Chapter 24: Industry comes of Age
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Transcript of Chapter 24: Industry comes of Age
Chapter 24: Industry comes of Age
By:Ricky, Sally, Bryan, Alex and Lucy Per. 8
OUR TWO MAIN OBJECTIVES
Identify the abuses in the railroad industry and discuss how these led to the first efforts at industrial regulation by the government
Describe how the economy came to be dominated by giant trusts, such as those in the steel and oil industries, and the growing class conflict it precipitated
Development of the Railroad System
Giant growth in railroads
- 1865: 35,000 miles of track
- 1900: 192,556 miles of track
- Cities along the railroad lines became mega-cities and hubs for travel and trade
- Building of railroads provided many Americans with jobs
Transcontinental Railroad
Deadlock over the project ended in 1862 when the South seceded
A big point that won over Congress was one that suggested that the Union should bind the Pacific Coast- more specifically California- to the rest of the Union and this railroad would do so
Project was ultimately handled by Union Pacific Railroad
Cornelius Vanderbilt (1794-1877)
Originally made his money off steam boating transportation
During the late 1860’s he ventured into railroads and amassed over 100 million dollars in profit
Vanderbilt helped popularize two significant improvements to the railroads: steel tracks and the development of a “first class” car
Standard Time Zones
Standard Time Zones were created because until the 1880’s, every town had their own “local” time
Train conductors worried about keeping schedules and avoiding accidents
On November 18, 1883 the major rail lines decreed that the continent would be divided into four “time zones”
Wrongdoing in Railroading
The first of many methods of corruption was “stock watering”
“Stock Watering” was when railroad stock promoters grossly inflated their claims about a given company’s assets and profitability and then sold stocks and bonds far in excess of the railroad’s actual value
High powered railroaders not only played with stocks but essentially bought and sold real people
Wrongdoing in Railroading Cont.
High Powered Railroaders regularly bought off judges and legislatures, or even elected their own people to high powered office positions
Railroad kings were often considered more powerful than the President because they had a greater impact on more peoples’ lives AND they were not limited to a four year term
The Government Fights Back
In 1887 Congress passed the Interstate Commerce Act which prohibited rebates and pools and required the railroads to publish their rates openly. It also forbade unfair discrimination against shippers and outlawed charging more for a short haul than a for a long one
ICC (Interstate Commerce Commission): set up by the act to administer and enforce the new legislation
The Interstate Commerce Act was the first large-scaled attempt to regulate business in the interest of society
TRUST TITANS
The three main “trust titans” were: Andrew Carnegie(steel), John D. Rockefeller (oil), and J.P. Morgan (banking)
Trust- a relationship whereby some sort of property is held by one party for the benefit of another
Andrew Carnegie (1835-1919)
Carnegie’s steel business was aided by his gifted organization ability and his high-class associates. He also made a lot of money by cutting out the “middle man”
By 1900, Carnegie was producing ¼ of the nations steel and he and his partners were taking in 40 million dollars a year
John D. Rockefeller (1839-1937)
Organized the Standard Oil Company in 1870
By 1877 Rockefeller controlled 95 percent of all of the oil refineries in the country
His company and power grew due to his genius move to develop trusts in which smaller oil companies gave a sizable piece of their stock to members of the board of his company allowing him to monopolize the industry quickly
J.P Morgan (1837-1913)
Financer and banker who orchestrated many famous business mergers such as the forming of General Electric in 1892, and the merger with the Carnegie Steel Company to form United States Steel Corporation in 1901
Was very aggressive and considered a “hot head” by his peers
“Gospel of Wealth”
As the gap grew between the rich and the poor, many wealthy businessmen found themselves crediting “heavenly help”
Steel tycoon Andrew Carnegie said that the wealthy, who were entrusted with society’s riches, had to prove themselves morally responsible according to a “Gospel of Wealth”
Social Darwinism
A survival-of-the-fittest theory developed by English professor Herbert Spencer and Yale professor William Sumner
The theory argued that individuals won their stations in life by competing on the basis of their natural talents, essentially the wealthy and powerful had demonstrated greater abilities than the poor
Very similar to “survival of the fittest”, “the millionaire were the product of natural selection” Sumner said
In Conclusion
As America grew after the Civil War so did the railroad system and also major monopolies over large industries. Money and power became more attractive than politics and high level corruption began to make its way into the business world. As the rich became richer, the gap widened between the upper and lower class and started the class conflict that still lingers today.