Section 1: Building an Industrial Empire

Conditions favoring industrial growth1. By the late 1800’s, the US was outproducing its European rivals2. US natural resources were the key factor

a. Vast supplies of: coal, iron ore, oil, timber and waterpower3. Growing number of workers was a factor as well

c. Many new immigrants were coming to Americad. Rushing to cities, mines and factories

4. With the growing number of people to work, it also meant more of a market for goods and services as well

5. Investors were then interested in investing money in railroads, mines and factoriesa. They figured they could get rich doing thisb. Formed corporations – a business owned by many investors rather than a single owner or a small number of partnersc. The investors then purchased stocks, or shares, in the businessd. The investors then earned dividends, or payments, that were based on the company’s profits

1. The better a company did, the more money stockholders got back

Continue Section 1…6. All levels of government: local, state and federal, stimulated the economics growth by providing money, land and encouragement

a. Protected private property and encouraged individual enterprise

b. Became known as a policy of laissez faire – “let the people do as they choose”

1. Business should operate with as little government regulation or interference as possible

7. Entrepreneurs – people who organized and managed businesses and took the financial risks

a. Many flourished during this time periodb. They were called captains of industry by some and robber

barons by others1. Some used illegal or improper methods to get ahead

Carnegie and Steel1. Steel becomes a huge and important industry from the 1870s on

a. Because it was harder and more lasting than iron, people began to use it for everythingb. Longer bridges, taller buildings, stronger railroad tracks, better plows, more efficient machines

Continue Section 1…2. Bessemer process

a. Launches the steel industryb. Done by blowing a blast of air through molten iron burning off impurities in the metal; results in strong, high-quality, flexible steel.

3. Andrew Carnegiea. Born in Scotland and comes to the US at age 12c. Takes a job in a textile mill near Pittsburgh, then works as a telegraphere. By 24, he’s a railroad supervisorf. Becomes wealthy from good investments and decides to enter the steel business in 1872g. Is able to bring in good people with higher pay but he works them very hardh. Kept worker’s wages low and their hours longi. Got lots of contracts: Brooklyn Bridge, the Washington Monument and

the New York City “El”j. By 1900, he’s producing more steel than all of Great Britaink. In 1901, he sells his company for almost $500 million dollars (making his personal fortune worth $75 billion to $279.8 billion in today’s money, to a corporation set up by J.P. Morgan (who then combines Carnegie and the other steel companies into US Steel which controls 3/5 of the nation’s steel)

Continue Section 1…Rockefeller and Oil

1. In the early 1800s, petroleum was seen as a bothersome and stinking fluid that would bubble from the ground2. Some people would scoop it up, bottle it and sell it as medicine3. Others would use it to burn for light or to lubricate the wheels of their wagon

4. Emergence of the oil industrya. In 1859, Edwin Drake dilled his first oil well in Titusville, PA

1. Scientists had previously learned how to create kerosene out of petroleum to use as lamp fuel

b. This would start the first oil boom1. Drake would end up bankrupt and poor until the PA

legislature decided to give him a $1500 a year annuity.c. World market develops for oil and its by-products

1. Kerosene, wax, lubricating oil, paint and varnishd. Entrepreneurs scrambled to drill wells, build storage tanks, build

pipelines and refineries – places where crude oil is processed into useful products.

5. Rockefeller enters the business in 1863 when he and 4 partners built a refinery in Cleveland, Ohio

a. 2 years later he bought out all but 1 partner, built a second refinery and began to expand

6. In 1870, he formed Standard Oil of Ohio which became one of the most powerful corporations ever in America.

Continue Section 1…Rockefeller’s Business Practices

1. Considered competition wasteful and small businesses inefficient2. Decided on business consolidation – uniting all companies in the same industry to create larger and more powerful businesses3. Set out to eliminate and take over weaker competitors4. Demanded efficiency, cost cutting and the latest technologies5. Expanded into all areas of the oil business

a. Bought pipelines, warehouses, storage tanks, railroad cars and more refineriesb. Owned chemical plants that made acids used in refining; built his own factory to make oil barrels and owned timberland to provide wood for themc. Vertical integration – Expansion into all parts of the industry, from raw materials to the sale of finished products

