1. Chapter 19 Section 1 & 2

2.  Industrial growth in the United States had lagged far behind that of European nations in the 1860’s.  By 1900 American industry would produce more goods than any other nation in the world.

3.  Railroads carried troops and supplies to the battlefronts during the Civil War.  After the Civil War railroad companies built new lines all around the country.

4.  Many railroads serving local communities ran no more than 50 miles and sometimes were not connected to one other.  When passengers or freight reached the end of one line they had to move to a train on a different line.

5.  Different lines used railed of different gauges making them incompatible.  May 30, 1886 southern railroads stopped running to begin adopting the northern gauge.

6.  In one day all 2,000miles of rail lines had been standardized.  Network: system of connected rail lines.  By 1900 there were more miles tracks in the United States then Europe and Russia combined

7.  Railroad travel was fast cutting travel times significantly.  Long distant travel was accommodating and made comfortable.

8.  Consolidate: combine  Larger companies bought up smaller companies or forced them out of business.

9.  Railroad barons: tough minded business people headed the drive for consolidation.  Cornelius Vanderbilt: The most powerful railroad baron; Son of a poor farmer he earned his fortune in steamship lines and then began buying railroads in New York State.  By the time of his death in 1877 he owned 4,500miles of track connecting New York City and the Great Lakes region.

10.  Railroad builders raced to create thousands of new tracks.  James Hill a Canadian finished the last major cross-country railroad in 1893 known as the Great Northern  The Great Northern ran from Minnesota to Washington.

11.  The Great Northern was built without aid from Congress.  To ensure his railroad made a profit, Hill encouraged farmers and ranchers to settle near his railroad.  He gave seeds, equipment and imported cattle to help farmers and ranchers.  He considered the people along his rail lines co-partners.

12.  Soon there were too many rail lines in parts of the country.  There was not enough traffic to keep all the lines busy.

13.  Rate wars broke out as rival railroads cut their fares to win customers.  Big railroads secretly offered rebates or discounts to their largest customers.  This in turn forced small companies out of business.  It also hurt small farmers

14.  Railroad barons realized competition was hurting their large railroad lines.  Pool: several railroad companies agree to divide up business and fix their prices in an attempt to limit competition

15.  Both rebates and pools kept shipping prices high for small farmers.  Many farmers joined the Populist Party.  Populists called for government regulation of railroad rates.

16.  Congress and several states passed laws to regulate railroad companies however the laws did not end the abuses.  Railroad barons paid large bribes to official to keep laws from being enforced.

17.  The American railroad made the rapid growth of industry possible.  Steelworkers turned iron into steel for tracks and engines.  Lumberjacks cut down forest to supply wood for railroad ties.  Miners dug coal to fuel railroad engines.

18.  Railroad companies themselves employed thousands of workers  Railroads opened up every corner of the country to settlement and growth.  New businesses and new towns grew where rail lines crossed.

19.  John D. Rockefeller and the Standard Oil Company would come to dominate the oil industry.  Rockefeller and a few other ruthless, imaginative business leaders shaped the nation’s emerging business and industries.

20.  Growth of the railroads fueled the growth of the steel industry  Iron rail lines rusted quickly but steel was much more expensive and difficult to make.

21.  William Kelly in the United States and Henry Bessemer in England both discovered a new way to make steel.  Bessemer Process: enabled steel makers to produce strong steel at a lower cost.

22.  Railroads began to lay steel railroads.  Skyscrapers also began to be built using steel  Everyday items like screws and needles began to be made using steel

23.  Pittsburgh became the steel making capital of the nation.  Steel mills brought jobs and prosperity to Pittsburgh. They also brought problems, black smoke turned the air gray and soot covered houses trees, streets, rivers.

24.  Andrew Carnegie: Scottish immigrant who made a fortune in the steel industry.  Carnegie is known for working his way up from a textile mill worker to building a steel mill in Homestead PA, close to Pittsburgh.

25.  Carnegie used his profits to buy out rivals.  He also bought iron mills, railroads, steamships lines and warehouses.  Carnegie soon had control over all steps in producing and shipping steel

26.  Vertical integration: having control over all the steps required to change raw materials into finished products.  Carnegie Steel Company was turning out more steel than all of Great Britain.

27.  Carnegie believed that the rich had a duty to improve society.  He gave over 60 million to build public libraries.  He gave millions more to charities.  After selling Carnegie Steel he spent his time and money helping people

28.  Big factories producing goods cheaper then small town factories caused the demand for local goods to fall. Many small factories closed.

29.  Montgomery Ward and Sear Roebuck sold goods in western farmlands by mail order catalogs.

30.  Capital: money  Factory owners used capital to buy raw materials, pay workers and cover shipping costs.  Corporation: a business owned by investors.  Stock: shares in a business.  Corporations can use money invested in shares to build new factories or buy new machines.

31.  Dividend: a share of a corporation’s profit  Stockholders hope to receive dividends.  The rise in corporations helped American industry to grown  Stockholders faced fewer risks than owners of private business.

32.  Corporations borrowed millions of dollars from banks.  J.P. Morgan: the most powerful banker in the 1890’s.  Morgan and his friends invested money in stock of troubled corporations.  They would then win seats on the boards of these corporations and direct them in ways that limited competitions and made profit.

33.  Between 1894 and 1898 Morgan gained control of most of the nation’s major railroads.  He took control of the United States Steel Company and was the first US business worth more than $1 billion.

34.  Industrial growth could not have occurred without the country supplies of natural resources such as Coal, gold, silver, copper, and forests

35.  1859 Americans discovered oil near Titusville Pennsylvania

36.  At that time Rockefeller knew oil was only valuable after it had been refined in to kerosene.  Rockefeller used his profits from his first oil refinery to buy up other refineries and combined them in to the Standard Oil Company

37.  Rockefeller formed the Standard Oil Trust  Trust: is a group of corporations run by a single board of directors.  Small oil companies turned over their stock to Standard Oil Trust to received stock in the new trust.

38.  The new stock paid high dividends but they gave up their right to choose the board of directors.  The Standard Oil Trust created monopoly in the oil industry.  Monopoly: a company that controls all or nearly all the businesses of an industry.  Other businesses followed Rockefeller’s lead forming huge monopolies.

39.  Free enterprise system: business are owned by private citizens  Americans argued that giant corporations were abusing the free enterprise system.

40.  Trusts and monopolies often put an end to competition.  Without competition there are no reasons for companies to keep their prices low.  It is also hard for new companies to start.

41.  Workers felt they were treated badly by large corporations.  Critics worried about political influence of trusts.  Americans worries that millionaires used their wealth to buy favors from politicians.

42.  Business leaders defend trusts.  Large corporations made goods cheaply and helped the consumer.

43.  Government did little to control giant corporations.  Sherman Antitrust Act: banned the formation of trusts and monopolies but it was too weak to be effective.