Industry’s Golden Age The Second Industrial Revolution & Rise of Big Business.
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Transcript of Industry’s Golden Age The Second Industrial Revolution & Rise of Big Business.
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Industry’s Golden Age
The Second Industrial Revolution
& Rise of Big Business
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Factors Encouraging Industrial Growth
Effects of War Constitution & Governmental Policies Growing Population (Immigration) Natural Resources New Sources of Power Introduction of Machinery American Inventors & Inventions Improved Means of Transportation &
Communication
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Constitution Coining money- made possible a stable
currency for business transactions Regulating interstate commerce – made
possible nationwide laws to regulate industry & transportation
Levying a tariff on imports – made possible protections against foreign competition
System of patents – encouraged inventors Ensures nationwide “common market”
without man-made barriers to movement of goods
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Effects of War Government needed war materials Farmers & city workers had more
money to spend – consumer goods were in greater demand
Not enough workers for industry – look to laborsaving machines
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Effects of Civil War Spurred industrial growth Secession of South left the federal
government in hands of Republican Party – favored business
Congress provided: Land & loans for transcontinental
railroads Established national banking system Enacted high protective tariffs
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Growing Population American population in the 19th
century almost doubled every 25 years 5 million in 1800 to 76 million in 1900
Steady increase meant sufficient workers for industry & expanding markets for goods
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Government Policies Government spurred industrial
growth: Granting land & cash subsidies to
railroad builders Levying high tariffs to protect
manufacturers Maintaining policy of laissez-faire (leave
business alone & let economy regulate itself) until end of the 19th century
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Natural Resources Abundance of raw materials
Coal Iron Lumber
Fertile soil for raising foodstuffs, cotton, & tobacco
Swift-running streams for waterpower
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New Sources of Power Electricity – communication,
lighting, & driving motors Petroleum – 1859 – Edwin Drake
drilled oil in PA First used for lubrication & lighting Late 19th century – gasoline & diesel
oil used in internal combustion engines
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Contributions of Steel
Spurred industrialization in the late 1800s Used for heavy
machinery Rails for trains Bridges to span
rivers Tall buildings
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Bessemer Process – 1850s New method of turning
iron into steel Produce more steel in one
day than older techniques could turn out in a week
Annual steel production grew from 15 thousand tons to 28 million tons by 1910
Prices dropped as steel production increased
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Cheaper Steel = Railroads Cheaper steel encouraged
railroads to lay thousands of miles of new tracks across the Great Plains to the Pacific Coast
Steel safer and more economical since it could carry a heavier load
Railroad companies are major employer in country
Spurred growth in other industries
Cornelius Vanderbilt Popularized the steel rail
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Significance of Railroad Building
Spurred industrialization of the post-Civil War years
Linked entire continent via railroad Created enormous domestic market for U.S.
raw materials & manufactured goods Paved way for incredible growth of Great West
Mining, agriculture, & ranching Great citywide movement Facilitated trade with Orient Seen by Americans as monumental
achievement
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Significance of Railroads
Facilitated large influx of immigrants Spurred investment from abroad Created concept of “time zones” Maker of new railroad aristocracy Native Americans displaced &
herded into ever-shrinking reservations
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Contributions of Communications
Samuel F.B. Morse’s telegraph began to be used by businesses to send business orders to distant locations 1866 Western
Union had over 2,000 offices
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Contributions of Communications
Alexander Graham Bell “talking telephone” had greater impact By end of 1800s, more
than a million telephones had been installed in U.S. offices & homes
Telephone becomes indispensable
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Contributions of energy Innovations require
new forms of energy: oil and electricity
Benjamin Sillman releases a report noting that oil could be refined to kerosene – when burned it produces light
Inexpensive fuel source
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Electricity’s Potential Thomas Alva Edison &
team of researchers worked to find uses for electricity
Produced many innovations – ranging from incandescent light bulb to phonograph to a central power plant
Lewis Latimer – worked for Edison – contributed to light bulb design
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ELECTRICITY Edison’s To Do
List
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Edison’s Inventions
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Edison’s Inventions
Edison's Patents
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Results of Industrial Growth
New industrial products and services Machine – and factory – made products Investors financed new industries to satisfy demand Railroad transportation Telegraph & telephone communication Steel Oil
Higher standard of living – average American enjoyed an increasing array of material comforts
