Unit 4 Industrialization

5 Factors for America’s 2nd Industrial Revolution 1. Abundant natural resources – fertile soil, fresh water, timber, coal, iron ore, etc.

2. “Free Enterprise” system – capitalism, open markets, strong work ethic, and Social Darwinism

3. Role of Government – “laissez-faire” capitalism A hands off policy – government has little interference in the economy Government created a patent system & tariffs

4. Legacy of 1st Industrial Revolution – steam power and mass production

5. Economic stimulus provided by Civil War – Northern manufacturing of uniforms, weapons, and processed food

Modern Industrial Economy Railroad lines made the United States a true national market George Pullman invented the sleeping rail car & George Westinghouse invented the air brake Gustavus Swift developed the first refrigerated train car

Technological Innovations Henry Bessemer made steel production more economical & removed impurities This “Bessemer Process” reduced the cost of making steel by 80% Samuel Morse developed the telegraph Cyrus Field laid the first transatlantic cable line between the U.S. & Europe

Technological Innovations Alexander Graham Bell invented the telephone Thomas Edison invented the phonograph and a practical lightbulb. He filed more than 1000 patents

Emergence of a National Market A Growing Population The U.S. population tripled between 1860-1920 Large numbers of European and Asian immigrants as well as 60 years of relative peace allowed the population to soar! This created a large number of consumers ready to purchase goods and a large supply of cheap labor Emergence of a National Market National Markets – thanks to the spread of railroads and communication innovations Large retailers developed (Woolworths, Sears & Roebuck)

Corporations A corporation is a company chartered by a state and recognized in law as a separate “person” Corporations issue stocks, or shares of ownership in the corporation, to investors Each stockholder is a partial owner of the corporation Corporate stocks are transferable & can be inherited or sold

Entrepreneurs Entrepreneurs are those who take risks by engaging in business to make a profit Some entrepreneurs became extremely wealthy and became known as “captains of industry” The 2nd Industrial Revolution is also referred to as the “Gilded Age” Refers to a gold surface but with less expensive metal underneath This was in reference to unethical tactics and serious social problems of the era

Famous Entrepreneurs Andrew Carnegie was a penniless immigrant from Scotland He started out in the railroad industry, but made his fortune in the steel industry By 1900, Carnegie was making ¼ of all the steel in the U.S. He had complete control of the production and distribution process – vertical integration He sold his company to J.P. Morgan in 1901 for 225 million He spent the rest of his life giving away his fortune in acts of philanthropy

Famous Entrepreneurs John Pierpont (J.P.) Morgan was the son of a banker and financier Consolidated railroads, helped Edison start an electric company, know as General Electric, and formed an investment banking institution He also formed the 1st billion dollar company when he combined Carnegie’s steelworks with other steel companies

Famous Entrepreneurs John D. Rockefeller made profits by investing in oil refineries He formed Standard Oil Company in Ohio and purchased rivals expanding into other Northeastern states He brought 90% of all oil refining under his control, a form of horizontal integration In his older years, he also became a philanthropist giving away funds to both education and science

Monopolies Monopoly – complete control over the production of a good or service Monopolies has less incentive to improve their product since they faced no competition Monopolies could raise their prices at any time to earn excessive profits and consumers had to pay it due to the lack of alternative products

Government Regulation of Monopolies Government began to curb the power of big businesses Companies would donate to political campaigns to get friendly legislation passed, but then not want any other government regulations/interference Government passed the first anti-trust laws, establishing the principle that Congress could regulate business in certain circumstances