Industrialization

The Rise of Industry

• Main Ideas: – Natural Resources and a large labor force allowed the US

to industrialize rapidly.– Inventions helped economic development– Free enterprise promoted industrialization

• Key Terms: gross national product, laissez-faire, entrepreneur

• People and Inventions: Alexander Graham Bell, Thomas Edison, George Westinghouse, typewriter, telephone, phonograph, light bulb, car, airplane

The Rise of Industry

• Industry rapidly grew after the Civil War as millions of Americans left their farms to work in mines and factories.

• By 1914 the GNP was eight times greater than at the end of the Civil War.

• Natural resources included: timber, copper, coal, and iron.

• The population nearly tripled during this time period, assuring a large workforce.

New Inventions

• Bell invents the telephone in 1876, revolutionizing business and personal communication

• Edison (called an invention factory) invented the light bulb (1879), phonograph (1877), and motion pictures, among other things

• Westinghouse made better generators and a way to distribute electricity

• Other inventions include: automobile (1893) typewriter (1873), and airplane (1903)

Free Enterprise

• Laissez-faire – a French phrase meaning “let the people do as they choose.”

• Free Enterprise depends on the government limiting its involvement in trade and letting the market (supply and demand) regulate wages and prices.

• Entrepreneur – a person who risks their own money to organize and run a business.

The RailroadsLinking the Nation

• Main Idea: After the Civil War, railroads sped up the nation’s industrialization and linked the country together.

• Key Terms: time zone• People and Events: Pacific Railway Act,

Grenville Dodge, Leland Stanford, Cornelius Vanderbilt

Linking the Nation, Continued

• The Pacific Railway Act of 1862 awarded the building of the transcontinental railroad to two corporations, The Union Pacific and Central Pacific Railroads.

• The Union Pacific built east to west and the main workers were CW veterans, Irish immigrants, farmers, cooks, and ex-convicts under the direction of Grenville Dodge. They faced mountain blizzards, desert heat, and angry Native Americans.

Linking the Nation, Continued

• The Central Pacific workers built west to east and were made up largely of Chinese Immigrants. All of the supplies had to be shipped by sea from the eastern US.

• Leland Stanford made his fortune investing in the Central Pacific Railroad and later was governor of California and founded Stanford University.

Linking the Nation, Continued

• Time Zones: Before the 1880s each community set its clocks by the sun’s position at noon.

• This led to many different time zones that made it difficult and sometimes dangerous to schedule trains.

• The American Railway Association is responsible for our current system of 4 time zones.

The RailroadsRobber Barons

• Main idea: the government helped finance railroad construction, but its method led to corruption.

• Some railroad owners manipulated the government programs through bribery and cheating their investors. They became known as “Robber Barons.”

Big Business

• Main Idea: Business people like Andrew Carnegie and John Rockefeller developed new ways to expand business

• Key terms: – Corporation– Stock– Monopoly– Trust

The Rise of Big Business

• Big business would not have been possible without corporations.

• Big corporations could produce more goods cheaply and efficiently.– Corporation: an organization owned by many

people but treated like a single person (corpus - body).

– Stock: shares of ownership

Consolidating IndustryCompetition

• Competition with large corporations led to many small companies going out of business (compare to modern “big box” stores putting local merchants out of business)

• Many business leaders didn’t like competition because it drove prices down.

• By the 1870s competition had reduced many industries to a few large and efficient corporations.

Consolidating Industry

• Andrew Carnegie and Steel– Realized money could be made by investing in

companies that made railroad bridges, sleeping cars, and locomotives

– Learned of a cheap, efficient method for making high quality steel and opened a factory in Pittsburgh

– Made a fortune

Consolidating Industry

• John D. Rockefeller and Standard Oil– Instead of drilling for oil, he decided to build oil

refineries.– By 1870 his company (Standard Oil) was the

nation’s largest oil refiner.– He bought out his competition until he had a

monopoly (mono=one – a monopoly is when a single company has control of an entire market or resource).

Consolidating IndustryNew Business Organizations

• Many Americans feared monopolies because a monopoly had no competition to keep prices low or quality high.

• Laws were passed to try to prevent monopolies from forming.

• Corporations got around those laws by forming trusts ( a trust is a way for one person to manage another person’s property).

Consolidating IndustryInvestment Banking

• Another increase in the size of corporations began in mid-1890s when investment bankers began to help put new holding companies together (holding company – owns stock of many companies).

• J.P. Morgan was one of these bankers. J.P. Morgan Chase is a modern bank that has its roots in this time period.

Big BusinessSelling the Product

• American companies began making so many different products it was difficult to continue to have specialty stores.

• Departments stores were developed that could sell many types of products under one roof.

• Mail order retailers like Sears and Montgomery Ward supplied the small towns on the frontier.

Unions

• Low wages, long hours, and dangerous working conditions were common in big industries.

• This led workers to band together to fight for better conditions but had little bargaining power against big companies.

Unions, continued

• Skilled workers formed trade unions • Employers opposed unions because they felt

they were conspiracies that interfered with property rights.

• Companies used many techniques to fight unionization including: making employees sign contracts promising not to join a union, firing union organizers, lockouts and blacklisting union members.

New Unions

• AFL – the American Federation of Labor: made up of several trade unions.

• IWW – Industrial Workers of the World• Women’s Unions – International Ladies’

Garment Workers Union and Women’s Trade Union League

Working Women

• Women worked in one of three areas:– Domestic service– Teachers, nurses, sales clerks – Industrial workersWomen were paid less than men, even if doing the

exact same job. It was assumed a woman had a man helping to support her.