Chapter 14Chapter 14Steel, Oil and RailroadsSteel, Oil and Railroads

The Main Idea

During the late 1800s, new technology led to rapid industrial growth and the expansion of railroads.

New Industries EmergeNew Industries Emerge

• New technologiesNew technologies

– ElectricalElectrical power replaced steam and water power. power replaced steam and water power.

– Larger Larger factoriesfactories produced more and more goods. produced more and more goods.

– Faster Faster transportationtransportation moved people and goods moved people and goods more cheaply.more cheaply.

• Dramatic industrial growthDramatic industrial growth

– Period sometimes called the Period sometimes called the Second Industrial Second Industrial RevolutionRevolution

New Industries EmergeNew Industries EmergeMaking SteelMaking Steel

•Bessemer ProcessBessemer Process of purifying steel. of purifying steel.

– helped to make America the world’s top helped to make America the world’s top producer producer

– transformed the U.S. into a modern transformed the U.S. into a modern industrial economy.industrial economy.

– William Kelly created the idea in the United William Kelly created the idea in the United States.States.

=Construction companies could build bigger bridges Construction companies could build bigger bridges and taller buildings, locomotives and steel rails.and taller buildings, locomotives and steel rails.

=The low cost of steel made ordinary items affordable.The low cost of steel made ordinary items affordable.

STEEL

STEEL• Definition• Uses /

Innovations• Process• Impact of

industry importance

Steel is an alloy of iron with about 1-2 percent carbon.

IRON

STEEL

CAST IRON

Uses

Chicago

Making SteelMaking Steel•Bessemer ProcessBessemer Process of purifying steel. of purifying steel.

– helped to make America the world’s top helped to make America the world’s top producer producer

– transformed the U.S. into a modern transformed the U.S. into a modern industrial economy.industrial economy.

– William Kelly created the idea in the William Kelly created the idea in the United States.United States.

=Construction companies could build bigger bridges Construction companies could build bigger bridges and taller buildings, locomotives and steel rails.and taller buildings, locomotives and steel rails.

=The low cost of steel made ordinary items The low cost of steel made ordinary items affordable.affordable.

Bessemer Process

Changed everything – cheap consistent steel

IMPACT OF STEEL

Cities went vertical.

Railroads were built everywhere

Vertical Integration

• Mines• Trains• Ships• Coal• Coke ovens• Steel mills

Andrew Carnegie—STEEL Andrew Carnegie—STEEL •Rose from Scottish immigrant child to Rose from Scottish immigrant child to steel magnate. steel magnate.

•Used profits from various business Used profits from various business investments to found own investments to found own company and buy out rival steel company and buy out rival steel producers.producers.

•By 1901 the Carnegie Steel Company By 1901 the Carnegie Steel Company dominated the U.S. steel industry. US dominated the U.S. steel industry. US Steel Corporation.Steel Corporation.

•After retiring, devoted his time to After retiring, devoted his time to charity, supporting education and charity, supporting education and building public libraries.building public libraries.

Andrew Carnegie

-Made steel process efficient

Sold company

Become insanely rich---

Gave most away – 90% +

…and then tore it down.

Stevens Point got a library.

Worker unrest – safety concerns –

Unions form

You tell me…

Railroads

Cornelius Vanderbilt—Cornelius Vanderbilt—RAILROADSRAILROADS

•VanderbiltVanderbilt began investing in railroads during the began investing in railroads during the Civil War. Civil War.

•By 1872, he owned the New York Central Railroad. By 1872, he owned the New York Central Railroad.

•At the height of his career he controlled 4,500 miles At the height of his career he controlled 4,500 miles of track.of track.

•He supported few charities, but gave money to what He supported few charities, but gave money to what would come to be Vanderbilt University. would come to be Vanderbilt University.

•He died leaving an estate of $100 million.He died leaving an estate of $100 million.

Railroads Expand—More Railroads Expand—More TracksTracks

• 1865 to 1890, the number of 1865 to 1890, the number of miles of railroad track miles of railroad track increased nearly fivefold. increased nearly fivefold. – 1860=30,000 miles1860=30,000 miles

– 1890=180,000 miles1890=180,000 miles

• To aid the growth, the federal To aid the growth, the federal government gave thousands of government gave thousands of acres of land to railroad acres of land to railroad companies.companies.

TRANSCONTINENTAL TRANSCONTINENTAL RAILROADRAILROAD

• Laid tracks westward from Omaha, Laid tracks westward from Omaha, NebraskaNebraska

• Prairie lands and gently rolling hills Prairie lands and gently rolling hills made for quick progress.made for quick progress.

