2nd Revolution 1st Revolution

Railroads Textiles

Oil Railroads

Steel Iron

Electricity Coal

These are the BIG ones

2nd Revolution 1st Revolution

Railroads Textiles

Oil Railroads

Steel Iron

Electricity Coal

These are the BIG ones

Causes of Rapid Industrialization:Leading Markets

Causes of Rapid Industrialization:Leading Markets

1. Unskilled labor in abundance.2. Abundant capital.3. New, talented group of businessmen.4. Market growing as US population increased. (concumers)5. Government involvement in economic growth.6. Abundant natural resources.

1. Unskilled labor in abundance.2. Abundant capital.3. New, talented group of businessmen.4. Market growing as US population increased. (concumers)5. Government involvement in economic growth.6. Abundant natural resources.

Causes of Rapid IndustrializationCauses of Rapid Industrialization

• Industrialization brings positives effects: • Inventions are created-More products--produced faster-- produced

cheaper• Jobs are created--- people have money to buy more goods-economy

gets better for everyone• Rich people get richer-- create more factories or businesses -- create

more jobs--economy gets better for everyone• Immigration-when jobs are available-------people move to the

location of jobs-industrialization causes immigration--• Factories are built where people live-------cities grow

• Industrialization brings positives effects: • Inventions are created-More products--produced faster-- produced

cheaper• Jobs are created--- people have money to buy more goods-economy

gets better for everyone• Rich people get richer-- create more factories or businesses -- create

more jobs--economy gets better for everyone• Immigration-when jobs are available-------people move to the

location of jobs-industrialization causes immigration--• Factories are built where people live-------cities grow

Pros of Industrial RevolutionPros of Industrial Revolution

• Industrialization brings negative effects:• Industrialization causes--pollution-air, water• Industrialization causes---poverty- government doesn’t protect

workers at first- workers compete with other workers for low skill jobs- workers work long hours- get low pay- unsafe working conditions

• Poverty is so bad-children need to work• Massive wealth is created by factory owners- causes corruption-

business owners use money to influence government officials

• Industrialization brings negative effects:• Industrialization causes--pollution-air, water• Industrialization causes---poverty- government doesn’t protect

workers at first- workers compete with other workers for low skill jobs- workers work long hours- get low pay- unsafe working conditions

• Poverty is so bad-children need to work• Massive wealth is created by factory owners- causes corruption-

business owners use money to influence government officials

Cons of Industrial RevolutionCons of Industrial Revolution

The Railroads

The Railroads

Railroad TycoonsRailroad Tycoons

Vanderbilt

James Hill

Jay Gould

Russell SageTom Scott

Why did the RR industry grow so quickly?

Why did the RR industry grow so quickly?

√ Govt. subsidized building of transcontinental RR due to so much of the plains being unsettled

√ By 1900, the U.S. had 192,556 miles of track or roughly 1/3 of all the tracks in the world

√ RR companies given 155.5 million acres by the Govt.√ Govt. received discount on postal delivery rates and

military traffic in return√ Cities grew where the RR went

RR Business AbusesRR Business Abuses√ Wealthy RR owners stopped competing with other by the

1880’s and worked together to charge excessive rates√ Called “pools” the RR companies agreed to divide the

market and establish prices√ Gave rebates or kickbacks to larger corporations√ Bribed judges, legislatures, employed lobbyists, and had

their own people elected to office√ Gave free passes to journalists and politicians√ Slashed rates on competing lines and made up the

difference on other lines√ Long haul/short haul tactics- charging more per mile for a

short distance than a long distance√ “Law! What do I care about the law? I have the power!”-

Cornelius Vanderbilt√ RR Tycoons became the most powerful people in the US

for a time

Govt. Reactions to Railroad AbusesGovt. Reactions to Railroad Abuses

√ Slaughterhouse cases- 1873- Court ruled labor is not a federal issue, but a state one; Federal government cannot regulate companies engaged in intrastate trade

√ Munn v. Illinois- 1877- Public has the right to regulate business when there is a public interest involved

√ Wabash case- 1886- individual states had no power to regulate interstate commerce- only Federal Govt. could; nullified Munn case

Interstate Commerce Act 1887Interstate Commerce Act 1887

√ 1st large scale legislation passed by federal Govt. to regulate corporations in the interest of society

• Prohibited rebates and pools• Required RR to publish their rates openly• Forbade discrimination against shippers

STEELSTEEL

STEELSTEEL

√ Cornerstone of 2nd industrial revolution√ Held together skyscrapers, railroad tracks, bridges√ By 1900, US produced as much steel as Britain and

Germany combined

Andrew Carnegie and U.S. SteelAndrew Carnegie and U.S. Steel

√ First giant of the steel industry√ Scottish immigrant born into poverty√ Made a fortune through investments√ 1864- saw the Bessemer process in action on a visit to

England- returned home and bought steel companies√ By 1890, he produced about ¼ of all steel in the nation√ Disliked monopolies and trusts√ His organization was more of a partnership with other

steel tycoons (up to 40 at one point)

Andrew Carnegie and U.S. SteelAndrew Carnegie and U.S. Steel

√ Bought freighters, railroads, and coal companies to create a monopoly

√ Required workers to work 12-14 hours per day and hired armed guards to break strikes (homestead)

√ In 1901, he sold his company, U.S. Steel, to JP Morgan for $400 million

√ JP Morgan enlarged the company and brought total assets to $1.4 billion- the first billion dollar corp. in history (greater than the sum of the entire U.S. in 1800)

