Industrialization Chapter

The rise of the United States as an industrial power began after the Civil War. Many factors promoted industry, including cheap labor, new inventions and technology, and plentiful raw materials. Government policies encouraged growth and large corporations became an important part of the economy. As industry expanded workers tried to form unions to fight for better wages and working conditions.

United States Industrializes The Industrial Revolution began in the United States in the early 1800s. With the end of the Civil War, American industry expanded and millions of people left their farms to work in mines and factories. By the early 1900s, the United States had become the world’s leading industrial nation.

By 1914 the nation’s gross national product (GNP) was eight times greater than it had been when the Civil War ended. What is the gross national product? The total value of all goods and services produced by a country. The Gross National Product (GNP) is the total dollar value of all final goods and services produced for consumption in society during a particular time period. Its rise or fall measures economic activity based on the labor and production output within a country.

What was one of the reasons for the nation’s industrial success? An abundance of raw materials. What were the natural resources found in the United States that led to the country’s industrial success? Water, timber, coal, iron and copper At the same time what new resource began to be exploited what was this resource? Petroleum

Why was petroleum in high demand? It could be turned into kerosene. What was kerosene used for? Used in lanterns and stoves In 1859 who drilled the first oil well near Titusville, Pennsylvania? Edwin Drake By 1900 oil fields from Pennsylvania to Texas had been opened. As oil production rose it fueled economic expansion.

Between 1860 to 1910 the population of the United States tripled. American industry began to grow at a time when the social and economic conditions in China and Europe convinced many to leave in search for a better life.

What was another important factor that enabled the United States to industrialize so rapidly? Free enterprise- What is this? An economic system where few restrictions are placed on business activities and ownership. In the 1800s many Americans embraced the idea of what which meant “let the people do as they choose?” Laissez-faire What did the supporters of laissez-faire believe? Government should not interfere with the economy other than to protect private property rights and maintain peace.

Laissez-faire relies on supply and demand rather than the government to regulate prices and wages. Supporters claim that a free market with competing companies leads to greater efficiency and creates wealth for everyone. Supports low taxes to ensure that private individuals will make most of the decisions about how the nations wealth is spent. They also believed that the government’s debt should be kept limited since money the government borrows from banks is not available to be loaned to individuals for their use.

There were those willing to take a risk with their capital to organize and run a business what was this group of people called? Entrepreneurs In the late 1800s entrepreneurs were attracted to manufacturing and transportation fields. As a result hundreds of factors and thousands of miles of railroads were built.

Why was Europe an important source of capital? Foreign investors saw more opportunities for growth and profit in the U.S. than at home. In the late 1800s state and federal government had a laissez-faire attitude by keeping taxes and spending low and by not imposing regulations on industry.

New Inventions New inventions increased America’s productivity which in turn produced wealth and job opportunities. What areas would these new inventions improve? Transportation, communications which was vital to the nations industrial growth. Led to the founding of new corporations which produced new wealth and new jobs.

Technology improved connections among people. In 1866 Cyrus Field laid a telegraph cable across the Atlantic Ocean providing instant contact between the United States and Europe.

Guglielmo Marconi An Italian inventor, proved the feasibility of radio communication. He sent and received his first radio signal in Italy in By 1899 he flashed the first wireless signal across the English Channel and two years later received the letter "S", telegraphed from England to Newfoundland. This was the first successful transatlantic radiotelegraph message in 1902.

Elisha Otis (1852) Otis, installed the first passenger safety elevator in a New York department store, and later his passenger elevator made the skyscraper feasible.

George Mortimer Pullman American industrialist and developer of the railroad sleeping car.

Thaddeus Lowe, Experimented with the cooling properties of compressed gases and developed a Carbon Dioxide cooled commercial ice-making machine in 1866.

Alexander Graham Bell Alexander Graham Bell, American inventor and teacher of the deaf, most famous for his invention of the telephone.

Thomas Alva Edison Thomas Alva Edison was the most prolific inventor in American history. He amassed a record 1,093 patents covering key innovations and minor improvements in wide range of fields, including telecommunications, light bulb electric power, sound recording, motion pictures, primary and storage batteries, and mining and cement technology.

In 1871, Ritty became a saloon owner in Dayton. Unfortunately for Ritty, some of his employees stole money from the business. In 1878, while on a ship bound for Europe, Ritty saw a machine that counted the number of times that the ship's propeller completed a revolution. He returned to the United States, and with the assistance of his brother, a mechanic, he invented the first cash register. James Ritty

Jan E. Matzeliger Inventor of the shoe-lacing machine, Jan Matzeliger not only revolutionized the shoe industry but made Lynn, Massachusetts, the "shoe capital of the world." Born in South America, Matzeliger at eighteen came to the United States to work in a shoe factory where he conceived of a machine that would do the work of more than a dozen workers.

Granville T. Woods,was known as the "Black Edison”- invented more than a dozen devices to improve electric railway cars and many more for controlling the flow of electricity.