Union Pacific

• Tracks were laid eastward from Sacramento, Tracks were laid eastward from Sacramento, California. California.

• Chinese workers laid tracks through tougher Chinese workers laid tracks through tougher terrain, crossing deserts and blasting through terrain, crossing deserts and blasting through mountains.mountains.

= May 18, 1869= The two lines met. United the May 18, 1869= The two lines met. United the country physically and economically. country physically and economically. Golden Golden SpikeSpike. .

Central Pacific

East ---West Connection Communication

TIME ZONES - Organization

Corruption

Railroad Productivity

                                                                                          

Land GrantsLand Grants• The first The first majormajor

railroad land grants railroad land grants originated with the originated with the 1862 legislation 1862 legislation that enabled the that enabled the transcontinental transcontinental railroad. At that railroad. At that time, the Union time, the Union Pacific and Central Pacific and Central Pacific railroads Pacific railroads were granted were granted 400-400-foot right-of-ways foot right-of-ways plus plus ten square ten square miles miles of land of land for for every mile every mile of track of track built.built.

• P.460

• Depending on sources, 9.5% to 17% of all US lands were given/ controlled by railroads.

George Pullman—Pullman, George Pullman—Pullman, ILIL

•Made his fortune designing and building Made his fortune designing and building sleeper cars that made long-distance travel sleeper cars that made long-distance travel more comfortable. more comfortable.

•He built a town south of Chicago to house He built a town south of Chicago to house workers in relative comfort, believing happy workers in relative comfort, believing happy workers were more productive.workers were more productive.

•The Pullman Company controlled aspects of The Pullman Company controlled aspects of life in the town, and criticism was not tolerated.life in the town, and criticism was not tolerated.

Effects Of Railroad…Effects Of Railroad…•Promoted trade and provided jobs.

•Boosted steel industry and train manufacturers.

•Contributed to the growth of the modern corporation. •Gave industrialists quick and inexpensive access to distant markets and distant sources of raw materials.

Effects Of Railroad…Effects Of Railroad…•Settlement of the West was easier.

•Sparsely populated areas began to fill with residents.

•New towns were founded and existing ones expanded.

•Led to the adoption of standard time.

New Industries EmergeNew Industries EmergeOil industry beginsOil industry begins

•Oil was a key commodity as a fuel source Oil was a key commodity as a fuel source and for lubrication. and for lubrication.

•Edwin L. DrakeEdwin L. Drake drilled the first drilled the first commercial oil well. Oil prospectors, or commercial oil well. Oil prospectors, or WildcattersWildcatters, looked for oil in other , looked for oil in other regions.regions.

•Major sources of energy from oil fueled a Major sources of energy from oil fueled a revolution in transportation and industry. revolution in transportation and industry.

OIL

• Historical Origins / uses• US origins• Impact / Innovation• Problems

First oilFirst oil347 AD

First oilFirst oil1846 – first mechanical well

Titusville

Spindletop

Signal Hill

By introducing the world's first commercial oil well in 1859, Edwin Drake launched an oil boom in Western Pennsylvania comparable to the California gold rush of '49.

First usesFirst uses

• 3,000 years 3,000 years of use –of use –– Lamp oilLamp oil– MedicineMedicine– Seal boatsSeal boats– Generally a Generally a

nuisancenuisance

• 150 years 150 years modern oil modern oil industry industry

Impact – New energy Impact – New energy economyeconomy

• 20 to 1 energy 20 to 1 energy ratioratio

• Nothing like it.Nothing like it.

Kerosene, not gasoline- Kerosene, not gasoline- first oil usefirst oil use

Products todayProducts today

• Petrochemicals (Plastic) Petrochemicals (Plastic) • Asphalt Asphalt • Diesel fuel Diesel fuel • Fuel oils Fuel oils • Gasoline Gasoline • Kerosene Kerosene • Liquefied petroleum gas (LPG) Liquefied petroleum gas (LPG) • Lubricating oils Lubricating oils • Paraffin wax Paraffin wax • Tar Tar

Some of biggest Some of biggest companies in the companies in the

worldworld

•

John D. Rockefeller—OIL John D. Rockefeller—OIL

•Starting with an oil refinery and superb Starting with an oil refinery and superb business sense, used both business sense, used both verticalvertical and and horizontal integrationhorizontal integration to capture 90% of to capture 90% of the U.S. oil refinery business by 1879. the U.S. oil refinery business by 1879.

•Standard Oil Trust—consisted of 40 Standard Oil Trust—consisted of 40 corporations that controlled every phase of corporations that controlled every phase of oil refining.oil refining.

– 1913 gave away over half of his fortune to 1913 gave away over half of his fortune to charity. charity.

