Growth of the Transportation Growth of the Transportation SystemSystem

Section 2Section 2

StagecoachesStagecoaches• Expansion & settlement into the West Expansion & settlement into the West

created the need for fast, efficient, and created the need for fast, efficient, and economical means of transportation & economical means of transportation & communication.communication.

• 1857: Wells, Faro & Company organized a 1857: Wells, Faro & Company organized a stagecoach service from St. Louis to San stagecoach service from St. Louis to San FranciscoFrancisco

The Pony ExpressThe Pony Express• Early 1860s: Wells, Faro & Company added Early 1860s: Wells, Faro & Company added

the Pony Express servicethe Pony Express service– Involved 150 stations stocked w/fresh horsesInvolved 150 stations stocked w/fresh horses– Pony Express guaranteed delivery of a letter Pony Express guaranteed delivery of a letter

from Missouri to California w/in 10 days!from Missouri to California w/in 10 days!

Job advertisement for the Pony Express.

Look closely at the requirements.

TelegraphTelegraph• Within 18 months of the Pony Service, Within 18 months of the Pony Service,

the the telegraphtelegraph was introduced was introduced

• Pony Service was abandonedPony Service was abandoned

Pacific Railroad Act, 1862Pacific Railroad Act, 1862• Authorized a route from Omaha, Authorized a route from Omaha,

Nebraska, to San Francisco, Nebraska, to San Francisco, California.California.– Building the railroad could not have Building the railroad could not have

been possible w/out the substantial land been possible w/out the substantial land grants from the US government to the grants from the US government to the railroad companiesrailroad companies•Land grants financed constructionLand grants financed construction•Companies received 120km right of way => Companies received 120km right of way =>

60 km on either side of the rail line60 km on either side of the rail line•Value of this land increased w/the coming of Value of this land increased w/the coming of

the railway b/se it was close to the linethe railway b/se it was close to the line

• 1920: peak of railroad construction1920: peak of railroad construction w/420,000 km of trackw/420,000 km of track

Factors Affecting Industrial Factors Affecting Industrial LocationsLocations

Building the 1st Building the 1st Transcontinental RailroadTranscontinental Railroad• Pacific Railway Act of 1862Pacific Railway Act of 1862 – U.S. Government – U.S. Government

hired Union Pacific and Central Pacific Railway hired Union Pacific and Central Pacific Railway Company to extend railways across the United Company to extend railways across the United States.States.

• Central Pacific – Started in Sacramento, CACentral Pacific – Started in Sacramento, CA

• Union Pacific – Started in Omaha, NEUnion Pacific – Started in Omaha, NE

• The 2 railroad companies met in The 2 railroad companies met in Promontory, Promontory, UtahUtah to drive the to drive the “Golden Spike”“Golden Spike” on May on May 10, 186910, 1869

Promontory, Utah May 10, Promontory, Utah May 10, 18691869

The WorkersThe Workers

•Majority of workers were Chinese Majority of workers were Chinese and Irish immigrantsand Irish immigrants

•The working conditions for all, was The working conditions for all, was very poor and strenuous!very poor and strenuous!

•The working conditions were tough The working conditions were tough because of the difficult terrain and because of the difficult terrain and weather conditionsweather conditions

Who did the Railroad Who did the Railroad Impact?Impact?• Native Americans (called it the Iron Horse)Native Americans (called it the Iron Horse)

• Helped Westward expansionHelped Westward expansion

• Made trade much easierMade trade much easier

• Hurt the farmers economically because of Hurt the farmers economically because of the higher costs for farmersthe higher costs for farmers

• They made deals with wealthy They made deals with wealthy businessmen (became corrupt)businessmen (became corrupt)

• Became crucial to the U.S. economyBecame crucial to the U.S. economy

LegislationLegislation• Interstate Commerce Act of 1887Interstate Commerce Act of 1887

