THE INDUSTRIAL AGE

1865-1914

Railroads Lead the Way!

Essential QuestionHow did railroad expansion affect the United

States economy?

Railroad Expansion

Railroad expansion is accompanied by consolidationLarge companies buy smaller companies

or drive them out of businessMakes large companies more efficientMakes industrial processes more uniform

Railroads Stimulate the Economy Railroads brought major changes to

American industry and American life Connect east and west coast Railroads stimulate

Steel IndustryLumber IndustryCoal Industry

Competing for Customers Large railroads offered rebates to their

biggest customersSmaller railroads are forced out of

businessRaised freight rates for farmers and

customers shipping small amounts of goods

Railroad industry business leaders formed poolsCombining resources to raise prices

Laissez-faire: Government hands off the economy!!!!

Answer the Essential Question

How did railroad expansion affect the United States economy?

~ Railroad expansion allowed a few powerful individuals to build great fortunes

~ It benefited coal, iron and steel industries

~ Opened up the entire United States to economic growth

Making Connections

How did industrialists and their companies build their fortunes?

~ By consolidating small companies into large companies

~ Offering rebates to companies shipping large amounts of goods

Making Connections

Do you think owners of small farms supported the rebates given by railroad companies?

~ No, because the rebates were given only to large customers and freight rates increased for small farmers.

Inventions

Essential QuestionsHow did the inventions of the late 1800s

revolutionize society?

Inventions

By 1920, Americans in cities drove cars through streets lit with electric lights. They went to department stores where they bought everything from kitchen sinks to shoes. Americans also could do their shopping by mail – or pick up the telephone and order groceries from the local store. The automobile, the electric light and the telephone were invented after 1870.

Inventions

Within a generation, they became part of everyday life for millions of people. These new inventions helped people communicate more quickly over long distances. Improvements in communication helped unify the country and promoted economic growth.

Inventions

Telegraph (1844) – Samuel MorseOperators sent messages in morse codeOffers instant communicationConnects United States and Europe

Inventions

Telephone (1876) – Alexander Graham BellBusinesses are first to use phonesInstant communicationEventually telephones become common in

homes

Inventions

Electric Light Bulb (1879) – Thomas Edison “The Wizard of Menlo Park”Electric Power PlantFactories, trolleys, streetlights, and lamps

are powered by electricity

Inventions

Engine Powered Aircraft (1903) – “The Wright Brothers” Oliver and Wilbur“Broke the bonds of Earth and see the world

in a new way”Attracted attention of United States military

in 1911

Inventions

Wright Brothers

Henry Ford’s Automobile

1903 – Henry Ford established his own auto making company in Detroit, Michigan and began designing cars

1908 – Model T is introducedImmensely popularAffordable and easy to keep in repair

Assembly Line revolutionized industry Mass production decreased

manufacturing costs so products could be sold more cheaply

Model T

Assembly Line

Answer the Essential Question

How did the inventions of the late 1800s revolutionize society?

An Age of Big Business

Essential QuestionHow did Americans build fortunes in the oil

and steel industry?

Foundations of Growth

New technology and abundant natural resources led to economic growth

1859 – Edwin L. Drake strikes oil by digging a well in Titusville, PA

Led to creation of multimillion-dollar petroleum industry

Factors of Production

Change from an agricultural to industrial economy is possible due to the “factors of production”Land – includes all natural resourcesLabor – Rapid population growth

provides more workersCapital – Manufactured goods used to

make other goods and services○ Examples: machines, buildings, tools,

MONEY

Raising Capital

Companies want to expand and to do so, need to raise capitalBecame corporations by selling shares,

or stock, of its business to the publicPeople who invest in the corporation by

buying stock are its shareholders, or partial owners

Railroads were the first to form corporations

The Oil Business John D. Rockefeller’s Standard Oil

Company controlled the oil industry Rockefeller created a monopoly by driving

his competition out of businessLowered pricesPressured customers not to deal with rival

companiesConvinced railroads to give him special rates

Used “horizontal integration” to help Standard Oil grow wealthy and powerfulCombined competing companies into one

corporation

Standard Oil

The Steel Business

New processes for making steel created an important industryBessemer ProcessOpen hearth process

Pittsburgh, PA; Cleveland; Chicago, Detroit became important hubs in steel production

Andrew Carnegie

1890 – Andrew Carnegie dominates the steel industry

Company becomes powerful through “vertical integration”Acquiring companies that provided

equipment and services needed By 1900, Carnegie Steel Company is

producing 1/3 of the nation’s steel

Answer the Essential Question

How did Americans build fortunes in the oil and steel industries?

