Industrial Development31-32

How did industrial development affect life in the late 1800s?What were the major inventions, innovations, and entrepreneurs

of the time period?How did industrial leaders accumulate wealth and power and

justify their means?

USA becomes Industrial Leader

• By 1880—United States world’s leading producer of goods

• Why? Unlimited labor force (mostly immigrants), abundant coal supply, iron mining, discovery oil (Edwin Drake) and development of the railroad (network to ship and transport goods)

Public Support• Laissez-faire gov’t policies: “hands off” gov’t

approach• Unlimited immigration supplied labor no

education, willing to work for little pay• High tariffs protected American industry• Public financing of RR and businesses

Entrepreneurs and Innovations:late 1800’s see an explosion of inventions and

innovations • Telephone: Alexander G. Bell, improves

communication• Light bulb: Thomas Edison, improves standard

of living• Electric Power: Nikola Tesla (AC Power),

improves standard of living• Bessemer Process: Henry Bessemer, removes

impurities from iron = steel, build better buildings• Typewriter invented by Christopher Sholes,

creates work for women

Entrepreneurs and Innovations

• Photography— George Eastman, Kodak camera, amateur photography now possible

• Phonograph and Motion pictures— Edison, provides entertainment

• Radio—Nikola Tesla, improves communications and provides entertainment

• Retail and canned foods

Entrepreneurs and Innovations

• John Rockefeller— oil, owned 90% of oil in world, Standard Oil Company & Trust

• Andrew Carnegie— steel, American Steel Co• JP Morgan— big business finance• Vanderbilt— railroads• DuPont— chemical manufacturing (first

dynamite)• Westinghouse— electric industry• Duke--tobacco

Railroads lead the way….

• “iron horse” nickname

• Leading consumer of goods

• Better transportation leads to growth & settlement of west

• transcontinental completed in 1869 built by Irish and Chinese

• Standardization of time: time zones—Eastern, Central, Mountain, Pacific

Railroad Prosperity• Growth of urban areas• Development of Company Towns (company owned

everything in town controlling worker and harsh conditions)– Pullman, Illinois made RR cars

• Railroad scandals: gov’t land grants, graft, and stock fraud, and strikes

Example of railroad abuses!

Grange and Railroads

• Railroad abuses– unfair rates

• Granger laws—attempt to regulate railroads by states

• Supreme Court Rulings: Wabash v. Illinois states Granger laws are unconstitutional

• Interstate Commerce Act: attempt to regulate business, required RRs to post rates and fees

BIG BUSINESS• Corporations develop

• Limited liability leads to public investment• Mass market selling

Advantages Disadvantages

Greater efficiency: mass production

Unfair competition: no regulations leads to monopolies

Economy of scale: reduction in cost as output increases

Corruption and bribery

Manager system:

OwnerManagersSupervisorsWorkers

Destroyed labor union movements: sought out court orders, denied recognition

Productivity studies: to increase worker productivity

Corrupt practices: horizontal and vertical integration

Top 3 Boxes on p. 32

Public Reactions

• Mixed public feelings• Social Darwinism

– Based on Darwin’s theory of evolution– Survival of the fittest – Also applies to business world– best business will thrive– Used to justify their wealth– “Gospel of Wealth” by Andrew Carnegie

• Rags to Riches– “American Dream”– Horatio Alger—dime novels, depicted tales of

adventure and success

Robber Barons• Extreme profits made by business owners…public

begins to use “Robber Baron” to describe the Captains of Industry like Carnegie, Rockefeller, Vanderbilt, etc.– Made extreme profits by using corrupt business practices

and at the cost of the employee

• PHILANTHROPY begins: – practice of giving away large sums of money– helped improve the image of robber barons

• Big Business practices exposed, public begins to call for regulation:

• Sherman Anti-Trust Act (1890) weak law, but set precedent for future laws, 1st attempt to regulate big business!

The Bessemer process was

a. A way to make coal into energy.

b. A method of braking a heavy train.

c. A way of changing iron into steel.

d. A method picking party members for gov;t jobs.

Which of the following was NOT a "captain of industry".

a. Ida Tarbell

b. John Rockefeller

c. Andrew Carnegie

d. Cornelius Vanderbilt

This is the theory that the best businessmen will rise to the top and get rich?

a. Social Gospel

b. b. Social Darwinism

c. Social Competition

d. Social Relativity

Philosophy that people should help those that are less fortunate than them?

a. Social Darwinism

b. Social Gospel

c. Social Isolation

d. Social Divinity

Which answer most likely refers to how a poor oilfield worker would describe Rockefeller?

a. as a friend

b. b. as a robber baron

c. as a captain of industry

d. as a good family man

Monopoly

• A business that controls all or most of the supply of a product

• Ex—in the game to win you want to control all the properties on the board

Trust

• When several businesses act as one under the control of a board of directors

• Formed with the intent to monopolize

• Often corrupt, restricted trade, and fixed prices

• Examples: Standard Oil or US Steel

Merger

• Two or more businesses combining together to form one larger business

• Example—Verizon and Alltel or AT&T and Cingular

Holding Company

• Exists to own or control other businesses as a parent company

• Businesses are often unrelated companies

• Does not produce goods or services

• Today multi-national

Horizontal Integration

• Type of monopoly formed by controlling all of the same type of business

• Example: – Postal Service– Windows – George Westinghouse– James B. Duke

Vertical Integration

• Monopoly formed by controlling business related to the primary business

• Ex– Rockefeller owned:– Oil Drills– Oil Refineries– Oil Distribution

Vertical and Horizontal Integration

• Resources

• Manufacturing

• Distribution

Industrialization Magic Foldable

Captains of Industry• John D. Rockefeller• Andrew Carnegie• J.P. Morgan• Cornelius Vanderbilt• Social Darwinism• Philanthropy

Inventors & Innovators• Nikola Tesla• Thomas Edison• Alexander G. Bell• Henry Bessemer• George Eastman• Horatio Alger

Vertical and Horizontal Integration

• ____________

• ____________

• ____________

• The flood of immigrants into the United States in the late 1800s and labor wars that racked the nation for decades mobilized a national movement to restrict immigration. In this 1891 political cartoon, a judge scolds Uncle Sam that "If Immigration was properly Restricted you would no longer be troubled with Anarchy, Socialism, the Mafia and such kindred evils!" After he resigned from the Supreme Court in 1880, Justice William Strong became president of the National Association to Secure the Religious Amendment of the Constitution, which sought to restrict the influx of Catholic and Jewish immigrants and to declare the United States a “Christian nation.”