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Industrialization 1865-1901 Chapter 9.

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1 Industrialization Chapter 9

2 Section 1: The Rise of Industry
I Can… Identify the effects of expanding population on industry. Explain the effects of technological innovations such as the telephone and telegraph on American development.

3 The Rise of Industry The Industrial Revolution began in the United States in the early 1800s; however, the nation was still largely a farming country when the Civil War erupted. In 1860 out of a population of 30 million, only 1.3 million Americans worked in industry. After the Civil War, industry greatly expands and millions of Americans left farms to work in mines and factories. The Civil War challenged industries to make products more quickly and efficiently than ever before. By 1900 the U.S. was the leading industrial nation.

4 The United States Industrializes after the Civil War
How? 1. Plenty of raw materials needed for industry: water, wood, coal, iron, copper 2. Large workforce: population tripled between Due to large families and high immigration levels. Larger population also increased demand for manufactured goods. 3. The transcontinental railroad brought settlers and miners to the west and moved resources to the factories in the east.

5 The Rise of Industry

6 The Rise of Industry In 1859, Edwin Drake drilled what became the world’s first oil well in Titusville, Pennsylvania. Before this, whale blubber had been used for light and fuel. Whaling had become time-consuming and the whales were becoming scarce. Drilled oil was cheap to produce and easy to transport. The oil industry will grow quickly and encourage such industries as kerosene and gasoline.

7 The Rise of Industry First oil well in Titusville, Pennsylvania.

8 The Rise of Industry What is Free Enterprise?
Capitalism an economic system that functions without government interference Laissez-Faire-popular concept in the 1800s (“Let people do as they choose”) Supply and demand determine prices and wages, not government. Encouraged foreign investment in the U.S. What was the government’s role in industrialization? Laissez-faire attitude-kept taxes low, encouraging investment. Few regulations on industry Gave land grants to spur RR growth High tariffs designed to protect American companies from foreign competition. Ex. Morrill Tariff- one of the highest in U.S. History.

9 What was the impact of New Inventions?
1865: No electric lighting, ice was expensive, and mail took weeks to get from east to west. Between : Patent and Trademark Office issued 500,000 patents for innovations. 1900: There were inventions such as the sewing machine, typewriter, phonograph, and vacuum cleaner.

10 The Rise of Industry Industrialization makes mass production possible.
Mass production is the process of producing goods in large numbers. By selling more, producers can charge consumers less money and still make a profit. Depends upon machinery to carry out tasks that were once done with hand tools.

11 Advances in Communication
Telegraph: perfected by Samuel F.B. Morse; Morse code- short impulses to represent letters of the alphabet. 1896-Guglielmo Marconi; invented the wireless telegraph. Telephone: Alexander Graham Bell In 1877 Bell and others organized the Bell Telephone Company eventually became the American Telephone and Telegraph Company (AT&T). These inventions made it possible for individuals and businesses to communicate much easier and on a much broader scale.

12 The Rise of Industry: Advances in Communication

13 Electric Power Thomas A. Edison- “Wizard of Menlo Park”
inventor of the phonograph, electrical lighting, and power station and much more. Supported by wealthy industrialists like J.P. Morgan Received more than 1,000 patents on new inventions.

14 Electric Power Symbol of the new age of technology.
The light bulb enabled factory work to continue after sunset. In 1882 the Edison Electric Illuminating Company supplied electric power to customers in New York City. In 1889 several of Edison’s companies merged to form the Edison General Electric Company, today known as GE. As a result people worked longer hours, the number of US factories increased, and industries produced more goods.

15 Electric Power Other inventions also revolutionized society.
Thaddeus Lowe-ice machine (basis of the refrigerator). Gustavus Swift- refrigerated railcar; reduced food spoilage. Bessemer Process- process for purifying iron, resulting in strong, but lightweight steel. Made it cheaper and easier to remove impurities. Allowed for construction of new buildings. Along with elevators made it possible for building skyscrapers. Suspension bridges- bridges in which the roadway is suspended by steel cables. The first suspension bridge was the Brooklyn Bridge.

