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Chapter 9 Slide 2 I Can Identify the effects of expanding population on industry. Explain the effects of technological innovations such as the telephone and telegraph on American development. Slide 3 The Industrial Revolution began in the United States in the early 1800s; however, the nation was still largely a farming country when the Civil War erupted. In 1860 out of a population of 30 million, only 1.3 million Americans worked in industry. After the Civil War, industry greatly expands and millions of Americans left farms to work in mines and factories. The Civil War challenged industries to make products more quickly and efficiently than ever before. By 1900 the U.S. was the leading industrial nation. Slide 4 The United States Industrializes after the Civil War How? 1. Plenty of raw materials needed for industry: water, wood, coal, iron, copper 2. Large workforce: population tripled between 1860-1910 Due to large families and high immigration levels. Larger population also increased demand for manufactured goods. 3. The transcontinental railroad brought settlers and miners to the west and moved resources to the factories in the east. Slide 5 Slide 6 In 1859, Edwin Drake drilled what became the worlds first oil well in Titusville, Pennsylvania. Before this, whale blubber had been used for light and fuel. Whaling had become time-consuming and the whales were becoming scarce. Drilled oil was cheap to produce and easy to transport. The oil industry will grow quickly and encourage such industries as kerosene and gasoline. Slide 7 First oil well in Titusville, Pennsylvania. Slide 8 What is Free Enterprise? Capitalism an economic system that functions without government interference Laissez-Faire-popular concept in the 1800s (Let people do as they choose) Supply and demand determine prices and wages, not government. Encouraged foreign investment in the U.S. What was the governments role in industrialization? Laissez-faire attitude-kept taxes low, encouraging investment. Few regulations on industry Gave land grants to spur RR growth High tariffs designed to protect American companies from foreign competition. Ex. Morrill Tariff- one of the highest in U.S. History. Slide 9 1865: No electric lighting, ice was expensive, and mail took weeks to get from east to west. Between 1860-1890: Patent and Trademark Office issued 500,000 patents for innovations. 1900: There were inventions such as the sewing machine, typewriter, phonograph, and vacuum cleaner. Slide 10 Industrialization makes mass production possible. Mass production is the process of producing goods in large numbers. By selling more, producers can charge consumers less money and still make a profit. Depends upon machinery to carry out tasks that were once done with hand tools. Slide 11 Telegraph: perfected by Samuel F.B. Morse; Morse code- short impulses to represent letters of the alphabet. 1896-Guglielmo Marconi; invented the wireless telegraph. Telephone: 1871 Alexander Graham Bell In 1877 Bell and others organized the Bell Telephone Company eventually became the American Telephone and Telegraph Company (AT&T). These inventions made it possible for individuals and businesses to communicate much easier and on a much broader scale. Slide 12 Slide 13 Thomas A. Edison- Wizard of Menlo Park inventor of the phonograph, electrical lighting, and power station and much more. Supported by wealthy industrialists like J.P. Morgan Received more than 1,000 patents on new inventions. Slide 14 Symbol of the new age of technology. The light bulb enabled factory work to continue after sunset. In 1882 the Edison Electric Illuminating Company supplied electric power to customers in New York City. In 1889 several of Edisons companies merged to form the Edison General Electric Company, today known as GE. As a result people worked longer hours, the number of US factories increased, and industries produced more goods. Slide 15 Other inventions also revolutionized society. Thaddeus Lowe-ice machine (basis of the refrigerator). Gustavus Swift- refrigerated railcar; reduced food spoilage. Bessemer Process- process for purifying iron, resulting in strong, but lightweight steel. Made it cheaper and easier to remove impurities. Allowed for construction of new buildings. Along with elevators made it possible for building skyscrapers. Suspension bridges- bridges in which the roadway is suspended by steel cables. The first suspension bridge was the Brooklyn Bridge. Slide 16 I Can Discuss ways in which the railroads spurred industrial growth. Analyze how the railroads were financed and how they grew. Slide 17 Slide 18 Slide 19 By the 1900s the US had over 200,000 miles of track. 1862: President Lincoln signed the Pacific Railway Act that provided for the construction of a transcontinental railroad by two corporations, the Union Pacific and the Central Pacific. To encourage rapid construction, the government offered each company land along the right-of-way. Land Grants Slide 20 1863: the Central Pacific started laying track eastward from Sacramento, California, while the Union Pacific headed westward from Omaha, Nebraska. Construction was difficult and expensive. Laborers faced harsh and dangerous conditions. Many that worked on the railroad were immigrants. Irish Chinese Met at Promontory Point, Utah. Slide 21 Railroad expansion spurred industrial growth, by increasing markets for new products. It was also a huge consumer itself. Many railroads started to consolidate in larger companies. Cornelius Vanderbilt was one of the most famous consolidators. In 1781, he began construction on NYs Grand Central Station. Eventually there will be seven giant