The Gilded Age The Rise of Industrial America, 1865 - 1900

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Transcript of The Gilded Age The Rise of Industrial America, 1865 - 1900

  • Slide 1
  • The Gilded Age The Rise of Industrial America, 1865 - 1900
  • Slide 2
  • U.S. emergence as an Industrial Power U.S. economy averaged growth rate of 4% a year Factors that lead to U.S. growth Abundance of natural resources Immigrants supply abundance of labor America becomes largest market in the world for industrialized goods Inventions of laborsaving technologies improve productivity Businesses benefited from friendly government policies that protected private property Talented entrepreneurs emerge with abilities to build and manage vast enterprises
  • Slide 3
  • The Business of Railroads The creation and expansion of the rail system was the single biggest factor in improving American industrial life Promotes growth of other industries Divides country into four time zones Created modern stock-holder corporation Also helped to create complex structures for finance, business management and regulation of competition Eastern Trunk lines Trunk line major route between large cities; smaller branch lines connected trunk lines with outlying towns Inefficiencies of Pre-Civil War built railroads reduced through consolidation Commodore Cornelius Vanderbilt used millions earned in steamboat business to merge local rail lines into New York Central Railroad (1867)
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  • The Business of Railroads Western Railroads Railroads play critical role in trans-Mississippi West Encouraged settlement of Great Plains Linked west and east to create national market Federal Land Grants Federal government gave huge subsidies to rail companies in form of loans and land grants 170 million acres given to railroads 3x more than given away under Homestead Act Government expected railroad to sell lands to help subsidize construction costs Also expected to increase the value of government lands along rail lines Negative consequences of subsidies Promoted hasty and poor construction Led to widespread corruption in all levels of government
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  • The Business of Railroads Transcontinental Railroads Began during Civil War to tie California with rest of Union Union Pacific built east from Omaha, NE Central Pacific built west from Sacramento, CA Thousands of Irish and Chinese laborers were backbone of construction crews Met at Promontory Point, UT driving of golden spike Before 1900, 4 other transcontinental rail lines were finished Northern Pacific Duluth, MN Seattle, WA Atchison, Topeka and Santa Fe Kansas City, MO Los Angeles, CA Southern Pacific New Orleans, LA Los Angeles, CA Great Northern St. Paul, MN Seattle, WA
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  • The Business of Railroads Competition and consolidation New technologies tend to be overbuilt True of railroads built in 1870s 80s Speculators went into railroad business to make quick profits by selling off assets and watering down stock Railroads began to offer reduced rates to favored customers (while getting kickbacks) and charging smaller customers exorbitant freight rates Panic of 1893 forced a quarter of all railroads into bankruptcy JP Morgan and other bankers quickly bought and consolidated many bankrupt railroads By 1900, there are 7 giant rail systems that control nearly 2/3 of nations rail lines Many people invested in railroads but often felt duped in the end Attempts to regulate railroads are ineffective until the creation of the Interstate Commerce Commission in the early 20 th century
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  • Industrial Empires This era is often called the 2 nd Industrial Revolution as economy shifts from textile, clothing and leather production to heavy industry The Steel Industry Bessemer process Henry Bessemer and William Kelly discovered that blasting air through molten iron produced high-quality steel Great Lakes region emerges as leading steel producer Andrew Carnegie shrewd Scottish immigrant who became a giant in steel industry Vertical monopoly controlling every stage of the industrial process from mining raw materials to transporting finished products U.S. Steel Corporation Carnegie retires and sells to JP Morgan First billion dollar company Employed 168,000 and controlled over 3/5 of worlds steel production
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  • Industrial Empires The Oil Industry First oil well drilled by Edwin Drake in 1859 in Pennsylvania Rockefeller and the Standard Oil Trust John D. Rockefeller founded Standard Oil in 1863 Increased size of company by applying latest technologies in oil refineries and efficient practices Also used extortion and undercutting competition to force rivals to sell out By 1881, Standard Oil Trust controlled 90% of oil refinery business Horizontal Monopoly control of one segment of a specific industry Rockefeller created Standard Trust to bring former competitors under his control Controlled supply and demand to increase profits and make him very wealthy At time of retirement, Rockefeller worth over $900 million Many industries emulate Rockefeller and create trusts to maximize their profits Sugar, tobacco, leather, meat