○ Formed corporations○ Used methods of vertical and horizontal

integration○ Formed trusts and monopolies

Attitudes Toward Business Industrialization and the changes

associated with it caused American attitudes toward business to alter in the late 1800s.

Attitudes Toward Business ***The tremendous wealth some

entrepreneurs gained during the late 1800s, as well as the cut-throat business methods they used, led some Americans to rethink their ideas on the meaning of business success. New philosophies tried to explain and justify both the accumulation of wealth and the practices used to achieve it.***

Attitudes Toward Business Two ways people viewed business in the

19th century: Laissez Faire

○ What is it?Hands off the economy!

Social DarwinismWhat is it?

○ Survival of the fittest, only the strong survive (leads to monopolies)

How is Social Darwinism applied to business competition?○ Big businesses will conquer smaller, weaker businesses

Attitudes Toward Business Robber Barons vs. Philanthropists?

The philosophies described above and the growing gulf between the rich and poor led some Americans to criticize the laissez-faire policies and those who profited from them. Instead of viewing wealthy entrepreneurs as Horatio Alger heroes, critics condemned them as robber barons – steal from the poor and keep the money

Attitudes Toward Business Philanthropist: Person who gives their

wealth back to the community. Example: Rockefeller Library,

Carnegie Hall

Attitudes Toward Business WHAT DO YOU THINK? WERE THE

ENTREPRENUERS ROBBER BARONS OR PHILANTHROPISTS? WRITE ONE PARAGRAPH ANSWERING THIS QUESTION AND EXPLAIN YOUR ANSWER USING SPECIFIC EXAMPLES AND DETAILS.

Corporations Grow Larger Many Americans admired the

efficiencies of large business Others argued that a lack of

competition hurt consumersNo reason to improveNo reason to keep prices low

1890 – Sherman Antitrust ActProhibited monopolies and poolsRarely enforced, ineffective

Sherman Antitrust Act

Did the Sherman Antitrust Act support competition?

Labor Organizations (Unions) Business growth in the late 1800s

brought generally higher wages to American workers. Yet periodic unemployment and poor working conditions remained a fact of life for workers. In addition, employers held enormous power over the lives of their workers and could lower wages and fire employees at will.

Labor Organizations

To improve conditions, increasing numbers of American workers formed labor unions beginning in the late 1820s. As working conditions changed with industrialization, many more workers became interested in unions.

What is collective bargaining? Negotiating between union workers

and owners

Labor Organizations

Knights of Labor Founder: Terrence Powderly Characteristics

Skilled/unskilled workers, women and African Americans

Reforms:○ 8 hour work day○ End child labor○ Equal opportunities for women

Labor Organizations

American Federation of Labor (AFL) Founder: Samuel Gompers Characteristics

Collection of unions and skilled workers in similar trades

Reforms:○ Higher wages○ Better working hours○ Better working conditions

Labor Organizations

International Ladies’ Garment Workers Union (ILGWU)

Founder: Samuel Gompers Characteristics

Workers in cloth manufacturing industrySweat shops

Worked with AFL

Triangle Shirtwaist Factory Fire

Labor Conflict

If collective bargaining failed, labor unions often used strikes, or work stoppages, to achieve their aims. Strikes sometimes ended in union victories; often, however, they led to violence as business owners sought state and even federal support to end walkouts.

Labor Conflict

ConflictGreat Railroad Strike

What happened?Pay cutsTroops sent in to end strike

Who won?Union

Labor Conflict

ConflictHay Market Riot

What happened?Labor rally held by Chicago anarchistsFirst time violence is used

Who won?No clear cut winner

Labor Conflict

ConflictHomestead Strike

What happened?strike at Carnegie Steel plant to protest a

wage cut Who won?

Management – 75% of workers lose jobs

Labor Conflict

Conflict?Pullman Strike

What happened?Government called in by management to put

down strike Who won?

Management