1. The
Rise of
American Industry

2. Important Questions to Ponder
What factors contributed to the rise of American industry?
How did government policy on business lend itself to abuse?
In what ways did the entrepreneurs help to shape the American industrial revolution?
How did Labor address the abuses of the industrial revolution?

3. Report on Manufacturers 1791
Alexander
Hamilton

4. Factors Encouraging Industrial Growth
1791 – Alexander Hamilton issues the Report on Manufacturers
Hamilton believed wealth of America’s natural resources assured development of industry
America’s natural resources not fully developed before Civil War

5. Constitution and Government Policy
the Constitution assisted the growth of America industry and business in the following ways:
coining of money by Federal Government provided stable currency for business transactions
regulating interstate trade made possible “national laws” for industry and transportation

6. Constitution and Government Policy
tariffs protected against foreign competition
an established system of patents protected and encouraged inventors
5th and 14th Amendments provided that no person could be deprived property without due process of law

7. Corporations and Entrepreneurs

8. Corporations & Monopolies

9. Corporations
a business arrangement whereby capital is raised by selling shares of stock in return for profit and partial ownership in a company
profit and ownership based on amount of shares purchased by each individual investor
losses limited to amount of the individual investment

10. Monopolies huge corporations formed in last half of the 19th Century
by 1900 less than 2% of manufacturing companies produced 50% of all manufactured goods
some companies became monopolies:
gained complete control over the price and production of a particular item (oil, steel, flour, etc.)
all serious competition eliminated

11. Regroup
What did Hamilton believe assured the development of American industry?
Whose responsibility of interstate commerce?
What is the purpose of a patent?
What is a corporation?
What is a monopoly?

12. The
Entrepreneurs

13. The Entrepreneurs
Entrepreneur: a person who organizes, manages and assumes the risk of creating and running a business. They also claim the lion’s share of the profits.
Can you provide a modern example of an entrepreneur?

14. EXAMPLE 1900 – J.P. Morgan formed the United States Steel Corporation:
merged a number of steel corporations
U.S. Steel became the world’s largest corporation (monopoly)

15. J.P. Morgan

16. United States Steel Corporation
Corporate Monopoly
United States Steel Corporation
1900

17. Entrepreneurs
business leaders in post – Civil War period referred to as either of the following:
Organize and manage risks of business & take lion’s share of the profits
Buy & sell companies
Known as “robber barons” for negative action
Known as captains of industry for the positives

18. Robber Barons/Captains of Industry

19. John D. Rockefeller
developed the Standard Oil Company into enormous corporate monopoly:
controlled 95% of America’s refined oil business
used horizontal integration
horizontal integration – a business practice whereby a corporation buys up rival companies for the purpose of eliminating competition

20. Refined Oil Standard Oil Company Horizontal Integration John D.
Rockefeller

21. Shipping & Railroads
Cornelius "Commodore"
Vanderbilt

22. Andrew Carnegie
Carnegie Steel Company produced over one – half of the nation’s steel
used vertical integration to develop his corporation
vertical integration – a form of business organization where a corporation acquires businesses that contribute to the completion of a finished product

23. Steel
Carnegie Steel Company Vertical Integration
Andrew
Carnegie

24. Henry Ford produced the Model T Ford
assembly line and mass production techniques made car affordable for average person
used vertical integration techniques
paid high wages
refused to recognize labor unions

25. Automobiles
Ford Motor Company Model T Ford Assembly Line
Henry
Ford

26. “Competition is the keen cutting edge of business, always shaving away at costs”. Henry Ford

27. Model T
Assembly Line

28. Regroup What is an entrepreneur? Examples?
What is horizontal integration?
What is vertical integration?
How did the assembly line dramatically change industrial production? What was the benefit for the consumer? The Producer?