Andrew Carnegie and JP MorganAndrew Carnegie and JP Morgan

Iron & Steel ProductionIron & Steel Production

OilOil

OilOil

√ First oil well drilled by E.L. Drake in Titusville, PA. in 1859√ Kerosene emerged as the standard for lamps; destroyed

whale oil industry

RockefellerRockefeller

√ Rockefeller began buying oil wells in 1850’s as the industry

was just starting√ Because of the sheer volume he had to ship, RR companies

competed for his business- he would only use them if they

gave him great deals and raised the rates of competitors; he

would then use the savings to crush competition√ Depression of 1873 caused many companies to go bankrupt-

Rockefeller bought them and increased his holdings√ By 1879, he controlled 90% of all oil refineries

TECHNOLOGYTECHNOLOGY

Thomas Alva EdisonThomas Alva Edison

The Light BulbThe Light Bulb

The Phonograph (1877)The Phonograph (1877)

The Motion Picture CameraThe Motion Picture Camera

Alexander Graham BellAlexander Graham Bell

Telephone (1876)Telephone (1876)

The Ediphone or Dictaphone

The Ediphone or Dictaphone

Alternate CurrentAlternate Current

George WestinghouseGeorge Westinghouse

Alternate CurrentAlternate Current

Westinghouse Lamp adWestinghouse Lamp ad

The AirplaneThe Airplane

Wilbur Wright Orville Wright Wilbur Wright Orville Wright

Kitty Hawk, NC – December 7, 1903 Kitty Hawk, NC – December 7, 1903

Model T AutomobileModel T Automobile

Henry FordI want to pay my workers so that they

can afford my product!

Henry FordI want to pay my workers so that they

can afford my product!

“Model T” Prices & Sales

“Model T” Prices & Sales

The Reorganization of Work

The Reorganization of Work

Frederick W. TaylorThe Principles of Scientific Management (1911)

Frederick W. TaylorThe Principles of Scientific Management (1911)

The Reorganization of Work

The Reorganization of Work

The Assembly LineThe Assembly Line

U. S. Patents GrantedU. S. Patents Granted

1790s 276 patents issued. 1790s 276 patents issued.

1990s 1,119,220 patents issued. 1990s 1,119,220 patents issued.

NEW PHILOSOPHIES AND IDEAS

NEW PHILOSOPHIES AND IDEAS

Business Culture: Capitalism

Business Culture: Capitalism

Laissez Faire the ideology of the Industrial Age.

Laissez Faire the ideology of the Industrial Age.

Individuals should compete freely in the marketplace.

No room for government in the market!

Individuals should compete freely in the marketplace.

No room for government in the market!

Free Enterprise: Capitalism “Business and Government don’t mix.” In the United States this statement has been argued for over for many

years. Do they Mix? What do you think?

Free Enterprise: Capitalism “Business and Government don’t mix.” In the United States this statement has been argued for over for many

years. Do they Mix? What do you think?

√ The Market System: Laws of supply and demand regulate business- (The Invisible Hand)

√ According to Adam Smith’s ideas:√ Business should be free of government interference.

√ Smith understood that:√ Business owners or Entrepreneurs, as a rule, want to

make as much money or profit as possible.√ They don’t want to pay taxes.

Social DarwinismSocial Darwinism× British economist.× Advocate of

laissez-faire.× Adapted Darwin’s

ideas from the “Origin of Species” to humans.

× Notion of “Survival of the Fittest.”

× British economist.× Advocate of

laissez-faire.× Adapted Darwin’s

ideas from the “Origin of Species” to humans.

× Notion of “Survival of the Fittest.”

Herbert SpencerHerbert Spencer

% of Millionaires in 1900

% of Millionaires in 1900

% of Millionaires in 1918

% of Millionaires in 1918

The Gospel of Wealth:Religion in the Era of

Industrialization

The Gospel of Wealth:Religion in the Era of

Industrialization

Russell H. ConwellRussell H. Conwell

$ Wealth no longer looked upon as bad.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

$ Wealth no longer looked upon as bad.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

“On Wealth”“On Wealth”

Andrew CarnegieAndrew Carnegie

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

BUSINESS ABUSE?BUSINESS ABUSE?

New Type of Business Entities

New Type of Business Entities

1. Pool (corp. alliances)Industries would not compete. Instead, they would fix prices and divide shares of the market.

2. Trust Confidence placed in a person or corporation to control the property or investments of others

1. Pool (corp. alliances)Industries would not compete. Instead, they would fix prices and divide shares of the market.

2. Trust Confidence placed in a person or corporation to control the property or investments of others

Standard Oil Co.Standard Oil Co.

Standard Oil Co.Standard Oil Co.

New Type of Business Entities

New Type of Business Entities

2. Trust: Horizontal Integration John D.

(same business) Rockefeller

2. Trust: Horizontal Integration John D.

(same business) Rockefeller

Vertical Integration (realated):o Andrew Carnegie U. S. Steel

Vertical Integration (realated):o Andrew Carnegie U. S. Steel

U. S. Corporate Mergers

U. S. Corporate Mergers

The ‘Bosses’ of the Senate

The ‘Bosses’ of the Senate

The ‘Robber Barons’ The ‘Robber Barons’

Regulating the TrustsRegulating the Trusts1877 Munn. v. IL

1886 Wabash, St. Louis & Pacific Railroad Company v. IL

1890 Sherman Antitrust Act in “restraint of trade” “rule of reason” loophole

1895 US v. E. C. Knight Co.

1877 Munn. v. IL

1886 Wabash, St. Louis & Pacific Railroad Company v. IL

1890 Sherman Antitrust Act in “restraint of trade” “rule of reason” loophole

1895 US v. E. C. Knight Co.

Relative Share of World Manufacturing

Relative Share of World Manufacturing