6. Marketed high-quality products at low prices; drove other competitors out of business; became almost a monopoly

a. By 1879, Standard Oil controlled 90% of the oil-refinery businessb. Set up a new form of business organization called a trust – where the shareholders of many companies turn in their shares of stock in exchange for new shares in the trust; a board then controls the policies of all the companies brought together in the trustc. Rockefeller led the board, gave him lots of power

Continue Section 1…A New Oil Boom

1. Rockefeller retired in 1897 with a fortune of $900 million (between $392 billion and $663.4 billion in today’s dollars)2. New uses of petroleum were emerging

a. Gasoline became a major product with the beginnings of Henry Ford’s automobiles

2. New oil discoveries were being madea. Anthony Lucas began drilling on a hill called Spindletop near Beaumont, Texasb. On January 10, 1901, the well erupted with a flow that shot 175 feet into the air and took 9 days to bring it under controlc. By the end of the year, 440 wells were pumping oil thered. Other wells were drilled in Texas and Oklahoma e. By the early 1900s, oil stood toe to toe in importance with steel in the US economy

Section 2: Linking the Nation by Rail

Movement: Transportation Revolution1. At the end of the Civil War, the US had about 35,000 miles of track; by 1916, it had exceeded 250,000 miles2. Offered year round, dependable service, dependable schedule; could go where canals and rivers couldn’t go 3. Products from communities could reach a national market4. Encouraged a revolution in industry

a. Trains could carry raw materials to factories at distant locations and finished goods throughout the nationb. Encouraged mass production – making goods in large quantities; and mass consumption – the use of goods and services by large numbers of people

Consolidating the Railroad1. To avoid cooperating with competing lines, railroad companies adopted conflicting schedules, built separate train stations, and used different gauges – the distance between the rails, could range from 4 feet, 8.5 inches to 6 feet2. Trains with wheels of one gauge couldn’t run on the tracks of another gauge

Continue Section 2…

3. Larger railroads took over smaller one like Standard Oil did with other oil companies4. As railroads consolidated, they adopted standard schedules, signals, equipment and gauges

a. Created a number of trunk and feeder linesb. Trunk lines – a major railroad line that linked important cities: New York City to Chicago; the most important linesc. Feeder lines – smaller railroads that fed into the trunk lines

Continued Growth1. The volume of people and goods traveling by rail grew steadily2. Stronger and faster locomotives pulled refrigerator, dining and plush sleeping cars

Cornelius Vanderbilt1. Became a millionaire in shipping 2. 1867, took over the New York Central Railroad, which merged with other lines to provide a trunk line from New York City to Buffalo3. When he died in 1877, his company operated over 4500 miles of track going all the way to Chicago

a. Worth $143 billion to $178.4 billion in today’s money

Continue Section 2…Problems of Competition

1. Competition for traffic pushed owners to offer free passes for large shippers and low rates on heavy freight and long hauls2. The offered customer rebates (or returns of part of the normal fee)

a. For companies like Standard Oil who demanded them for being a large volume business

3. Railroads sought to limit competition by forming pools – an arrangement where several companies agree to divide the available business in an area among themselves

a. They would then raise prices in the areas they controlled

4. Jay Gould and Jim Fisk (both very wealthy) bought and sold lots of railroad companies.5. JP Morgan (another extremely wealthy individual) saw the problems with

competition as being wasteful and dangerousa. He helped more than a half dozen railroad lines out of financial troublesand forced them to give control to his hand picked trusteesb. Consolidated railroads to reduce competition, cut costs, set rates, eliminated rebates and issued new stock to raise money

Section 3: The Business of InventionA Flurry of Inventions

1. March 10, 1876, Alexander Graham Bell sent the first telephone message2. In 1878, a telephone was installed in the White House3. By 1915, there were 10 million telephones in the United States

a. By then, Bell had consolidated hundreds of local telephone systems into the American Telephone and Telegraph Company or AT&Tb. This gave the nation a centralized communications system