– put in place for Government to – put in place for Government to supervise railroad activitiessupervise railroad activities

• Led to more financial problems Led to more financial problems (railroads were forced out of business, (railroads were forced out of business, which led to the Panic of 1893)which led to the Panic of 1893)

• This caused the Large Firms to start This caused the Large Firms to start buying up the railways, which paved buying up the railways, which paved the way for Big Businessesthe way for Big Businesses

Industrialization FactorsIndustrialization Factors

• Unskilled and semi-skilled labor in Unskilled and semi-skilled labor in abundanceabundance

• New, talented entrepreneurs New, talented entrepreneurs • Oil Oil • InventionsInventions

– New technology that allows mass productionNew technology that allows mass production– Bessemer ProcessBessemer Process

• RailroadsRailroads• Changes in business strategy Changes in business strategy

– Vertical Integration & Horizontal ConsolidationVertical Integration & Horizontal Consolidation– Social DarwinismSocial Darwinism

The Reorganization of The Reorganization of WorkWorkThe Reorganization of The Reorganization of WorkWork

Frederick W. TaylorThe Principles of Scientific Management (1911)

Frederick W. TaylorThe Principles of Scientific Management (1911)

The Reorganization of The Reorganization of WorkWorkThe Reorganization of The Reorganization of WorkWork

The Assembly LineThe Assembly Line

Horizontal IntegrationHorizontal Integration

• The Standard Oil Companies The Standard Oil Companies acquisition of 40 refineries acquisition of 40 refineries companies.companies.

• An automobile manufacture’s An automobile manufacture’s acquisition of a sports utility vehicle acquisition of a sports utility vehicle manufacturer.manufacturer.

Vertical IntegrationVertical Integration

• Vertically integrated companies Vertically integrated companies are united through a hierarchy are united through a hierarchy with a common owner. Usually with a common owner. Usually each member of the hierarchy each member of the hierarchy produces a different product or produces a different product or service, and the products service, and the products combine to satisfy a common combine to satisfy a common need. need.

Vertical and Horizontal Vertical and Horizontal IntegrationIntegrationVertical and Horizontal Vertical and Horizontal IntegrationIntegration

Regulating the Regulating the TrustsTrustsRegulating the Regulating the TrustsTrusts1877 1877 Munn. v. ILMunn. v. IL

• The Supreme Court decided that a state could set The Supreme Court decided that a state could set maximum rates for the storage of grain.maximum rates for the storage of grain.

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

• Supreme Court reversed itself by declaring that Supreme Court reversed itself by declaring that railroad rates set by state laws interfered with railroad rates set by state laws interfered with Congress’s exclusive power to regulate interstate Congress’s exclusive power to regulate interstate commercecommerce

1890 1890 Sherman Antitrust Act Sherman Antitrust Act The Sherman Antitrust Act established the The Sherman Antitrust Act established the

principle that government should act to break principle that government should act to break up trusts and other forms of monopoly.up trusts and other forms of monopoly.

1895 1895 US v. E. C. Knight Co.US v. E. C. Knight Co. • Supreme Court ruled that the federal government Supreme Court ruled that the federal government

had no authority to break up the sugar monopoly.had no authority to break up the sugar monopoly.

1877 1877 Munn. v. ILMunn. v. IL• The Supreme Court decided that a state could set The Supreme Court decided that a state could set

maximum rates for the storage of grain.maximum rates for the storage of grain.

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

• Supreme Court reversed itself by declaring that Supreme Court reversed itself by declaring that railroad rates set by state laws interfered with railroad rates set by state laws interfered with Congress’s exclusive power to regulate interstate Congress’s exclusive power to regulate interstate commercecommerce

1890 1890 Sherman Antitrust Act Sherman Antitrust Act The Sherman Antitrust Act established the The Sherman Antitrust Act established the

principle that government should act to break principle that government should act to break up trusts and other forms of monopoly.up trusts and other forms of monopoly.

