The Rise of American Industry: Industrialization (1865-1901)

1. INDUSTRIALIZATION (1865-1901) Chapter 9

2. Section 1- The Rise of Industry Main Idea: American industry grew rapidly after the Civil War, bringing revolutionary changes to American society. After the Civil War, millions of Americans left farms to work in mines & factories. * By 1914, the nation’s gross national product, or GNP, (value of all goods & services produced by a country) was eight times greater than when the Civil War ended.

3. Why was American industrialization so successful? Abundance of natural resources. * Water, timber, coal, copper, & petroleum -- Settlement of the West created a large market for manufactured goods. -- RRs carried settlers west and carried raw materials back east for industry. -- 1859 - Edwin Drake drilled first oil well near Titusville, Pa. Edwin Drake

4. 2. Large workforce * 1860-1910, population more than tripled. Why? -- Large families. -- Immigration (over 20 million) * Due to conditions in Europe & Asia; they were looking for a better life. * More demand for industrial products.

5. 3. Free enterprise system * Laissez-faire policy by U.S. gov’t. -- Did not interfere w/ business. -- Supply & demand regulated markets. * Profit motive attracted many entrepreneurs (people willing to risk their $$, or capital, by investing it in industry) * European investors could make big $$ by investing in American industry.

6. Capitalism • Capitalism=free enterprise: individuals own most businesses • an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition

7. 4. Government helped, not hindered, business. * Morrill Tariff - tariff on foreign imports; made American goods cheaper, more attractive to buyers. * Land grants to railroad companies & businesses; this further spurred settlement of the west and boosted the economy.

8. *Thomas Alva Edison - phonograph, better light bulb, electric generator, battery, motion picture, power company for cities, etc……. Thomas Edison was the most prolific inventor in American history…….

9. Electricity Becomes Widespread • Businesses installed electrical elevators (made with steel) • Allowed buildings to be built with multiple floors • Factories installed lighting • Allowed factory to operate 24/7 • Stores installed lighting and heating • Allowed stores to stay open later, and in cold weather

10. BESSEMER STEEL PROCESS • Coal and iron were plentiful within the U.S. • When you removed the carbon from iron, the result was a lighter, more flexible and rust resistant compound – Steel • The Bessemer process did just that (Henry Bessemer & William Kelly) BESSEMER CONVERTOR CIRCA 1880

11. NEW USES FOR STEEL • The railroads, with thousands of miles of track, were the biggest customers for steel • Other uses emerged: barbed wire, farm equipment, bridge construction (Brooklyn Bridge- 1883),and the first skyscrapers BROOKLYN BRIDGE SPANS 1595 FEET IN NYC

12. Nothing…..NOTHING….contributed to the settling of the West and the realization of “Manifest Destiny” more than the RAILROAD!!!

13. Section 2 - The Railroads Main Idea: After the Civil War, the rapid construction of railroads accelerated the nation’s industrialization and linked the country together. Pacific Railway Act -1862; provided for construction of a transcontinental railroad. * Would connect country from east to west. * Mostly built w/ immigrant labor (Irish & Asian)

14. The Transcontinental Railroad Meeting point…. Promontory Point, Utah

15. PROFESSOR DOWD CREATES TIME ZONES • In 1869, to remedy communication problems, Professor C.F. Dowd proposed dividing the earth into 24 time zones • The U.S. would be divided into 4 zones: the eastern, Central, Mountain, and Pacific • 1883 – Railroads synchronized their watches across U.S. • 1884 – International Conference adopts zones PROFESSOR DOWD EXPLAINS HIS TIME ZONES

16. Time zones were created to make RR travel safer and more reliable.

17. Much of the financing of RRs depended on federal gov’t land grants to RR companies. Companies would then sell the land to raise $$$ for construction of the RR.

18. RAILROADS SPUR OTHER INDUSTRIES • The rapid growth of the railroad industry influenced the iron, coal, steel, lumber, and glass businesses as they tried to keep up with the railroads demand for materials • The spread of the railroads also led to the growth of towns, new markets, and opportunity for profiteers

19. Railroads spur further inventions • 1869: George Westinghouse patented air brakes for trains • 1887: Granville Woods patented a telegraph system for trains • Gustavus Swift developed refrigerated cars for transporting food • By 1883, 3 transcontinental railroad lines existed in the U.S.