The Wizard of Menlo Park1. Thomas Edison worked up to 20 hours a day in his lab in Menlo Park, NJ2. In 1877, he invented a machine that recorded sound on tinfoil wrapped around a rotating cylinder3. Also created a motion picture machine

a. Presented the first motion-picture show in New York City in 18964. 1879, he created the electric light bulb

a. He then devised a system of generating stations, meters and overhead wires to produce and carry electricity to homes and businessesb. JP Morgan helped back him when he formed the Edison Illuminating Company and built a power station in NYCc. September 4, 1882, he threw a switch and lighted a number of NYC buildings

Continue Section 3…5. By 1900, there were 2,774 stations powering some 2,000,000 electric lights around the US6. George Westinghouse and Nicola Tesla added more innovations to electricity7. Electricity began to pull trolley cars and railroads; the first subway beneath city streets and lifted elevators to the tops of the skyscrapers

New Forms of Transportation1. Henry Ford was a young engineer at Edison’s Detroit power company2. He was experimenting with a gasoline powered engine to power a horseless carriage; Edison pushed him to keep working on it

a. Ransom E. Olds was another person working to develop the gasoline engine

3. Ford opened the Ford Motor Company in 1903a. He wanted to build a car that could be produced cheaply and sold at a low priceb. Spring of 1908, Ford introduces the Model T for $850

a. By 1914, sales reached 248,000 and it was selling for $490c. Low costs were due to the design: no frills, no options, standard car, blackd. The assembly line – a row of workers and machines along which work is passed until the final product is put together

a. They could put a whole car together in 93 minutes

Continue Section 3…4. The airplane

a. 2 Ohio bicycle mechanics, Orville and Wilbur Wright developed a heavier than air flying machine using the gasoline engine that was designed by the auto makersb. On Dec. 17, 1903, they took flight at Kitty Hawk in North Carolina at the sand dunes for 12 seconds to a distance of 120 feet

Section 4: The SellersIndustries and companies need to compete for business; marketing – selling a product or service. Consumers – the buying public, were bombarded with advertisements, special deals and gimmicks. The goal was to convince consumers to buy their products, beat the competitions and conquer the marketplace.

Growth of Advertising1. In 1867, businesses spent $50 million on advertising, by 1910, they were spending $1 billion2. Growth of magazine and newspaper readership helped to reach millions of people

a. In 1860, there were some 387 daily newspapers, by 1914, there were over 2,500 daily newspapers and nearly 14,000 weekly newspapers; these reached some 73,000,000 readers (and potential consumers)

3. Before the rise of advertising, if you wanted something, you went in a store and asked for that item; with advertising, people were buying specific brands because they’d heard or seen an advertisement

What are some of the ads you recognize? How have they changed? How are ads marketed today?

Continue Section 4…Retailing

1. Manufacturers produced huge quantities of goods, but most consumers only need one or a couple at a time; so few sold directly to individual consumers

a. They sold to retailers – those who sold goods directly to consumers in small quantities

2. Retailers included: door to door salespersons, push-cart peddlers who sold items on the street and shopkeepers

a. General stores in little towns sold a little of everything: from plows to foodb. In towns and shops, there were a wide variety of shops to choose from

a. These shops would specialize in one type of merchandise3. Department stores

a. 1862 – Alexander D. Stewart opened Stewart’s Cast Iron Palace in New York Cityb. Followed by: John Wanamaker in Philly, R.H. Macy in New York City and Marshall Field in Chicagoc. Made a wide selection of goods available in one location; many used advertisements

4. Chain storesa. Chain store – two or more stores under the same ownership and selling the same line of products

Continue Section 4… b. The first chain store was the Great Atlantic & Pacific Tea Company

(became known as the A & P); opened in 1859 and sold only teaa. As they started more stores, they added grocery itemsb. Had 67 stores by 1876 and 1,000 by 1915

c. F.W. Woolworth’s Five and Ten Cent chain started in 1879a. By 1900 had 59 stores with yearly sales of $1,000,000 (after early failures)

d. 1916 – Piggly Wiggly chain was started in Memphis, Tennessee by Clarence Saunders

a. Self-service instead of having clerks in each department or counter; they then brought the items to a check-out line to pay for them

