S1-Unit 1 Reading 1: Industry/Railroads (Copy)

* Required

Background: In the late 1800s and early 1900s, John D. Rockefeller formed a monopoly in the oil industry. A monopoly is when a business has virtually removed all competition. When this occurs, many monopolies then drastically raise their prices because, without competition, they can charge whatever they want. This is a political cartoon depicting John D. Rockefeller as a giant in Washington, D.C. Oil is covering the entire capitol.

1

What is a monopoly? * (1 Point)

When companies in the same industry divide up the business among each other

When a corporation buys out the stock of competing companies

When a company removes all competition

When a company puts control of their business under a single group

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2

Why were monopolies able to charge very high prices for their products? * (1 Point)

There is no competition

Fair market value

Vertical integration

None of the above

3

How does the cartoon depict John D. Rockefeller? * (1 Point)

A person that other businesses like

Someone who protects small businesses

As a giant dominating Washington, D.C.

All of the above

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BIG BUSINESS IN THE LATE 1800s AND EARLY 1900s

In 1873, Andrew Carnegie left the railroad business and joined the steel industry. By 1899, The Carnegie Steel Company made more steel than all of Britain combined. Carnegie consistently sought to improve technology and offered talented employees stock as innovative ways to improve his profits.

In this time, many companies began to dominate their market so that competition against their businesses hardly existed. These businesses became monopolies. Through Horizontal Integration, companies bought out all similar companies to decrease competition. Through Vertical Integration, companies bought out all of their suppliers. Then, they drastically increased the price of these supplies to keep others from competing against them.

Andrew Carnegie was a pivotal leader in the steel industry and claimed hard work helped him to succeed. Charles Darwin published On the Origin of Species in 1859 to explain his biological theory of the complexity of various species as being attributed to natural selection and survival of the fittest. Philosophers, such as Herbert Spencer, claimed economic success could be explained through Darwin’s findings as well. Social Darwinists felt the healthiest companies would thrive and the weak companies would die out and that this was beneficial to society. A “Laissez Faire” (hands off government) economy with little intervention to help labor was viewed as ideal by Social Darwinists. This meant the government should be involved as little as possible in the economy.

Since the Civil War, thousands of millionaires emerged in the USA. Many Protestants had a strong work ethic and, despite religious tension with biological Darwinism, Protestant industry leaders embraced the new philosophy of Social Darwinism. Many believed the theories of Social Darwinism excused the cruel actions taken against factory workers. The poor were tragically viewed as lazy or ineffective to Social Darwinists. Yet, many factory workers worked grueling hours for low pay. Many factories also had hazardous conditions.

In 1892, J.P. Morgan united Edison General Electric and Thomson-Houston Electric Company and formed General Electric. In 1901, Morgan also merged his steel company with the Carnegie Steel Company. John D. Rockefeller united the Standard Oil Company with other companies through trust agreements by giving stock to members of a board of trustees. By 1880, Rockefeller controlled 90% of the Oil Industry. He paid workers low wages to maximize profit. He also charged extremely low prices to put competitors out of business. Then, he drastically increased prices when he was the only seller left. Without competition, people had to use his business or do without oil. There is a mixed perception about the historical impact of Rockefeller. At times, he was a ruthless business leader. Yet, he gave a way a significant portion of his wealth to charities. Rockefeller donated over $500 Million dollars to charity to fund education and advancement in medicine.

Many in the USA government began to assert that monopolies damaged the common good of all. The Sherman Anti-trust Act tried to break up monopolies and make them illegal. Initially, the big businesses used their influence and the Sherman Anti-trust Act did little to halt their monopolistic pursuits.

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4

Andrew Carnegie formed a monopoly in the __________ industry. * (1 Point)

steel

oil

electric

textile

5

When a company buys out all of its competitors to be a monopoly, that company is practicing __________ integration. * (1 Point)

monopolistic

horizontal

vertical

industrial

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6

When a company buys out all the suppliers of its product to be a monopoly, that company is practicing __________ integration. * (1 Point)

monopolistic

horizontal

vertical

industrial

7

Who used the biological theory of Darwinism to attempt to explain occurrences within the economy? * (1 Point)

Charles Darwin

J.P. Morgan

Herbert Spencer

Thomas Edison

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8

What was the goal of the Sherman Anti-trust Act? * (1 Point)

To increase the power of oil monopolies

To stop monopolies from forming

To reduce the amount of pollution occurring in steel factories

To ensure that the federal government was practicing a "Laissez Faire" approach to economics

9

John D. Rockefeller is most associated with which industry? * (1 Point)

Oil

Electric

Textile

Steel

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NATURAL RESOURCES FUEL INDUSTRIALIZATION

In the years after the Civil War, advances in technology began to change the nation. There were three causes of these advances: a large supply of natural resources, government support for businesses and inventions, and a growing city population that wanted the new products.