systems with terminals in major cities. Slide 22 To make rail service safer, the country was divided into 4 time zones. Before time was kept independently, so scheduling and safety became a huge concern. In 1884, delegates from 27 countries divided the globe into 24 time zones. Railroads played a key role in transforming American industries and business. They could transport large amounts of goods quickly, cheaply, and efficiently. Because they linked the nation, they allowed businesses to obtain raw materials easily and to sell finished goods to a larger number of people. Slide 23 2 views: Robber Barons: built their fortunes by stealing from the public. They used bribery, insider-trading, cheating, and ruthlessness to make their fortunes. (Jay Gould) Slide 24 Captains of Industry: served their nation in a positive way by increasing supply of goods, building factories, raising productivity, and expanding markets. Robber Baron or Captain of Industry? Slide 25 Slide 26 It was a railroad construction company formed by Union Pacific owners that contracted themselves to build the new railroad at highly inflated prices. It gave or sold stock at cheap prices to politicians to influence legislation. Showed the corruption and the power of the Robber Barons. Many politicians in Washington including Speaker of the House Blaine and future president Garfield were implicated in accepting bribes. Slide 27 James J. Hill was clearly not a robber baron; he built the Great Northern Railroad from St. Paul Minnesota, to Everett, Washington, without any federal land grants. It became the most successful transcontinental railroad and the only one not eventually forced into bankruptcy. Slide 28 I Can Analyze how large corporations came to dominate American business. Evaluate how Andrew Carnegies innovation transformed the steel industry. Slide 29 Slide 30 By 1900 big business dominated the economy Big business would not have been possible without the corporation. A corporation is owned by many people but treated as though it were a single person. They can : own property pay taxes make contracts and sue and be sued. Stockholders are those who own the corporation. They own shares of ownership called stock. By issuing stock this allows a corporation to raise large amounts of money while spreading out the financial risk. Slide 31 They worked to maximize profit in several ways. Ex., paying workers the lowest possible wages or paying as little as they could for raw materials. With the money raised from the sale of stock they could invest in new technologies, hire a larger workforce, and purchase new machines. Economies of scale: means the corporation makes goods more cheaply because they produces so much so quickly using large manufacturing facilities. Slide 32 All businesses have two kinds of costs: Fixed- costs a company has to pay, whether or not it is operating. (loans, mortgages, taxes) Operating- costs that occur when running a company. (wages, shipping, raw materials) Big corporations had the advantage because of their low operating costs-they could continue to operate in poor economic times by cutting prices to increase sales. The changing nature of business organizations and the new importance of fixed costs caused competition to become so severe it forced many small companies out of business. Slide 33 Many corporate leaders did not like the intense competition that had been forced on them. Many tried to organize pools, or agreements to maintain the prices at a certain level. However, they broke apart whenever one member cut prices to steal the market share from another, and allow competition to resume. By the 1870s, competition had reduced many industries to a few large and highly efficient corporations. Slide 34 Railroads are the first industry to take off in the years following the Civil War. Key figure in the railroad industry was Cornelius Vanderbilt (the Commodore). In 1869, he extended his New York Central Railroad to reach Chicago. Slide 35 Andrew Carnegie Born in Scotland, the son of a poor hand weaver who immigrated to the US in 1848. Later he will become supervisor of the Pennsylvania Railroad. He will start to invest in companies that serve the railroad industry. Slide 36 He will travel to Europe and come into contact with Henry Bessemer. Bessemer had developed a new method for making steel known as the Bessemer process. Using this process, manufactures could make steel much cheaper than ever before. This increased production of steel meant faster expansion of railroads and more construction of buildings. After meeting Bessemer, Carnegie decided to concentrate his investments in the steel industry. He opens his company in Pittsburgh and implemented the Bessemer process. Slide 37 He will also use vertical integration as a way to increase manufacturing efficiency. A vertically integrated company owns all of the different businesses on which it depends for its operation. He owned not only the steel mills, but also the necessary iron ore, coal mines, railroads, and ships used in transport.. Slide 38 Some businessmen like Carnegie also used horizontal integration. This is combining many firms engaged in the same type of business into one large corporation. This takes place as companies compete. Slide 39 John D. Rockefeller became one of the nations richest and most powerful businessmen. Standard Oil was the nations first trust. A trust is a business arrangement under which a number of companies unite into one system. Slide 40 Trusts serve to destroy competition and create monopolies. At one time he owned 90% of the oil refining industry. Manages the companies as a single unit. Through the trust, Rockefeller was able to dictate