16 Railroads I Can… Discuss ways in which the railroads spurred industrial growth. Analyze how the railroads were financed and how they grew.

17 Railroads

18 Railroads

19 Railroads By the 1900s the US had over 200,000 miles of track.
1862: President Lincoln signed the Pacific Railway Act that provided for the construction of a transcontinental railroad by two corporations, the Union Pacific and the Central Pacific. To encourage rapid construction, the government offered each company land along the right-of-way. Land Grants

20 Railroads 1863: the Central Pacific started laying track eastward from Sacramento, California, while the Union Pacific headed westward from Omaha, Nebraska. Construction was difficult and expensive. Laborers faced harsh and dangerous conditions. Many that worked on the railroad were immigrants. Irish Chinese Met at Promontory Point, Utah.

21 Railroads Railroad expansion spurred industrial growth, by increasing markets for new products. It was also a huge consumer itself. Many railroads started to consolidate in larger companies. Cornelius Vanderbilt was one of the most famous consolidators. In 1781, he began construction on NY’s Grand Central Station. Eventually there will be seven giant systems with terminals in major cities.

22 Railroads To make rail service safer, the country was divided into 4 time zones. Before time was kept independently, so scheduling and safety became a huge concern. In 1884, delegates from 27 countries divided the globe into 24 time zones. Railroads played a key role in transforming American industries and business. They could transport large amounts of goods quickly, cheaply, and efficiently. Because they linked the nation, they allowed businesses to obtain raw materials easily and to sell finished goods to a larger number of people.

23 Railroads: Robber Barons v. Captains of Industry
2 views: “Robber Barons”: built their fortunes by stealing from the public. They used bribery, insider-trading, cheating, and ruthlessness to make their fortunes. (Jay Gould)

24 Railroads: Robber Barons v. Captains of Industry
“Captains of Industry”: served their nation in a positive way by increasing supply of goods, building factories, raising productivity, and expanding markets. Robber Baron or Captain of Industry?

25 Railroads

26 Railroads: Credit Mobilier Scandal
It was a railroad construction company formed by Union Pacific owners that contracted themselves to build the new railroad at highly inflated prices. It gave or sold stock at cheap prices to politicians to influence legislation. Showed the corruption and the power of the Robber Barons. Many politicians in Washington including Speaker of the House Blaine and future president Garfield were implicated in accepting bribes.

27 Railroads James J. Hill was clearly not a robber baron; he built the Great Northern Railroad from St. Paul Minnesota, to Everett, Washington, without any federal land grants. It became the most successful transcontinental railroad and the only one not eventually forced into bankruptcy.

28 Big Business I Can… Analyze how large corporations came to dominate American business. Evaluate how Andrew Carnegie’s innovation transformed the steel industry.

29 Big Business

30 Big Business: The Rise By 1900 big business dominated the economy
Big business would not have been possible without the corporation. A corporation is owned by many people but treated as though it were a single person. They can : own property pay taxes make contracts and sue and be sued. Stockholders are those who own the corporation. They own shares of ownership called stock. By issuing stock this allows a corporation to raise large amounts of money while spreading out the financial risk.

31 Big Business: The Rise They worked to maximize profit in several ways.
Ex., paying workers the lowest possible wages or paying as little as they could for raw materials. With the money raised from the sale of stock they could invest in new technologies, hire a larger workforce, and purchase new machines. Economies of scale: means the corporation makes goods more cheaply because they produces so much so quickly using large manufacturing facilities.

32 Big Business: The Rise All businesses have two kinds of costs:
Fixed- costs a company has to pay, whether or not it is operating. (loans, mortgages, taxes) Operating- costs that occur when running a company. (wages, shipping, raw materials) Big corporations had the advantage because of their low operating costs-they could continue to operate in poor economic times by cutting prices to increase sales. The changing nature of business organizations and the new importance of fixed costs caused competition to become so severe it forced many small companies out of business.