– He donated millions to education and good He donated millions to education and good works through his Rockefeller Foundation.works through his Rockefeller Foundation.

John D. Rockefeller

Started Standard Oil

Created refinery monopoly

Also insanely rich from oil

How rich is insanely How rich is insanely rich?rich?

• Name:Name: John D. Rockefeller John D. Rockefeller • Age at Highest Earnings:Age at Highest Earnings: 74 74 • Age at Death:Age at Death: 97 (died May 23, 1937) 97 (died May 23, 1937) • Net Worth:Net Worth: ▬ 329.9 Billion $USD ▬ 329.9 Billion $USD • Original Net Worth:Original Net Worth: US$1 Billion (September US$1 Billion (September

29 1916)[2]29 1916)[2]US$900.0 Million (1913-eve of WWI) [3] US$900.0 Million (1913-eve of WWI) [3]

• Origin:Origin: United States United States • Main Source of Wealth:Main Source of Wealth: Standard Oil Standard Oil • Other Achievements:Other Achievements: First Billionaire (Globally- First Billionaire (Globally-

USD)[4] and The Rockefeller Foundation USD)[4] and The Rockefeller Foundation (Created:1913)[5] (Created:1913)[5]

The Auto Industry- Car The Auto Industry- Car CultureCulture

Highway systemHighway system

Car Car cultureculture

Suburbia- Suburbia-

Daily Gas usage by country

Relative Gas Prices

Future of OilFuture of Oil

ProblemsProblems

• Non-renewableNon-renewable• Major pollutantMajor pollutant• Most “not” in USMost “not” in US• No price controlsNo price controls• WE NEED IT!!!!!!WE NEED IT!!!!!!

A Mixed LegacyA Mixed LegacyCritics Critics

– Business tycoons were “Business tycoons were “robber robber baronsbarons” who profited unfairly by ” who profited unfairly by squeezing out competitors. squeezing out competitors.

– They lived lavish lifestyles from their ill-They lived lavish lifestyles from their ill-gotten rewards. gotten rewards.

ProponentsProponents– Business tycoons were “Business tycoons were “captains of captains of

industryindustry” who used their business ” who used their business skills to make the American economy skills to make the American economy more productive. more productive.

– That in turn made the American That in turn made the American economy stronger.economy stronger.

A Favorable Climate for A Favorable Climate for BusinessBusinessFree Free MMarkets arkets

•CapitalismCapitalism== competition determines competition determines prices and wages, and most industries are prices and wages, and most industries are run by private businesses. run by private businesses.

•In the 1800s, business leaders believed inIn the 1800s, business leaders believed in laissez-fairelaissez-faire capitalism with no capitalism with no government intervention.government intervention.

•EntrepreneursEntrepreneurs risked their money and risked their money and

talents in new ventures.talents in new ventures.

Proprietorships and Proprietorships and PartnershipsPartnerships

– Small businesses were run by Small businesses were run by individual proprietors or had more individual proprietors or had more than one owner in a partnership. than one owner in a partnership.

– In either case, owners are personally In either case, owners are personally responsible for all business debts and responsible for all business debts and obligations. obligations.

CorporationsCorporations– As industries grew, the structure of As industries grew, the structure of

ownership changed. ownership changed.

– Businesses were owned by Businesses were owned by stockholders; decisions made by a stockholders; decisions made by a board of directors, with day-to-day board of directors, with day-to-day operations run by corporate officers. operations run by corporate officers.

– Investment money was raised by Investment money was raised by selling stock, and investors were bound selling stock, and investors were bound only by the amount of their investment. only by the amount of their investment.

Trusts and MonopoliesTrusts and Monopolies

– Some companies merged and turned Some companies merged and turned their stocks over to a board of trustees their stocks over to a board of trustees who ran the group of companies as a who ran the group of companies as a single entity. single entity.

– Sometimes a trust gained a Sometimes a trust gained a monopolymonopoly, , having complete control of an industry. having complete control of an industry.

– With no competition, prices could be With no competition, prices could be raised or lowered at will.raised or lowered at will.

Social DarwinismSocial Darwinism

•Economic life was controlled by the Economic life was controlled by the natural law of competition (survival of natural law of competition (survival of the fittest)the fittest)

•Agreed with the well-known economist, Agreed with the well-known economist, Adam Smith’s ideas of the law of Adam Smith’s ideas of the law of supply and demand.supply and demand.

•Businessmen liked the ideas of Businessmen liked the ideas of capitalism, they actively sought to capitalism, they actively sought to eliminate competition and control the eliminate competition and control the free market.free market.

•John Rockefeller and Andrew Carnegie.John Rockefeller and Andrew Carnegie.