1. AP FOCUS
What were three factors in bringing on the age of industry that transformed modern America in the late 19th and early 20th centuries?

2. The New American Economy
Three politicians can lay claim to having the most influence of non-businessmen on making the American economy the most powerful in the world. Businessmen are the real doers, but three US politicians had vision for what America could become if business was both unleashed and harnessed just right, and one of these politicians even invented something and remains the only president to ever have a patent. The three men were Alexander Hamilton, Henry Clay, and inventor Abraham Lincoln (Lincoln invented a device to allow river boats to rise up in the water to get over sand bars). As we press on in the study of the Gilded Age be aware that political corruption gets all the attention while the phenomenal growth of the US economy in the late 19th century is the miraculous story we have long since taken for granted.

3. The New American Economy
Regarding the contributions through the vision of Hamilton, Clay, and Lincoln, what they set in motion goes back to Hamilton’s commitment to provide incentives for industrialization but also to maintain American agricultural strength (as opposed to Jefferson who wanted to keep America strictly rural). Henry Clay’s American System included a tariff to protect American industry, a central bank to stabilize the economy, and the use of public money to build internal improvements in order to boost the national economy. Lincoln backed the tariff, the transcontinental railroad, and the national currency, and national markets existed for US products within nine years of his assassination.
Together, these men led the industrial revolution which was spurred on by the Civil War and by the rise of big business in the Gilded Age to place the United States third behind the United Kingdom and Germany by 1895 in achieving world markets. America had more natural resources than both those countries put together, foreshadowing our coming potential.

4. The Second Industrial Revolution was fueled by 3 industries: railroads, steel, & oil

5. Industrialism
A. By 1900 the U.S. exceeded the combined output of Germany and Great Britain.
1. U.S. borrowed heavily from Europe; after World War I, U.S. emerged as
largest creditor.
2. Technological innovations:
a. steel: railroads, skyscrapers, engines
b. oil: internal combustible engine, cars (suburbs), subways, street railroads
c. Electricity: lights, power, refrigerated railroad cars
d. Advances in business: telephone, typewriter, cash register, adding machines.
e. Mass popular culture (early 20th century): Cameras, phonographs, bicycles, moving
pictures, amusement parks, professional sports.
f. Contrasts 1st Industrial Revolution: textiles, coal, iron, early railroads.

6. I. Major Ideas Invention and Innovation in the Industrial Age
Accelerated technological innovation, emphasizing new inventions and applied science.
In the first decade of the  US Patent Office ( ) 276 new inventions were patented, From 1890 to 1900 235, 000 new devices were patented. 

7. I. Major Ideas
3. In 1880, about 50% of Americans worked in agriculture; only 25% by 1920
4. Class divisions became most pronounced in U.S. history during this period.
5. Farmers lost ground
a. In 1880, 25% of those who farmed did not own their land.
b. 90% of African Am

8. II. Railroad Building II. Railroad building
A. By 1900, 192,556 miles of track; 35,000 in 1865 alone (more than all Europe combined)
1. Gov’t subsidized transcontinental railroad building since unpopulated areas were
initially unprofitable
a. Railroad companies given million acres along RR lines (checkerboard)
b. Gov’t received low rates for postal service and military traffic in return.
2. Cities flourished where lines were laid while bypassed cities became "ghost towns"

9. Irish workers made up a large percentage of laborers on the eastern section
Chinese workers made up a large percentage of laborers on the western leg
B. The Transcontinental Railroad (completed in 1869)
1. Pacific Railway Act (1862): Passed by Republican Congress during Civil War. 2. Union Pacific Railroad appointed by Congress to build west from Omaha, Nebraska
a. Company granted 20 square miles for each mile of track constructed
b. Company also granted federal loans for each mile: $16,000 for flat land,. $32,000 for
hilly country; $48,000 for mountainous country
c. Construction began in 1865
d. Irish "paddies" who fought in the Union armies worked at a frantic pace.
e. Insiders of the Credit Mobilier construction company pocketed $73 million
for some $50 million worth of work.
1869 is same year as Suez Canal completion—similar effects; both opened access & tie two worlds together
1st transcontinental railroad connected the west coast to eastern cities in 1869

