17b Industrial Growth

8/4/2019 17b Industrial Growth

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Life in the 1860sLife in the 1860s No indoor electric lights No refrigeration No indoor plumbing Kerosene or wood to heat

Wood stoves to cook with Horse and buggy In 1860, most mail from the

East Coast took ten days toreach the Midwest and three

weeks to get to the WestCoast. A letter from Europe to a

person on the frontier couldtake several months to reachits destination.

Life in the 1900sLife in the 1900s US Govt issued 500,000

patentselectricity Refrigerated railroad cars Sewer systems and sanitation Increased productivity made

live easier and comfortable. Power stations, electricity for

lamps, fans, printing presses,appliances, typewriters, etc.

New York to San Francisco to

10 days using railroad. 1.5 million telephones in useall over the country

Western Union Telegraphwas sending thousands ofmessages daily throughout

the country.


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Natural ResourcesCapital

(gold, silver and banking)

US Government supportDesire: Creative inventors and

industrialists

Transportation SystemLabor force (immigrants)


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Oil

Mining

Sugar

Steel

Meatpacking

Beef/Cattle

Construction

Telegraph

Telephone

Railroad

Marketing

Sewing Machine

Vacuums

Typewriters

Automobile

Salt

Coal

Agricultural


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Immigrants from Europe

Old New New New

Immigrants provided the laborforce for industrial expansion of

the US.

They also became the customerswho in return bought the items

produced.


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0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1871-

1880

1881-

1890

1891-

1900

1901-

1910

1911-

1920

Old Ne

1,593,000181,18802,753,00926,000

1,110,0001,847,0001,069,0005,780,000540,0002,928,000

Chart: Rise of Immigrants

OldOld = Englandand Germany

NewNew= Southern Europe: Italy, Russia, Poland


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Pullman Cars

What helped the railroad industry prosper?Bessemer Process

Westinghouse Air Brakes

Steel Rails

Standard Gauge

What helped the railroad industry prosper?Bessemer Process

Westinghouse Air Brakes

Steel Rails

Standard Gauge


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ExpansionofRailroads1869, 30,000 milesoftrack1900, 200,000 milesoftrackDistribution System to the marketplaceSymbol ofgrowth


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In 1856 Henry Bessemer deviseda way

of converting iron into steel on alargescale.

His invention involved blowing airthrough molten iron in a converter, orfurnace, in order to burn off the excess

carbon.His invention revolutionized the

Industrial Age.

New Uses for Steel

Steel used in railroads, barbed wire,farm machines

Changes construction: BrooklynBridge; steel-framed skyscrapers

In 1856 Henry Bessemer deviseda way

of converting iron into steel on alargescale.

His invention involved blowing airthrough molten iron in a converter, orfurnace, in order to burn off the excess

carbon.His invention revolutionized the

Industrial Age.

New Uses for Steel

Steel used in railroads, barbed wire,farm machines

Changes construction: BrooklynBridge; steel-framed skyscrapers


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BETWEEN 1860 TO 1900BETWEEN 1860 TO 1900Elevator---1852

BessemerProcess---1852

Sewing Machine---1853

Dynamite---1867

Typewriter---1868

Levi Blue Jeans/Basketball---1873

Telephone---1876

Phonograph---1878

Light bulb and cash register---1879

Zipper---1883

Gasoline automobile and skyscraper---1885New YorkCity---first city to have electricity--1890

Radio---1895

Subway---1897

X-ray---1900

Between1800 to

1900, US Govt.

issued 500,000patents


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With theBessemer Process

&Carnegie steel,Skyscrapersrevolutionized the

buildingindustry..

Major cityskylines would bedotted with this

new type ofbuilding as the

1900s begin.


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Thomas Alva EdisonThomas Alva Edison

Wizard of Menlo ParkWizard of Menlo Park


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Edison Inventions helped to shape modern societyEdison Inventions helped to shape modern societyMore than 1,000 inventions patented

Light bulbPhonograph

Incandescent electric lampStarter for automobiles that eliminated hand crank

BatteriesPerfected stock ticker

New York City first city to powered by electricityThe motion picture camera & projector

First used hello as phone greetingHelped Alexander G. Bell with the telephone

Edison Inventions helped to shape modern societyEdison Inventions helped to shape modern societyMore than 1,000 inventions patented

