Bridge to the 20 th Century

1. Bridge to the 20th Century • Industry, Immigration, and Reform

2. What changed? • 1840’s- production and buying habits. • Instead of producing all they needed they specialized in one or two goods and bought the others from other producers. • Free enterprise based economy grew. • Economic system where private businesses and individuals the factors of production.

3. Advances create new American way of life and business • Telegraph • Improved the rate of information exchange across the country. • The first “wiring” of the world

4. Water Transport • Steamships • The advent of steam powered boats brought faster more efficient ways to ship goods. • Canals • America dug canals to get waterways to where they wanted them to go. • Railroads • The railroads will quickly overshadow both of these innovations.

5. Delta King

6. Markets Spread and Regions Specialize • Markets Spread • With new innovations in transportation farmers in Ohio could share their goods with residents of New York City. • Regions Specialize • Geography gives central points in the transportation system special roles. • NYC- becomes link for American agriculture to Europe • Chicago- will become beef center due to railroad hub.

7. The Nature of Work Changes • Production went from being done by skilled workers (masters/journeyman/apprentices) in the shop to being done by the unskilled in the factories.

8. Working Conditions and Revolt • Many factories employed young women because they could pay them less. • Pay was still better than the women’s alternative choices. • Work area was usually poorly ventilated cramped, and hot for the 12+ hour work day

9. Revolt • Soon unskilled and skilled workers would unite and protest conditions and wages by striking. • Businesses usually won because they just replaced unskilled labor, often from the large immigrant labor pool. • Soon trade unions were being formed to protect workers interests. • The Supreme Court would validate their right to strike • Later these will become great agents for change in industry.

10. Immigration • 1830-1860 immigration dramatically increased • 1845-1855- 3 million came to the US, which had a population of 20 million. • Where are they from? • Northern and Western Europe • 1.3 million Irish came to the US during the Irish Potato Famine • Were targets for discrimination and violence for Roman Catholic faith and their willingness to work for cheap.

11. Expansion of Industry • Transition 1865-1920 • US goes from being an agricultural society after the Civil War to the leading industrialized nation in the world.

12. How and Why? • Natural Resources • Oil • Called “Black Gold” crude oil becomes the fuel of the late 19th and 20th century. • Cars, Ships, etc. • First practical use was as kerosene for lighting lamps. • Took a breakthrough of steam engines in 1859 being used to drill for oil before the industry could take off.

13. Steel Process • Becomes the build block for the world in the late 19th and 20th century. • Made of coal and iron • Discoveries of large iron ore deposits in the US drove this industry to grow.

14. Benefits of Steel • Stronger and more flexible than iron. • Took the invention and improvement of a cheap and efficient manufacturing process to grow the industry. • Uses • Railroads • Construction • Bridges • Skyscrapers

15. Inventions • Changed the way people and business functioned daily. • Electricity • This cheap and efficient source of energy changed the face of America like no other invention. • Effects • Powered all sorts of devices • Spurred the growth of the appliance industry • Made travel cheap • Allowed cities to expand. • With the advent of streetcars • Allowed business to locate wherever it wanted to • Enabled industry to grow immensely.

16. Effect of new innovations • The people gained power • The expanding population made people a force in American business as consumers • Created new industries • Some of which gave women new jobs- secretary and operators • Improved the overall standard of living.

17. The Age of Railroads • Crisscrossing the US • By 1869 railroad tracks crossed the entire US and created a monopolistic business full of greed and corruption. • The Transcontinental Railroad • Completed in 1869 it connected the entire US by rail.

18. Discrimination • Ethnic Minorities • The Irish and Chinese were used and abused in the building of the railroad. • Some Results • Created a US market for business • California oranges could be shipped to NYC for sale • Time Zones • Forced the invention of time zones to coordinate rail schedule.

