Industrialization 1850’s

Inventions that lead to Industrialization Thomas Edison & Menlo Park Thomas Edison & Menlo Park Light bulb, Phonograph, Motion pictures Light bulb, Phonograph, Motion pictures Kodak Eastman Kodak Eastman Photography; Brownie Camera Photography; Brownie Camera Electric Power Electric Power Edison ~ Direct Current vs. Westinghouse ~ Alternating Current Edison ~ Direct Current vs. Westinghouse ~ Alternating Current Bessemer Process Bessemer Process Makes steel stronger & cheaper to produce Makes steel stronger & cheaper to produce Steam Engine Steam Engine

US as a Industrial World Leader By 1880 US is world’s leading producer of goods By 1880 US is world’s leading producer of goods WHY??? WHY??? Unlimited immigrant labor Unlimited immigrant labor Coal supply Coal supply Iron mining (west) Iron mining (west) Discovery of oil Discovery of oil Edwin Drake Titusville, PA Edwin Drake Titusville, PA Railroad development Railroad development

Government Supports Industry Laissez-faire government policies Laissez-faire government policies Let the market regulate prices and demand Let the market regulate prices and demand Unlimited supply of immigrant labor Unlimited supply of immigrant labor High tariffs protect American business High tariffs protect American business Public financing of Railroads Public financing of Railroads

Growth of BIG Business Advantages Advantages Greater efficiency Greater efficiency Economies of Scale Economies of Scale Larger production = cheaper product Larger production = cheaper product Manager System Manager System Educated in management Educated in management Corporations Corporations Many owners Many owners Disadvantages Disadvantages Unfair business practices Unfair business practices Monopoly Monopoly Horizontal/Vertical integration Horizontal/Vertical integration Trust Trust Cartel Cartel Corruption & bribery Corruption & bribery Destroyed labor unions Destroyed labor unions Unsafe/unhealthy working conditions Unsafe/unhealthy working conditions

Business Practices Monopoly Total control over all production of a single product; can set own price Cartel Make deals with other business owners to refuse doing business with competitors Trust Giving the management of stocks to a board of trustees allowing for management of corporation to pay out dividends to owners/operators

Entrepreneurs and Innovations John D. Rockefeller ~ Horizontal Integration John D. Rockefeller ~ Horizontal Integration Standard Oil Company All production of a certain product

Entrepreneurs and Innovations Andrew Carnegie ~ Vertical Integration Andrew Carnegie ~ Vertical Integration Mine Railroad Factory All factors of production

Entrepreneurs and Innovations J.P. Morgan J.P. Morgan Finance Capitalist Finance Capitalist Loaned money to start companies Loaned money to start companies Consolidated railroads Consolidated railroads Cornelius Vanderbilt Cornelius Vanderbilt Railroad tycoon Railroad tycoon James B. Duke James B. Duke American Tobacco American Tobacco

Railroads take the Lead National Markets No longer competing locally Link east and west Standardize time zones Railroad companies will use interlocking directorates in order to keep prices high

Robber Barons or Captains of Industry Extreme profit made – no tax Extreme profit made – no tax Unfair business practices Unfair business practices Squeezed out smaller firms Squeezed out smaller firms Provided jobs for laborers Provided jobs for laborers Improved communication & transportation Improved communication & transportation Innovation (better, faster, stronger) Innovation (better, faster, stronger) Philanthropists Philanthropists Carnegie, Vanderbilt, Rockefeller Carnegie, Vanderbilt, Rockefeller Donated money for libraries, colleges, & the arts Donated money for libraries, colleges, & the arts

Government Regulation Interstate Commerce Commission 1887 Interstate Commerce Commission 1887 Regulate Railroad rates Regulate Railroad rates Outlaw Monopolies Outlaw Monopolies “bad” one ~ Form trusts “bad” one ~ Form trusts Sherman Anti-Trust Act 1890 Sherman Anti-Trust Act 1890 Didn’t define a trust Didn’t define a trust Used against labor unions Used against labor unions Not effective in regulating big business Not effective in regulating big business U.S. v E.C. Knight Co. U.S. v E.C. Knight Co. 1st case tried under Sherman Anti-Trust Act 1st case tried under Sherman Anti-Trust Act Found NOT GUILTY Found NOT GUILTY

Social Darwinism Applying Darwin’s natural selection to society Applying Darwin’s natural selection to society The fittest survive, innovate, and take control of their destiny The fittest survive, innovate, and take control of their destiny Fittest = wealthy, successful Fittest = wealthy, successful Used to justify large profits and hostile business practices Used to justify large profits and hostile business practices