Light bulbPhonograph

Incandescent electric lampStarter for automobiles that eliminated hand crank

BatteriesPerfected stock ticker

New York City first city to powered by electricityThe motion picture camera & projector

First used hello as phone greetingHelped Alexander G. Bell with the telephone

Wizard of Menlo ParkWizard of Menlo Park


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Alexander Graham BellAlexander Graham Bell

Telephone (1876)Telephone (1876)


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The AirplaneThe Airplane

Wilbur Wright Orville WrightWilbur Wright Orville Wright


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Model T AutomobileModel T Automobile

Henry FordHenry Ford


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BETWEEN1860TO1900Specialty stores----sold single line of goods

Department stores---combined specialty stores

Chain stores---stores with branches in cities

Mail catalog stores

New ways to advertise

Montgomery Wards, J.C.Montgomery Wards, J.C.Penney, Macys, Sears &Penney, Macys, Sears &

Roebuck, and WoolworthsRoebuck, and Woolworths


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An economic belief supported bythe U.S. that opposes the

government regulating business.

In the late 1800s businesses operated withoutmuch government regulation. This is known as

laissezlaissez--fairefaire economics.

Laissez-faire means allow to beallow to be or thegovernment stays out of a personsgovernment stays out of a persons

businessbusiness.

Laissez faire supports our economic system of

capitalismcapitalism


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1. Laissez Faire-> the ideology of the Industrial Age.

a. Individuals should compete freely in themarketplace.

b. Own their own business &use their skills to betterour culture &make profit for themselves.

c. The market was not man-made or invented&no

room for government in the market.d. Government shouldallow for natural competition

for the betterment of our society.


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Economic system characterized

by private property ownershipIndividuals & companies compete for their own

economic gain (ProfitProfit)

Capitalists determine the prices of goods &services.

Production & distribution are privately orcorporately owned.

Reinvestment of profits

Supports laissez faire & the free enterprisefree enterprise

system


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1790s 276 patents issued. 1990s 1,119,220 patents issued.

Gave an inventor the right to make and sellaninvention.

1790s 276 patents issued. 1990s 1,119,220 patents issued.

Gave an inventor the right to make and sellaninvention.


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Economic system based on

cooperation rather thancompetition

Many Americans opposed capitalism and

believed a socialistic economysocialistic economy would better suitthe US because some capitalists were corrupt.

Believes in government ownershipgovernment ownership of businessand capital (money, natural resources)

Government controls production, sets wages,prices and distributes the goods. No profit or

competition.

Opposite oflaissez fairelaissez faire and capitalismcapitalism


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MORRILL TARIFF ACT, 1862MORRILL TARIFF ACT, 1862To protect & encourage American industry, Congress

passed this tariff after the South seceded from the Union.

NATIONAL BANKING SYSTEM, 1863NATIONAL BANKING SYSTEM, 1863To stimulate the economy & set up a banking system,

Congress passed this act which was a significant steptowards a unified, national banking system until replacedby the Federal Reserve in 1913.

MORRILL ACT, 1862MORRILL ACT, 1862To promote education, Congress provided grants of publiclands to the states for support of education. Land-grant

colleges

LAND GRANTS TO RAILROADSLAND GRANTS TO RAILROADSUS Govt. donated land to railroad companies to encourage

growth of this mode of transportation. US Govt. donatedapprox. 160 million acres of land.


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Corporation:Corporation: form ofbusinessconsisting ofa groupof

people authorized by law toact asasingle personand withthe ability tosell sharesofstockto raise capital

Shareholdersor stockholdersShareholdersor stockholders:: investors whoinvesttheir money intoacorporation who each receive ashare of

ownershipinproportion to the amount they invested

ifthe corporation makesaprofit---thaninvestorgetsadividenddividend or ashare ofthe profit.

Limited liability:Limited liability: Important aspect ofacorporationislimited liability. Shareholders have the right toparticipatein the profits, through dividendsand/or the appreciationof

stock,but are not held liable for the company's debts.

