Chapter 14

A New Industrial Age

Natural Resources Fuel Industrialization

Edwin L. Drake

Henry Bessemer

Thomas Alva Edison

Christopher Sholes

Alexander Graham Bell

Railroads

Span time and spaceCreated a network of tracksRomanceTime zonesOpened the door for corruption

Promontory Point, Utah

Golden spike of Promontory Point

Time zones around the worldProfessor C.F. Dowd

Pacific Mountain Central Easter

Opportunities and Opportunists

With the railroad came those individuals who took advantage of a new development for their own personal gain

George M. Pullman

Credit Mobilier

Towns were created to service the railroad that were owned by the railroad

The stock holders of the RR also owned the Companies that laid the rail for the RR

The RR companies owned by the stockholders sold the rights to lay the track to themselves for twice the amount it would cost and pocketed the profits

Granger Laws

Farmers and passengers were being discriminated against and charged outrageous prices for travel and usage

Illinois and other states passed a series of laws that allowed the state to regulate the fees for train travel – The Granger Laws

Munn vs. Illinois – Supreme court ruled that the granger laws were constitutional

Interstate Commerce Act

1877 Congress passed this lawSaid that railroad travel was a form of

interstate travel and therefore regulated by the federal government

Establish a five man board designed to monitor interstate commerce (ICC)

Consolidation

ICC failed to do what it was commissioned to do

Overbuilding and abuses led to the panic of 1893

600 banks and 15,000 people were out of business or work

1895 4,000,000 had lost their jobsInvestment firms like J.P. Morgan bought

out all the railroad companies

Andrew Carnegie

Became one the brightest and most successful financial investors of the time

Carnegie Steel

Carnegie tried to control as much of the steel industry as the law would allow

He adopted two business practices that are in use today

• Vertical integration

• Horizontal integration

Vertical Integration

Finished ProductTransportation

Warehouse

Refinery

Resource production

Horizontal Integration

Similar product company Similar product company

Similar product company Alleviating Competition

Drive out all the competition (Monopoly)

Businesses begin to adopt the Social Darwinistic approach to business – Survival of the fittest and only the strong survive

John D Rockefeller

Another of the financial giants of the time

Standard Oil

Mergers through trust Not horizontal Integration Controlling interest

owned by a board of trustees

Gives the trustees total control over a products production and sell.

He controlled 90% of the oil refining in the US

Sherman Anti-Trust Act

Made it illegal to form a trust that interferes with free trade agreements among business

Workers begin to protect themselves in the labor community – The formation of labor Unions become common place

Life in the Factory

12 hour work daysNo vacationNo sick leaveNo reimbursement for injuries675 work related deaths a week8,000,000 women working in factories20% of boys and girls under the age of 15 held

full time jobs

Little or no pay!!!!!!!

Child – $.27 cents a day (14 hour work Day)Women - $267/YearMen - $498/year

Andrew Carnegie – $23,000,000/ year with no income taxes

Labor Unions Emerge

Craft UnionsSamuel Gompers

– American Federation of Labor (AFL)

Eugene V. Debs– American Railway Union

William Haywood– Industrial Workers of the World (IWW)

Labor Unions Lead to strikes

The great strike of 1877 – (RR Workers)

The Haymarket strike– Police brutality

The Homestead strike– Steel industry

The Pullman Car strike– RR Car Company