29. Business & Government Practices

30. Laissez – faire
a “hands off” policy, whereby government interferes with business as little as possible
believed government should not regulate business beyond providing an atmosphere allowing business development, such as the following:
stable currency
protective tariffs

31. Competition and Absorption
large corporations merged and combined to do the following:
eliminate competition
increase profits
Increase business efficiency
many Americans opposed monopolies:
feared lack of competition
called for laws to regulate big business abuses (especially railroads)

32. Competition & Absorption

33. Public Good v.
Private Gain

34. Social Darwinism Used to justify imperialism and industrialism
Based on writing of Charles Darwin
Origin of the Species
plants and animals evolved over time
through “natural selection” certain species lived while others died out “survival of the fittest”
Darwin’s theory dealt only with plant and animal kingdoms, not human society

35. “While the law of competition may sometimes be hard… it ensures the survival of the fittest”. Andrew Carnegie

36. Charles Darwin
“Origin of Species”

37. Herbert Spencer Applied theory of evolution to human society
Social Statics (book title):
human society evolves through competition
certain people advance over others through hard work, intelligence or strength (survival of the fittest)
human progress is natural and can not be stopped
all progress in the result of competition
Coined term “survival of the fittest”

38. Herbert Spencer
“Social Statics”

39. Herbert Spencer Spencer’s theory called “Social Darwinism
embraced by most Americans
What should the role of government be?
How much should the government be involved in our economy?
Should the market determine prices, conditions and so on?

40. “All socialism involves slavery”.
Herbert Spencer

41. Andrew Carnegie Believed in Social Darwinism
Carnegie put forth his social philosophy in a series of magazine articles entitled, “The Gospel of Wealth”

42. Andrew Carnegie Gospel of Wealth (1889) stated the following:
poverty the result of a character flaw
hard work and thrift would lead to success
government should not interfere with competitive struggle between individuals
government’s only function is to maintain order and protect property
laissez – faire the most efficient economic policy
the rich are obligated to help society through philanthropy

43. Andrew Carnegie
“Gospel of Wealth”

44. “I resolved to stop accumulating and begin the infinitely more
serious and difficult task of wise
distribution”.
Andrew Carnegie

45. Carnegie & The “Gospel of Wealth”
Childhood
Home
Skibo
Castle

46. Carnegie & Philanthropy
Carnegie Library

47. Carnegie Hall

48. Henry George disagreed with the “Gospel of Wealth”
angered at a society of poverty amidst great wealth
social philosophy put forth in book entitled, “Progress and Poverty”

49. Henry George Progress and Poverty stated the following:
rich do not have higher moral character than the poor
rich were lucky in grabbing the best land and other sources of wealth first
rich should therefore be heavily taxed
ideas of Henry George rejected by most Americans
ideas considered too radical

50. Henry George
“Progress and Poverty”

51. “The tragedy of the poor is the poverty of their aspirations”.
“What has destroyed every previous civilization has been…the unequal distribution of wealth and power”. Henry George
“The tragedy of the poor is the
poverty of their aspirations”.
Adam Smith

52. Regroup
What argument was used to justify imperialism and industrialism?
What is “Social Darwinism”?
What arguments did Carnegie make in the Gospel of Wealth?
What is philanthropy?

53. The
Gilded
Age

54. The Gilded Age (1877 – 1900)
an era of great wealth and industrialization
noted for conspicuous consumption
conspicuous consumption – the habit of those who had money to spend it in ways that made their wealth most obvious (enormous mansions, yachts, elaborate balls and parties)

55. New York City Townhouse
1885

56. Kykuit

58. The "Lady" Astor

59. The Gilded Age (1877 – 1900)
upper classes also considered philanthropy a social responsibility to help the less fortunate
Rockefeller and Carnegie gave away hundreds of millions of dollars
many workers poor and believed they were exploited during the Gilded Age
factory and mine workers received very low wages
called “wage slavery” by workers and labor unions

60. Philanthropists
Rockefeller
Carnegie

61. The Gilded Age (1877 – 1900)
many Americans demanded government action against the power and perceived abuses of big business
OWS, anyone?
“It’s not fair”!!

62. “God gave me my money. I believe the power to make money is a gift from God…Having been endowed with the gift…it is my duty to make money and still more money and use the money… for the good of my fellow man according to the dictates of my own conscience”. John D. Rockefeller

63. Sherman Anti-Trust Act (1890)
passed by the U.S. Congress to do the following:
outlaw any monopoly or conspiracy in “restraint of trade”
aimed at preventing monopolies from controlling the market
Create more competition which would have the effect of lowering prices on consumer goods

64. Regroup What was the Gilded Age and what made it gilded?
What is conspicuous consumption?
What was the Sherman Antitrust Act and why was it perceived as necessary by many Americans?