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Results of Industrial Growth
Great fortunes Business leaders accumulated great wealth Exercised tremendous economic power Exerted considerable influence upon gov’t Finance philanthropies
Growth of cities Increased world trade & imperialism Serious economic problems – preventing
monopolies, protecting consumers, improving standards for workers, banking system, levying fair taxes, leveling out the business cycle
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FREE ENTERPRISE (business that is free from government involvement)
+
NEW TECHNOLOGICAL DEVELOPMENTS
+
NEW FORMS OF BUSINESS ORGANIZATION
=
INDUSTRIES’ PRODUCTIVITY & PROFITS
The Growth of Big Business
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Stronger Organization
Pool – agreement, usually secret, among competing companies to fix prices & output or to divide sales territory Declared illegal by Interstate Commerce Act
Trust – group of companies turn their control over to a Board of Directors Board runs the companies as a single enterprise A trust can turn into a monopoly when a trust
gains total control over an industry Holding Company – buys sufficient voting
stock in different companies in order to control them
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Key Figures New technologies, industries, and changes in
society lead to the emergence of key figures in the Second Industrial Revolution Railroads
Cornelius Vanderbilt James J. Hill
Oil John D. Rockefeller
Steel Andrew Carnegie J. P. Morgon
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John D. Rockefeller 1870 formed Standard Oil
in Cleveland OH By 1877 – controlled 95% of
oil refineries in U.S. Nation’s largest oil refiner Created a monopoly –
trust that gains exclusive control of an industry
Worth $900 million in in 1897($189.6 billion today) Bill Gates: $60 billion
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Horizontal Integration Owning all the businesses in a particular field
Standard Oil Controlled 90% of U.S.
Refining Business
Barrels
PipelinesTank Cars
Storage
Facilities
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Andrew Carnegie Immigrant from Scotland
to U.S. in 1848 1873 – concentrated on
steel and built an empire that controlled every aspect of production process Pioneered use of Bessemer
process for making steel
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Vertical Integration
To lower cost of production, purchase iron ore mines, coal mines, railroads & shipping, and steel mills
Improve efficiency by making supplies more reliable, controlling the quality of the product at all stages of production, and eliminate middlemen’s fees
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U.S. Steel By turn of century, U.S. Steel produced
more steel than all of Great Britain ¼ of all steel in the United States
Estimated worth in 1901 without income taxes: $250 million (today: $100.5 billion)
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J. Pierpoint Morgan Owned a Wall Street
banking house which financed the reorganization of railroads, insurance companies, & banks
In 1901, launched the enlarged U.S. Steel Corp. America’s first billion
dollar corporation
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“Nouveau Rich” Arrogant class of “new rich” after
Civil War Older American aristocracy losing
power and prestige in the face of “new rich” Economic liberty and community
involvement being overshadowed by monopoly and political machines
Antitrust crusaders
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Philosophy Social Darwinism
Charles Darwin – Origin of Species – “survival of the fittest”
Used theory as foundation of promoting the virtues of free-market capitalism
Others argued divine providence was responsible for winners and losers in society God granted wealth as He had given grace for
material and spiritual salvation of the select few Those who stayed poor must be lazy and lacking
in enterprise
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Philosophy Carnegie’s Gospel of Wealth
Justified uneven distribution of wealth by industrialists
Stated money should be given away for public good but not to individuals in want
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Advantages of Big Business Mass Production
Offered the public new, improved, & less expensive products
Wide Distribution Increased profits by using large-scale
advertising & by selling their products to entire nation
Efficient management Could afford to hire most capable
executives, maintain costly research laboratories, & raise capital for expansion
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Abuses by Big Business Elimination of Competition – destruction
of small businessman Power Over the Consumer – force
consumer to pay high prices & accept inferior quality
Exploitation of Workers – pay low wages & keep workers from forming unions
Influence Over the Gov’t – bribing politicians & buying votes
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Government Regulation of Trusts Sherman Anti-Trust Act of 1890
Created in response to public demand for curbing excesses of trusts
Provision Forbade combinations in restraint of
trade Provided penalties for corporations &
individuals that violated the act
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Weaknesses of Sherman Antitrust Vague language of the law Ability of business leaders to use
forms of combination other than the trust
Lack of sufficient funds, personnel, & executive determination for enforcement
Interpretations by Supreme Court favoring big business
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Impact of 2nd Industrial Revolution
Standard of living rose sharply
Urban centers mushroomed as factories increasingly demanded more labor
American agriculture eclipsed by industrialism
Foreign trade developed as high U.S. productivity threatened to flood American market
Free-enterprise eclipsed by monopoly
Workplace became regimented & impersonal
Women achieved social & economic independence
Social stratification more pronounced