The Great Railroad strike also referred to as the Great Upheaval started in July in Martinsburg West Virginia. The workers were protesting against a reduction of salaries by Baltimore and Ohio Railroad. The striking employees would not heed calls to return to work until the second pay cut was revoked. In response to the stalemate, the state deployed state police to reinstate train service. The results of the 1873 strike and the contribution of the 1873 panic to the strike are analyzed in the paper.
Financial Panic
After the civil war, the railroad sector took the lead in industrial progress in the U.S. By 1877, nearly 79000 miles of track crisscrossed the U.S. As the rail industry grew, their political and economic influence grew as well. At the time, a significant percentage of the nation's employees were employed in the railroad sector. Indeed, the railroad sector severed as the primary link between farmers and traders in the country.
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Complex financial issues dominated Grant presidency, and monetary policy was one of the key issues. Before the war, the American economy operated on a gold standard. Banks gave out paper money that could be exchanged for a similar value of gold coins. Since the war was costly, the federal government issued Greenbacks to ease the financial burden of the depression.The Great Railroad strike was to a large extent attributed to over speculation in the railroad sector. The economic recession weakened the Republican party the Democrats gained the House of Representatives in 1874. Indeed, pessimism abounded during the 1873 panic. Workers lost faith in the government and their employers due to plummeting salaries and wages. Initially, many people thought Jay Cooke and Company bankruptcy impacted only on Wallstreet, but the panic signaled along economic depression of the entire nation.
Inflation led to increasing in the price of goods and services, job cuts and subsequent slashing of wages. The U.S Treasury hoped to withdraw the Greenbacks after the war and return to hard money. Attempts by President Grant to remove the Greenbacks resulted in a major economic collapse in the U.S. In 1873, nearly a dozen overextended railroads stopped paying their bills due to a cash crunch. The move forced the nation’s leading lender, Jay Cooke, and company into bankruptcy in 1873. On September 1873, Jay Cooke and Company, the country’s leading lender and financier of the railroad construction, realized it had exhausted the money meant construct the rail. Due to fears of losing more money, the company suspended its operations in the main cities in the U.S. The shocking reports created a lot of panic in the United States. Hard pressed banks closed down, and many applied for bankruptcy. The move prompted a Republican senator to send an urgent telegram to the president. He warned the president of an imminent danger of a national bank panic.
Railroad industry suffered immediate bankruptcy, and thousands of railroad employees lost their jobs. According to statistics, nearly 1 in every 8 Americans became unemployed. With unemployment rates at 25% in most cities, the value of individual employer dropped significantly. Attempts by workers to protest the move by rail managers to cut the salaries by made matters worse. The company responded by firing and blacklisting employees suspected of participating or leading the strike (Shi, 2012) . Declining wages, job cuts, and pessimism prompted the railroad workers to halt operations of Baltimore and Ohio Railroad company. The panic leads to the closure of several banks, and this made it difficult for the company to pay its workers. Railroad workers faced harsh economic conditions during the 1873 panic, the employees lacked a union and as a result, could not air their grievances collectively. As the economic depression worsened, managers of railroad companies agreed to slash salaries in the spring of 1877. The pay cut amounted to a 30% pay cut in just three years. The workers responded by blocking railroads thereby hindering rail operations.
Results of the Great Railroad Strike
The Railroad strike led to many changes not only in the Railroad sector but on the organization of labor unions as well. Labor unions became better organized and efficient than they were before. The number and frequency of strikes also increased significantly. Indeed, the strike served as an eye-opener to many workers. In 1886, nearly 800000 workers downed their tools demanding for better remuneration. Additionally, the strike signaled an era of strife between employers and union bosses. Business leaders and politicians took measures to ensure that such strikes do not occur. Many employees suspected of participating in the strike were blacklisted and could not secure employment. States formed militias to deal with striking workers. The National Guards created was tasked with protecting business premises from vandalism during protests. Lastly, union leaders laid out strategies that would prevent protests and appeal to employees. The strategies involved negotiations with employers before opting for strikes.
Conclusion
The panic of 1873 pushed the U.S and Europe into major economic depression. Many companies withdrew their money from banks leading a cash crisis in the U.S. To avoid incurring heavy losses; Railroad owners decide to cut workers’ salaries which resulted in a 45-day strike. Although the strike never succeeded, it created awareness too many employees.
References
George B. Tindall and David E. Shi (2012). America; A Narrative History. W.W. Norton and Company; 9 edition, 30-33.
