Presentation on theme: "Questions What is the most important invention of today? Who was the first billionaire in U.S. History? Why do we have time zones? Who had more money:"— Presentation transcript:
Questions What is the most important invention of today? Who was the first billionaire in U.S. History? Why do we have time zones? Who had more money: Rockefeller or Bill Gates? How did industrialists create monopolies? Is the game “Monopoly” related to this time period? Were men like Carnegie and Rockefeller positive or negative for the country? What were the causes and effects of industrialization?
Industrialization Industrialists, Wealth & Power 1865-1920
Innovations/Inventions Bessemer Process Electricity Telephone Escalator Elevator Light bulb Electric sewing machine Assembly line Central heating Electric trolley cars Refrigerated rail cars What was the most important innovation of the “Gilded Age”?
Brooklyn Bridge Built 1883 Suspension bridge Symbol Impact of industry –Manufacturing –Fortunes made by few –Hard labor
Steel Workers & Production Bessemer Process –Refine iron into steel –Large quantities cheaply (2,000 tons in 1867 to 7 million tons in 1900) –Steel more durable than iron (train tracks, girders, beams, cables)
Skyscraper Flatiron building NYC (1901) Steel structure Steel fueled growth of construction Changes in American cities –Growth, need for space –Taller buildings = profit for developers
Andrew Carnegie & Fellow Businessmen Innovation & invention sparked growth By 1900 4,000 millionaires Andrew Carnegie –Immigrant –Bessemer process, wealth through steel –Philanthropist in later life –Millionaire” a trustee for his poorer brethren” –Produced 80% of nation’s steel
Carnegie Sold the company to J.P. Morgan in 1901 for $480 million He gave away over $350 million –Carnegie Hall –Carnegie Library –The Carnegie Endowment for International Peace –The Carnegie Institution of Washington –The Carnegie Foundation for the Advancement of Teaching –The Carnegie Hero Funds –Built 2,509 libraries
Pennsylvania Oil Field First successful well in Titusville, PA in 1859 Industrialists raced to exploit oil reserves refining became big business
Refining One barrel yielded: –60-65% illuminating oil –10% gasoline –5-10% benzoyl or naphtha (volatile inflammable liquid used as a solvent in dry cleaning, varnish making, etc.) –with the remainder tar and wastes
John D. Rockefeller, Sr. Began as a bookkeeper Went into refining with partners Bought out partners for $72,500 Partnered with brother called company “Standard Works” Bought refineries to eliminate “wasteful” competition By 1879, controlled over 90% of American refining (he was only 40 years old!)
Why? the state of the oil business was chaotic entry costs were so low in both oil drilling and oil refining, the market was glutted with crude oil with an accompanying high level of waste weak firms in their attempts to survive drove prices down below production costs hurting even the well managed firms such as his own
How Rockefeller did it… Created a “trust” –Stockholders of indep. Companies agree to exchange shares of stock for trust certificates issued by firms such as Standard Oil –Shareholders receive dividends, but lost control of management –Gained a virtual monopoly over oil industry
Rockefeller cont’d By making its own barrels, glue, hoods, pipelines, food for horses, etc... Standard Oil enlarged each time his profit margin The costs of barrels dropped of $1.25 each, sparing $4 million per year price of metal boxes was lowered of 15 cents, sparing $5 million per year Used oil byproducts (gasoline - when gas engine became available)
Rockefeller Philanthropy $75 million to University of Chicago Rockefeller Institute for Medical Research $50 million to General Education Board (to improve schools in the South) Rockefeller Sanitary Commission (to eradicate hookworm) Rockefeller Foundation (food, health and work for poor)
Railroads Cornelius Vanderbilt NY and Harlem RR Hudson RR New York Central Railroad Co.
"I have been insane on the subject of moneymaking all my life." -- Vanderbilt, quoted in the New York Daily Tribune, March 23, 1878.