33 Big Business: The Rise Many corporate leaders did not like the intense competition that had been forced on them. Many tried to organize pools, or agreements to maintain the prices at a certain level. However, they broke apart whenever one member cut prices to steal the market share from another, and allow competition to resume. By the 1870s, competition had reduced many industries to a few large and highly efficient corporations.

34 Big Business: The Players
Railroads are the first industry to take off in the years following the Civil War. Key figure in the railroad industry was Cornelius Vanderbilt (the Commodore). In 1869, he extended his New York Central Railroad to reach Chicago.

35 Big Business: The Players
Andrew Carnegie Born in Scotland, the son of a poor hand weaver who immigrated to the US in 1848. Later he will become supervisor of the Pennsylvania Railroad. He will start to invest in companies that serve the railroad industry.

36 Big Business: The Players
He will travel to Europe and come into contact with Henry Bessemer. Bessemer had developed a new method for making steel known as the Bessemer process. Using this process, manufactures could make steel much cheaper than ever before. This increased production of steel meant faster expansion of railroads and more construction of buildings. After meeting Bessemer, Carnegie decided to concentrate his investments in the steel industry. He opens his company in Pittsburgh and implemented the Bessemer process.

37 Big Business: The Players
He will also use vertical integration as a way to increase manufacturing efficiency. A vertically integrated company owns all of the different businesses on which it depends for its operation. He owned not only the steel mills, but also the necessary iron ore, coal mines, railroads, and ships used in transport. .

38 Big Business: The Players
Some businessmen like Carnegie also used horizontal integration. This is combining many firms engaged in the same type of business into one large corporation. This takes place as companies compete.

39 Big Business: The Players
John D. Rockefeller became one of the nation’s richest and most powerful businessmen. Standard Oil was the nation’s first trust. A trust is a business arrangement under which a number of companies unite into one system.

40 Big Business: The Players
Trusts serve to destroy competition and create monopolies. At one time he owned 90% of the oil refining industry. Manages the companies as a single unit. Through the trust, Rockefeller was able to dictate prices, eliminate competition, and control the US oil industry. Much of his success was due to his use of vertical integration. Rather than pay other producers to supply the materials he needed, Rockefeller’s company made what it needed itself (i.e., its own barrels, cans, and so on). Rockefeller- “pay nobody a profit.”

41 Big Business: The Players
With the expansion of business came a new kind of business leader: the finance capitalist. Bankers who exert economic influence through companies’ stocks and bonds. The most powerful and influential of the early finance capitalists was J.P. Morgan.

42 Big Business: The Players
Morgan eventually exercised control over banks, insurance companies, and various stock market operations. He was so rich he eventually bought out Carnegie’s steel company to form a new company—US Steel. He paid nearly 5 hundred million dollars for the company. Supported Edison in his invention of the light bulb.

43 Big Business: The Rise Many companies start to create a new organization called a holding company. does not produce anything itself. It owns the stock of companies that do produce goods. By 1904 the US had 318 holding companies. These giant corporations controlled 5,300 factories and were worth more than $7 billion.

44 Selling the Product As vast new products were produced by American industry, retailers looked for new ways to market and sell goods. New forms of advertisements: Large display ads with illustrations Mass advertising in newspapers and magazines.

45 Big Business: Selling the Product
Early Ads New Ads

46 Big Business: Selling the Product
Advertising is used to attract customers to new retail businesses, the department store. This changed the idea of shopping by bring a huge array of different products together in a large elegant building.

47 Selling the Product Chain stores, a group of similar stores owned by the same company first appeared in the mid- 1800s. They focused on thrift, offering low prices. Woolworth’s opened in 1879, and became one of the most successful retail chains in America.

48 Big Business: Selling the Product
To reach millions of people who lived in rural America, retailers began issuing mail-order catalogs. Montgomery Ward and Sears, Roebuck were the two largest mail- order companies.

49 Selling the Product

50 Unions I Can… Describe industrial working conditions in the United States in the late 1800s. List the barriers to labor union growth.