19. Opportunity and Opportunists • Opportunity • Isolated areas were now linked to the rest of the US promoting trade creating new markets for businesses. • Chicago- Sears and JC Penny’s are located here due to RR. • Extortion • LA paid a $600,000 subsidy to the RR to make sure it ran into LA instead of a more eastern route.

20. Opportunists • Train car manufacturer who built a town next to his factory for his workers • Why? • Wanted to create a tightly controlled environment that produced a stable work force. • No alcohol, no loitering.

21. Did it work? • No. Worker held a violent strike in 1894 (pullman strike).

22. Reigning in the Railroads • The Problems • Land Grants • Railroads sold land grants to businesses vs. settlers • Price Fixing • Farmers got screwed • Different rates depending on whom you were.

23. How the RR’s did this • Bribes • Free Passes • Extortion

24. Reform • Munn v. Illinois • Case where Supreme Court upheld state’s rights to regulate intrastate commerce to protect consumers. • Interstate Commerce Commission-1887 • It was the federal government’s regulatory arm over interstate commerce. • Ineffective till 1906 and Teddy Roosevelt.

25. Consolidation • Andrew Carnegie • Who? • Business entrepreneur (primarily investor) who amasses a tremendous fortune and becomes one of the world’s wealthiest men. • Innovations • Management Techniques • Improved Production Methods • Searched for the cheapest way to make better products. • Gathered Talent • Attracted the best and brightest to work for him

26. Business Strategies • Monopoly • Vertical integration • Bought and controlled all levels of the manufacturing process, from the raw materials to the transportation. • Horizontal Integration • Bought out or merged with all competitors • Created a monopoly that allowed him to control prices.

27. Vertical Consolidation

28. Successful? • His company produced 80% of the nations steel in 1901.

29. Social Darwinism • What is it? • Application of Charles Darwin’s theory of evolution to the economic arena. • The fittest, most efficient business will survive in a free enterprise market. • Natural selection governs in this theory, and many say government has no right to interfere. • It’s Place in American Thinking • Fit in with Protestant work ethic • Individual responsibility and blame. • Religion- God’s will • Poor must be lazy and inferior because the selection process passed them by, and they deserved their lot in life.

30. Captains of Industry or Robber Barons? • Consolidation • Oligopoly • Through mergers and acquisitions entire industries came under the control of a few sellers. • Monopoly • This led to monopolies where one or a few companies controlled entire industries.

31. How to form a monopoly • Holding Companies • These were companies that did nothing but buy the stocks of other companies to form monopolies. • Trusts • Where separate companies merged and turned their stocks over to a group of trustees who ran the group as one corporation. • Not legal mergers- kind of a gray area.

32. Problems • Did not share the wealth • Paid workers poorly • Raised prices to reap profits • Discounts and Kickbacks • Often would get RR discounts and RR kickbacks

33. Criticism • Charity Defense • The robber barons defended their wealth by saying that they gave vast amounts to charity. • Rockefeller- $500 million • Rockefeller Center • Funded University of Chicago’s creation • Carnegie- $325 million- 90% of his wealth • Carnegie Hall • 3,000 libraries nationwide JdRockefeller

34. Reform • Sherman Antitrust Act- 1890 • What? • Made interference with free trade by forming a trust illegal. • Did it Work? • Not really • Written with too much gray area • Supreme Court struck down cases brought • Business outsmarted the law.

36. Workers of the Nation Unite • Exploitation • Long Hours • 12+ hours, 6 days a week • No vacation, sick leave, unemployment, or compensation for injury • Women and Children • All in family had to work to survive • Children and women were paid less. • Children were sacrificing their education

37. Child Labor

38. Labor Unions • Why? • Workers consolidated to gain power, just like the robber barons. • Reflection of Society • Some refused to admit minorities and women. • Women • Push for and get laws protecting women and minors in the workplace • Examples • Fire codes • Age limits for employment

39. Government vs. the labor unions • Sherman Antitrust Act • Companies got the courts to stop strikes by ruling they hurt interstate commerce.