2. The first Industrial Revolution  Began in the 1700s when people stopped making things by hand and began using machines  The spinning jenny, steam engines, and the cotton gin are early examples of the technology used

3. Steam Power  Invented by the Scottish Mechanical engineer James Watts  Improved on design by other inventors  Key Power source of the Early Industrial Revolution  Replaced human, animal, wind and water power  Allowed industries to be built anywhere.

4. Industrial Innovation  The Second Industrial Revolution (1865-1914) was sparked by several inventions and discoveries  Bessemer Process, Steam Train, Oil, Electricity, etc.

5. Steel  The Bessemer Process  Invented in 1859 by William Kelly (U.S.) and Henry Bessemer (G.B.)  Used hot air to remove impurities  Produced more steel in 1 day than previously produced in a week  Improved and adapted by William Holley – significantly increased production Why is this important?

6. Bessemer Advantages  Allowed development of Industrial cities  Pittsburgh, PA – Gary, IN – Cleveland, OH  Allowed railroad industry to replace iron rails  Last longer and easier to make  Steel used in construction  Lighter weight – can build taller buildings (Skyscrapers)  Resists rust and corrosion  Used in nails, wire, etc.

7. Steel Mills  Bessemer process allowed development of steel mills  Pittsburgh became production capital of U.S.  Brought jobs and prosperity  Pollution choked the city and covered it in soot  Rivers turned yellow

8. Oil  Petroleum used by Europeans to grease wagons & tools  Late 1850s process of refining crude to kerosene  Replaced whale oil for lamps and lighting

9. Oil Drilling  In 1859 Edwin Drake used a steam powered drill to search for oil under ground  Called Drake’s Folley (no one believed it would work)  After production topped 20 Barrels /day others tried  Similar to Gold Rush (Oil called “Black Gold”)  By 1880 25 million Barrels produced in PA alone

10. Oil Products  Kerosene, Waxes, Lubricants, Petroleum Jelly, etc.

11. Transportation  Railroads  Steam Ships  Horseless Carriages  Airplanes

12. Steam Trains and Railroads  The locomotive was invented by Richard Trevithick in 1804  Rapidly refined and became a viable transportation by 1830s  In U.S. the Civil War led to rapid expansion of rail system in U.S.  As price of steel dropped expanded faster  Steel use was faster and stronger than old iron rails  Steel cost 12 dollars a ton in 1873

13. Steam Trains  Locomotives rapidly improved  Early trains were slow and hard to stop  George Westinghouse invents airbrakes 1868  Allowed cars and locomotive to brake simultaneously  Granville woods improved Airbrake and developed a communication system for trains  Standard track width (gauge) was adopted  No need to change trains for different tracks  Improves efficiency and speed of travel

14. Transcontinental Railroad  First completed in 1869 at Promontory Point, UT  Golden Spike driven by Leland Stanford  Connected the country by land  Allowed rapid transportation of people and goods The original "golden spike", on display at the Cantor Arts Museum

15. Affects of Rail travel  Linked small towns to large cities  Rapid western expansion/settlement  Urban growth/Job Growth  Expand other industries  National Distribution of goods  National standard time to coordinate schedules  Began in 1883 by agreement of Rail owners in U.S. and Canada  Made into law with the 1918 Standard Time Act

16. Steam Ships  First came into use in the 1800s  Began with sailing ships hybridized to paddle ships  Screw-Propeller adopted later on  Rapid cross ocean travel  First Atlantic crossing credited to the SS Savannah May 1819

17. Horseless Carriages  First developed using steam by French military officer Nicholas-Joseph Cugnot (inefficient and loud)  Gasoline fueled internal combustion engine built by Nicholas A. Otto in 1876  In 1893 Charles and J.Frank Duryea built the first “car”

18. Suspension Bridge  Uses steel cables to suspend a roadway over gaps  First suspension bridge in the U.S. was the Brooklyn Bridge that crossed the East River in NYC  At the time was longest bridge in the world

19. Airplanes  Invented in 1903 by Orville and Wilbur Wright  First successful flight at Kitty Hawk, NC  Lasted only 12 seconds but proved it was possible

20. Communication

21. Telegraph  Invented by Samuel Morse in 1837  Allowed for communication with electricity  Used a series of dots and dashes called Morse Code  Led to a company called Western Union  Had 2,000 offices by 1866  Could rapidly communicate over long distances

22. Telegraph  First commercial telegraph line completed May 1844  The first message sent on theis line was “What hath God Wrought”  The telegraph embossed paper with a series of dots and dashes to be interpreted

23. Telephone  Invented by Alexander Graham Bell  First successfully demonstrated at Philadelphia Centennial Exposition in 1876  By 19000ver 1 million installed in homes and businesses  Required operators to connect lines (created job opportunity for women)

24. Typewriter  Christopher Sholes developed typewriter in 1867  Sold patent to E. Remington & Sons.  Produced easily legible documents  Used carbon paper and strike arms to print  Created another job opportunity for women

25. Electricity  First studied by the Greek Thales of Miletus in 600 B.C.E.  Renewed interest in the 1600s but saw little progress until 19 th century  Ben Franklin’s kite experiment in 1750s proved lightning was electrical energy  In early 1800s other scientists began to experiment leading to the development of communication, lighting and other devices

26. Thomas Edison  Opened invention business at Menlo Park NJ 1876  Used Direct Current (DC) for electrical inventions  Held over 1,000 patents when he died in 1931  Major inventions include:  Multi-message Telegraph  Electric Lightbulb  Phonograpn  Motion Picture Machine  Telegraphic Stock Ticker  First Electric Power Plant  Electric vote counter

27. Westinghouse and Tesla

28. A.C. Electricity  Alternating Current (AC)developed by Tesla & Westinghouse  More efficient than D.C.  Could be transferred long distances and distributed  Allowed cities to be lighted by electricity  Made electric streetcars possible

