The Age of Innovation and Industry

Ohio’s own Thomas Edison Invented over 1,000 items including the light bulb, phonograph. Born in Milan, Ohio. Edison’s Mono Park lab reconstructed at Greenfield Village in Michigan.

Building on Edison Inventions such as the light bulb and being able to distribute electricity more efficiently resulted in a new age of innovation and the rise of big business.

Vast changes in Technology 1865 most Americans kept fresh foods in an ice box, sent letters that took over a month to be delivered and used lamps for lighting. By 1900 many Americans had electric lights, kept foods cold in an electric refrigerator, and could send messages across the continent in an instant by telegraph or telephone (Bell)

Investors This age of invention led to an increase of Capitalism-economic system in which factories, equipment and other means of production are privately owned (Market Economy)

Investing Example Wealthy banker J.P. Morgan supported Edison with $150, to research in return Edison gave the company the rights to his light bulb for 5 years. Edison Electric Light Company

Innovation 1790-Government began providing patents By 1860 only 36,000 patents had been issued Between over 600,000 were issued.

New energy source Before the Civil War, lamps mainly burned whale oil…very expensive former railroad conductor Edwin Drake leased land in Titusville, PA to study techniques of drilling salt wells. He decides to drill for oil and by August, 1859 he strikes oil. Supplies fuels for lamps, oils for machines and later gasoline for cars.

Steel Bessemer Process-Removed impurities from steel (Henry Bessemer) Andrew Carnegie saw this and invested heavily opening the Carnegie Steel Company which would build the largest and most modern steel mill near Pittsburgh, PA. Made steel cheaper, quicker and better quality.

Steel manufacturing Used improved steel in building railroads, bridges, and skyscrapers. Below is 1932 workers at Rockefeller Center

Assembly Line Frederick Taylor used time and motion studies to determine how fast an assembly line should move and broke up work in a way to reduce wasted time. This increased productivity which increased profits.

Henry Ford Used to take 12 hours to assemble a Model T Ford. Divided the assembly into 84 distinct steps. Each worker responsible for one step reducing injuries and making time more efficient. Time cut in less than half to make a care…by 1927 Ford had produced more than 15 million model T’s.

Henry Ford Wanted to make cars in a manner that average Americans can own a car.

Factors of Production Land, Labor, Capital and Entrepreneurship Land and Labor was abundant Capital is any asset that can be used to produce an income…money, buildings, tools and machinery…all of this required financial backing.

Rise of Corporations A company that is organized by law independent of its owners. Owned by shareholders Competition gives a variety of products at the best prices

John D. Rockefeller Formed a corporation called Standard Oil in Cleveland, Ohio (1870) Bought out smaller oil companies, including refineries. Undercut competitors with lower prices (economies of scale) Forced competitors to be sold to them or go bankrupt.

Monopoly 1882-Standard Oil becomes a monopoly. A company that completely dominates a particular industry. If competitors are out of the way, a company can raise its prices and get great profits.

Trusts A set of companies that are managed by a small group of people. Trustees that run the trust have the power to prevent companies in the trust from competing with each other.

Late 1800’s business environment Laissez-faire-the free market, through supply and demand, would regulate itself if the government did not interfere. French word meaning “Hands off…or leave business alone”

Social Darwinism This idea that grew out of Darwin’s Theory that only the strong survive. This held that the best run businesses and individuals would be the survivals…survival of the fittest.

Business had the power Federal government did not stop monopolies but actually assisted the businesses by setting high tariffs on imported goods. Policies seemed to be working…exports doubled from 1877 – 1900…by 1900 America has the strongest economy in the world.

Sherman Anti Trust Acts Passed in 1890 that outlawed trusts, monopolies, and other forms of business that restricted trade. Vague language that left it open to courts to enforce…though they did not enforce

Gilded Age Mark Twain book about rich industrialist and corrupt politicians. Something that is Gilded looks good on the outside but only on the outside.

Philantropists Industrialists Andrew Carnegie, John Rockefeller, and Cornelius Vanderbilt were risk takers (entrepreneurs) that became very wealthy but many of their workers were in poverty. Philantropist-person who gives money to support wealthy causes. Over one billion dollars given to causes by 1900.

Robber barons or captains of industry