Railroad Transportation was key to industrialization –Move freight and passengers 1860 only 30,000 miles of track (most in East) Needed to load, unload several times to move it (why is this bad?)
“The Commodore” Cornelius Vanderbilt After Civil War Quit school at 11 to help his poor family 1810 $100 loan and started his first boating business Steamship route through Nicaragua to compete with Panama route (This netted $1 million/year) Age 70 switched to RR business
How he did it… Builders began consolidating rail lines “Vandy” bought rails between NY & Chicago NY Central RR refused to sell, he refused to let passengers and freight transfer from NY Central to his NY Central finally sold By 1877, controlled 4,500 mi. of track
Consolidated Rail Lines Inexpensive and faster shipping RR companies laid track side-by-side so traffic could move in both directions Caused Time Zones to be created!
Vanderbilt’s Philanthropy $50,000 to the Church of Strangers $1 million to Central University (now Vanderbilt University) Left the rest of his fortune to his son William
William H. William Henry Vanderbilt (above) Also, Jay Gould (right leg), who handed Vanderbilt's father, Cornelius, two of his rare defeats in building a railroad empire. Gould indirectly forced the younger Vanderbilt and others to build larger integrated rail systems. Cyrus W. Field (left leg), developer of the New York Elevated Railroad (and the first transatlantic cable). Field was the brother of Stephen J. Field, a Justice of the U.S. Supreme Court.
A Footnote to the Vanderbilt Fortune When asked by a reporter whether railroads should be run for the public benefit, William Vanderbilt responded, "The public be damned!"
Today’s Dollars $100 billion= –GDP of Portugal –Could pay 7 times over for the recovery of W. Europe after WWII –Could pay to send a man to the moon 4 times –Could pay for 5 international space stations
Wealth Rankings (today’s dollars) 1.Rockefeller $189.6 billion 2.Carnegie $100.5 billion 3.Vanderbilt $95.9 billion - began with $100 loan! 4.Astor $78 billion (fur trading) 5.Bill Gates’ Microsoft stock worth $29.93 billion (down from over $100 billion before the tech. stock plunge)
Do the following at the bottom of your notes… Write a one-sentence summary of what you learned so far Write a one-sentence reaction to the information Make a Prediction: Predict which factors you think allowed these men to do all of this. Make a Prediction: What effect do you think they will have on American society? Evaluate: So far, do you think men like Carnegie and Rockefeller were positive or negative for the country? Why?
Key Factors Natural resources –Coal, oil, iron ore Improved transportation –railroad, mechanized farming equipment Growing labor force - immigration Innovation in technology (inventions) “Social Darwinism” philosophy Laissez-faire government policies –No income tax, no environmental controls –Backed management over labor
Robber Barons or Captains of Industry? Drove companies out of business Exploited workers Cut corners on quality “bought” government officials Overcharged for goods Polluted environment Used natural resources Industrial espionage
Robber Barons or Captains of Industry? Willing to gamble Philanthropy Inventions/innovations Lowered cost of products (economies of scale) Improved overall quality of life
Impact of Industrialism Benefited middle class with mid-level jobs Poor water, sewage systems Little education among factory workers Disease typhoid, cholera in filthy cities Inflated prices at company stores Long hours, injuries on job Low pay but better than Europe
Change and Discrimination Women entered work force but paid less Women in textile mills 50% of men’s pay Child labor - almost 2 million children Minorities and immigrants - CA Chinese self-employed to make more $ Businesses pitted minorities against each other
Organized labor Shorter hours More pay Elimination of child labor Some unions discriminated Strikes and violence
Food Contamination Fraud - narcotics sold as cures Canned foods - dangerous additives Muckrakers - The Jungle, McClure’s –Used writing to expose corruption, wrongdoing
Toll on Environment Mining Clear-cutting forests Overgrazing livestock Chicago River - “great open sewer” Air pollution from burning coal to power machines