Industrialization: The Building of Modern America

Industrialization  The growth of industry in the United States exploded in the late 1800’s.  As a result, the U.S. emerged as one the leading industrial nations in the 20 th century.  A SIMPLE explanation of WHY this occurred can be traced to: 1.Advances in technology. 2.Changes in HOW our economy worked.

Corporations  In the late 1800s, business structure began to change – organized large corporations  Organizers raise money by selling shares of stock (certificates of ownership) in the company in return for a share of the profits  Limited Liability – individuals who bought the stocks were not help personally responsible for any debts of the company

Changes in technology Bessemer Steel Process  A cheap, efficient method of producing STEEL.  Developed by a British manufacturer named Henry Bessemer  Involves injecting air into molten iron to remove carbon.  By 1880, 90% of steel in US produced by this method  New, cheap steep needed for: Railroad tracks, barbed wire, new farm equipment, NEW type of construction: skyscrapers, bridges…CARS!

Changes in technology Assembly Line  Begins as a study by Frederick Winslow Taylor observing time and motion to improve efficiency in manufacturing.  Ends as Henry Ford’s motor company perfects the method known as the “assembly line”.  Using this “scientific management”, cars and other products are produced cheaply and quickly.  Has terrible effect on workers: fatigue, injuries, and boredom. Ford bumps pay to $5.00 a day and reduces hours to 8 hour day.

Changes in technology Harnessing of electricity  World famous American inventor Thomas Edison perfects the incandescent light bulb. It’s success necessitates Edison’s creation a of system to safely harness and deliver electricity to city homes.  The safe harnessing and delivery of electricity completely changed the nature of business. Manufacturers could now locate their factories anywhere—not just near sources of power (like rivers).  Electricity also started completely new industries devoted to electrical appliances such as: lamps, refrigerators, stoves, washers, dryers, etc.

Changes in technology Telephone  Perfected by Alexander Graham Bell and Thomas Watson in  Paved the way for a means of almost instantaneous, world- wide communication. Airplane  Two bi-cycle manufacturers from Dayton, Ohio (Wilber and Orville Wright), create a craft that flies under its own power for 12 seconds.  Humble in its beginning, the airplane will soon revolutionize travel around the world.

Changes in our economy  During the late 1800’s the U.S. Government adopted a policy of laissez-faire capitalism.  This policy essentially meant that the government would not involve itself at all in the regulation or control of private business.  This policy encouraged the creation of monopolies in certain key industries. Oftentimes these industries seemed to be controlled by ultra wealthy and powerful men. Among them were: Andrew Carnegie:  Born in Scotland to poor parents, Carnegie would eventfully become one of the wealthiest men in history.  Immigrating to America, Carnegie would make his fortune in the revolution of the steel industry.  A practitioner of Vertical Integration (buying out your suppliers) and Horizontal Integration (buying out your competitors), Carnegie eventually controlled the majority of steel manufacturing in the U.S..  His fortune was immense; his commitment to charitable causes equaled it.

Changes in our economy J.P. Morgan  Famous U.S. banker who advocated the use of the HOLDING COMPANY. This was a company created to solely “buy out the stock” or ownership of companies in a certain industry. In effect, they created monopolies. John D. Rockefeller  Industrial giant whose fortunate, like Carnegie’s, became world famous.  Rockefeller utilized the practice of creating TRUSTS to consolidate certain industries.  A “trust” would collect the “stock” of several companies and run those separate companies as one large corporation. In effect, they created monopolies.  Through this technique, Rockefeller was able to gain almost total control of the OIL industry in the U.S. (then the leading producer of oil in the world)

Changes in our economy Cornelius Vanderbilt  This industrial “colossus” would make his fortune in the railroad and transportation industries.  Men like Vanderbilt took advantage of the nation’s demand for cheap transportation of peoples and goods.  They also took advantage of government corruption. During this time period, the wealth of the railroads was distributed to various government officials and representatives to insure that the railroad industry was given special land grants in the West to build their railroads as cheaply as possible.  This wealth and the special considerations given by the government created several railroad monopolies in the U.S. that kept profits high and took advantage of poor farmers and smaller industries in getting their products to market.

What allowed these big businesses to exist?  Emphasis on Laissez-faire capitalism – no government regulations on business or profits, low taxes –Gov. GAVE land grants to railroad companies  Post-civil war saw a huge migration from farm-life to city life, increasing the workforce – movement of blacks from south to north to find jobs (great migration)  Huge influx of immigrants  America was a vastly large country that possessed a wealth of natural resources and navigable rivers for trade

Impact on the U.S.  Rapid industrialization and the forces driving it were quickly transforming the United States into the “modern” nation we would recognize today.  It did, however, come at a human cost.  Lack of government regulation and overt government corruption at the hands of industry were creating an exploitive and abusive environment that many Americans felt they were powerless to change.  Was it a government “of the people” or was it a government for “Carnegie, Rockefeller, and Vanderbilt”?  A movement began during this time period to make government and “big business” more accountable to the public.  This movement would have many supporters from very diverse backgrounds.  Today, we refer to this movement as the PROGRESSIVE MOVEMENT.  It too, would have a significant and lasting impact on the “building of a modern America”