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  • Industrial Empires Antitrust movement Trusts come under widespread scrutiny and attack in 1880s Middle class citizens feared trusts unchecked powers Old money interests resented increasing influence of the new rich After failing to curb trusts at the state level, reformed finally moved Congress to pass Sherman Antitrust Act (1890) Prohibited an contract, combination, in the form of trust or otherwise, or conspiracy in restrain to trade or commerce Too vaguely worded to stop development of trusts United States v. E.C. Knight Co. Sherman Antitrust Act only applies to commerce not manufacturing
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  • Laissez-Faire Capitalism Conservative economic theories Government economic intervention was a foreign idea in the late 19 th century Adam Smith government should not regulate business; it should be regulated by the invisible hand of laws of supply and demand Businesses would be motivated by their own self-interests to offer improved goods and services at low prices Laissez-faire used by industrialists to justify their methods of doing business Rise of monopolistic trusts seemed to undercut the competition needed for regulation; however still used to justify a lack of government involvement
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  • Laissez-Faire Capitalism Social Darwinism Darwins theory of natural selection played a role in economics English social philosopher Herbert Spencer was most influential social Darwinist Darwins ideas should be applied to the marketplace Concentration of wealth in the hands of the fit benefited the future of humanity Professor William Graham Sumner of Yale Help for the poor was misguided as it interfered with the laws of nature Help for the poor would only weaken the evolution of the human species
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  • Laissez-Faire Capitalism Gospel of wealth Many Americans found religion more convincing than social Darwinism to justify acquisition of wealth John D. Rockefeller a diligent application of the Protestant work ethic gave him wealth Reverend Russell Conwell everyone had a duty to become rich Andrew Carnegie the wealth had a God-given responsibility to carry out project of civic philanthropy for the benefit of society
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  • Technology and Inventions Inventions Samuel F.B. Morse telegraph (1844) Cyrus W. Fields Trans-Atlantic cable (1866) Alexander G. Bell telephone (1876) George Eastman camera (1888) Lewis E. Waterman fountain pen (1884) King Gillettes safety razor and blade (1995)
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  • Technology and Inventions Edison and Westinghouse Thomas Edison greatest inventor of 19 th century Established a laboratory in Menlo Park, NY More than a thousand patented inventions Phonograph Incandescent lamp Dynamo for generating electricity Mimeograph machine Motion picture camera George Westinghouse Held more than 400 patents Air brakes on railroad cars (1869) Transformer for producing high-voltage alternating current
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  • Technology and Inventions Marketing Consumer goods Increased factory output called for new methods of selling goods Department stores R.H. Macy New York Marshal Field Chicago Mail-order companies Sears-Roebuck Montgomery Ward Packaged food become a common item Kellogg and Post breakfast cereals Gustavus Swift refrigerated railcars Advertising Promoted a consumer economy Going shopping becomes a past time
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  • Impact of Industrialization The Concentration of Wealth The growth of American industry raised the standard of living for most Also created sharper economic and class divisions 1890 richest 10% controlled 90% of wealth The Expanding Middle class Growth of large corporations introduced need for thousands of white collar workers Industrialization created jobs for accountants, clerical workers and salesmen Also increased demand for services from doctors, lawyers, public employees and storekeepers Wage Earners 1900 2/3 of Americans worked for wages 10 hrs a day, 6 days a week Wages determined by laws of supply and demand Due to large available labor pool, most wages were barely above subsistence level David Ricardo iron law of wages Raising wages arbitrarily would only increase in the working population Increase of working population would in turn cause wages to fall This would create a Real wages ( income adjusted for inflation) rose steadily during late 19 th century 11 million of 12.5 million families in the US averages less than $380 a year
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  • Impact of Industrialization Working Women 20% of workforce in 1900 were female Only 5% of married women were in wor