10. Rails Across the Continent
In 1862, Congress authorized the transcontinental railroad:
Union Pacific worked westward from Nebraska (Irish laborers)
Central Pacific worked eastward from CA (Chinese immigrants)
May 10, 1869 the 2 tracks met at Promontory Point in Utah
By 1900, 4 more lines were built to the Pacific
3. Central Pacific Railroad pushed east from Sacramento over Sierra Nevada.
a. CP ran a relatively clean operation compared to Union Pacific (Credit Mobilier)
b. Gov’t provided same subsidies as to Union Pacific
c. 10,000 Chinese laborers, "coolies," worked as cheap, efficient and docile labor
d. Sierra Nevada became a major challenge as workers could only chip through
a few inches a day through rocky tunnels.
4. Railroad completed at Promontory Point, Utah on May 10, 1869.
a. Union Pacific built 1,086 miles of line
b. Central Pacific built 689 miles
5. Significance:
a. Linked the entire continent via railroad and by telegraph
b. Paved the way for incredible growth of the Great West.
c. Facilitated a burgeoning trade with the Orient
d. Seen by Americans at the time as a monumental achievement along with
the Declaration of Independence and the freeing of the slaves.
Show RR clip 7

11. Other Transcontinental Lines
Northern Pacific Railroad 1883
6. Other Transcontinental lines
a. No subsequent RR received gov’t loans but all received generous land grants.
b. Northern Pacific Railroad completed in 1883 (Lake Superior to Puget Sound)
c. Atchison, Topeka, and Santa Fe RR completed in 1884.

12. Federal Land Grants to Railroads by 1871
The national gov’t doled $65 million & millions of acres in land grants (received reduced rates for shipping)

13. Railroad Construction, 1830-1920

14. Railroad Consolidation and Mechanization
“Pullman cars” & “refrigeration cars”
C. Railroad Consolidation and Mechanization
1. Cornelius Vanderbilt ( )
a. Popularized the steel rail; replaced the old iron tracks of the NY Central RR
b. Amassed a fortune of $100 million dollars
2. Jay Gould and Russell Sage by 1880 controlled much of railroad traffic in West.
a. Gutted their railroads by stock watering and pocketing profits rather than reinvest.
b. Gould had earlier tried to corner the gold market during Grant's presidency.
3. Significant improvements in railroad building
a. Steel, standard gauge of track width, Westinghouse air brake,
b. Pullman Palace Cars afforded luxurious travel, introduced in 1860s.
In 1870, RR companies developed the 1st time zones to better schedule the RR system; the US would not adopt time zones until 1918

15. Significance of America’s RR Networks
1) Spurred Industrialization
2) United Nation (physically)
3) created huge domestic markets for raw mat. & man. Goods
4) Stimulated 3 west. Frontiers (mining, ag., and ranching)
5) RR led to cityward movement of late 19th cent.
D. Significance of America’s railroad network
1. Spurred the industrialization of the post-Civil War years (especially steel)
2. Sprawling nation became united physically.
3. Created enormous domestic market for US raw materials and manufactured goods.
4. Stimulated creation of 3 Western frontiers: mining, agriculture, and ranching
5. Railroad led to great cityward movement of late 19th c.
6. Facilitated large influx of immigrants.
7. Spurred investment from abroad
8. Concept of time altered with creation of distinct "time zones" from coast to coast.
9. Maker of millionaires; a new railroad aristocracy emerged
10. Native Americans displaced and herded into ever-shrinking reservations

16. Significance of America’s RR Networks
6) Facilitated large influx of immigrants
7) spurred investment from abroad
8) time zones
9) maker of millionaires, new rr aristocracy emerged
10) N.A. displaced and herded into reservations
D. Significance of America’s railroad network
1. Spurred the industrialization of the post-Civil War years (especially steel)
2. Sprawling nation became united physically.
3. Created enormous domestic market for US raw materials and manufactured goods.
4. Stimulated creation of 3 Western frontiers: mining, agriculture, and ranching
5. Railroad led to great cityward movement of late 19th c.
6. Facilitated large influx of immigrants.
7. Spurred investment from abroad
8. Concept of time altered with creation of distinct "time zones" from coast to coast.
9. Maker of millionaires; a new railroad aristocracy emerged
10. Native Americans displaced and herded into ever-shrinking reservations

