New York chapter of the...
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Alexander Agassiz, 75, scientist and engineer, 27 March 1910.
Benjamin Altman, 73, merchant and art collector, founder and chairman of B. Altman and Company, a New York department store, 7 October 1913.
John D. Archbold, 68, president of the Standard Oil Company of New Jersey, 5 December 1916.
George F. Baer, 71, president of the Philadelphia and Reading Railroad, 26 April 1914.
James Gordon Bennett, 77, newspaper publisher, owner of the New York Herald, 14 May 1918.
Charlotte Blair, 56, industrial manufacturer, founder and director of the American Cast Iron Pipe Company, 1917.
Samuel Billings Capen, 71, merchant and trustee of Wellesley College, 29 January 1914.
John G. Carlisle, 74, lawyer and statesman, former U.S. secretary of the treasury (1893-1896), 31 July 1910.
Andrew Carnegie, 83, industrialist who founded one of the world's largest steel companies; philanthropist who endowed educational programs, the Carnegie library system, and the Carnegie Endowment for Peace, 11 August 1919.
Robert J. Collier, 42, editor and publisher, Collier's Weekly, 8 November 1918.
Katherine Coman, 58, economic...
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Leonard P. Ayres, The War with Germany: A Statistical Summary (Washington, D.C.: Government Printing Office, 1919);
Roger W. Babson, W, B. Wilson and the Department of Labor (New York: Brentano, 1919);
Ernest L. Bogart, Direct and Indirect Costs of the Great World War (Washington, D.C.: Carnegie Endowment, 1919);
Maurice J. Clark and others, Readings in the Economics of War (Chicago: University of Chicago Press, 1918);
Horace B. Drury, Scientific Management: A History and Criticism (New York: Columbia University Press, 1915);
Richard T. Ely, Property and Contract in their Relations to the Distribution of Wealth (Port Washington, N.Y.: Kennikat Press, 1914);
H. L. Gantt, Work, Wages and Profits: Their Influence on the Cost of Living (New York: Engineering Magazine, 1910);
Frank B. Gilbreth and Lillian M. Gilbreth, Applied Motion Study (New York: Sturgis & Walton, 1917);
Gilbreth and Gilbreth, Fatigue Study (New York: Sturgis & Walton, 1916);
William I. Hull, Preparedness: The American Versus the Military Programme (New York: Fleming H. Revell, 1916);
Walter Lippmann, Drift and Mastery: An Attempt to...
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Important Events in Business and the Economy, 1910–1919
- Nearly one-third of the nation's coal miners are unionized, compared to 10 percent of workers in other industries.
- On January 1, more than 2.5 million women (more than one-third of the U.S. female workforce) work as housekeepers. African American and immigrant women hold the majority of these jobs.
- On June 18, Congress passes the Mann-Elkins Act, which empowers the Interstate Commerce Commission (ICC) to regulate railroad, cable, wireless, telephone, and telegraph companies.
- In July, a survey reports that an unskilled laborer who worked twelve-hour days, seven days a week, could not support a family of five. Poverty forced wives and children to work.
- On September 7, the U.S. and Great Britain settle their dispute over fishing rights in the Atlantic Ocean.
- On October 1, twenty people are killed and seventeen injured when John J. and James McNamara blow up the Los Angeles Times building because the newspaper favors the right of workers to choose whether to join a union.
- Air conditioning is invented.
- The first motor-driven hook-and-ladder truck, the "Mack," is introduced.
- On February 21, the United States and Japan sign a navigation and commerce treaty that...
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