One of the more important natural resources was oil. In 1840 a Canadian geologist discovered that kerosene could be used to light lamps. Kerosene was produced from oil. This increased Americans’ demand for oil.

In 1859 Edwin L. Drake used a steam engine to drill for oil. This technological breakthrough helped start an oil boom in Kentucky, Ohio, Illinois, Indiana, and Texas. Oil-refining industries started in Cleveland and Pittsburgh, and entrepreneurs began turning oil into kerosene.

Oil produced yet another product— gasoline. At first, gasoline was thrown away. However, when the automobile became popular, gasoline was in great demand.

In addition to oil, Americans discovered that their nation was rich in coal and iron. In 1887 explorers found large amounts of iron in Minnesota. At the same time, coal production increased from 33 million tons in 1870 to more than 250 million tons in 1900.

Iron is a strong metal. However, it is heavy and tends to break and rust. Researchers eventually removed the element carbon from iron. This produced a lighter, more flexible metal that does not rust. It became known as steel. The Bessemer process, named after British manufacturer Henry Bessemer, provided a useful way to turn iron into steel.

Americans quickly found many uses for steel. The railroads, with thousands of miles of track, bought large amounts of the new metal. Steel was also used to improve farm tools such as the plow and reaper. Engineers used steel to build bridges. One of the most remarkable bridges was the Brooklyn Bridge. Steel also was used to build skyscrapers, such as the Home Insurance Building in Chicago.

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10

What caused advances in technology? * (1 Point)

A large supply of natural resources

Government support for businesses and inventions

A growing city population that wanted new products

All of the above

11

Who first used a steam engine to drill for oil? * (1 Point)

Edwin L. Drake

Henry Bessemer

George Westinghouse

Christopher Sholes

12

Who discovered that kerosene could be used to light lamps? * (1 Point)

Edwin L. Drake

Henry Bessemer

George Westinghouse

A Canadian geologist

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13

The Bessemer process provided a useful way to turn iron into steel. * (1 Point)

True

False

14

Steel is less flexible than iron. * (1 Point)

True

False

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INVENTIONS PROMOTE CHANGE

Beginning in the late 1800s, inventors produced items that changed the way people lived and worked. In 1876 Thomas Alva Edison established the world’s first research laboratory in Menlo Park, New Jersey. He used the lab to develop new inventions. Edison perfected an early light bulb there. Then, Lewis H. Latimer helped Edison improve the light bulb with his invention of a carbon filament. This filament lasted longer than those in the past. Later, Edison worked to establish power plants to generate and distribute electricity.

Another inventor, George Westinghouse, developed ways to make electricity safer and less expensive. The use of electricity changed America. By 1890 electricity ran machines such as fans and printing presses. Electricity soon became available in homes. This led to the invention of many appliances. Cities built electric streetcars that made travel cheaper and easier. This led to the spread of urban areas. In addition, electricity made it possible for businesses to have greater flexibility in the location of their plants. They could locate their companies in areas with large populations, where there were many natural resources, or where there was easy access to rail and water shipping routes. This flexibility helped industries to grow.

In 1867 Christopher Sholes invented the typewriter. This led to dramatic changes in the workplace. Almost ten years later, in 1876, Alexander Graham Bell and Thomas Watson invented the telephone.

Both these inventions had an impact on office work and led to the creation of jobs for women. By 1910 women made up about 40 percent of the nation’s office work force. In addition, work that had been done at home—such as sewing clothes—was now done in factories. With so much clothing being mass-produced in factories, more garment workers were needed. Many of these workers were women.

Inventions had several positive effects. Machines allowed employees to work faster, which led to a shorter workweek. Inventions improved the standard of living in the country, too. This attracted new immigrants looking for a better life. In turn, this created a larger work force and more consumers.

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15

Who established the world's first research laboratory in Menlo Park, New Jersey? * (1 Point)

Lewis H. Latimer

Thomas Alva Edison

Christopher Sholes

Alexander Graham Bell

16

Who invented the telephone? * (1 Point)

Lewis H. Latimer

Thomas Alva Edison

Christopher Sholes

Alexander Graham Bell and Thomas Watson

17

Who invented a carbon filament to improve the light bulb? * (1 Point)

Lewis H. Latimer

Thomas Alva Edison

Christopher Sholes

Alexander Graham Bell and Thomas Watson

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18

Who invented the typewriter? * (1 Point)

Lewis H. Latimer

Thomas Alva Edison

Christopher Sholes

Alexander Graham Bell and Thomas Watson

19

The invention of the typewriter and the telephone had an impact on office work and led to the creation of jobs for women. * (1 Point)

True

False

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RAILROADS SPAN TIME AND SPACE

Before and after the Civil War, railroads extended throughout the United States. In 1869 the nation completed work on its first transcontinental railroad—a railroad that crossed the entire continent. By 1890 more than 200,000 miles of rail lines zigzagged across the United States. A major figure in the expansion of regional railroads was Cornelius Vanderbilt. He linked small railroads into a larger network, connecting New York to the Midwest.

