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The Gilded Age

The Gilded Age. In which the Industrial Revolution changed America causing the growth of cities, control of the Great Plains, and a fight for justice. Incorporating America: the rise of big business. What led to the rise of big business?. 2 nd IR US/Germany  modernity in industry

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The Gilded Age

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  1. The Gilded Age In which the Industrial Revolution changed America causing the growth of cities, control of the Great Plains, and a fight for justice.

  2. Incorporating America: the rise of big business

  3. What led to the rise of big business? • 2nd IR • US/Germany  modernity in industry • Innovation/invention in area of metals, machinery, chemicals, foodstuffs • Shortage of labor (post-CW)  increase in technology • Efficient, high-speed, labor-saving machinery • New products • Better productivity = more products  expansion of co. into more states • Standardized machinery, parts, • Abundance of natural resources/power sources • Coal, iron, oil, wood, water, electricity

  4. Entrepreneurs & Innovators • 440,000 patents in 1800s, 234,956 in 1890s • Growth of labor • Immigrants: 23 mil. By 1914 • Movement from farm to city •  new markets for products • Gov. that encouraged business • High tariffs • Gov. $$ and land to finance RR, other improvements

  5. Laissez Faire  industry control gov. • Gospel of Wealth: Carnegie • $ of wealthy from God . . . Must be morally responsible • Social Darwinism: Herbert Spencer • Wealthy deserve wealth- inherently better • Poor are so b/c of own shortcomings- deserve it • Shouldn’t help the “unfit” to survive  impedes progress • Russell Cornwell, “Acres of Diamonds” speech • William Graham Sumner, What Social Classes Owe Each Other

  6. “dig in your own backyard” • http://historymatters.gmu.edu/d/5769 • “I say that you ought to get rich, and it is your duty to get rich ... The men who get rich may be the most honest men you find in the community. Let me say here clearly ... ninety-eight out of one hundred of the rich men of America are honest. That is why they are rich. That is why they are trusted with money. That is why they carry on great enterprises and find plenty of people to work with them. It is because they are honest men. ... I sympathize with the poor, but the number of poor who are to be sympathized with is very small. To sympathize with a man whom God has punished for his sins ... is to do wrong. ... Let us remember there is not a poor person in the United States who was not made poor by his own shortcomings…”

  7. Spencer Sumner

  8. Fueling industry • RR connect E – W  national market for goods, services • Telegraph system, steamships, electricity (1880s) • US leader in AG by 1870 • Fueled economy  wheat, corn to flour, meal • Cattle industry- from slaughter to packing saw growth of major industry • Stimulated industrial sector of econ • Applying science to industry • Scientists + engineers  kerosene/gasoline from crude oil • Refining steel (Bessemer process- GB) • Led to new products @ lower prices • Focus on maximum production, national/international marketing & distribution • Steel, oil, processed food, tobacco

  9. http://www.youtube.com/watch?feature=player_embedded&v=kW-3wnWpoR8http://www.youtube.com/watch?feature=player_embedded&v=kW-3wnWpoR8

  10. Railroads • 1865- 35,000 miles • 1900- 200,000 • Gov. grants of land to RR companies • Built by private companies- sold bonds to raise $ for contruction • Gov. aid through land grants, loans, tax breaks • Haul military personnel/equipment, mail, gov. freight • Grow economy = grow gov. revenue • Corruption: Credit Mobilier • Town success dependent on RR stop • Ghost towns = no stop

  11. RR connect raw material to factories  nat’l market for goods • Also a market themselves – steel, iron, lumber • Built by: civil war vets, immigrants (Irish, Chinese), African-Americans • Harsh climate, Indian raids, water shortages • 90% of Central Pacific workers = Chinese • Handle explosives, operate power drills (high danger, high death) • Cornelius Vanderbilt- “Commodore” • Involved in steamboats, but moves to RR bc of hazards of wartime shipping • Consolidated rail lines into rail network- New York Central • Death in 1877- William Henry took over & extended 13,000

  12. Rockefeller and oil: rags to riches i • Oil discovered in Titusville, PA  refineries in Cleveland, Pittsburgh • Cleveland also rail/shipping connections, so service to oil fields an advantage • JDR moved into oil business during CW • Organized, self-disciplined, daring, aggressive • 1862- backed friend’s (partner) refinery business • 1870- Standard Oil Co. of Ohio • Led nation • More people enter industry  price decreasing, trade destroyed • Led JDR to find way to end chaos and “stomp out” competition

