Late 19th Century America

Mr. MarstonDominion Christian High

SchoolMarietta, GA

America as a great industrial power

• By 1890, America was one of the top three industrialized powers in the world

• Great Britain• Germany• United States

Industrialization increased the standard of living and the opportunities of most

Americans. Some question the “means” by

which the industrial capitalists became

wealthy.

Industrialization increased the standard of living and the opportunities of most

Americans. Some question the “means” by

which the industrial capitalists became

wealthy.

Causes for Industrialization

• 1. Population Growth led to increased demand for products and an increased work force to produce them.

1860: 32 million1910: 92 milliona.Movement westward (source of raw

materials)b.Rapid expansion of railroads

Causes for Industrialization

• 2. new machines and methods• 3. government friendly to economic

growth (willing to stay out of the way)• 4. new sources of power: oil and

electricity• 5. abundant capital• 6. talented group of businessmen

(entrepreneurs)• 7. surplus labor from immigration

New Business CultureNew Business CultureLaissez Faireto leave alone)Laissez Faireto leave alone)

the ideology of the Industrial Age.

Individuals should compete freely in the marketplace.

The market was not man-made or invented.

No room for government in the market!

the ideology of the Industrial Age.

Individuals should compete freely in the marketplace.

The market was not man-made or invented.

No room for government in the market!

“Captains of Industry”

• Derisively called “robber barons” because of their greed and aggressive business practices.

Andrew Carnegie: (Steel)John D. Rockefeller: (Oil)Cornelius Vanderbilt (railroads)J.P. Morgan: (investment banker)

The Steel Industry: Andrew Carnegie

Andrew Carnegie

• “Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community”

• The man who dies rich, dies disgraced”• “Rags to riches story”• Immigrant from Scotland• His skill was as a business organizer and

innovator in running factories• He hired the best people to perform the

technical work for him

• 1875: Edgar Thompson Works: An integrated steel factory and sell steel to the Pennsylvania Railroad Company

• Vertically Integrated System: all processes from start to finish are controlled by one entity. For steel, from blast furnaces to steel rails.

• Carnegie always modernized to the most recent equipment before his competitors

Vertical Integration example

• Carnegie Steel

• American steel production1865: 19,000 tons1900: 10 million tonsHe sold to JP Morgan in 1901 for $480

million and Carnegie’s companies became the core of US Steel Corporation

Carnegie’s legacy

• Gave away $350 million• 3,000 libraries• Education (Carnegie-Mellon

University)• Carnegie Hall: (NYC)

Carnegie Hall

The Gospel of Wealth:Religion in the Era of

Industrialization

The Gospel of Wealth:Religion in the Era of

Industrialization

Russell H. ConwellRussell H. Conwell

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

“The Gospel of Wealth”

• “Not evil, but good, has come to the race from the accumulation of wealth by those who have the ability and energy that produces it.”

“On Wealth”“On Wealth”

Andrew CarnegieAndrew Carnegie

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

John D. Rockefeller

• Built empire on refining oil, not in its production

• Expert organizer • Established refineries and he worked

hard to make a high quality product• Bought out competitors or went into

partnership• Made deals with the railroads to

subsidize his shipping charges of oil

Rockefeller

Standard Oil Refinery

• Created monopoly of American oil refining

• Rockefeller could control how oil went onto the market

• He could create business stability• By 1879, Rockefeller controlled 95%

of the U.S. oil refining industry

“pay nobody a profit”

Standard Oil owned the pipelines leading to railroads, plus the tank cars and the oil storage facilities

• Rockefeller organized his company into a trust: business entity with a board of trustees that made decisions and controlled the day to day operations of several companies

Horizontal Integration

• Consolidation of all of one entire segment of an industry.

• 1. raw materials• 2. Transport and Manufacturing• 3. Marketing and Selling

Cornelius Vanderbilt

• Shipping and railway magnate• Controlled rail lines from New York to

Chicago

Cornelius [“Commodore”] Vanderbilt

Cornelius [“Commodore”] Vanderbilt

Can’t I do what I want with my money?Can’t I do what I want with my money?

J.P. Morgan

• Born wealthy• Investment banker: bought company

shares and bonds wholesale and then sold them at a profit.