1895 1895 US v. E. C. Knight Co.US v. E. C. Knight Co. • Supreme Court ruled that the federal government Supreme Court ruled that the federal government

had no authority to break up the sugar monopoly.had no authority to break up the sugar monopoly.

The Gospel of The Gospel of Wealth:Wealth:Religion in the Era of Religion in the Era of IndustrializationIndustrialization

The Gospel of The Gospel of Wealth:Wealth:Religion in the Era of Religion in the Era of IndustrializationIndustrialization

Russell H. ConwellRussell H. Conwell

$ Wealth no longer Wealth no longer looked upon as looked upon as bad.bad.

$ Viewed as a sign of Viewed as a sign of God’s approval.God’s approval.

$ Christian duty to Christian duty to accumulate wealth.accumulate wealth.

$ Should not help the Should not help the poor.poor.

$ Wealth no longer Wealth no longer looked upon as looked upon as bad.bad.

$ Viewed as a sign of Viewed as a sign of God’s approval.God’s approval.

$ Christian duty to Christian duty to accumulate wealth.accumulate wealth.

$ Should not help the Should not help the poor.poor.

““On Wealth”On Wealth”““On Wealth”On Wealth”

Andrew CarnegieAndrew Carnegie

$ The Anglo-Saxon race The Anglo-Saxon race is superior.is superior.

$ ““Gospel of WealthGospel of Wealth” ” (1901).(1901).

$ Inequality is Inequality is inevitable and good.inevitable and good.

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

$ The Anglo-Saxon race The Anglo-Saxon race is superior.is superior.

$ ““Gospel of WealthGospel of Wealth” ” (1901).(1901).

$ Inequality is Inequality is inevitable and good.inevitable and good.

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

John D. RockefellerJohn D. Rockefeller• Owner of the Standard Oil Company. Owner of the Standard Oil Company. • Used rebates, buyouts, and oil pipelines to Used rebates, buyouts, and oil pipelines to

reduce costs and eliminate competition. reduce costs and eliminate competition. Rebates were discounts given by the Rebates were discounts given by the railroads so that Rockefeller’s shipping costs railroads so that Rockefeller’s shipping costs were lower than his competitors’. were lower than his competitors’.

• Rockefeller bought out his failing or marginal Rockefeller bought out his failing or marginal competitors. competitors.

• Pipelines enabled the Standard Oil to cut its Pipelines enabled the Standard Oil to cut its shipping costs below those of its shipping costs below those of its competitors.competitors.

Standard Oil Co.Standard Oil Co.Standard Oil Co.Standard Oil Co.

Andrew CarnegieAndrew Carnegie• He was a Scottish-born American He was a Scottish-born American

industrialist, businessman, and a major industrialist, businessman, and a major philanthropist. He was an immigrant as philanthropist. He was an immigrant as a child with his parents. He built a child with his parents. He built Pittsburgh's Carnegie Steel Company. Pittsburgh's Carnegie Steel Company. Paid his workers low wages, drove tough Paid his workers low wages, drove tough bargains with railroad companies on bargains with railroad companies on their prices for shipping steel, and did their prices for shipping steel, and did all in his power to bankrupt competitors. all in his power to bankrupt competitors. In 1901 Carnegie sold his huge steel In 1901 Carnegie sold his huge steel company for nearly $500 million to a company for nearly $500 million to a group of bankers led by J.P. Morgan.group of bankers led by J.P. Morgan.

New Financial New Financial BusinessmanBusinessmanNew Financial New Financial BusinessmanBusinessman

The Broker:The Broker: J. Pierpont MorganJ. Pierpont Morgan

The Broker:The Broker: J. Pierpont MorganJ. Pierpont Morgan

Robber BaronsRobber Barons

•One reason John D. One reason John D. Rockefeller, Andrew Rockefeller, Andrew Carnegie, and J. Pierpont Carnegie, and J. Pierpont Morgan were sometimes Morgan were sometimes called robber barons was called robber barons was because they used ruthless because they used ruthless business tactics against business tactics against their competitors.their competitors.

