Contract labor system Summary

  • Last updated on November 10, 2022

During the mid-nineteenth century, a labor shortage in the western United States led to creation of a contract labor system to help the mining and railroad industries attract cheap immigrant labor to the United States. Using labor contracts that paid below-market wages, American industries attracted thousands of Chinese immigrants, angering some Americans who feared immigrant competition and eventually prompting the enactment of federal legislation outlawing foreign contract labor.

The California gold rush;and Chinese immigrants[Chinese immigrants]California gold rush that started in 1849 saw the first influx of Chinese and other Asian immigrants into the state as a shortage of American labor forced mining companies to seek out immigrant workers. Chinese immigration to the Western Hemisphere had been begun long before California’s gold rush. Spanish emigration companies had recruited cheap Asian labor to work in Peru;silver minesPeruvian silver mines and Cuban plantations. During the Civil War, U.S.U.S. Civil War (1861-1865), the Lincoln administration pushed through the 1864 Act to Encourage Immigration, which established the U.S. Emigration Office. That office worked with the American Emigrant CompanyAmerican Emigrant Company, a private organization that focused on European immigration to respond to the shortage of workers created by the drafting of some one million American men into the Union Army. The law was repealed in 1868, but by that time, a mechanism for recruiting immigrant workers had been established.Contract laborsystemContract labor system[cat]LABOR;Contract labor system[01260][cat]ASIAN IMMIGRANTS;Contract labor system[01260]

Railroad Workers

Also during Railroads;and immigration[immigration]1868, the U.S. and Chinese governments signed the [a]Burlingame Treaty of 1868Burlingame Treaty, under China;emigration policywhich China allowed mass emigration of workers to the United States. At the same time, labor was needed to build the first Chinese immigrants;railroad workerstranscontinental American railroad, a massive engineering and construction feat that required thousands of workers performing dangerous work for limited wages. Immigration agents signed contracts with employers promising specified numbers of immigrant laborers, who would sign contracts to work for at least three years, in return for wages that were low by American standards. This contract labor system was difficult to enforce after the immigrant workers arrived in the United States, where they could leave their jobs relatively easily for better-paying work elsewhere without serious consequences for breaking their contracts.

Chinese railroad workers watching a Central Pacific train roll by during the 1870’s.

(Hulton Archive/Getty Images)

The Railroads;Chinese workersrailroads recruited tens of thousands of Chinese laborers from China’s Pearl River area in Guongdong Province, paying their passage to the United States. Derisively known as "Coolies"[coolies]“coolies” to many Americans, the Chinese workers did much of the most dangerous work in the construction of the railroad, particularly in helping to blast tunnels through the Sierra Nevada range.

American companies were not the only agencies recruiting contract labor. During the 1870’s a group of Chinese American industrialists known as the Chinese Six Companies;and contract labor[contract labor]Six Companies used their close ties to their homeland to attract thousands of Chinese immigrants to San Francisco to work in the Chinese-run industries or to establish their own businesses. Also known as the Chinese Consolidated Benevolent Association, the Chinese Six Companies helped build a Chinese American community that would assist new immigrants find jobs and adapt to their new homeland.

Other Asian countries that sent large numbers of contract laborers to the United States included Japan and the Philippines. Many Japanese laborers were recruited to work on Hawaii;contract labor systemHawaii;Asian immigrantsHawaiian pineapple and sugar plantations. Under the contract labor system, they signed three- to five-year contracts to work in return for wages and free passage to Hawaii. By the end of the nineteenth century, when Hawaii became an American territory, the Japanese were one of the islands’ largest minority groups, while native islanders made up only a small minority of the population. Filipinos were also heavily recruited to work in Hawaii. The contract labor system worked more efficiently on the islands than it did in the continental United States because of the islands’ isolation and small geographical area, which limited the ability of immigrant workers to abandon their contract jobs to find work elsewhere.

Immigration laws

In the United States, the influx of low-wage immigrant workers brought in by the contract labor system angered many American labor organizations, such as the Knights of LaborKnights of Labor, which lobbied the California and federal governments to restrict or halt all Chinese immigration. The labor groups feared American wages were being depressed by cheap foreign labor and directed their ire at the Chinese. In 1862, California responded to these complaints with the Anti-Coolie Act that imposed a special tax on all Chinese workers. Particular targets of this law were Chinese miners, who were forced to pay a monthly $2.50 tax in order to work in California. Mining companies employing Chinese miners were responsible for collecting the tax and were subject to large fines for noncompliance. The state law targeted Chinese workers on the assumption that raising the costs of immigrant labor would stop mass immigration from Asia. However, the tax had little effect in slowing immigration.Contract labor system

Further Reading
  • Ambrose, Stephen. Nothing Like It in the World. New York: Simon & Schuster, 2001. Examination of the leaders and workers involved in the construction of the transcontinental railroad.
  • Lee, Erika. At America’s Gates: Chinese Immigration During the Exclusion Era. Chapel Hill: University of North Carolina Press, 2007. Detailed look at the various federal and state laws passed in the latter half of the nineteenth century and early twentieth century to limit Chinese immigration to the West Coast.
  • Peck, Gunther. Reinventing Free Labor. New York: Cambridge University Press, 2000. Examination of the contract labor system for all immigrants and the legal changes in labor law for immigrants.
  • Takaki, Ronald. Strangers from a Different Shore. Boston: Back Bay Books, 1998. Wide-ranging book that examines the immigration stories of Chinese, Japanese, Filipino, Korean, and Southeast Asian immigrants to the United States.
  • Zia, Helen. Asian American Dreams. New York: Farrar, Straus and Giroux, 2001. Examination of stories about individual immigrant families in the United States dating back to the nineteenth century.

Alien Contract Labor Law of 1885

Asian immigrants

Asian Indian immigrants

Asiatic Exclusion League

California gold rush

Chinese immigrants

Credit-ticket system

Guest-worker programs


Indentured servitude

Japanese immigrants

Categories: History