  13. 1872- South Improvement Co created to handle marketing of oil shipments • Allow JDR to control traffic and gain admiration from RRs  secret rebates on standard rates from RRs for large shipments so could keep his business • Pressure competitors to sell @ his own price • “if we did not sell out, we should be crushed out” • JDR could dissuade RRs from servicing other companies, create price wars • By 1879, Standard Oil controlled 90-95% of US refined oil • JDR policy- “pay nobody a profit” • Vertical integration: made own barrels, cans, pipelines, tank cars, oil-storage facilities, etc. • Trusts formed. Legal formation allowing 1+ people to manage property of others, now used to control businesses • 37 stockholders convey stock to 9 “trustees” who gave direction to all S.O. cos • Copied by others in 1880s • Vulnerable to prosecution via state laws vs. monopoly/restraint of trade

  14. 1892- Supreme Court of Ohio order SO Trust dissolved • Next phase = holding company • Company that controls other companies by holding all/majority of stock • Standard Oil Co. of New Jersey- holding company for all SO companies • The good: $500 million donated during 98-year lifetime • Most to education, medicine • “I have always regarded it as a religious duty to get all I could honorable and to give all I could.”

  15. Carnegie and Steel: rags to riches ii • Early on, worked way up through telegraph company, then RRs, bridge building, iron, finally STEEL, investments • Travelled to GB & learned of Henry Bessemer process of steel-making  all eggs in a steel basket • Very competitive, desire for efficiency, most up to date machinery, expanded during recessions • Kept much profit when times were good, so when economy down (construction, labor costs low) he could buy out competition and expand • Steel = miracle material of post-CW • Not new, but CHEAP with Bessemer Process • 1/3 of world’s steel procuded by Carnegie • Sold company to J.P. Morgan in 1901 for $400-500 million (to become 1st billion dollar corp)

  16. Iron & Steel Production

  17. New Type of Business Entities

  18. The Gospel of wealth, 1889 • Stands out due to philosophy of big business • Wealthy = public benefactors • “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.” • Inequality is inevitable and good • Best way to dispense fortune was during one’s lifetime for public good. Should provide means for people to help themselves: universities, libraries, hospitals, parks, halls, churches. $120 mil. to public libraries and higher ed.

  19. Morgan and finance • 1857- work in NY firm as representative of father’s bank in London • 1860- was agent of bank under name of J. Pierpont Morgan and Co. Channeled Euro $ into US  became financial powerhouse • JPM = investment banker • Bought corporate stocks/bonds and later sold at profit • Since want client companies to do well (so make $$), involved in operation of client’s firms and gain seats on boards. • JPM saw RRs as future, so bought and reorganized companies after Panic of 1893. By end of decade, owned 1/6 of US rail • 1901- purchase Carnegie’s steel/iron holdings = U.S. Steel Corp. • “Mr. Carnegie, I want to congratulate you on being the richest man in the world.”

  20. Innovations and inventions • Telephones • Typewriters • Adding machines • Sewing machines • Cameras • Elevators • Farm machinery

  21. Thomas Alva Edison “Wizard of Menlo Park”

  22. The Light Bulb

  23. The Phonograph (1877)

  24. The Ediphone or Dictaphone

  25. The Motion Picture Camera

  26. Alexander Graham Bell Telephone (1876)

  27. Alternate Current George Westinghouse

  28. Alternate Current Westinghouse Lamp ad

  29. The Airplane Wilbur Wright Orville Wright Kitty Hawk, NC – December 7, 1903

  30. Model T Automobile

  31. “Model T” Prices & Sales

  32. COMPARISON ROBBER BARONS CAPTAINS OF INDUSTRY • ? • ?

  33. Effects on workers • Dehumanization of worker • Free enterprise/farming replaced by corporations • Factory controls life- whistle, subservient behavior • 2/3 of people dependent on wages • Does increase 1860-1890 (50%), 1890-1914 (another 37%) • Working conditions poor, hours long • Child labor • SOL rose  more physical comforts • Women impacted by new inventions: typewriter, telephone  new image of independence • Gibson Girl

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