New Business Culture:New Business Culture:“The American Dream?”“The American Dream?”New Business Culture:New Business Culture:“The American Dream?”“The American Dream?”

Protestant (Puritan) “Work Ethic”Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels]Horatio Alger [100+ novels]

Protestant (Puritan) “Work Ethic”Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels]Horatio Alger [100+ novels]

Is the idea of the “self-made man” a MYTH??Is the idea of the “self-made man” a MYTH??

The Protectors of Our The Protectors of Our IndustriesIndustriesThe Protectors of Our The Protectors of Our IndustriesIndustries

The Changing American

Labor Force

The Changing American

Labor Force

Child LaborChild Labor

Child LaborChild Labor

Discussion QuestionsDiscussion Questions

– What were the cost and benefits of What were the cost and benefits of the industrial transformation of the industrial transformation of the Post- Civil War era?the Post- Civil War era?

– Was the growing class division of Was the growing class division of the time a threat to American the time a threat to American democracy? Why or why not?democracy? Why or why not?

****** Types of Industries Types of Industries ******

INDUSTRY

Primary

Secondary

Tertiary

Farming

MiningFishing

Automobile

SteelConstruction

Lawyers

BarbersCooks

Mechanics

Doctors

Teachers

PRIMARY INDUSTRYPRIMARY INDUSTRY• Industries based on the extraction Industries based on the extraction

of natural resourcesof natural resources• Also known as resource industriesAlso known as resource industries• Examples: mining, fishing, forestry, Examples: mining, fishing, forestry,

& farming& farming

SECONDARY INDUSTRYSECONDARY INDUSTRY• Further process the raw materials supplied by Further process the raw materials supplied by

primary industriesprimary industries• For example: growing farming is a primary For example: growing farming is a primary

industry, but manufacturing clothes from the industry, but manufacturing clothes from the cotton is a secondary industrycotton is a secondary industry

• Examples: construction, automobile, & steel Examples: construction, automobile, & steel industriesindustries

• Also includes machinery & equipment used in Also includes machinery & equipment used in factoriesfactories

• Non-durable goodsNon-durable goods: those that are consumed: those that are consumed Examples: food, clothingExamples: food, clothing

TERTIARY INDUSTRYTERTIARY INDUSTRY• Provide servicesProvide services

• Categories: transportation, public Categories: transportation, public utilities, wholesale & retail trade, finance, utilities, wholesale & retail trade, finance, insurance, & real estateinsurance, & real estate

• Examples of employees: barbers, cooks, Examples of employees: barbers, cooks, mechanics, lawyers, doctors, & teachersmechanics, lawyers, doctors, & teachers

Locating Secondary Locating Secondary IndustriesIndustries• Some of the factors that influence Some of the factors that influence

the location of secondary industries the location of secondary industries are:are:

1.1. MarketMarket

2.2. Cost & skills of laborCost & skills of labor

3.3. Raw materialsRaw materials

4.4. Fuel & powerFuel & power

5.5. Site & servicesSite & services

6.6. ClimateClimate

7.7. Gov’t interventionGov’t intervention

8.8. Geographical inertiaGeographical inertia

1. The Market Factor1. The Market Factor• Location w/in the market is importantLocation w/in the market is important

• Need a good location to reduce Need a good location to reduce transportation costs & to provide transportation costs & to provide after-sales serviceafter-sales service

• For example: perishable products are For example: perishable products are manufactured close to their markets manufactured close to their markets to avoid spoilingto avoid spoiling

