Industrialization The Rise of Industry and the Transcontinental Railroad.

IndustrializationIndustrialization

The Rise of Industry and the The Rise of Industry and the Transcontinental RailroadTranscontinental Railroad

Essential QuestionEssential QuestionEssential QuestionEssential Question

Industrialization Industrialization increased the standard increased the standard

of living and the of living and the opportunities of most opportunities of most

Americans, Americans, but at what costbut at what cost??

Industrialization Industrialization increased the standard increased the standard

of living and the of living and the opportunities of most opportunities of most

Americans, Americans, but at what costbut at what cost??

Natural ResourcesNatural Resources

Edwin DrakeEdwin Drake drilled the nation’s drilled the nation’s first oil well in first oil well in 1859 in 1859 in PennsylvaniaPennsylvania

OilOil Production Production fueled industrial fueled industrial growthgrowth

Large WorkforceLarge Workforce

Between 1860 and Between 1860 and 1910, the population 1910, the population in the US in the US TRIPLEDTRIPLED!!

Over Over 20 Million20 Million immigrants arrived immigrants arrived between 1870-1910 between 1870-1910 and they flocked to and they flocked to work in our nation’s work in our nation’s factoriesfactories

New InventionsNew Inventions

Alexander Graham Alexander Graham BellBell invented the invented the telephonetelephone in 1876 in 1876

Thomas Alva EdisonThomas Alva Edison invented the invented the phonograph, phonograph, light light bulbbulb, and electric , and electric generatorgenerator

U. S. Patents GrantedU. S. Patents GrantedU. 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.

Expansion of RailroadsExpansion of Railroads

1865 the nation had 35,000 miles track1865 the nation had 35,000 miles track 1900 boasted over 200,000 miles!1900 boasted over 200,000 miles! Construction Construction linkedlinked distant regions of the distant regions of the

nation and helped create a nation and helped create a NationalNational market for productsmarket for products

Construction Construction stimulated the economystimulated the economy by by spending millions on steel, coal, and spending millions on steel, coal, and timbertimber

Pacific Railway ActPacific Railway Act

Railroad boom began in 1862 when Railroad boom began in 1862 when Lincoln signed the Lincoln signed the Pacific Railway ActPacific Railway Act

The Act provided for construction for the The Act provided for construction for the first transcontinental railroad by two first transcontinental railroad by two construction companiesconstruction companies Union PacificUnion Pacific Central PacificCentral Pacific

The Union PacificThe Union Pacific

Led by Engineer Led by Engineer Grenville DodgeGrenville Dodge, the Union , the Union Pacific moved Pacific moved WestWest from from Omaha NebraskaOmaha Nebraska Railroad workers included Civil War Railroad workers included Civil War

veteransveterans, new , new Irish immigrantsIrish immigrants, frustrated , frustrated farmers and miners, and farmers and miners, and ex-convictsex-convicts

Employed over 10,000 workersEmployed over 10,000 workers

Central PacificCentral Pacific

Engineered by Engineered by Theodore JudahTheodore Judah who sold stock to the “Big Four” who sold stock to the “Big Four” including including Leland StanfordLeland Stanford They pushed They pushed EastEast from from Sacramento Sacramento

CaliforniaCalifornia A labor shortage in California led the A labor shortage in California led the

Central Pacific to hire over 10,000 Central Pacific to hire over 10,000 Chinese immigrantsChinese immigrants to lay the track to lay the track

Chinese Workers in the Chinese Workers in the SnowSnow

Life working Life working on the rails on the rails was rough, was rough, dirty, dirty, dangerous, dangerous, with lots of with lots of gambling, gambling, drinking, and drinking, and hard fightinghard fighting

Two Lines MeetTwo Lines Meet May 10, 1869 the two lines met in Promontory May 10, 1869 the two lines met in Promontory

Summit, Utah (near Ogden, Utah)Summit, Utah (near Ogden, Utah) Two celebrate the event, they drove in a Two celebrate the event, they drove in a

famous “golden spike”famous “golden spike”

Two Lines MeetTwo Lines Meet

Government HelpGovernment Help

The Transcontinental RR would never have The Transcontinental RR would never have been built without been built without helphelp from the from the federal federal governmentgovernment

The gov. gave large The gov. gave large Land GrantsLand Grants to RR to RR companies, who could companies, who could sellsell that land to settlers that land to settlers or businesses to raise money for RR or businesses to raise money for RR constructionconstruction

By the 1860s the federal land grant system had By the 1860s the federal land grant system had given over given over 120 million acres120 million acres of land to RR of land to RR

Consolidation of the RRConsolidation of the RR

By 1900 there were hundreds of small lines By 1900 there were hundreds of small lines that needed to be that needed to be consolidatedconsolidated

Cornelius VanderbiltCornelius Vanderbilt purchased and merged purchased and merged many lines in NY and Chicago and was able to many lines in NY and Chicago and was able to offer the first offer the first direct servicedirect service between the cities between the cities

