New technology and abundant natural resources led to economic growth.
In the 1850s, researchers found they could burn petroleum to produce heat and smoke free light. Suddenly oil became very valuable.
In 1859 Drake drilled a well in Titusville, Pennsylvania and struck oil.
During the late 1800s, new technology, transportation, and business methods allowed the country to tap its rich supply of natural resources and increase production.
The change from an agricultural economy to an industrial one was possible because the United States had the resources needed for a growing economy.
One way a company can raise capital is by becoming a corporation. A corporation is a company that sells shares, or stock, of its business to the public. People who invest in the corporation by buying stock are its shareholders, or partial owners.
During periods of strong economic growth, shareholders earn dividends– cash payments from corporation’s profits.
If a company fails- the investor loses all of their money.
Great fortunes were made from oil. John D. Rockefeller was the most famous figure of the oil industry.
In 1870 Rockefeller organized the Standard Oil Company of Ohio and set out to dominate the oil industry.
Rockefeller lowered his prices to drive his competitors out of business, pressured customers not to deal with rival companies, and persuaded the railroads to give him special rates.
In 1882 Rockefeller formed a trust, a group of companies managed by the same board of directors. Rockefeller did this by acquiring stock in many different oil companies.
Rockefeller created a monopoly- or total control of an industry by a single producer.
Steel also became a huge business in the late 1800s. A strong and long-lasting form of iron treated with carbon, steel was the ideal material for railroad tracks, bridges, and many other products.
English inventor Henry Bessemer came up with the Bessemer process that allowed steel to be made cheaper, this changed the industry.
In the 1870s, large steel mills were built near sources of iron ore in western Pennsylvania and eastern Ohio. Pittsburgh, Pennsylvania, became the steel capital of the world.
The leading figure in the early years of the American Steel Industry was Andrew Carnegie, the son of a Scottish immigrant.
After learning of the Bessemer process, Carnegie built a steel plant near Pittsburgh.
By 1890 Carnegie dominated the steel industry. His company became powerful through vertical integration– the acquiring of companies that provided equipment and services he needed. Carnegie bought iron and coal mines, warehouses, ore ships, and railroads to gain control of all the parts he need to make and sell steel.
Andrew Carnegie, John D. Rockefeller, and other industrial millionaires grew interested in philanthropy- the use of money to benefit the community. They used their huge fortunes to found schools, universities and other civic institutions.
In 1890 Congress passed the Sherman Antitrust Act, which prohibited trusts and monopolies. End