In 1873, the United States was in the midst of an economic depression,
a period of low production and sales and high rates of unemployment
and business failures. The root cause of the 1873 depression was the collapse of the mighty railroad, which had overextended itself. With the last
spike driven into the transcontinental railroad in 1869, America’s obsession with the railroad had begun. In the excitement, railroad tracks were
being built in every direction. Two-thirds of the track headed west, an
area still largely unsettled. By 1873, there were thousands of miles of railroad tracks going virtually nowhere, at least nowhere that was profitable
to shippers or to the railroads themselves. One year earlier, two-thirds of
all railroads were unable to pay their stockholders dividends (the amount
of money an investor makes off a company).
In 1873, Jay Cooke & Company failed. Jay Cooke (1821–1905)
had been the chief financier of the railroads. With branches closing in
New York City and Philadelphia, Pennsylvania, railroad construction
came to an abrupt halt. Railroad workers suddenly found themselves
without jobs: By 1874, five hundred thousand railroad employees were
out of work. By the end of 1873 alone, more than five thousand businesses—railroad and others— had failed.
By 1877, 20 percent of the entire labor force in the United States
was unemployed. Another 20 percent was working regular hours; the remaining 60 percent worked irregular hours, taking work when it was
available. Railroad workers were laboring at wages a full 35 percent
below what they had made before the depression. The Pennsylvania
Railroad announced that it would reduce wages by another 10 percent
effective June 1, 1877, and soon, other eastern railroads announced similar cuts. Workers could take no more—they were already making next
to nothing and working fifteen to eighteen hours a day to earn it.
On July 16, 1877, forty firemen and brakemen from the Baltimore
& Ohio Railroad went on strike in Maryland. Police quickly broke up
the crowd. A second strike took place the next day in West Virginia, and
this time, strikers seized control of the train depot. Trains were not coming in or leaving. Police arrested strike leaders, but the crowd managed
to release them. President Rutherford B. Hayes (1822–1893; served
1877–81) sent in federal troops to take control. It was the first time a
U.S. president had taken federal action against strikers.
On July 19, strikers of the Pennsylvania Railroad marched in
Pittsburgh. The demonstration ended in rioting. Federal troops were
sent in from Philadelphia, and when they fired into the crowd, twentyfive people were killed and more were wounded. This event served only
to infuriate the strikers further. They set fire to freight cars and sent them
into the roundhouse (garage for trains), where soldiers were gathered.
Though the soldiers escaped, they were not able to prevent the destruction of the depot by the angry mob, which had grown to somewhere between four thousand and five thousand people. Five hundred train cars,
more than one hundred locomotives, and thirty-nine buildings were destroyed. While all this was happening, similar riots were taking place at
depots across Pennsylvania. Freight was going nowhere; trains could not
run. Federal troops restored order one city at a time. Strikers returned to
work, having caused more than $10 million in property damages.
Although the railroad crisis lasted just one month, the consequences
were felt for years. At first, the public had sided with the railroad laborers; they knew these men were working in unsatisfactory conditions and with very little pay. But after the Great Strike, middle- and upper-class
Americans took a stand against labor. They felt these men, and not just
railroad workers, must be controlled by any means available. Miners,
sewer workers, and millhands all joined in on the side of the railroad strikers. It was privileged America against labor, and the battle had just taken
a drastic turn. For the first time, workers realized they had true power.