1. Growth of the Steel Industry Civil War Spurred the growth of the steel industry Iron rails...
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Transcript of 1. Growth of the Steel Industry Civil War Spurred the growth of the steel industry Iron rails...
Growth of the Steel Industry Civil War
Spurred the growth of the steel industry Iron rails wore out quickly so they had to
be replaced by steel Steel costly and difficult to make
2
Making Steel a New Way
1850s William Kelly – United States Henry Bessemer – England
Discovered new way to make steel Bessemer process
Enabled steel makers to produce strong steel at a lower cost
Manufacturers Made steel nails, screws, and needles Steel girders – used to support skyscrapers
3
Thriving Steel Mills
Steel mills Sprang up in cities throughout the midwest Pittsburgh became the steel-making capital
of the nation Coal mines and transportation helped steel
mills thrive Brought jobs and prosperity Caused problems
Industrial waste poured into the water Thick black smoke Soot blanketed houses, trees, and streets
4
Controlling the Steel Industry Carnegie
Saw the Bessemer process in action Borrowed money and began his own steel
mill Bought out rivals Bought iron mines, railroad and steamship
lines, and warehouses Controlled all phases of the steel industry
– mining iron ore to shipping finished steel Vertical integration
Changing raw materials into finished products
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The “Gospel of Wealth”
Carnegie Drove workers hard Believed rich had a duty to help the poor
and to improve society “gospel of wealth” Gave millions to charities
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The Corporation and the Bankers Railroad boom
Nearly every town had it own small factory
Big factories Made goods more cheaply than small
factories Railroads distributed goods to nationwide
markets Demand for local goods fell Small factories closed Increased their output
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The Corporation and the Bankers Expanding Factories
Needed capital, or money for investment Used capital to buy raw materials, pay
workers, and cover shipping and advertising costs
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The Rise of the Corporation Expanding business became
corporations Corporation
Business owned by investors Stock
Shares in the business Dividends
Shares of a corporation ‘s profit Stockholders
Elect board of directors to run the corporation Face fewer risks than owners of private
businesses10
Banks and Industry
Corporations Attracted large amts. of capital from
investors Borrowed millions of dollars from banks Loans helped American industry grow Bankers made huge profits
Bankers J. Pierpont Morgan
Most powerful banker in the late 1800s Used banking profits to gain control of major
corporations11
Banks and Industry - Continued
J.P. Morgan Invested in the stock of troubled corporations Won the seats on the board of directors Adopted policies that reduced competition and
ensured big profits 1894-1898
Gained control of most of the nation’s major rail lines
Began to buy up steel companies – including Carnegie Steel – merged it into a single large corporation
Became head of the United States Steel company First American business worth more than $1 Billion
12
Rockefeller’s Oil Empire
Iron ore plentiful Mesabi Range of Minnesota
Coal Pennsylvania, West Virginia, and the
Rocky Mountains Rocky Mountains
Also contained other minerals such as gold, silver, and copper
Forests provided lumber for building
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Rockefeller’s Oil Empire - Continued
1859 Oil discovered
Drillers near Titusville, Pennsylvania made the nation’s first oil strike Oil boom follows
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Rockefeller and Standard Oil John D. Rockefeller
Went to Pennsylvania for the oil fields Oil had little value until it was refined, or
purified, to make kerosene Builds an oil refinery Competition was wasteful Used profits from his refinery to buy
other refineries Combined companies into the Standard
Oil Company of Ohio15
Rockefeller and Standard Oil - Continued
Rockefeller Shrew businessman Improving the quality of his oil Tried to get rid of competition Standard Oil slashed prices to drive
rivals out of business Pressured customers Forced railroad companies to grand
rebates to Standard Oil
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The Standard Oil Trust
1882 Rockefeller formed the Standard Oil trust
Group of corporations run by a single board of directors
Stockholders in smaller companies turned their stock over to Standard Oil Received stock in the new trust Paid high dividends
Created a monopoly of the oil industry Controls all or nearly all the business of an
industry Controlled 95% of all oil refining in the U.S.
17
The Standard Oil Trust - Continued
Monopolies Other companies began to set up trusts
and build monopolies 1890s
monopolies and trusts controlled some of the nation’s most important industries
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The Case For and Against Trusts
Americans Leaders of giant corporations abusing
free enterprise system Businesses owned by private citizens
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The Case Against Trusts
Trusts and monopolies reduced competition Without competition thee was no reason for
companies to keep prices low or to improve their products
Political influences of trusts Government moves towards controlling giant
corporations Sherman Antitrust Act – 1890
Banned formation of trusts and monopolies Too weak to be effective
20