20. RAILROADS LED TO GROWTH OF CITIES • Many of today’s major cities owe their legacy to the railroad • Chicago, Minneapolis, Denver, and Seattle all grew up thanks to the railroad “MY KIND OF TOWN”

22. Industrial Leaders • John D. Rockefeller • Formed the company Standard Oil • Controlled 90% of the country’s oil • Owned the oil refineries, the pipelines and railroads

23. Industrial Leaders • Andrew Carnegie • Built a steel company • By 1900 his company supplied 1/4 of all steel on the market. • Used his capitol (money) to ensure he had the lowest price, and therefore no one else could compete

24. Extravagant Wealth of Industrial Leaders • Amassed fortunes • Multiple homes worth millions of dollars • Outrageous parties Vanderbilt’s NYC home Vanderbilt’s NC home

25. The Gilded Age • Term coined by • Mark Twain • Gilded = covered thinly w/ gold leaf or paint • Analogy used for American society • Golden on the outside and rotting on the inside

26. The Rise of Trusts • Competing businesses combined to create monstrous firms called trusts. • Examples: • 5,300 independent manufacturers  319 Industrial trusts • 2,400 utilities companies (RR, electricity, water)  127 utility trusts • Same happens in oil, coal, steel, whiskey, sugar, tobacco, banking, farm machinery

27. Trusts Influence Gov’t Affairs • Industrial giants ran for office. • Manipulated gov’t by: • giving lots of $ to political candidates. • bribing lawmakers to de-regulate business, take an anti-union stance, impose high tariffs (taxes) on foreign goods.

28. What do you see? • Who are the men with hats? • Who are the men at the desks? • What is the message of the cartoon?

29. Wealthy Americans Face Criticism • Wide gap between rich and poor. • Material wealth of 1% of population greater than that of other 99% combined. • Few individuals control majority of America’s natural resources, industries and utilities.

30. Industrialists Defend Big Business • Industrialist argued that they deserved their wealth because they took the most risk. • In 1889, Carnegie wrote The Gospel of Wealth, arguing the rich deserved what they had, but they should share it.

31. Some big-business owners were called “Robber Barons” for their practice of swindling investors & bribing government officials.

32. Example of someone who has been labeled a “Robber Baron” - Jay Gould, who manipulated stock values by practicing “insider trading.” He used information he received as a railroad owner to manipulate stock prices to his benefit.

33. ROBBER BARONS Alarmed at the cut-throat tactics of industrialists, critics began to call them “Robber Barons” Famous “Robber Barons” included Carnegie, Rockefeller, Vanderbilt, Stanford, and J.P. Morgan J.P MORGAN IN PHOTO AND CARTOON

34. ROBBER BARONS WERE GENEROUS, TOO • Despite being labeled as greedy barons, rich industrialists did have a generous side • When very rich people give away lots of money it is called “Philanthropy” • Carnegie built libraries, Rockefeller, Leland Stanford, and Cornelius Vanderbilt built schools ROCKEFELLER CHAPEL – UNIVERSITY OF CHICAGO

35. Big businesses boomed because…… Favorable business climate. Ex: Corporations were easy to form: * An organization owned by many people; stockholders own shares of stock, each representing a percentage of the business. * Selling stock allows a business to raise huge amounts of capital ($$ to invest in the business). * It is run like it is owned by a single person.

36. Economies of scale – the cost of manufacturing is decreased by producing goods quickly in large quantities. Big corporations could squeeze out smaller businesses and force them to close. Many corporations began to consolidate (merge their businesses w/ others like them). * Pools - agreements among companies to maintain prices at a certain level. Did this practice interfere w/ the law of supply & demand, and keep costs to consumers high?

37. Andrew Carnegie - “Captain of the Steel Industry” • * Used the Bessemer Process - a • cheap way of making steel. • * Vertical integration: • -- Company owns all of the different businesses • on which it depends for its operation. • -- Ex: w/ Carnegie: Coal mines, limestone • quarries, iron ore fields. (He didn’t have to • pay profits to “middle-men” who owned • those businesses.)

38. Horizontal integration - Company buys out his competitors! Reduces competition…does this hurt the consumer? How? Ex: John D. Rockefeller’s Standard Oil had control of 90% of the oil business in the US. Monopoly - When a single company achieves control of an entire market for a particular product or service.

41. “Give me your tired, your poor, your huddled masses yearning to be free, the wretched refuse of your teaming shore. • Send these, the homeless, tempest-tost, to me • I lift my lamp beside the golden door.” • Emma Lazarus- The New Colossuss • The Statue of Liberty

46. Irish Potato Famine1846-1850 • Over 2 million die and 1 million emigrate • Black 47 worse year of the famine

48. Nativist Movement develops out of fear of New Immigration – The Know Nothing Party is created on an anti-immigration platform. There was a fear of taking jobs and a fear of new religions.