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Industrialization

This text discusses the causes of industrialization in the late 19th century, including natural resources and population growth, as well as the improvements in transportation and the rise of laissez faire economics. It explores the ideologies of Adam Smith and Karl Marx, and the impact of industrialization on society. The text also highlights the emergence of corporations, different economic terms, and the changes brought about by industrialization.

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Industrialization

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  1. Industrialization (1865-1900)

  2. Causes of Industrialization • Natural Resources • Population Growth • US population tripled b/t 1860 & 1910 • 31.5 million to 92.2 million • Improvements in Transportation • Transcontinental Railroad • Population Ticker

  3. 1st Transcontinental Railroad (1869) Railroads created the need for time zones

  4. Laissez Faire “let people do as they choose” • Economic system in which there is no government involvement • Only gov’t role is to protect property rights and maintain peace • Supply and Demand decide prices and wages • Basis of capitalism – our current economic structure in the United States

  5. Adam Smith • Wealth of Nations (1776) • Invisible Hand • Self-interest guides the most effective use of resources in an economy • Supply and Demand Economics

  6. Adam Smith (cont.) • What people make the most money under this system? • Difficult and Dangerous Jobs = $$$ • Specialization of Labor

  7. Karl Marx (1818-83) • Communism – an ideology that seeks to create a classless society in which the gov’t controls the means of production (economy). COMMAND economy. • An equality-based society • Community shares wealth • Same wages for all occupations

  8. Capitalism-ish or Communism-ish? • Mrs. Houser decides to cut a rap album and to sell it in the school cafeteria. • The minimum wage • Pay for work past 40 hour • Federal regulation of housing prices • Public schools • I sell my own rap albums for $1 in order to put Mrs. Houser out of business and then raise my prices to $20

  9. Economic Terms • Corporation – business owned by multiple entrepreneurs • Pepsico, Altria, Proctor and Gamble, • News Corporation • 25 Biggest Corporations • Stock– ownership in a business • Google, Apple • Pools – agreements to maintain prices at a certain level

  10. More Terms • Fixed Costs - $$$ a company has to pay all the time • Loans, mortgages, taxes • Operating Costs - $$$ a company must pay only when producing • Wages, utilities, shipping, materials, etc.

  11. Here Come the Rockefellas • Vertical Integration • A business purchases other businesses that it depends on • Andrew Carnegie (US Steel)

  12. Horizontal Integration • Combing firms in the same industry under one corporation • Buying out the competition • More control over prices • John Rockefeller • Standard Oil

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  14. Changes Brought By Industrialization • Machine based factories – less manual labor • Poor working conditions • Lint, dust, toxic fumes • Increase in worker injuries • Standard of Living goes up • Real wages increase 50% b/t 1860 and 1890 • 22 cents an hour; 59 hours per week in 1900 • Deflation – a rise in the value of money • Opposite of inflation • Factories tried to lower worker wages

  15. Response to Conditions = Unions • Union - an organization of workers, formed to deal/negotiate with employers • Workers love ‘em – Employers hate ‘em

  16. Attempts to Prevent Unions • Blacklist– union organizers fired and put on a list that was distributed • Lockout– union workers locked out of factory and not paid – scabs hired • Strikebreakers • Courts often ruled in favor of big business

  17. The Great Railroad Strike of 1877 • Upset with pay cuts following Panic of 1873’s recession • 80,000 workers in 11 states • Fights b/t workers and state militias sent to quell the violence • 100 dead, millions of $$$ in damage

  18. A better way • Arbitration – allowing a third party to help workers and management reach an agreement • Wanted… • 8 hr work day, no child labor, equal pay for women, worker- owned companies

  19. American Federation of Labor • AFL – Samuel Gompers • Three goals • Convince companies to recognize unions • Closed shops • 8 hour work day • 500,000 members in 1900 • AFL-CIO

  20. Thomas Edison • The Wizard of Menlo Park

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