The Rise of American Business, Industry and Labor, 1865-1901

From Agricultural to Industrial

After the Civil War, the U.S. was still largely an agricultural nation.

By the 1920’s --- 60 years later ---, it had become a leading industrial power in the world.

Major areas of growth in Business and Industry

Transportation: railroads and automobiles; urban transportation

Building materials: steel

Energy sources: coal, oil, electricity

Communications: telegraph, telephone

Transportation: automobiles

Prior to 1860 Use of horses and buggy

After 1860 Automobile engine (two cycle) invented by Karl Benz 1893 Diesel engine by Rudolf Diesel 1893 Gasoline automobile Steel production increases Construction of roads

Transportation: railroads

Prior to 1860 Railroads extended west to the Mississippi River.

After 1860 Transcontinental railroad connected the nation, east

and west in 1869. With rail transportation, iron, coal, steel, lumber and

glass industries expanded. Towns grew, new markets opened, new opportunities

to make $

Representative Entrepreneurs: Case Studies in Wealth and Effort

John D. Rockefeller Standard Oil Company By 1880 controlled 90% of

America’s refining business. Made huge profits, but paid

employees low wages. Drove his competitors out of

business by selling at a lower price than it cost to produce it. When his competitors went out of business, then he hiked the price up.

Inventions Promote Change

Inventions affect the way people lived and worked.

The harnessing of electricity completely changed the nature of business in America.

By 1890, electric power ran numerous machines from fans to printing presses.

Photo: Westinghouse Generator for New York City

Inventions Change Lifestyles

The invention of the typewriter and telephone affected office work and created new jobs for women.

With industrialization, clothing could be mass-produced in factories creating a need for garment workers.

Entrepreneur: Andrew Carnegie

Carnegie was born in Scotland to penniless parents.

Entered steel business in 1873. Carnegie Steel Company

manufactured more steel than all the factories in Great Britain.

Continually searched for ways to make better products more cheaply.

Bought out his suppliers –coal fields and iron mines, ore freighters and railroad lines – in order to control the raw materials & transportation.

Entrepreneur: Henry Ford

Creates quadricycle in 1896.

12 years later created a car so good and so cheap it put America on wheels.

Model T built by assembly line

Millions of Americans could now afford a car

J. Pearpont Morgan

Began career as an accountant

J.P. Morgan and Company 1895.

Coldly rational Reorganized the

railroads Created U.S. Steel, first

billon-dollar corporation in 1901.

Big Business and Capitalism

Laissez-faire capitalism ruled the day at the beginning of Industrial Revolution.

Unbridled money-making.

Captains of Industry or

Robber Barons? Ruthless business

practices But also, philanthropy

Forms of Business Organization

Monopoly one company controls an industry or is the only

provider of a product or service  Conglomerate -   large business with a number of

companies

Trust An unincorporated business organization created by a legal document, a declaration of trust, and used in place of a corporation or partnership

Holding Company Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries

Adam Smith: Wealth of the Nations

Father of Economics Influential thinker Wrote at beginning of

Industrial Revolution Favored an unregulated

economy. “The Less government

interfers with business, the more prosperous the nation will be”.

Urbanization: a Direct Result of the Industrial Revolution Burgeoning factories

were centralized in cities which offered a central location for resources and workers.

Immigrants and rural workers flooded cities in hopes of finding employment.

Negative Effects of Urbanization

Housing (tenements, slums, etc.)

Health (disease, sanitation, etc.)

Working Conditions (child labor, etc.)

Political Machines (Tamany Hall, graft, etc.)

Positive Effects of Urbanization:

New Technologies (elevators, skyscrapers, street lighting, water and sewage systems, etc.)

Cultural Benefits (museums, theaters, parks, libraries, education, etc.)

Board Game: Monopoly

This board game was invented when America's Gilded Age was in its final death throes. 

Invented by Lizzie   Magie. 

The Landlord's Game

Originally named "The Landlord's Game" Lizzie said it might well have been called "The Game of Life"

"The Commons" for The People not private profiteers

Lizzie ws a Georgist (one who follows the teaching of economist Henry George) and believed that things found in nature like mineral wealth, are part of the commons and thus should really be owned by "We the people' not private profiteers.

It was an ideology directly born out of the times - The Gilded Age - when Robber Barons used monopolies in steel, oil, rail and finance to dominate the American economy. 

Massive Monopolies were built

The Robber Barrons like Carnegie, Rockefeller, Morgan, built vast fortunes by owning all the stops on the Monopoly Board of America.  While working people's conditions collapsed to the point where we went into the Great Depression.

Most Americans worked for someone else - monopolists

In his 1888 State of the

Union Address, President Grover Cleveland said the "citizen is ...trampled to death beneath an iron heel," he also called out the corruption of Congress by the Robber Barons.

President Cleveland's reality

"We discover that the fortunes realized by our manufacturers are no longer solely the reward of sturdy industry and enlightened foresight, but they are the result from the discriminating favor of the Government and are largely built upon undue exactions from the masses of our people" 

President Grover Cleveland

No restriction on Monopolies

President Cleveland's 1888 reality was our most prominent Founding Father's worst fear.  On Dec. 20, 1787, Thomas Jefferson wrote to James Madison about his concerns regarding the first draft of the Constitution, namely that it did not include a Bill of Rights, and in particular, it did not include a "restriction of monopolies"

See clearly the gross injustice

In inventing the Board game Monopoly, Lizzie Magie's hope, and that of many, was that the stranglehold of the Economic Royalists of the era could somehow be broken. 

"Let the children once see clearly the gross injustice of our present ...system and when they grow up, if they are allowed to develop naturally, the evil will soon be remedied."

          The End (for now)