• He reorganized railroads• Purchased U.S. Steel from Carnegie

in 1901 (the first billion dollar corporation)

J.P. Morgan

Tobacco

• James Buchanan (Buck) Duke formed the American Tobacco Company

• Controlled 90% of the nation’s cigarette market

End result of Industrial Capitalism

• Rising standard of living• Rich got richer• Most others were better off.• 1860 and 1900: richest 2% of

American families owned more than a 1/3 of the wealth

• 10% owned almost 75%• Upward mobility was common

Long term economic decline in prices and the cost of living, real wages and earnings went up by 50% between 1860 and 1890

Relative Share of World Manufacturing

Relative Share of World Manufacturing

Inventions

• 276 patents in 1790’s• 234, 956 by the 1890’s

• “Invention was the mother of new industries.”

U. S. Patents GrantedU. S. Patents Granted

1790s 276 patents issued. 1790s 276 patents issued.

1990s 1,119,220 patents issued. 1990s 1,119,220 patents issued.

New inventions

• New processes in steel making and refining

• Refrigerator car: meat could be sent back east and gave rise to packinghouses in Chicago and Minneapolis.

• Glassmaking became mechanized• Tobacco manufacturing (machine to

roll cigarettes)

Other inventions

• 1868: air brakes for trains (George Westinghouse)

Steam turbines, gas distribution and electrical devices.

Typewriter, sewing machine, vacuum cleaner, internal combustion engine, and the motion picture.

Standardize size and designs of clothes

Other improvements

• Paper from wood pulp led to inexpensive newspapers, magazines, and books.

Thomas Alva EdisonThomas Alva Edison

“Wizard of Menlo Park” “Wizard of Menlo Park”

The Light Bulb (1879)The Light Bulb (1879)

The Phonograph (1877)The Phonograph (1877)

The Ediphone or Dictaphone

The Ediphone or Dictaphone

The Motion Picture CameraThe Motion Picture Camera

Alexander Graham BellAlexander Graham Bell

Telephone (1876)Telephone (1876)

Bell

• 1877: staged a conversation between Boston and New York

• Formed Bell Telephone Association, that became National Bell Telephone Company

• 1885: American Telephone and Telegraph (AT&T)

Alternate CurrentAlternate Current

George WestinghouseGeorge Westinghouse

Alternate CurrentAlternate Current

Westinghouse Lamp ad

Westinghouse Lamp ad

Politics and government response to “Big

Business”• 4 issues in the 1870’s• 1. civil service reform• Hayes attacked a New York Political

machine that controlled NY’s tariff-collecting agency (led by Senator Roscoe Conkling)

• 2. government corruption• 3. revision of the tariff• 4. regulation of trusts

Republican party splits• Stalwarts: Conkling’s supporters (high

tariff, hard currency, and the spoils system)

• Half-Breeds: moderate Republicans favored reform

• 1880 Election• James Garfield (Half-Breed for president)

shot in a Washington D.C. train station• Chester A. Arthur: (Stalwart) becomes

president

Civil Service Reform under Arthur

• Pendleton Act: 3 civil service commissioners appointed by president to ensure that civil service offices went to people who scored well on civil service exams, not personal friends or lackeys of the president (spoils system)

Tariff Reduction Attempt

• “Mongrel Tariff” a failed effort to reduce the tariff as its supporters and detractors split along party lines.

• Republicans (industrial areas) supported it

• Democrats: South and West favored low tariff

Election of 1884

• Grover Cleveland (Democrat)• James G. Blaine (Republican)• Mugwumps: deserters of Republican

party who supported Grover Cleveland

• Cleveland won

Interstate Commerce Act (1887)

• Regulation of railroad companies• A. Railroad rates must be reasonable

and just• B. all railroad companies must

publish rates and financial reports• C. create a regulatory agency

(Interstate Commerce Commission)

Sherman Anti-trust Act (1890)

• Made monopolies illegal• Act was ineffective until tougher

federal regulations came later

McKinley Tariff (1890)

• High duties on manufactured and agricultural imports than any previous tariff in history

• Lowered revenue by decreasing trade

• Extremely unpopular