Cost & skills of labourCost & skills of labour• Both cost & quality determine Both cost & quality determine

location of industry location of industry

• Wages for workers are a significant Wages for workers are a significant cost cost – Have become more important than Have become more important than

transportation coststransportation costs– Especially true in producing electrical & Especially true in producing electrical &

electronic goodselectronic goods

Raw materialsRaw materials• Location of raw materials influences location of Location of raw materials influences location of

industryindustry

• Some industries use a lot of natural resources & Some industries use a lot of natural resources & produce a lot of wasteproduce a lot of waste

• For example: iron & steel industriesFor example: iron & steel industries– Finished product is only one-quarter of the Finished product is only one-quarter of the

weight of the original raw materialsweight of the original raw materials– Processing plants located near the raw Processing plants located near the raw

materialsmaterials In some cases, it is easier or In some cases, it is easier or

less expensive to move the less expensive to move the finished goods, so these finished goods, so these industries locate themselves industries locate themselves near their marketsnear their markets

Fuel and powerFuel and power• During the IR, water power from rivers & coal from During the IR, water power from rivers & coal from

coal fields were important in determining the coal fields were important in determining the location of the industrylocation of the industry– Remember Moses Brown’s textile mill at Remember Moses Brown’s textile mill at

Pawtucket, Rode IslandPawtucket, Rode Island– Most textile mills were located alongside rivers Most textile mills were located alongside rivers

or water sources b/se the water provided poweror water sources b/se the water provided power

The location of power does not play as big a role in determining the location of the industry b/se power can be transported in the form of electricity

Site and servicesSite and services• Flat land is needed for car Flat land is needed for car

manufacturing, oil refining, aircraft manufacturing, oil refining, aircraft production, manufacturing of production, manufacturing of recreational vehiclesrecreational vehicles

• Gov’t try to attract industries by Gov’t try to attract industries by providing providing industrial parksindustrial parks that are that are designed specifically for industries to designed specifically for industries to set up new facilitiesset up new facilities

Climate Climate • In the past, climate was an important In the past, climate was an important

factor in determining location of the factor in determining location of the industry.industry.

• For example, the damp climate of For example, the damp climate of Britain and the New England states Britain and the New England states (USA) helped the textile industries by (USA) helped the textile industries by making the fiber easier to work with.making the fiber easier to work with.

• Now climate can be artificially Now climate can be artificially controlled.controlled.

• Exception: film industry in HollywoodException: film industry in Hollywood– Warm, sunny climate for filmingWarm, sunny climate for filming

Gov’t interventionGov’t intervention• Gov’t tries to attract the Gov’t tries to attract the

manufacturing industry by manufacturing industry by offering special incentivesoffering special incentives– Advertisement paid for by the gov’t Advertisement paid for by the gov’t

of the state of Vermont to attract of the state of Vermont to attract companiescompanies

Geographical inertiaGeographical inertia

Sometimes a manufacturing Sometimes a manufacturing plan will be in what seems like a plan will be in what seems like a bad location => but locations bad location => but locations change over time, so what may change over time, so what may have been a good place to build have been a good place to build a plant has now deteriorateda plant has now deteriorated

Production CycleProduction Cycle

Location of Service Location of Service IndustriesIndustries• Growth rate for service industries (tertiary Growth rate for service industries (tertiary

industries) is much faster than for primary or industries) is much faster than for primary or secondary industriessecondary industries

• But locating a service industry is not as But locating a service industry is not as complex as locating a manufacturing industrycomplex as locating a manufacturing industry

• Service industries are generally located Service industries are generally located where people livewhere people live

• Every city needs plumbers, teachers, Every city needs plumbers, teachers, entertainers, and lawyersentertainers, and lawyers

• As cities grow, more services are needed As cities grow, more services are needed – For example, b/se of Calgary’s rapid boom, For example, b/se of Calgary’s rapid boom,

we are dangerously short of doctorswe are dangerously short of doctors• Some specialized services are only located in Some specialized services are only located in

federal and state capital cities (usually gov’t federal and state capital cities (usually gov’t services)services)