An Industrial Giant

1. An Industrial Giant

2. When the Civil War began, the industrial output of the US wasbelow that of Europe. By the end of the 1800’s, it was the world’s largest • American manufacturing flourished for many reasons • New natural resources were steadily discovered and exploited • New opportunities attracted the brightest and hardest working population • The growth of the country increased market sizes • Tariffs protected American companies from foreign competition • American industry attracted foreign capital

3. The era also produced the “Robber Barons” – businessmen who acquired wealth through corruption, stock manipulation, and cutthroat competition • Labor was provided by an increasing stream of immigrants seeking opportunity

4. Rapid advances in technology created new machines, processes, and power sources • Agriculture saw a huge increase in labor-saving machines • Improvements in milling grain resulted in packaged breakfast cereals • Canning improved housekeeping • The cigarette-rolling machine created an industry • George Eastman developed mass-produced roll photographic film and a cheap efficient camera • The typewriter revolutionized office work

5. Railroads were the most significant element in American economic development in the late 19th century • The skeleton of the railroad systems were already laid – the latter 1800’s would be spent on integrating the systems • High fixed (operating) costs required railroads to carry as much traffic as possible – this resulted in the construction of feeder lines (feeding the trunk)

6. Rich businessmen such as Cornelius Vanderbilt and Jay Gould put together railroad lines to create railroad networks • Railroads were also integrated with those in the South • Integration required standardization – standard track gauge became 4 feet 81/2 inches (two horses behinds) • Braking, signaling, and coupling also were standardized

7. Fixed rates for cargo were created though concessions were made to avoid hauling empty cars • Railroads promoted regional economic growth in areas with sparse populations • To settle new regions, land was sold cheaply. Travelers were offered reduced rates • Agents traveled Europe to recruit more settlers

8. Technology advanced economic development • Air brakes invented 1869 by George Westinghouse allowing larger and faster trains • The sleeping car was invented by George Pullman • The demand for larger engines to pull heavier trains resulted in advancements in steel production • Close ties developed between railroads and telegraph offices dominated by Western Union • Standard schedules resulted in the establishment of the time zones used today

9. Transformation of iron manufacturing impacted nation almost as much as railroads • Biggest change in ways to mass-produce steel • Bessemer process - stream of air directed into molten iron caused carbon and other impurities to burn off. Other ingredients added to create steel

10. Vast growth in steel output due to huge supplies of iron ore and coal deposits • Mesabi region – iron ore so concentrated that it could be mined with steam shovels like gravel • Pittsburgh, surrounded by coal fields, became center of steel production

11. Oil industry expanded faster than steel • 1859 - First successful oil well drilled in PA • Most important product was kerosene to fuel lamps • By 1870’s, refiners learned how to “crack” petroleum which increased percentage of kerosene produced • By-products such as naphtha, rhigolene, and cymogene began appearing on the market Hey Jed! They say Beverly Hills is the place you ought to be

12. 1876 - Telephone invented by Alexander Graham Bell • By 1900 800,000 telephones in use in US (double that of Europe) • ATT dominated the business Can you hear me now?

13. Western Union attempted to compete with device made by Thomas Edison • Edison eventually took out over 1,000 patents – most important discovery was electric light bulb • Factories began substituting steam power for electricity – electric motors smaller & safer

14. Competition between lines kept freight rates • Competitive pressures eventually cut into profits causing railroads to offer rebates and other enticements • Railroads charged higher prices on lines where there was no competition • It often cost more to ship goods short distances than long

15. Few benefited from cutthroat competition • Low prices = bankrupt railroads during economic downturn • Reorganization brought railroads under control of powerful bankers such as J P Morgan • Railroad networks became “centralized” and opposed competitive practices

16. Industry was competitive but hurt by variances in demand • Andrew Carnegie • Capitalized on technological improvements • Engaged in ruthless business tactics • Sold out to JP Morgan – creation of US Steel – world’s first billion dollar corporation • Became philanthropist

17. Production fluctuated – output often surged ahead of need • Cleveland became fastest-growing oil refining center due to NY central RR and Erie Canal • In 1870 Standard Oil founded by John D. Rockefeller • Used technology and ruthless business tactics to take control of most of the industry

18. Standard Oil used RR rebates and under-pricing competitors to force out small independents • Since kerosene was sold in stores, SO established its own stores and sold goods at lower prices to drive out stores selling competitors kerosene • SO also used spies and bribery to hurt competitors and influence government

19. Rockefeller • Excellent manager – knew organization not oil • Competed ruthlessly but ready to ally with competitors to peacefully control market • Established new business concept- the trust (stocks of SO and other Rockefeller entities supervised by nine trustees) • SO not a corporation • Competition disappeared – profits skyrocketed

20. Monopolies tended to form due to costs in duplication of equipment and loss of service efficiency • Utility industry depended on patents – Bell and Edison fought great battles in court over competing inventions • Edison and the Thomson-Houston Electric Company merged to create General Electric in 1892

21. GE and Westinghouse dominated the electricity market • The latter 1800’s saw the development of urban department stores • John Wanamaker and Marshall Field dominated

22. Assignment • Students will form groups: 4 students per group • Groups will produce a newspaper covering the information in pages 490-500. Each student is responsible for two articles • Two grades will be assessed: a group grade based on the whole newspaper and an individual grade based on the students’ byline article

23. Assignment • Newspapers should appear as they would in the late nineteenth century • Articles should be written as if the events were occurring • The group grade can be raised through the addition of ads, letters, etc. • Students are responsible for all information contained in this project for testing purposes

24. Assignment • Articles will include: • American Ambivalence to Big Business • Reformers: George, Bellamy, and Lloyd • Reformers: The Marxists • Railroad Regulation • The Sherman Anti-Trust Act • The Labor Union Movement • The American Federation of Labor • Labor Militancy Rebuffed