5. Mail Ordera. Aaron Montgomery Ward noticed that rural people had little chance to shop in stores, so he started a service to allow people to shop by mail

a. In 1872, he sent out a one sheet price listb. By 1884, his Montgomery Ward catalog was 240 pages and offered almost 10,000 different items

b. Richard Sears saw the same opportunitiesa. Started with watches and jewelry, then expanded

Continue Section 4… b. In 1893, Sears teamed with Alvah C. Roebuck to found Sears, Roebuck and Company in Chicagoc. Got a huge boost with the Rural Free Delivery Service that the US Post Office startedd. By the early 1900s, they were the world’s largest mail-order retailer, distributing 6 million catalogs a year each with 500 pages

c. Wards and Sears would eventually add chain of department stores to supplement the mail order business; bringing together 3 retail ideas: mail order, chain stores and department stores

Section 5: Organizing WorkersConditions in the Workplace

1. Into the 1900s, workers still worked 10 hour days, 6 days a weeka. Skilled labor earned $12 a weekb. Unskilled labor about $6c. Few holidays or vacationsd. Easy to replace workers (workers exceeded jobs available)e. Few safety standards in factories, mines and millsf. Job-related accidents and diseases killed many, men, women and kidsg. 20% of women over 16 (5.3 million) and 1.8 million children worked for wagesh. Men earned more than women, adults more than children and native-born more than foreign born; Protestants earned more than Catholics and Jews; whites more than non-whitesi. Blacked worked in the least desirable jobs; last hired and first fired and earned less than almost everyone, regardless of skill

Continue Section 5… The Growth of Labor Unions

1. Were small and weak during most of the 1800s; difficult to organize workers of different skills and backgrounds

2. Rather than forming a union for all railroad workers, they were organized by category or department3. Most employers actively opposed unions4. The Knights of Labor

a. Began as a secret society in 1869 by garment worker Uriah Stevensb. 1879, Terence Powderly took over, ended secrecy and opened it to

all workersc. Accepted women as well and had 60,000 black members at its peakd. Called for higher wages, an 8 hour day, compensation – payment, for work related injuries and the end to child labor (Powderly also wanted

to see worker-run factories, mines and railroads)e. Disliked strikes – work stoppage in order to force an employer to

agree to worker demandsa. When a series of strikes failed, tens of thousands of

workers left the union; by 1890 membership fell from 730,000 to 100,000

b. A few years later the Knights of Labor dissolved

Continue Section 5… 5. The American Federation of Labor

a. Founded in 1896 as an alliance of national craft unions: cigar makers, carpenters, typesetters, machinists and othersb. By, the 1890s, the AFL was the most important

a. Membership went from 140,000 in 1886 to over 2,000,000 by 1914b. Included almost 1/3 of the nation’s skilled workersc. The vast majority of workers though still remained unorganized

6. Women wage earnersa. Very few allowed women membersb. Women worked as hard as men, under hazardous conditions, at less payc. Garment-making and food-processing industries were good organizing areas where women took the lead in forming their own organizationsd. WTUL – Women’s Trade Union League

a. Formed by Mary Kenny O’Sullivanb. Led at one time by President Rose Schneiderman

1. Also organized the ILGWU – International Ladies’ Garment Worker’s Union2. Mostly Jewish immigrants 3. Lead a strike in 1909-1910 in New York City’s garment industry where 20,000 workers walked off their jobs

Continue Section 5… Labor Unrest

1. Most employers fought the union movementa. They fired those that joined unionsb. To break up strikes, they hired scabs – non-union workers who take over strikers’ jobsc. Strikes many times turned violent

a. Railroad strike of 1877 happened when railroads tried to lower worker’s wages

a. Involved over 80,000 workers and affected 500,000 other workersb. Affect 2/3 of the nation’s railroads from WV to CAc. Last 2 weeks and left 100 dead and the President (Hayes) to call in federal troops to battle the workers

b. 1892 Carnegie Steel Company plant strike in Homestead, PAa. Lowered wages for workers by nearly 20%b. Workers walked off the job, were locked out and

scabs were hired.c. Pinkerton detectives were hired to drive away strikersd. After a battle, 10 workers and 3 detectives were deade. Governor of PA called in the state militiaf. Company reopened and strikers gave up