Risk is spread over theRisk is spread over the shareholdersshareholders so if theso if thecompany goes bankrupt, the loss is not socompany goes bankrupt, the loss is not so

devastatingdevastating


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FORMATION Individual or person decides tooperate a business

OWNERSHIP IndividualIndividual

CONTROLANDMANAGEMENT

By owner or persons delegated by

the proprietor

NETPROFITSLOSSES

Profits to ownerLosses absorbed by owner

UNLIMITED LIABILITY


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FORMATION By agreement between associates(partners)

OWNERSHIPJointly by two or more individuals;Jointly by two or more individuals;

or by terms of partnershipor by terms of partnershipagreementagreement


By partners or persons they

delegate

NETPROFITSLOSSES

Shared according to partnership

agreement

UNLIMITED LIABILITY


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FORMATION Organized by associates andlegalized through state charter

OWNERSHIP Stockholders, according to numberof shares


Through Board of Directors, elected

by the stockholders (usually one

vote per share of stock held)

NETPROFITSANDLOSSES

Dividends: to stockholders = profitsLose: only the amount invested by

stockholders according to number ofshares

LIMITED LIABILITYLIMITED LIABILITY


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Conglomerate A group of unrelated business owned by a

single corporation. Stillused today bycompanies thatmerge.

PoolCompeting companies thatagree to fix pricesCompeting companies thatagree to fix prices

and divide regions amongmembers sothatand divide regions amongmembers sothatonly one companyonly one company operates ineach area.operates ineach area.

Outlawed today.Outlawed today.

Trust(Monopoly)(Monopoly)

Companies inrelated fields agree to combineunderthe directionof a single board of

trustees, which meantthatshareholders had

no say. Outlawed today.

HoldingCompany

A company thatbuys controllingamounts ofA company thatbuys controllingamounts ofstock inrelated companies, thus becomingthestock inrelated companies, thus becomingthemajority shareholder, and holding considerablemajority shareholder, and holding considerablesay overeach company's business operations.say overeach company's business operations.

Outlawed today.Outlawed today.


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BIGGER IS BETTER

A trust or monopolytrust or monopoly

controls an entireindustry

make product cheaper

lower prices to customer


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Coke fields

purchasedby

Carnegie

Coke fields

Iron ore deposits

purchasedby

Carnegie

purchasedby

Carnegie

Coke fields

Iron ore deposits

Steel mills

purchasedby

Carnegie

purchasedby

Carnegie

purchasedby

Carnegie

Coke fields

Iron ore deposits

Steel mills

Ships

purchasedby

Carnegie

purchasedby

Carnegie

purchasedby

Carnegie

purchasedby

Carnegie

Coke fields

Iron ore deposits

Steel mills

Ships

Railroads

purchasedby

Carnegie

purchasedby

Carnegie

purchasedby

Carnegie

purchasedby

Carnegie

purchasedby

Carnegie

VerticalIntegrationVerticalIntegration

You controlallphases ofproductionfrom the rawmaterialtothe finished product

HorizontalIntegrationHorizontalIntegrationBuy outyourcompetitionuntil

you have controlof a single areaof industry


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Advantages Vertical IntegrationAdvantages Vertical IntegrationAdvantages Vertical IntegrationAdvantages Vertical Integration

You are always in control of supply of theYou are always in control of supply of theproducts you needproducts you need

In control of labor cost, land/resourcesIn control of labor cost, land/resources Always in control of the costAlways in control of the cost

Schedule your production of autosSchedule your production of autosbecause you are in control of all factorsbecause you are in control of all factors

You are always in control of supply of theYou are always in control of supply of theproducts you needproducts you need

In control of labor cost, land/resourcesIn control of labor cost, land/resources Always in control of the costAlways in control of the cost

Schedule your production of autosSchedule your production of autosbecause you are in control of all factorsbecause you are in control of all factors


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Horizontal Integration




Examples

Standard Oil

Carnegie Steel

Swift & Company: meat producers

United Fruit Company: bananas

Dole Pineapple

Examples

Standard Oil

Carnegie Steel

Swift & Company: meat producers

United Fruit Company: bananas

Dole Pineapple

Horizontal IntegrationBuy out your competitionuntil you have control of a

single area of industry

Horizontal IntegrationBuy out your competitionuntil you have control of a

single area of industry


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Modern Day Examples ofModern Day Examples ofH

orizontal IntegrationH

orizontal Integration

Modern Day Examples ofModern Day Examples ofH

orizontal IntegrationH

orizontal IntegrationMicrosoftMicrosoft

PG & EPG & E

ComcastComcast

StarbucksStarbucks

MicrosoftMicrosoft

PG & EPG & E

ComcastComcast

StarbucksStarbucks

17b Industrial Growth

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