Post on 03-Jan-2016
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Unit II Notes: The Gilded Age and Industrialization 1877-1909
What do we mean by the term “Gilded Age”?
• Time period from 1877-1909• Characterized by rapid industrialization• Entrepreneurial expansion• Efficiencies in production = lower prices and
more affordable goods• Rise of corporations• Huge profits made owners “instant” millionaires• Industrialists amassed enormous wealth and
created a lavish lifestyle for themselves
Factors from the Civil War that Lead to Economic Growth in America
• Steam Power– Replaced human and animal power in agriculture
and factories– Needed coal or wood to create steam– Used in transportation• Trains• Steamboats
The Bessemer Process (steel)
• Made production of steel more economical• Could now make 5 tons of steel in 15 minutes
instead of 12 hours
Coal
• Main source of fuel in America• Production increased from 14 million tons in
1860 to 100 million tons in 1884
Refining Petroleum
• First oil well drilled 1859 PA• Used to make kerosene for lighting• Used for machine lubrication• Will later be refined into gasoline for cars and
planes
Internal Combustion Engine
• Fuel is burned to turn propellers or turbines
Commercial Use of Electricity
• First used to relay messages along telegraph wires
Inventors
• Alexander Graham Bell• Created the telephone in 1876 • Increased the speed of communication
Thomas A. Edison
• Patented the light bulb in 1880 • Increased factory hours and efficiency• First filaments were bamboo; replaced with
tungsten
Elisha Otis
• Created the passenger elevator in 1852• Allowed for the construction of sky scrappers• Safety device that prevented elevator
accidents
Elias Howe
• Invented the sewing machine in 1846• Shortened time for clothing production• Improved quality of clothing• Clothing became cheaper
Christopher Sholes
• Created QWERTY typewriter in 1867• Improved and sped up communication• Sold patent to Remington Arms; mass
production began in 1881
The Wright Brothers
• Wilber and Orville were bicycle shop owners• Tried to make bike into flying machine* created first successful plane• Dec. 17, 1903 flew for 12 seconds; traveled
120 feet in Kitty Hawk, NC
Cyrus McCormick
• Invented mechanical reaper• Improved speed of harvesting grains (wheat,
corn, oats)• Increased farm production• Decreased price of bread, cereal, etc…
Free Enterprise System
• Economic system in which people have the freedom to:– Produce what they wish – Sell what they wish at the price of their choice– Buy whatever they can afford
Free Enterprise/Capitalism
• Right to private property• Profit Motive• Economic Freedom
Entrepreneur
• A person who starts a business is the hope of making a profit
• One who invests capital hoping to make a profit
“Captains of Industry”
• Entrepreneurs of the Gilded Age • Forged the modern industrial economy of the US• Created enormous wealth for themselves• Lived lavish lifestyles
Andrew Carnegie
• Came to US from Scotland 1848 at age of 13• Worked in Pittsburg cotton mill as a boy• Telegraph operator for Penn. RR• Promoted to RR Superintendent at 30• Invested in oil and iron• 1870’s went into steel business• Founded Carnegie Steel in 1892
Andrew Carnegie
• Under cut his competitors prices to drive them out of business
• Bought his own coal mines, iron ore fields, and shipping lines to control production prices and supply
• Paid workers low wages and forced them to work 12 hour shifts
• Crushed attempts to unionize
Carnegie
• Sold Carnegie Steel to JP Morgan in 1901 for $480 million
• Spent the rest of his life in philanthropy• Built libraries, museums, and universities• Gave away $350 million
John D. Rockefeller
• Born in New York to working class family• Studies book keeping in school• Went into business selling fruits and vegetables • Invested his money in an oil refinery in
Cleveland• Made kerosene and lubricants• In 1870 formed Standard Oil of Ohio• By 1879, he controlled 90% of the refining in
the US
Rockefeller
• Standard Oil became a monopoly or trust• He forced competitors out• Forced railroads to give him better rates• In 1892, the government split up his company
into 20• He remained the major shareholder of all 20• He gave away millions to education and science• He founded the University of Chicago and
Rockefeller Foundation
Henry Ford
• Born in Dearborn, Michigan• Lived on farm until 16• Apprenticed as a machinist in Detroit• Hired as engineer @ Edison Electric• In 1896 created his first plans for a car; called
the Ford Quadricycle (electric powered)• In 1903 he formed Ford Motors Co.
Ford
• 1908 introduced the Model T• 1914 introduced the assembly line• Introduced the $5/day wage (equivalent to
$110 today)• By 1918, 50% of all cars in the US were Model T’s• His revolutionary vision was to create a cheap,
reliable, car build by skilled, loyal workers• Introduced profit-sharing to employees who stayed
at least 6 months
Ford
Radical Ideas:•Required that his employees maintain a “proper” lifestyle.•Pacifist; opposed WWI•Anti-Semite
Assembly Line
Henry Form Museum
Cornelius Vanderbilt
• Born 1794 Staten Island, NY• Grew up poor; parents illiterate• Dad worked as a seaman• One of 8 children• Dropped out of school at 11 to work w/ his
dad• Invested $ in a sailboat; built a business
ferrying goods around New York Harbor
Vanderbilt• 1917 started steamboat business• By 1840’s had 100+ ships• Was called Commodore Vanderbilt by his
contemporaries• 1860’s invested in NY rail lines• By 1870’s he owned RR’s in NY, Chicago, and to the
west• At his death, he had accumulated the largest wealth of
any person in US history• $ 100,000,000 estate was left primarily to his oldest
son (Henry); other 12 children got $2 million each
Vanderbilt
• In todays $, his estate would be worth $143 billion
• Left $1 million to build Vanderbilt University
Biltmore Estate
Famous Descendants
• Gloria Vanderbilt, clothing designer• Anderson Cooper, CNN news anchor
J. P. Morgan(John Pierpont)
• Born in 1837 in Hartford, CT.• Son of a banker• Went into family business• In 1871 built his own finance company; JP
Morgan & Co.• Dominated banking and finance in the US• Family business still in operation (Chase)
J.P. Morgan
• Created several monopolies– U.S. Steel (world’s largest steel manufacturer)– Consolidated Railways (controlled rail systems on
the east coast)
J.P. Morgan
• Ardent sailor; won several World Cup races• Avid art collector; his collection was donated
to the Met in NYC• Avid book collector; his books are found in the
Morgan Library in NYC• Married twice; first wife dies 5 months after
wedding• Four children; 1 son, 3 daughters
J.P. Morgan
• One of America’s leading businessmen• Helped to create the modern banking system• His consolidation of rail systems helped to
standardize railroads
Monopolies
• A monopoly occurs when one company or group owns all or nearly all of a product or service
• Rockefeller was accused of having a monopoly since he controlled 90% of the oil refineries in the late 1800s
• Monopolies usually hurt the consumer because of a lack of competition, which can lead to poor products
How Monopolies Formed
• Horizontal Integration – When companies acquire rival companies’ property
• Example – AT&T tried to merge with T Mobile• Example – Rockefeller bought out his
competition and then took over their refineries
How Monopolies Formed
• Vertical Integration – When a company takes control of the entire production and distribution of a product
• Example – Carnegie took control of the iron mines, he owned the trade routes between the mines and the mills, and the steel mills themselves
Comparing Horizontal and Vertical Integrations
Consolidating
• Businesses often consolidate, or to shrink, their facilities to save costs. If they can remove “X” amount of employees or steps in a manufacturing process, they can increase their profits.
• Example: Rockefeller merged with his competitors to consolidate the oil industry