1. Industrialization & “Big Business”

2. Industrialization First began in US during the early 1800s
Accelerated during the Civil War
By 1900, US had become the world’s leading industrial power

3. Natural Resources US had plentiful natural resources: Water Timber
Coal
Iron
Copper
Oil
Large workforce, thanks to immigration

4. Laissez-faire Approach by Government
US government supported the “free enterprise” system
Kept taxes low
Minimal regulation of businesses
Made no effort to control wages or prices
Did, however, enact high tariffs to protect US industries from European competition

5. Steel
Used for building railroads, heavy machinery, and skyscrapers and other buildings
Stronger, lighter, more durable, and more flexible than iron

6. Bessemer Process
Developed by Sir Henry Bessemer, put into mainstream use in US by Andrew Carnegie
New process for making steel more efficiently and cheaply, while also producing steel of a superior quality

7. Andrew Carnegie 1835 – 1919 Scottish immigrant
Started from poverty, worked his way up through telegraph and railroad companies until he eventually made a fortune investing in his own steel company
In 1901, Carnegie sold his steel company for $230 million and began pursuing philanthropic interests.
By the time of his death, he had given away nearly $450 million!

8. U.S. Steel
Created in 1901 when J.P. Morgan bought out Carnegie and several other large steel manufacturers to create the world’s first billion-dollar company

9. Oil
First major US oil well was drilled in Pennsylvania by Edwin L. Drake in 1858
Richest oil finds of 19th century would come in Texas and Oklahoma
Used at first for making kerosene for lighting, but later used to power and lubricate machinery

10. John D. Rockefeller
1839 – 1937
Became rich off his near-monopoly in the American oil industry
First billionaire in US; was worth $1.4 billion when he died (That’s about $600 billion in today’s dollars) – He held a little over 1% of the total wealth of the US!

11. Standard Oil Company
Created in 1870 by Rockefeller and several partners
Volume pricing allowed Standard Oil to bankrupt any competitors who refused to sell out
Became so powerful a monopoly that it was ordered broken up by the Supreme Court in 1911

12. Railroads
Railroads became the lifeline of all American agricultural and industrial production
Moved natural resources to the factories, farm goods to market, and manufactured goods to distributors

13. Cornelius Vanderbilt 1794 – 1877 “The Commodore”
Dropped out of school to operate a ferry business which grew into a huge fortune in the shipping and railroad industries
Founded Vanderbilt University with a $1 million donation, the largest in US history at that time
One of his grandsons built Biltmore House in Asheville, NC

14. Electricity
Vital to new industrial growth, the ability to use electrical power to create light and run machinery allowed factories to run 24 hours a day
Electricity also opened up new avenues of entertainment

15. Thomas Edison 1847 – 1931 “The Wizard of Menlo Park”
Holder of over 1000 patents
Developed the phonograph, the light bulb, and motion picture camera
Founder of Edison General Electric Company, which later became General Electric (GE)
A better developer of ideas than marketer, many of his inventions would make other people rich

16. George Westinghouse
1846 – 1914
Inventor, who developed the air brake and rotary steam engine for the railroads
Made his fortune in electricity by backing Nikola Tesla’s alternating current (AC) method of electrical distribution over Edison’s direct current (DC) method

17. Westinghouse Electric Company
Founded in 1886
Became first commercially successful electric power company
Also continued to develop devices that used electricity, like kitchen appliances and lighting fixtures

18. Banking & Finance
Larger and more powerful banking firms were needed to loan money to these new mega-corporations
Small banks began to merge, just as small corporations had merged into monopolies like US Steel and Standard Oil

19. J.P. Morgan
1837 – 1913
Financed the merger of steel companies into the giant US Steel; also financed the merger of electric operators into General Electric
Key stakeholder in several other corporations, including International Harvester, AT&T, and numerous railroads
Was scheduled to sail on the Titanic, but cancelled his reservation at the last minute

20. Tactics of Industry
Monopolies: control of an entire market or good by a single corporation
Trusts: combination of independent corporations under one group of managers
Holding companies: ownership of multiple companies by a single controlling company which doesn’t actually produce anything itself
Interlocking Directorates: when the directors of one company serve on the board of directors of multiple other related companies

21. Integration
Vertical
Company buys all of the different businesses on which it depends for its operations
Controls all of its suppliers from the natural resources on up
Controls all of the companies which transport and distribute its products
Horizontal
Company buys out all of its competitors to create a larger more efficient corporation
Ultimate form of horizontal integration is the creation of a monopoly

23. Other Key Inventions Alexander Graham Bell’s Telephone
Elisha Otis’ Elevator
Thaddeus Lowe’s Ice Machine
Gustavus Swift’s Refrigerated Railroad Car
Standardization of clothing & shoe sizes