He also built NY City’s He also built NY City’s Grand Central StationGrand Central Station To make rail service To make rail service safer and more reliablesafer and more reliable, ,

the American Railway Association divided the the American Railway Association divided the country into country into 4 time zones4 time zones regions where time regions where time was the same throughout each regionwas the same throughout each region

Industrial World Leader

-by 1880, U.S. is world’s leading producer of goods

-reasons why????

unlimited labor force

abundant coal supply

iron mining- Bessemer Process (steel)

discovery of oil in US– Drake

railroad development

Public Support

-laissez-faire government policies: “hands off”, no government intervention in business

-unlimited immigration supplied labor

-high tariffs protected American business; made imported goods more expensive

-public financing of railroads: Federal Land Grants!!!!

1. Laissez Faire the ideology of the Industrial Age.

Individual as a moral and economic ideal.

Individuals should compete freely in the marketplace.

The market was not man-made or invented.

No room for government in the market!

Entrepreneurs and Innovations

-late 1800’s saw an explosion of innovation and invention

-telephone: Alexander G. Bell

-light bulb: Edison

-electric power -Nikola Tesla—AC Power and George Westinghouse

Generator= Edison, N.Y.C

-Bessemer Process: injected air into IRON creating STEEL

-typewriter = Sholes

Entrepreneurs and Innovations

-photography : Eastman= KODAK

-phonograph- Edison

-motion pictures

-radio—Nikola Tesla

-retail stores: sold all of the goods produced in the new factories

-canned foods= created from new tin can steel after the rise of the Bessemer process!

Entrepreneurs and Innovations-John D. Rockefeller:

Standard Oil Company

-Andrew Carnegie: U.S. Steel Company

-J.P. Morgan: banker and leader of HUGE holding company

-Cornelius Vanderbilt: Railroad consolidator; offered first direct service from NY-Chicago, built NYC Central Station

-Dupont Family

-James B. Duke- mechanized production of cigarettes

Railroads lead the Way

-”iron horse”

-Leading consumer of goods: steel, iron, coal, timber

-better transportation leads to growth

-transcontinental, golden spike driven at Promontary Point, UTAH 1869

-standardization of time: 4 Time zones

Railroad Prosperity

-growth of urban areas

-Development of Company Towns

Pullman, Illinois makes RR cars: employees given housing, medical care, entertainment

-railroad scandals

Credit Mobilier: Union Pacific created CM construction company, hired themselves, charged high fees, skimmed profits into their pockets

gov’t land grants: RR would sell land to businesses instead of new settlers

Grange and the Railroads

-Railroad abuses: often charge more for short haul than long haul, charge discriminatory rates

-Granger Laws: passed to regulate RR companies to protect FARMERS

-Supreme Court rulings”

Munn v. Illinois= Supreme Court upheld Granger laws

Wabash v. Illinois=overturned Munn and said that states have no power to regulate interstate commerce

-Created after Wabash case

Interstate Commerce Act, 1887=

made rebated and pools illegal; railroads had to publish their rates to public; unfair discrimination illegal and can’t charge more for short haul than long

Interstate Commerce Commission (ICC)=

Federal Gov. attempt Federal Gov. attempt to regulate big to regulate big businesses, especially businesses, especially RR companies= RR companies= government will government will intervene to protect intervene to protect the public!the public!

Big Business

-corporations develop

-limited liability leads to public investment

-mass market selling

Advantages

-greater efficiency

-economy of scale: the larger the business the more efficient they can produce

-manager system

-productivity studies

Frederick Taylor: scientifically studied assembly lines and production to make factories and wage workers more productive

Disadvantages

-unfair competition practices: when monopolies develop they can control all prices and pay low wages

-corruption and bribery: they would skim profits and bribe Congressmen for government kickbacks

-destroyed labor union movements:

Did not want workers to unite for higher wages

Public Reactions

-mixed public feelings

-Social Darwinism

-based on Darwin’s theory of evolution

-survival of the fittest

-also applies to the business world

-the best businesses survive

-justified their wealth

-”Gospel of Wealth”: should be able to make as much money as possible as long as they gave back to society

-rags to riches

“American Dream”

Horatio Alger dime novels promoted individualism, you can pull yourself up by your bootstraps

Social DarwinismSocial DarwinismSocial DarwinismSocial Darwinism× British economist.× Advocate of

laissez-faire.× Adapted Darwin’s

ideas from the “Origin of Species” to humans.

× Notion of “Survival of the Fittest.”

× British economist.× Advocate of

laissez-faire.× Adapted Darwin’s

ideas from the “Origin of Species” to humans.

× Notion of “Survival of the Fittest.”

Herbert SpencerHerbert Spencer

Social Darwinism in Social Darwinism in AmericaAmerica Social Darwinism in Social Darwinism in AmericaAmerica

William Graham SumnerFolkways (1906)

William Graham SumnerFolkways (1906)

$ Individuals must have absolute freedom to struggle, succeed or fail.