Charles and Frank Duryea America's first gasoline powered commercial car manufacturers were two brothers, Charles Duryea ( ) and Frank Duryea. The brothers were bicycle makers who became interested in gasoline engines and automobiles. On September , their first automobile was constructed and successfully tested on the public streets of Springfield, Massachusetts. Charles Duryea founded the Duryea Motor Wagon Company in 1896, the first company to manufacture and sell gasoline powered vehicles. By 1896, the company had sold thirteen cars of the model Duryea, an expensive limousine, which remained in production into the 1920s.

Other Inventions Air Brake- George Westinghouse Electric Voting Machine- Thomas Edison Cable Street Car- Andrew S. Hallide Carpet Sweeper- Melville Bissell Electric Iron- Henry W. Seely Fountain Pen- Lewis E. Waterman Electric Welding Machine- Elihu Thomas Safety Razor with throwaway blades-King C. Gillette Motor driven vacuum cleaner- John Thurman

Linking the Nation After the Civil War, railroad construction dramatically expanded. In 1862 President Lincoln signed the Pacific Railway Act which provided for the construction of a transcontinental railroad by the Union Pacific and Central Pacific railroad companies. To encourage rapid construction the government offered each company land along its right of way.

In 1865 the Union Pacific under the engineer Greenville Dodge pushed westward from Omaha, Nebraska. The laborers faced blizzards in the mountains, scorching heat in the desert and Native Americans.

Four merchants known as the “Big Four” invested in the Central Pacific Railroad. They each bought stock in the railroad and eventually made a fortune. One of them Leland Stanford became the governor of California founded Stanford University and later became a United States Senator.

“Big Four” Theodore Dehone Judah sold railroad stock to his declining Central Railroad Company to four merchants Charley Crocker- Shop Owner Mark Hopkins- Hardware Store Owner Collis P. Huntington- Hardware Store Owner Leland Stanford- Grocery Store Owner

Railroads Spur Growth Railroads encouraged the growth of American Industry. The transcontinental railroad was the first of many lines to crisscross the nation after the Civil War. In the early 1800s most railways served only local needs, resulting in many unconnected rail lines.

One of the most famous and successful railroad consolidators was Cornelius Vanderbilt, a former steamboat captain who built the largest steamboat fleet in America. By 1869 Vanderbilt had purchased and merged three short New York railroads to form the New York Central. He was the first to offer direct rail service from New York to Chicago.

Land Grant System Building and operating railroads lines especially across the vast unsettled regions of the West often required more money that most private investors could raise on their own. To encourage railroad construction what did the federal government do? Gave land grants- land given to railroads by federal government to sell to settlers, real estate companies and other businesses to raise money they needed to built railroads.

Robber Barons The wealth of railroad entrepreneurs led to accusations that they had acquired their wealth through illegal means. One of the entrepreneurs with the worst reputation was Jay Gould who used information he obtained as a railroad owner to manipulate stock prices to his benefit.

Railroad investors realized they could make more money through land grants than by running a railroad so many investors bribed members of Congress to vote for more land grants. In 1872 corruption in the railroad system became public with the Credit Mobilier scandal. Several stockholders of the Union Pacific set up the Credit Mobilier a construction company.

The investors signed contracts with themselves. The company greatly overcharged Union Pacific and the railroad agreed to pay the inflated bills. When the railroad was completed the investors had made a fortune but the railroad was almost bankrupt. Congress agreed to give additional grants to the railroad after several members of Congress were given shares in the Union Pacific at a price below market value. An investigation implicated several members of Congress including James Garfield.

Not all of the entrepreneurs were corrupt. James J. Hill built the Great Northern Railroad without any federal land grants or subsidies. It became the most successful transcontinental railroad and the only one not to go bankrupt.

Big Business After the Civil War, big business assumed a more prominent role in American life. By the 1900 big business dominated the economy of the United States. Big business would not have been possible without the corporation. 3

What is a corporation? A corporation is an organization owned by many people but treated by law as though a single person. A corporation can own property, pay taxes make contracts and sue and be sued. The people who own corporations are called what? Stockholders

The Consolidation of Industry Competition between corporate leaders caused lower prices for consumers, but it also cut into profits. To stop prices from falling, companies organized pools or agreements to keep prices at a certain level. Pools usually did not last long. As soon as one member cut prices, the pool broke apart. By the 1870s, competition had reduce industry to a few large highly efficient corporations.

Andrew Carnegie a poor Scottish immigrant worked his was up from a bobbin boy in a textile factory to the president of the Pennsylvania Railroad. He invested much of his money in railroad-related businesses and later owned his own business. He opened a steel company in 1875 and quickly adapted his steel mills to use the Bessemer Process. Started at a $1.20 a week, worth close to 2 billion at his death.