51 Working Condition in the United States
Life for Industrial workers in America was difficult. Children left school at age 12 or 13; Children as young as 6 or 7 had to go to work or go hungry. Many worked 12 hours a day, 6 days a week. Many made less than a quarter and worked more than 60 hours a week. 1868 federal law granted government employees an 8 hour workday but did not affect private industry. Many were paid by what they produced—piecework Strict workplace discipline.

52 Working Conditions in the United States
Division of Labor—separate tasks Women excluded from most-skilled and highest –paying jobs. Children made up more than 5% of the workforce. Conditions: Dangerous-machines lacking safety devices Unhealthy-fumes, lint, dust Poorly lit Badly ventilated Noisy Repetitive No insurance or workers’ compensation.

53 Working Conditions in the United States

54 Working Conditions in the United States

55 Working Conditions in the United States

56 Working Conditions in the United States

57 Working Conditions in the United States

58 Working Conditions in the United States

59 Working in the United States
An economic phenomenon of deflation also made relations between workers and employers more difficult. Deflation: a rise in the value of money. This caused prices to fall, which increased the buying power of workers. However, companies cut wages regularly, but prices fell even faster, so that wages were actually still going up in buying power. Many workers still felt that companies were actually paying them less money for the same work. This made workers look to organize unions, to bargain collectively to negotiate higher wages and better working conditions.

60 Early Unions Early unions were local and usually limited to people with specific skills. Iron Molders’ International Union Knights of St. Crispin---shoemakers’ union

61 Early Unions Generally employers regarded unions as illegitimate conspiracies that interfered with their property rights. Most opposed industrial unions that united all craft and common laborers in a particular industry. Companies used several techniques to prevent unions from forming: Required workers to sign oaths and contracts promising not join a union. Hired detectives to go undercover and indentify union organizers. Blacklist-list of “troublemakers.” Once blacklisted it was hard to find other jobs. Lockout- if workers did form a union, the employers would lock the workers out of the property and refuse to pay them. Hire replacement workers---strikebreakers or scabs

62 Early Unions Workers who wanted to organize faced several problems:
There were no laws giving workers the right to organize or requiring owners to negotiate with them. Courts often ruled against them. Suffered from the perception that they threatened American institution. This was due to Marxism. In the late 1800s, the ideas of Karl Marx became very influential in Europe. He said that the basic force shaping a capitalist society was the class struggle between the workers and owners. He believed that eventually the workers would revolt, seize control of the factories, and eventually the government.

63 Early Unions Believed that after the revolution, the government would seize all private property and create a socialist society, where wealth was evenly divided. Eventfully he said the state would fade away and leave a Communist society where classes did not exist. His ideas shaped the thinking of many European unions. Some started to even support anarchy. Anarchists believe that society does not need government. As the ideas spread in Europe, many left and immigrated to the United States. People started to associate immigrant workers with revolution and anarchism, and became increasing more suspicious of union.


65 The Struggle to Organize
Workers attempted on many occasions to create large industrial unions, they were rarely successful. In many cases the confrontation with owners and the government led to violence and bloodshed. Great Railroad Strike: July 14, 1877 Baltimore and Ohio Railroads announce a 10% wage cut. This triggers the first nationwide labor protest. The day after the cuts took effect; many workers walked off the jobs and blocked the tracks. The strike spread until it involved 11 states and 80,000 workers. After violence spreads President Hayes sent federal troops to put down the strike. 100 dead and millions of dollars of property destroyed. Sparked a new violent era of labor relation.

66 The Struggle to Organize

67 The Struggle to Organize
After the failure of the Great Railroad Strike of 1877, workers realized they needed to be better organized. The Knights of Labor was a new organization and was the first nationwide industrial union. Called for: eight-hour work day a government bureau of labor statistics equal pay for women the abolition of child labor creation of worker-owned factories. Opposed strikes at first, preferring to use boycotts and arbitration to pressure owners.