$ Therefore, state intervention to reward society and the economy is futile!

$ Individuals must have absolute freedom to struggle, succeed or fail.

$ Therefore, state intervention to reward society and the economy is futile!

New Business Culture:New Business Culture:“The American Dream?”“The American Dream?”New Business Culture:New Business Culture:“The American Dream?”“The American Dream?”

Protestant (Puritan) “Work Ethic”Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels]Horatio Alger [100+ novels]

Protestant (Puritan) “Work Ethic”Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels]Horatio Alger [100+ novels]

Is the idea of the “self-made man” a MYTH??Is the idea of the “self-made man” a MYTH??

New Type of Business New Type of Business EntitiesEntitiesNew Type of Business New Type of Business EntitiesEntities1.1. PoolPool

18871887 Interstate Commerce ActInterstate Commerce Act Interstate Commerce Interstate Commerce Commission Commission created.created.

2.2. TrustTrust John D. John D. Rockefeller Rockefeller

1.1. PoolPool 18871887 Interstate Commerce ActInterstate Commerce Act Interstate Commerce Interstate Commerce Commission Commission created.created.

2.2. TrustTrust John D. John D. Rockefeller Rockefeller

Standard Oil Co. Standard Oil Co.

Standard Oil Co.Standard Oil Co.Standard Oil Co.Standard Oil Co.

New Type of Business New Type of Business EntitiesEntitiesNew Type of Business New Type of Business EntitiesEntities2.2. TrustTrust::

Horizontal IntegrationHorizontal Integration John D. John D. Rockefeller Rockefeller

2.2. TrustTrust:: Horizontal IntegrationHorizontal Integration John D. John D.

Rockefeller Rockefeller Vertical Integration:

o Gustavus Swift Meat-packingo Andrew Carnegie U. S. Steel

Vertical Integration:o Gustavus Swift Meat-packingo Andrew Carnegie U. S. Steel

Types of Big Businesses

-monopoly—when a business controls all or most of the supply of a product

-trust—when several businesses act as one under the control of a board of directors

-merger—when two or more businesses join to become one larger business

-holding company---business which exists in order to control other businesses as a parent company

-horizontal integration —type of monopoly formed by controlling all of the same type of business

-vertical integration —monopoly formed by controlling businesses related to the primary business

Types of Big Businesses

-monopoly—when a business controls all or most of the supply of a product

-trust—when several businesses act as one under the control of a board of directors

-merger—when two or more businesses join to become one larger business

-holding company---business which exists in order to control other businesses as a parent company

-horizontal integration —type of monopoly formed by controlling all of the same type of business

-vertical integration —monopoly formed by controlling businesses related to the primary business

Robber Barons

-extreme profits made by business owners

-Philanthropy??? Donating money for social progress

-big business practices exposed

(cheap wages, high profits!)

-public finally began to call for regulation by government

-Sherman Anti-trust Act, 1890

-forbade combinations in restraint of trade- made no distinction between good and bad trusts

-weak law but set a precedent for future regulation by the government to protect public

Regulating the TrustsRegulating the TrustsRegulating the TrustsRegulating the Trusts1877 1877 Munn. v. ILMunn. v. IL

1886 1886 Wabash, St. Louis & Pacific Wabash, St. Louis & Pacific Railroad Company v. IL Railroad Company v. IL

1890 1890 Sherman Antitrust ActSherman Antitrust Act in “restraint of trade”in “restraint of trade” ““rule of reason” loopholerule of reason” loophole

1895 1895 US v. E. C. Knight Co.US v. E. C. Knight Co.

1877 1877 Munn. v. ILMunn. v. IL

1886 1886 Wabash, St. Louis & Pacific Wabash, St. Louis & Pacific Railroad Company v. IL Railroad Company v. IL

1890 1890 Sherman Antitrust ActSherman Antitrust Act in “restraint of trade”in “restraint of trade” ““rule of reason” loopholerule of reason” loophole

1895 1895 US v. E. C. Knight Co.US v. E. C. Knight Co.

The Protectors of Our The Protectors of Our IndustriesIndustriesThe Protectors of Our The Protectors of Our IndustriesIndustries

The The ‘Robber Barons‘Robber Barons’ of the ’ of the PastPastThe The ‘Robber Barons‘Robber Barons’ of the ’ of the PastPast

The Gospel of Wealth:The Gospel of Wealth:Religion in the Era of Religion in the Era of IndustrializationIndustrialization

The Gospel of Wealth:The Gospel of Wealth:Religion in the Era of Religion in the Era of IndustrializationIndustrialization

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.

““On Wealth”On Wealth”““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.”

Relative Share of World Relative Share of World ManufacturingManufacturingRelative Share of World Relative Share of World ManufacturingManufacturing

Modern ‘Robber Barons’??Modern ‘Robber Barons’??Modern ‘Robber Barons’??Modern ‘Robber Barons’??