Carnegie began the vertical integration of the steel industry. What is a vertical integration company? A company which owns all the different businesses it depends on for operation. This not only saves money but also makes a big company bigger.

Cattle Slaughterhouse Refrigerated Rail Cars Cooled Warehouses Meat Packing Plants Delivery Vehicles Vertical Integration Company Ace Meat Industries

Business leaders also pushed for horizontal integration- combining many firms doing the same business into one large corporation. A monopoly occurs when one company gains control of an entire market. In the late 1800s, Americans became suspicious of large corporations and feared monopolies. Many states made it illegal for a company to own stock in another company without permission from the state legislature.

Horizontal Integration Purchase of Competing Companies in Same Industry U.S. Oil Company Independent Oil Refineries

Monopoly

In 1882 Standard Oil formed the first trust, which merged businesses without violating laws against owning other companies. A trust allows a person to manage another person’s property. A holding company did not produce anything itself. Instead it owned the stock of companies that did produce goods. The holding company controlled all the companies it owned, merging them all into one large enterprise.

Why did Americans fear monopolies? Americans feared monopolies because a company with a monopoly could charge whatever price it wanted for a product.

Selling the Product Retailers looked for new ways to market and sell their goods. Advertising changed with illustrations replacing small-type line ads. N.W. Ayer and Son of Philadelphia developed bold new formats for advertising.

The department store changed the idea of shopping by bringing in a huge assortment of products in a large glamorous building. Chain stores like Woolworth’s focused on offering low prices instead of special services or fancy décor.

Mail-order catalogs were created to reach rural Americans. Montgomery Ward and Sears, Roebuck were two largest catalog retailers.

How did department stores change the idea of shopping? Department stores brought a huge assortment of products into one building. They made shopping seem glamorous and exciting.

John D. Rockefeller By the 1880s the Standard Oil Company, under the direction of John D. Rockefeller and his associates had gained control of more than 90% of the oil refining business in the United States. 4

Unions In an attempt to improve their working conditions industrial workers came together to form unions in the 1800s.

Life for workers in industrial America was difficult. Dangerous working conditions and the income difference between the wealthy and the workers caused resentment. Between 1865 and 1897 the United States experienced deflation or a rise in the value of money. Relations between workers and employers were made more difficult by deflation.

Deflation caused prices to fall and companies to cut wages. To the workers it seemed their company wanted to pay them less for the same work. Workers felt the only way to improve their working environment was to organize unions.

Early Unions Two types of workers were part of industrial America. Craft workers had special skills and were generally paid more. Common laborers had few skills and as a result received lower wages. In the 1830s craft workers formed trade unions which were unions limited to people with specific skills.

By 1873 there were 32 trade unions in the United States. Employers opposed industrial unions which united all craft workers and common laborers in a particular industry. Companies went to great lengths to prevent unions from forming.

Companies would have workers take oaths to sign contracts promising not to join unions. They would also hire detectives to identify union organizers. Workers who organized a union or strike were fired and put on a what? Blacklist- What is a blacklist? A list of troublemakers. Once blacklisted a worker could get a job only by changing trade, residence of his or her name.

If a union was formed companies used a what? Lockout Workers went without pay and were locked out of the property. If the union did strike employers would hire replacement workers called strikebreakers also known as scabs. There were no laws that gave workers the right to organize.

The Struggle to Organize Workers attempted to create large unions, but rarely succeeded. Many times confrontations between owners and government ended in violence. The Great Railroad strike of 1877 occurred after severe recession in 1873 forced many companies to cut wages.

The failure of the great railroad strike led to a need for better organized laborers. By the late 1870s the first nationwide industrial union called the Knights of Labor was formed.

The riot would hurt the reputation of the union and people started to drop out. In 1893 railroad workers created the American Railroad Union (ARU) They unionized the Pullman Palace Car Company in Illinois. After recession caused the company to cut wages, a boycott of Pullman cars occurred across the United States. It tied up the railroads and threatened the economy.

The American Federation of Labor In 1886 delegates from over 20 of the nation’s trade union organized the American Federation of Labor.

The AFL’s first leader was Samuel Gompers whose plain and simple approach to labor relations helped union become accepted. Gompers wanted to keep unions out of politics and to fight for small gains such as higher wages and better working conditions.

Under Gompers leadership the AFL had three goals: to get companies to recognize unions and agree to collective bargaining to pushed for closed shops where companies could only hire members and to promote an eight-hour workday. By 1900s the AFL had over 500,000 members. The majority of workers however were still unorganized.

Working Women By 1900 women made up more than 18% of the labor force. Women worked as domestic servants, teachers, nurses, sales clerks and secretaries. Women were paid less than men. It was felt that men needed a higher wage because they needed to support a family.

Most union excluded women. A separate union for women was created by Mary Kenney O’Sullivan, Leonora O’Reilly. Jane Addams and Lillian Wald- the founders of the settlement house movement and helped to form the Women’s Trade Union League.