17. Railroad Corruption by Robber Barons

18. Wrong Doing in Railroading
Railroads were not without corruption, as shown by the Credit Mobilier scandal.
Jay Gould made millions embezzling stocks from the Erie, Kansas Pacific, the Union Pacific, and the Texas and Pacific railroad companies.
One method of cheap moneymaking was called “stock watering,” in which railroad companies grossly over-inflated the worth of their stock and sold them at huge profits.
E. Railroad corruption by the "Robber Barons"
1. Jay Gould: Forced prices of stocks to boom and bust on some of his lines.
2. stock watering: Railroad stock promoters grossly inflated value of railroad stock.
3. Railroad tycoons, for a time, became the most powerful people in America.
4. Eventually ruled as an oligarchy instead of cut-throat competition.
a. "Pools"
i. Formed defensive alliances to protect their profits.
ii. Competing firms agreed to divide the market, establish prices, place profits in a
common fund, and pro-rate profits.
b. Some gave secret rebates or kickbacks to large corporations..
c. Slashed rates on competing lines but made up difference on other lines.
d. Hurt farmers with long-haul, short-haul practices
5. Cornelius Vanderbilt: "Law! What do I care about the Law? Hain’t I got the power?"
Financier Jay Gould

19. The Railroad Industry
Cornelius “the Commodore” Vanderbilt was the most powerful figure in the railroad industry
America’s first “big business” was the railroad industry:
Railroads stimulated the coal, petroleum, & iron/steel industries
Large companies bought small railroads, standardized gauges & schedules, & pooled cars
Small lines in the east acted as tributaries to the 4 great trunk lines into the West 3 19

20. William Vanderbilt The public be damned!- William
What do I care about the law? H’aint I got the power?- Cornelius
5. Cornelius Vanderbilt: "Law! What do I care about the Law? Hain’t I got the power?"

21. Government Regulation of Robber Baron RR Tycoons
F. Government regulation of the "Robber Baron" railroad tycoons
1. Initially, Americans slow to react to the excesses of the railroad plutocracy.
a. Jeffersonian ideals hostile to gov’t interference with business.
b. Dedicated to free enterprise and to the principle that competition fuels trade.
c. Adam Smith: The Wealth of Nations (1776) – "bible" of capitalism.

22. Supreme Court Precedence: Slaughterhouse Cases, 1873
2. Supreme Court decisions
a. Depression of 1870s inspired farmers to protest against being forced into bankruptcy by unfair railroad policies.
b. Slaughterhouse Cases, 1873
i. Court ruled protection of "labor" was not a federal responsibility under the 14th
Amendment but a state responsibility.
ii. Significance: Protected businesses from federal regulation if they engaged only in
intrastate commerce (within a state).

23. Gov’t Regulation of Industry
From 1870 to 1900, 28 state commissions were created to regulate industry, especially RRs:
In 1870, Illinois declared RRs to be public highways; this was upheld by Munn v. Illinois (1876)
But, was overturned in Wabash v. Illinois (1886): “only Congress can regulate interstate trade”
c. Munn v. Illinois, (1877) -- (One of so-called farmer "Granger Laws") Munn case “ private property affecting public interest” can be “controlled by public for the common good”
d. Wabash case, 1886
i. Significance: Supreme Court ruled that individual states had no power
to regulate interstate commerce; responsibility rested with the federal gov’t.
-- In effect, overturned Munn v Illinois.
ii. Illinois law had prohibited short haul & long haul practices 23

24. Tariffs & Trusts Congress responded by creating:
This was the 1st attempt by the federal gov’t to regulate big business
The ICC became the model for future regulatory agencies
Congress responded by creating:
The Interstate Commerce Commission (ICC) in 1887 to regulate the railroad industry
3. Interstate Commerce Act passed in 1887 (despite Cleveland’s disapproval)
a. Set up Interstate Commerce Commission (ICC) (most important provision)
to enforce and administer the new legislation
b. Prohibited rebates and pools and required railroads to publish their rates openly.
c. Forbade unfair discrimination against shippers and outlawed charging more for
short haul than long haul over the same line.
d. Positive result -- provided an orderly forum where competing business interests
could resolve their conflicts in peaceful ways.
e. Yet, ICC didn’t effectively regulate the railroads; more of a panacea to public.
f. 1st large-scale attempt by fed. to regulate business in the interest of society. 24

25. The Interstate Commerce Act