65. Early Labor
Union Movement

66. Labor Movement Begins
union membership and activity developed rapidly in industrial era
working conditions improved through collective bargaining
collective bargaining – the process whereby union leaders represent union members in negotiations with management over the issues of wages, hours, conditions etc.

67. Collective Bargaining

68. Knights of Labor

69. Knights of Labor organized by Uriah Stephens in 1869
accepted skilled and unskilled workers
all meetings kept secret
In 1879 the K of L
ends secrecy of union meetings
membership grows into nation’s largest union

70. Uriah Stephens

71. Knights of Labor the K of L had the following major goals:
an eight hour workday
no child labor
equal pay for men and women
the formation of cooperatives so workers could work for themselves

72. Knights of Labor Haymarket Riot (1886):
a violent strike in Chicago’s Haymarket Square
seven policemen killed by a bomb
Knights blamed and accused of being anarchists
membership in the K of L therefore declined

73. American Federation of
Labor

74. American Federation of Labor
Founded by Samuel Gompers in 1886
larger membership than the Knights
AFL favored the following “bread and butter” goals:
eight hour work days
safer working conditions
higher wages
workers compensation insurance
reduced immigration

75. American Federation of Labor
AFL had the following membership policies:
only accepted skilled members
believed unskilled workers easily replaceable
skilled workers therefore had more bargaining power
AFL used the following methods to achieve their goals:
favored cooperation with management
lobbied for pro – labor legislation on state and national levels
reluctant but willing to strike

76. Samuel Gompers

77. “Show me a country that has no strikes and I’ll show you a country
in which there is no liberty”.
Samuel Gompers
President, AFL

78. Major Strikes

79. Homestead Strike (1892)
Unionized iron and steel workers opposed pay cuts
Amalgamated Association of Iron and Steel Workers
Homestead Strike failed for the following reasons:
state militia used to put down violence
union bankrupted
union lost public sympathy and support

80. Pullman Strike (1894)
Pullman Company built a company town (Pullman, Illinois)
provided housing and stores for employees
1894 – company cut wages 25 – 40%
rents and company store prices not cut
company refused to negotiate with workers

81. Pullman Strike (1894) American Railway Union:
led by Eugene V. Debs
organized nationwide boycott against Pullman
boycott prevented delivery of federal mail
Debs jailed for disobeying court injunction
injunction – a court order prohibiting a certain action (strike,boycott, protest march, etc.)

82. Eugene V. Debs
American Railway Union

83. Debs Calls For Nationwide Boycott Against Pullman

84. Pullman Strike (1894) The Pullman Strike had the following results:
army used to crush the strike
12 people killed
2000 railway cars destroyed
a court injunction successfully broke strike

85. Results of Labor Strikes
violent strikes lost unions public support and sympathy:
viewed as anarchist and too radical
especially after Russian Revolution (fear of communism)
union leadership hoped to reach agreement through the following techniques:
collective bargaining
Mediation
arbitration

86. “The most heroic word in all languages is revolution”. Eugene V. Debs
“It is impossible for capitalists and
laborers to have common goals”.
Samuel Gompers
President, AFL

87. Results of Labor Strikes
collective bargaining – negotiation between management and labor:
should negotiations break down a third party is sought
 mediation – a neutral third party seeks a solution between labor and management
mediator’s is solution “non – binding”
arbitration – labor and management agree to abide by the decision of a neutral third party

88. Regroup What is collective bargaining?
What is the result/product of collective bargaining?
What were the “bread and butter” goals of the AFL?
What two major strikes took place during this time? What were the causes/results?

89. Important Questions to Ponder
What factors contributed to the rise of American industry?
How did government policy on business lend itself to abuse?
In what ways did the entrepreneurs help to shape the American industrial revolution?
How did Labor address the abuses of the industrial revolution?