29. Tesla’s other inventions  Tesla Coil  Radio  Remote control  Fluorescent light  X-rays

30. Industrial Revolution Technology  The key to all of these inventions was Technology  Technology is advancing knowledge  Innovation drives technology  Scientific experimentation drives innovation  Machines replace human work through Technology

31. Big Business  Terms:  Corporation - a form of group ownership in which a number of people share the ownership of a business  Monopoly – complete control of a product or service  Cartel – an arrangement in which businesses making the same product agree to limit production to keep prices high  Horizontal integration – a system of consolidating many firms in the same business to lower production costs  Vertical integration – the practice of gaining control of many different businesses that make up all phases of a product’s development  Trust – a situation in which companies assign their stock to a board of trustees, who combine them into a new organization

32. Big Business  Terms  Entrepreneur – people who invest in a product or enterprise to make profit  Protective Tariff – taxes that make imported goods cost more in order to protect local industry  Laissez-faire – policies that allow business to operate with minimal government regulation  Social Darwinism – an application of Charles Darwin’s work which held that wealth was a measure of one’s inherent value and those who had it were the most “fit”  ICC – the Interstate Commerce Commission, a government body set up to oversee railroad operations  Sherman Antitrust Act – a bill passed in 1890 which outlawed any trust that operated “in restraint of trade or commerce among the several states”

33. Big Business People  John D. Rockefeller – an oil tycoon who made deals with railroads to increase his profits  Andrew Carnegie – a steel tycoon who used vertical integration to increase his power  J.P. Morgan – Financier and banker dominated finance and industrial consolidation bought U.S. Steel from Carnegie  Cornelius Vanderbilt – railroad tycoon who dominated the eastern rail industry and expanded it west to Chicago

34. Industrialization Changes Business Practices Business leaders combined funds and resources. Investors formed corporations that protected them from losing more than original investment. A corporation could operate in different regions.

35. The BIG Picture  Businessman like Rockefeller and Carnegie use new methods to expand business  New methods and help from the gov’t. allow business to control the U.S. Economy

36. New Business Methods: Advertising  Department Stores:  1862, A.T. Stewart, N.Y.C.  Provides many different consumer goods  Shopping becomes recreational  Urban Consumers  Mail-Order Catalogs:  Montgomery Ward, Chicago  Sears & Roebuck, 1890s  Supply rural consumers

37. New Business Methods: Rise of Corporations  Corporations fueled the rise of “Big Business”  Small business could not compete! Shut down in hard times!

38. Rise of Corporations  Corporation: organization owned by many people but treated by law as though it were a person.  Stockholders buy stock…  Raise money, spread the risk! (vs. partnership, proprietorship)  Created Economies of Scale…  Could produce goods more efficiently, which allowed to the rise of “big business” Produce more goods @ cheaper price, continue to operate in harsh economic times, drive out small competition!

39. New Business Methods  Corporations worked to maximize profits by: paying workers low wages paying lower prices for raw materials supporting research labs Standard Oil Factory

40. New Business Methods: Help from the Gov’t  Santa Clara County v. Southern Pacific Railroad Company  SCOTUS, 14 th Amendment and Corporations…  Received protection just as individuals would!

41. New Business Methods: “Pooling”  Competition created problems; low prices for consumers!!!  Railroad pools:  associations of competing railroads “for the purpose of a proper division of the traffic at competitive points and the maintenance of equitable rates that may be agreed upon.”  Interstate Commerce Act, 1887

42. New Business Methods: BIG Business!  By 1870s, competing businesses were merging together, creating “big business” 1.Mergers, Consolidation of Industry 2.Creation of Trusts 3.Holding Companies  Example of consolidation:  1870, Rockefeller’s Standard Oil Company owned 2% of the country’s crude oil…  By 1880 – it controlled 90% of U.S. crude oil!

43. How did it do so???

44. New Business practices  Monopolies:  Single company achieves control of an entire market!  Many states begin outlawing…  Trusts:  Legal maneuver allowing trustee to control several companies & run them as one.  Holding Companies:  Produce no actual product.  Controls several companies, merging into one large enterprise!

46. VERTICAL INTEGRATION “Carnegie Steel” Steel Refineries Railroad Lines Raw Materials Limestone Quarries Iron Ore Fields Coal Mines

47. HORIZONTAL INTEGRATION “Standard Oil Company” Refinery

48. New Business Methods: Trusts  … by creating Trusts!  Stocks would be traded in for trust certificates.  “Super-Corporation” created from many small corporations!  Standard Oil, 1882 – first TRUST!

50. New Business Methods: Investment Banking  J.P. Morgan  Buy large blocks of stock from companies looking to sell… (discounted)  Re-sell the stock for profit!  These investment bankers became interested in holding companies and trusts…  United States Steel, 1901

51. Captains of Industry? Were the tycoons “robber barons” who swindled the poor and drove small businesses under… or “captains of industry” who served the nation and made prices of goods cheaper ?

52. Is Big Business Bad for Small Businesses?

53. Or Is Big Business Good for the Nation?  Provides Jobs  Allows for product innovations  Financially supports universities, libraries, museums, etc.

54. Survival of the Fittest Charles Darwin’s idea of evolution of species applied to American capitalism led to the idea of Social Darwinism The belief that wealth was a measure of a person’s value and those who had wealth were most “fit” to survive

55. Conflict with Business Social Darwinists believed government should stay out of private business and thought it was wrong to use public funds to assist the poor. Americans who worried about the methods of industrialists called for federal regulation of business practices.

56. Sherman Antitrust Act  The ICC and the Sherman Antitrust Act began a trend toward government regulation of corporate power.