prices, eliminate competition, and control the US oil industry. Much of his success was due to his use of vertical integration. Rather than pay other producers to supply the materials he needed, Rockefellers company made what it needed itself (i.e., its own barrels, cans, and so on). Rockefeller- pay nobody a profit. Slide 41 With the expansion of business came a new kind of business leader: the finance capitalist. Bankers who exert economic influence through companies stocks and bonds. The most powerful and influential of the early finance capitalists was J.P. Morgan. Slide 42 Morgan eventually exercised control over banks, insurance companies, and various stock market operations. He was so rich he eventually bought out Carnegies steel company to form a new companyUS Steel. He paid nearly 5 hundred million dollars for the company. Supported Edison in his invention of the light bulb. Slide 43 Many companies start to create a new organization called a holding company. does not produce anything itself. It owns the stock of companies that do produce goods. By 1904 the US had 318 holding companies. These giant corporations controlled 5,300 factories and were worth more than $7 billion. Slide 44 As vast new products were produced by American industry, retailers looked for new ways to market and sell goods. New forms of advertisements: Large display ads with illustrations Mass advertising in newspapers and magazines. Slide 45 Early AdsNew Ads Slide 46 Advertising is used to attract customers to new retail businesses, the department store. This changed the idea of shopping by bring a huge array of different products together in a large elegant building. Slide 47 Chain stores, a group of similar stores owned by the same company first appeared in the mid- 1800s. They focused on thrift, offering low prices. Woolworths opened in 1879, and became one of the most successful retail chains in America. Slide 48 To reach millions of people who lived in rural America, retailers began issuing mail-order catalogs. Montgomery Ward and Sears, Roebuck were the two largest mail- order companies. Slide 49 Slide 50 I Can Describe industrial working conditions in the United States in the late 1800s. List the barriers to labor union growth. Slide 51 Life for Industrial workers in America was difficult. Children left school at age 12 or 13; Children as young as 6 or 7 had to go to work or go hungry. Many worked 12 hours a day, 6 days a week. Many made less than a quarter and worked more than 60 hours a week. 1868 federal law granted government employees an 8 hour workday but did not affect private industry. Many were paid by what they producedpiecework Strict workplace discipline. Slide 52 Division of Laborseparate tasks Women excluded from most-skilled and highest paying jobs. Children made up more than 5% of the workforce. Conditions: Dangerous-machines lacking safety devices Unhealthy-fumes, lint, dust Poorly lit Badly ventilated Noisy Repetitive No insurance or workers compensation. Slide 53 Slide 54 Slide 55 Slide 56 Slide 57 Slide 58 Slide 59 An economic phenomenon of deflation also made relations between workers and employers more difficult. Deflation: a rise in the value of money. This caused prices to fall, which increased the buying power of workers. However, companies cut wages regularly, but prices fell even faster, so that wages were actually still going up in buying power. Many workers still felt that companies were actually paying them less money for the same work. This made workers look to organize unions, to bargain collectively to negotiate higher wages and better working conditions. Slide 60 Early unions were local and usually limited to people with specific skills. Iron Molders International Union Knights of St. Crispin---shoemakers union Slide 61 Generally employers regarded unions as illegitimate conspiracies that interfered with their property rights. Most opposed industrial unions that united all craft and common laborers in a particular industry. Companies used several techniques to prevent unions from forming: Required workers to sign oaths and contracts promising not join a union. Hired detectives to go undercover and indentify union organizers. Blacklist-list of troublemakers. Once blacklisted it was hard to find other jobs. Lockout- if workers did form a union, the employers would lock the workers out of the property and refuse to pay them. Hire replacement workers---strikebreakers or scabs Slide 62 Workers who wanted to organize faced several problems: There were no laws giving workers the right to organize or requiring owners to negotiate with them. Courts often ruled against them. Suffered from the perception that they threatened American institution. This was due to Marxism. In the late 1800s, the ideas of Karl Marx became very influential in Europe. He said that the basic force shaping a capitalist society was the class struggle between the workers and owners. He believed that eventually the workers would revolt, seize control of the factories, and eventually the government. Slide 63 Believed that after the revolution, the government would seize all private property and create a socialist society, where wealth was evenly divided. Eventfully he said the state would fade away and leave a Communist society where classes did not exist. His ideas shaped the thinking of many European unions. Some started to even support anarchy. Anarchists believe that society does not need government. As the ideas spread in Europe, many left and immigrated to the United States. People started to associate immigrant workers with revolution and anarchism, and became increasing more suspicious of union. Slide 64 Slide 65 Workers attempted on many occasions to create large industrial unions, they were rarely successful. In many cases the confrontation with owners and the government led to violence and bloodshed. Great Railroad Strike: July 14, 1877 Baltimore and Ohio Railroads announce a 10% wage cut. This triggers the first nationwide labor protest. The day after the cuts took effect; many workers walked off the jobs and blocked the tracks. The strike spread until it involved 11 states and 80,000 workers. After violence spreads President Hayes sent federal troops to put down the strike. 