68 The Haymarket Riot 1886, nationwide, workers strike to build support for an eight-hour workday. On May 3, A clash between strikers and police left one striker dead in Chicago. A rally was held next day at the Haymarket Square in Chicago to protest the police brutality at the strike, by an anarchist group. 1500 people gathered to support the strikers; radical speakers addressed the crowd. As police tried to disperse the crowd, a bomb was thrown. Shots exchanged. 7 police killed, 4 workers, many injured. Knights of Labor were blamed. Some were convicted and hanged. Lost membership.

69 The Haymarket Riot

70 Homestead Strike Henry Frick tries to cut wages at Carnegie Steel.
Frick calls in the Pinkertons (a private police force known to break up strikes) to end the strike. Several died and many wounded in the fight with the Pinkertons Union workers admit defeat.

71 Pullman Strike George Pullman, sleeping car makers, laid off workers and cut wages by 25%. Workers that protested were fired. The boycott of the Pullman cars threatened to paralyze the economy. To break the strike, US mail cars were attached to the Pullman cars. Interfering with the US mail is a violation of federal law. Pres. Grover Cleveland sent in troops to break the strike.

72 American Federation of Labor
Led by Samuel Gompers who urged union members to stay out of politics. Sought to organize only skilled workers. Focused on workers’ wages, hours, and working conditions. Used strikes, boycotts, and collective bargaining.

73 Working Women After the Civil War, the number of women wage earners began to increase. The type of jobs women did outside the home reflected society’s idea of what constituted “women’s work.” Women were paid less, because it was assumed she had a man helping to support her, either her father or her husband. Early women labor organizers: Kenney O’Sullivan and Leonora O’Reilly. Established Women’s Trade Union League.

74 Review Causes of Industrialization Civil War Natural Resources
The war encouraged production, innovation, and expansion of railroads. Natural Resources Ample natural resources, including oil, fueled growth. Growing Workforce Immigrants willing to work for low wages flowed into the country. Technology/Innovation New technology and innovative business practices spurred growth. Government Policies Government policies encouraged investment in business and new technology.

75 Review Important Government Policies of the Late 1800s
Protective tariffs: Congress enacted tariffs on imported goods to make them cost more than locally produced goods. Laissez-faire: The government allowed businesses to operate under minimal government regulations. Subsidizing railroads: The government gave railroad builders millions of acres of land. Strike breaking: Government troops routinely helped break up strikes. Anti-union actions: Courts used legislation like the Sherman Antitrust Act to order unions to stop disruptive free trade.

76 Review Important People of the Late 1800s People Contribution
Thomas Edison Invented new technology, such as electric lighting that stimulated business. Henry Bessemer Developed process for creating strong lightweight steel for use in construction and railroad. Andrew Carnegie Use of vertical consolidation influenced the rise of big business; urged businessmen to also be philanthropists. John D. Rockefeller Use of new business strategies, such as horizontal consolidation, influenced the rise of big business. Samuel Gompers Formed the AFL, influencing the rise of labor union. Eugene V. Debs Challenged big business by orchestrating the Pullman Strike

77 Review Influential Labor Unions Name Date Founded Significance
National Trades Union 1834 First national union; open to workers from all trades. Knights of Labor 1869 Sought general ideological reform; open to workers from all trades. American Federation of Labor 1886 Focused on specific workers’ issues; organization of skilled workers from local craft unions. American Railway Union 1893 First industrial union; open to all railway workers.

78 Review Major Strikes of the Late 1800s. Cause Effect
Railroad strikes, 1877 Response to cuts in workers’ wages. Set the scene for violent strikes to come. Haymarket Square, 1886 Part of a campaign to achieve an eight-hour workday. Americans became wary of labor unions; the Knights of Labor were blamed for the riot and membership declined. Homestead Strike, 1892 Economic depression led to cuts in steelworkers’ wages After losing the standoff, steelworker unions lost power throughout the country. Pullman Strike, 1893 Wages cut without decrease in cost of living in the company town. Employers used the courts to limit the influence of unions.

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