Rise Of Big Business

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.

The Light BulbThe Light Bulb

Thomas Alva EdisonThomas Alva Edison

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

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)

Model T AutomobileModel T Automobile

Henry FordI want to pay my workers so that they

can afford my product!

Henry FordI want to pay my workers so that they

can afford my product!

“Model T” Prices & Sales

“Model T” Prices & Sales

Essential QuestionEssential Question

Industrialization increased the standard

of living and the opportunities of most

Americans, but at what cost?

Industrialization increased the standard

of living and the opportunities of most

Americans, but at what cost?

Causes of Rapid IndustrializationCauses of Rapid Industrialization1. Steam Revolution of the 1830s-1850s.

2. The Railroad fueled the growing US economy:

First big business in the US. A magnet for financial investment. The key to opening the West. Aided the development of other

industries.

1. Steam Revolution of the 1830s-1850s.

2. The Railroad fueled the growing US economy:

First big business in the US. A magnet for financial investment. The key to opening the West. Aided the development of other

industries.

Causes of Rapid IndustrializationCauses of Rapid Industrialization

3. Technological innovations. Bessemer and open hearth

process Refrigerated cars

3. Technological innovations. Bessemer and open hearth

process Refrigerated cars

4. Unskilled & semi-skilled labor in abundance.

5. Abundant capital.6. New, talented group of businessmen

[entrepreneurs] and advisors.7. Market growing as US population

increased.8. Government willing to help at all levels to

stimulate economic growth.9. Abundant natural resources.

4. Unskilled & semi-skilled labor in abundance.

5. Abundant capital.6. New, talented group of businessmen

[entrepreneurs] and advisors.7. Market growing as US population

increased.8. Government willing to help at all levels to

stimulate economic growth.9. Abundant natural resources.

Causes of Rapid IndustrializationCauses of Rapid Industrialization

Growth of Railroads• Government justified giving Railroads land

grants and loans for military and postal service purposes.

• Union Pacific Railroad extended railroad west from Omaha, NE.

• Central Pacific Railroad completed the transcontinental rail line from Sacramento, CA to Sierra, NV

• The two lines met near Ogden, UT

Revolution by Railways• Transcontinental RR created domestic market

for raw materials and manufactured goods.• Stimulated mining and agriculture by making

the movement of goods to market faster and farther.

• Creation of cities around RR • Advertising increased immigration from

Europe to farm the west.• Introduction of time zones• Created new society of millionaires.

New Business CultureNew Business Culture1. Laissez Faire the ideology of the

Industrial Age.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!

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!

New Type of Business Entities

New Type of Business Entities1. Pool

1887 Interstate Commerce Act Interstate Commerce Commission created.

2. Trust John D. Rockefeller

1. Pool 1887 Interstate Commerce Act Interstate Commerce Commission created.

2. Trust John D. Rockefeller

Standard Oil Co. Standard Oil Co.

New Type of Business Entities

New Type of Business Entities

2. Trust: Horizontal Integration John D.

Rockefeller

2. Trust: Horizontal Integration John D.

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

Standard Oil Co.Standard Oil Co.

Iron & Steel ProductionIron & Steel Production

New Type of Business Entities

New Type of Business Entities

U. S. Corporate Mergers

U. S. Corporate Mergers

New Financial BusinessmanNew Financial Businessman

The Broker: J. Pierpont Morgan – “Stock Watering” - “Interlocking Directorate”

The Broker: J. Pierpont Morgan – “Stock Watering” - “Interlocking Directorate”

Wall Street – 1867 & 1900

Wall Street – 1867 & 1900

The Reorganization of Work

The Reorganization of Work

The Assembly LineThe Assembly Line

% of Billionaires in 1900

% of Billionaires in 1900

% of Billionaires in 1918

% of Billionaires in 1918

The Protectors of Our Industries

The Protectors of Our Industries

The ‘Bosses’ of the Senate

The ‘Bosses’ of the Senate

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.

“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.”

Impact of Industrial Revolution

• Public no longer lived by the clock of nature.

• Women entered the work force with invention of typewriter and telephone.

• 1/10 of American people owned 90% of the nation’s wealth.

• Hundreds of thousands immigrants entered the US created a large, cheap labor market

Actions Against Labor Unions• Injunctions – court order ordering strikers to

return to work.• Lockouts – employers would lock the doors to

the factories and “starve them into submission”

• Yellow-Dog Contracts – employees were forced to sign an agreement not to join a labor union.

• Black List – Employers would put trouble makers on a list and circulate the list to other employers making it difficult to find work.

Regulating the TrustsRegulating the Trusts1886 Wabash, St. Louis & Pacific

Railroad Company v. ILThe court declared invalid an Illinois law

prohibiting long- and short-haul clauses in transportation contracts.

Interstate Commerce Act 1887Prohibited rebates and pools and

required RR to openly publish their ratesand charging more for short hauls than for long ones on the same line.

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

The court declared invalid an Illinois law prohibiting long- and short-haul clauses in transportation contracts.

Interstate Commerce Act 1887Prohibited rebates and pools and

required RR to openly publish their ratesand charging more for short hauls than for long ones on the same line.

Interstate Commerce Commission

• Provided a forum where competing businesses could resolve conflicts.

• It prevented “rate wars” among RR lines.

• Stabilized the existing business system.

• 1st attempt by the Federal Government to regulate business in the best interest of society.

Sherman Antitrust ActDeclared illegal every contract,

combination (in the form of trust or otherwise), or conspiracy in restraint of interstate and foreign trade.

• It did not distinguish between “good” trusts and “bad” trusts limiting actions of labor unions who were restraining trade.

• The law proved ineffective because of the loop holes corporate lawyers found.