Railroads made long-distance travel a possibility for many Americans. However, building and running the railroads was difficult and dangerous work. Those who did most of the work were Chinese and Irish immigrants and desperate out-of-work Civil War veterans. Accidents and diseases affected railroad builders. By 1888 more than 2,000 workers had died. Another 20,000 workers had been injured.

Railroads eventually linked the many different regions of the United States. However, railroad schedules proved hard to keep because each community set its own times—based mainly on the movement of the sun. The time in Boston, for example, was almost 12 minutes later than the time in New York.

To fix this problem, officials devised a plan to divide the earth’s surface into 24 time zones, one for each hour of the day. Under this plan, the United States would contain four time zones: Eastern, Central, Mountain, and Pacific. Everyone living in a particular zone would follow the same time. The railroad companies supported this plan. Many communities did too.

20

Which of the following was true of railroad workers? * (1 Point)

Most railroad workers were paid high wages

Most railroad workers were limited to an 8-hour workday

Railroad workers endured harsh conditions and frequent accidents

Immigrant railroad workers earned as much money as the other workers

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21

What year was the first transcontinental railroad completed? * (1 Point)

1890

1888

1869

1870

22

To fix the problem of railroad schedules, officials devised a plan to divide the earth's surface into 24 time zones. * (1 Point)

True

False

23

__________ did most of the work building and running the railroads. * (1 Point)

African American slaves

Cornelius Vanderbilt

Chinese and Irish immigrants

None of the above

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OPPORTUNITIES AND OPPORTUNISTS

Railroads made it easier for people to travel long distances and helped many industries grow. The iron, steel, coal, lumber, and glass industries all grew partly because the railroads needed their products. Railroads also increased trade among cities and towns. This allowed many communities to grow and prosper.

Railroads brought about new towns. In 1880 George M. Pullman built a factory on the prairie outside Chicago. Workers made the sleeping cars Pullman invented for trains. As demand for his cars rose, Pullman built a large town to house his workers. The housing was high quality, but he tried to control workers’ lives. Eventually, they rebelled.

The railroad industry offered people the chance to become rich, so it attracted many corrupt individuals. A well-known case of corruption occurred in 1864, when some stockholders in the Union Pacific Railroad formed a construction company called Crédit Mobilier. They gave this company a contract to lay railroad track at two to three times the actual cost. They kept all profits. To prevent the government from interfering, they gave shares of stock to some members of Congress. Eventually, authorities uncovered the scheme.

24

Why did the railroad industry attract many corrupt individuals? * (1 Point)

It made travel easier

It offered people the chance to become rich

It increased trade among cities and towns

None of the above

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25

What was Crédit Mobilier? * (1 Point)

A construction company formed by Union Pacific Railroad stockholders

A sleeping car invented by George M. Pullman

A company that gave loans to railroad workers

A bank

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THE GRANGE AND THE RAILROADS

One group angered by corruption in the railroad industry was farmers. Farmers were upset for a number of reasons. First, they claimed that railroads sold government land grants to businesses rather than to families. They also accused the railroad industry of setting high shipping prices to keep farmers in debt. They said railroads charged customers different prices. In response to these abuses, the Grangers took political action. They convinced some states to pass laws regulating railroad activity. Members of the railroad companies challenged the states’ rights to regulate them.

The battle reached the Supreme Court in 1877. In the case of Munn v. Illinois, the Court declared that government could regulate private industries to protect the public interest. The railroads had lost their fight.

A decade later, Congress passed the Interstate Commerce Act. The act gave the federal government the right to supervise railroad activities and other controls. The railroad companies, however, continued to resist all government intervention.

Beginning in 1893 an economic depression struck the country. It affected numerous institutions—including the railroads. Many railroad companies failed. As a result, they were taken over by financial firms. By 1900, seven companies owned most of the nation’s railways.

26

Why were the Grangers upset with the railroad companies? Select the TWO correct answers. * (1 Point)

The railroads charged all customers the same price

The railroad companies set maximum passenger rates

The railroads engaged in formal agreements to fix prices

The railroad companies misused government land grants

The railroads allowed the government to regulate their business

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27

In the case of Munn v. Illinois, the Court declared that government could NOT regulate private industries to protect the public interest. * (1 Point)

True

False

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