1. Unit II Notes: The Gilded Age and Industrialization 1877-1909

2. What do we mean by the term “Gilded Age”?
Time period from
Characterized by rapid industrialization
Entrepreneurial expansion
Efficiencies in production = lower prices and more affordable goods
Rise of corporations
Huge profits made owners “instant” millionaires
Industrialists amassed enormous wealth and created a lavish lifestyle for themselves

9. Factors from the Civil War that Lead to Economic Growth in America
Steam Power
Replaced human and animal power in agriculture and factories
Needed coal or wood to create steam
Used in transportation
Trains
Steamboats

10. The Bessemer Process (steel)
Made production of steel more economical
Could now make 5 tons of steel in 15 minutes instead of 12 hours

11. Coal Main source of fuel in America
Production increased from 14 million tons in 1860 to 100 million tons in 1884

12. Refining Petroleum First oil well drilled 1859 PA
Used to make kerosene for lighting
Used for machine lubrication
Will later be refined into gasoline for cars and planes

13. Internal Combustion Engine
Fuel is burned to turn propellers or turbines

14. Commercial Use of Electricity
First used to relay messages along telegraph wires

15. Inventors Alexander Graham Bell Created the telephone in 1876
Increased the speed of communication

16. Thomas A. Edison Patented the light bulb in 1880
Increased factory hours and efficiency
First filaments were bamboo; replaced with tungsten

20. Elisha Otis Created the passenger elevator in 1852
Allowed for the construction of sky scrappers
Safety device that prevented elevator accidents

21. Elias Howe Invented the sewing machine in 1846
Shortened time for clothing production
Improved quality of clothing
Clothing became cheaper

22. Christopher Sholes Created QWERTY typewriter in 1867
Improved and sped up communication
Sold patent to Remington Arms; mass production began in 1881

23. The Wright Brothers Wilber and Orville were bicycle shop owners
Tried to make bike into flying machine
* created first successful plane
Dec. 17, 1903 flew for 12 seconds; traveled 120 feet in Kitty Hawk, NC

24. Cyrus McCormick Invented mechanical reaper
Improved speed of harvesting grains (wheat, corn, oats)
Increased farm production
Decreased price of bread, cereal, etc…

25. Free Enterprise System
Economic system in which people have the freedom to:
Produce what they wish
Sell what they wish at the price of their choice
Buy whatever they can afford

27. Free Enterprise/Capitalism
Right to private property
Profit Motive
Economic Freedom

28. Entrepreneur
A person who starts a business is the hope of making a profit
One who invests capital hoping to make a profit

29. “Captains of Industry”
Entrepreneurs of the Gilded Age
Forged the modern industrial economy of the US
Created enormous wealth for themselves
Lived lavish lifestyles

30. Andrew Carnegie Came to US from Scotland 1848 at age of 13
Worked in Pittsburg cotton mill as a boy
Telegraph operator for Penn. RR
Promoted to RR Superintendent at 30
Invested in oil and iron
1870’s went into steel business
Founded Carnegie Steel in 1892

31. Andrew Carnegie
Under cut his competitors prices to drive them out of business
Bought his own coal mines, iron ore fields, and shipping lines to control production prices and supply
Paid workers low wages and forced them to work 12 hour shifts
Crushed attempts to unionize

32. Carnegie Sold Carnegie Steel to JP Morgan in 1901 for $480 million
Spent the rest of his life in philanthropy
Built libraries, museums, and universities
Gave away $350 million

37. John D. Rockefeller Born in New York to working class family
Studies book keeping in school
Went into business selling fruits and vegetables
Invested his money in an oil refinery in Cleveland
Made kerosene and lubricants
In 1870 formed Standard Oil of Ohio
By 1879, he controlled 90% of the refining in the US

38. Rockefeller Standard Oil became a monopoly or trust
He forced competitors out
Forced railroads to give him better rates
In 1892, the government split up his company into 20
He remained the major shareholder of all 20
He gave away millions to education and science
He founded the University of Chicago and Rockefeller Foundation

44. Henry Ford Born in Dearborn, Michigan Lived on farm until 16
Apprenticed as a machinist in Detroit
Hired as Edison Electric
In 1896 created his first plans for a car; called the Ford Quadricycle (electric powered)
In 1903 he formed Ford Motors Co.

45. Ford 1908 introduced the Model T 1914 introduced the assembly line
Introduced the $5/day wage (equivalent to $110 today)
By 1918, 50% of all cars in the US were Model T’s
His revolutionary vision was to create a cheap, reliable, car build by skilled, loyal workers
Introduced profit-sharing to employees who stayed at least 6 months

46. Ford
Radical Ideas:
Required that his employees maintain a “proper” lifestyle.
Pacifist; opposed WWI
Anti-Semite

47. Assembly Line

49. Henry Form Museum

53. Cornelius Vanderbilt Born 1794 Staten Island, NY
Grew up poor; parents illiterate
Dad worked as a seaman
One of 8 children
Dropped out of school at 11 to work w/ his dad
Invested $ in a sailboat; built a business ferrying goods around New York Harbor

54. Vanderbilt 1917 started steamboat business By 1840’s had 100+ ships
Was called Commodore Vanderbilt by his contemporaries
1860’s invested in NY rail lines
By 1870’s he owned RR’s in NY, Chicago, and to the west
At his death, he had accumulated the largest wealth of any person in US history
$ 100,000,000 estate was left primarily to his oldest son (Henry); other 12 children got $2 million each

55. Vanderbilt In todays $, his estate would be worth $143 billion
Left $1 million to build Vanderbilt University

56. Biltmore Estate

57. Famous Descendants Gloria Vanderbilt, clothing designer
Anderson Cooper, CNN news anchor

58. J. P. Morgan (John Pierpont)
Born in 1837 in Hartford, CT.
Son of a banker
Went into family business
In 1871 built his own finance company; JP Morgan & Co.
Dominated banking and finance in the US
Family business still in operation (Chase)

59. J.P. Morgan Created several monopolies
U.S. Steel (world’s largest steel manufacturer)
Consolidated Railways (controlled rail systems on the east coast)

60. J.P. Morgan Ardent sailor; won several World Cup races
Avid art collector; his collection was donated to the Met in NYC
Avid book collector; his books are found in the Morgan Library in NYC
Married twice; first wife dies 5 months after wedding
Four children; 1 son, 3 daughters

62. J.P. Morgan One of America’s leading businessmen
Helped to create the modern banking system
His consolidation of rail systems helped to standardize railroads

63. Morgan

67. Monopolies
A monopoly occurs when one company or group owns all or nearly all of a product or service
Rockefeller was accused of having a monopoly since he controlled 90% of the oil refineries in the late 1800s
Monopolies usually hurt the consumer because of a lack of competition, which can lead to poor products

69. How Monopolies Formed
Horizontal Integration – When companies acquire rival companies’ property
Example – AT&T tried to merge with T Mobile
Example – Rockefeller bought out his competition and then took over their refineries

70. How Monopolies Formed
Vertical Integration – When a company takes control of the entire production and distribution of a product
Example – Carnegie took control of the iron mines, he owned the trade routes between the mines and the mills, and the steel mills themselves

71. Comparing Horizontal and Vertical Integrations

72. Consolidating
Businesses often consolidate, or to shrink, their facilities to save costs. If they can remove “X” amount of employees or steps in a manufacturing process, they can increase their profits.
Example: Rockefeller merged with his competitors to consolidate the oil industry