100 dead and millions of dollars of property destroyed. Sparked a new violent era of labor relation. Slide 66 Slide 67 After the failure of the Great Railroad Strike of 1877, workers realized they needed to be better organized. The Knights of Labor was a new organization and was the first nationwide industrial union. Called for: eight-hour work day a government bureau of labor statistics equal pay for women the abolition of child labor creation of worker-owned factories. Opposed strikes at first, preferring to use boycotts and arbitration to pressure owners. Slide 68 1886, nationwide, workers strike to build support for an eight-hour workday. On May 3, A clash between strikers and police left one striker dead in Chicago. A rally was held next day at the Haymarket Square in Chicago to protest the police brutality at the strike, by an anarchist group. 1500 people gathered to support the strikers; radical speakers addressed the crowd. As police tried to disperse the crowd, a bomb was thrown. Shots exchanged. 7 police killed, 4 workers, many injured. Knights of Labor were blamed. Some were convicted and hanged. Lost membership. Slide 69 Slide 70 Henry Frick tries to cut wages at Carnegie Steel. Frick calls in the Pinkertons (a private police force known to break up strikes) to end the strike. Several died and many wounded in the fight with the Pinkertons Union workers admit defeat. Slide 71 George Pullman, sleeping car makers, laid off workers and cut wages by 25%. Workers that protested were fired. The boycott of the Pullman cars threatened to paralyze the economy. To break the strike, US mail cars were attached to the Pullman cars. Interfering with the US mail is a violation of federal law. Pres. Grover Cleveland sent in troops to break the strike. Slide 72 Led by Samuel Gompers who urged union members to stay out of politics. Sought to organize only skilled workers. Focused on workers wages, hours, and working conditions. Used strikes, boycotts, and collective bargaining. Slide 73 After the Civil War, the number of women wage earners began to increase. The type of jobs women did outside the home reflected societys idea of what constituted womens work. Women were paid less, because it was assumed she had a man helping to support her, either her father or her husband. Early women labor organizers: Kenney OSullivan and Leonora OReilly. Established Womens Trade Union League. Slide 74 Causes of Industrialization Civil War The war encouraged production, innovation, and expansion of railroads. Natural Resources Ample natural resources, including oil, fueled growth. Growing Workforce Immigrants willing to work for low wages flowed into the country. Technology/Innovation New technology and innovative business practices spurred growth. Government Policies Government policies encouraged investment in business and new technology. Slide 75 Important Government Policies of the Late 1800s Protective tariffs: Congress enacted tariffs on imported goods to make them cost more than locally produced goods. Laissez-faire: The government allowed businesses to operate under minimal government regulations. Subsidizing railroads: The government gave railroad builders millions of acres of land. Strike breaking: Government troops routinely helped break up strikes. Anti-union actions: Courts used legislation like the Sherman Antitrust Act to order unions to stop disruptive free trade. Slide 76 Important People of the Late 1800s PeopleContribution Thomas Edison Invented new technology, such as electric lighting that stimulated business. Henry Bessemer Developed process for creating strong lightweight steel for use in construction and railroad. Andrew Carnegie Use of vertical consolidation influenced the rise of big business; urged businessmen to also be philanthropists. John D. Rockefeller Use of new business strategies, such as horizontal consolidation, influenced the rise of big business. Samuel Gompers Formed the AFL, influencing the rise of labor union. Eugene V. Debs Challenged big business by orchestrating the Pullman Strike Slide 77 Influential Labor Unions NameDate FoundedSignificance National Trades Union 1834 First national union; open to workers from all trades. Knights of Labor1869 Sought general ideological reform; open to workers from all trades. American Federation of Labor 1886 Focused on specific workers issues; organization of skilled workers from local craft unions. American Railway Union 1893 First industrial union; open to all railway workers. Slide 78 Major Strikes of the Late 1800s. CauseEffect Railroad strikes, 1877Response to cuts in workers wages. Set the scene for violent strikes to come. Haymarket Square, 1886Part of a campaign to achieve an eight-hour workday. Americans became wary of labor unions; the Knights of Labor were blamed for the riot and membership declined. Homestead Strike, 1892Economic depression led to cuts in steelworkers wages After losing the standoff, steelworker unions lost power throughout the country. Pullman Strike, 1893Wages cut without decrease in cost of living in the company town. Employers used the courts to limit the influence of unions.