The Incorporation of America

1. The Incorporation of America Special Thanks to Ms. Susan M. PojerHorace Greeley HS, Chappaqua, NY, & Lara Boles, Parkway West

2. After the Civil War, the United States was still largely agricultural. • By the 1920’s, a mere 60 years later, it had become the leading industrial power in the world! • Three Main Factors Contributed to this Industrial Boom: • wealth of natural resources • explosions of inventions • growing urban population (provided cheap labor and markets for new products) The Expansion of Industry

3. In 1859, Edwin L. Drake used a steam engine to drill for oil near Titusville, PA. This removed oil from beneath the earth’s surface and started an oil boom throughout the nation. • Entrepreneurs began to transform the oil into kerosene (lamps/heating fuel) • Gasoline became the most important product of oil after the automobile became popular. The Expansion of Industry - Oil

4. In 1887, prospectors discovered iron ore in Minnesota. • The Bessemer Process was developed by Henry Bessemer and William Kelly around 1850. • Used a technique which involved injecting air into molten iron to remove the carbon and other impurities to transform it into steel • This made steel stronger at a lower cost – better to withstand pressure, hold, and be more secure and durable • By 1880, manufacturers in the U.S. were using this method to produce over 90% of the nations steel. The Expansion of Industry- The Bessemer Steel Process

5. Steel Makes Farming Easier • The Increase in farming efficiency means less farm workers are needed • This sends the nation’s laborers to the cities to look for jobs • A new class of Americans is created: City-dwelling working class

6. Railroads were the biggest customer for steel. • Steel made innovative construction possible • Brooklyn Bridge – completed 1883 • Home Insurance Building – in Chicago • Skyscrapers – invention of elevators and internal steel skeletons • Growth of Cities • Reasons: job/immigration • Effect: more workers/more people to sell goods The Expansion of Industry- New Uses For Steel

7. Andrew Carnegie • Gets start in RRs – enters Steel Market in 1873. By 1899 – manufactures more steel than all in GB combined

8. Andrew Carnegie • Reasons for success: • Management practices – searched for cheapest ways to make products • Incorporated new techniques, technology to improve quality • Sought most talented people – offered stock and encouraged competition among workers • Tried to control industry – used vertical integration • Bought out all his suppliers • Attempted horizontal integration – controlled up to 80% of steel industry

9. Andrew Carnegie “To sum up, do not drink, do not smoke, do not indorse, do not speculate. Concentrate, perform more than your prescribed duties; be strictly honest in word and deed. And may all who read these words be just as happy and prosperous and long lived as I wish them all to be. And let this great fact always cheer them: It is impossible for any one to be cheated out of an honorable career unless he cheats himself.” – Carnegie

10. Carnegie’s Philanthropy • "The man who dies rich dies disgraced," • You should be able to make as much money as you want if you give back • created 2,800 free libraries worldwide. • Carnegie Hall and other arts venues – money still supports them today • Carnegie Mellon University

11. Alternate Current Nikola Tesla George Westinghouse

12. Alternate Current Westinghouse Lamp ad

13. Thomas Alva Edison “Wizard of Menlo Park”

14. The Light Bulb

15. The Phonograph (1877)

16. The Ediphone or Dictaphone

17. The Motion Picture Camera

18. Thomas EDISON MANY MANY INVENTIONS! • Direct Current vs Alternating Current • Why is the invention of the light bulb so important? • Allows factories to be open all night long. • Invention of the “3rd Shift” • Another invention that continues the change in America from the Farm to the City

19. The Airplane Wilbur Wright Orville Wright Kitty Hawk, NC – December 17, 1903

20. Inventor Christopher Sholes Alexander Graham Bell George Westinghouse Orville & Wilbur Wright George Eastman (Kodak) Thomas Edison Invention • Typewriter (1867) • Telephone (1876) • Railroad air brake (1868) • Airplane (successful flight 12/17/1903) • Camera (1888) • Light Bulb Inventors and Their Inventions

21. Causes of Rapid Industrialization • Unskilled & semi-skilled labor in abundance. • Abundant capital. • New, talented group of businessmen [entrepreneurs] and advisors. • Market growing as US population increased. • Government willing to help at all levels to stimulate economic growth. • Abundant natural resources.

22. New Business Culture • Laissez Fairethe ideology of the Industrial Age. • Individual as a moral and economic ideal. • Individuals should compete freely in the marketplace. • The market was not man-made or invented. • No room for government in the market!

23. “Free and unfettered competition breeds the best product at the lowest price.” -Monopolies are bad in an economy. -However, too many laws, tariffs, and regulation choke business. -Therefore it is up to the government to ensure that monopolies do not exist, but not interfere too much into the economy.

24. Consolidation through “Merger” • Stock Market buyout of a public business • Use of intimidation or shady business tactics to ruin the business of a private company • Sometimes Mergers are executed by “Holding Companies” –a company whose sole purpose is to purchase stock in other companies How does Business get “BIG?”

25. How does business get “BIG?” • Consolidation through formation of “Trusts” • -Participating companies would turn their stock over to a group of “trustees” (people who ran the separate companies as one large corporation) • -Each company would then split the profits made by the entire Trust.

26. Negative term for Businessmen and bankers who: • Dominated their respective industries • Obtained huge personal fortunes, as a direct result of unfair business practicesor undue government influence. Robber Barons How to be a “Robber Baron” -Achieving great Personal wealth -Changing the economic landscape by creating and using new technology -Conflict with the government over unfair monopolies (anti-trust suits) -Optional Fourth Criteria: Sell your company and become a Philanthropist Political Cartoon Critical of Andrew Carnegie’s Philanthropy

27. New Business Culture:“The American Dream?” • Protestant (Puritan) “Work Ethic” • Horatio Alger [100+ novels] Is the idea of the “self-made man” a MYTH??

28. New Type of Business Entities • Pool1887Interstate Commerce ActInterstate Commerce Commission created. • Trust John D. Rockefeller • Standard Oil Co.

29. Standard Oil Co.

30. John D. Rockefeller • Standard Oil • employed tactics that made him a legend. Imposing his own discipline on the industry, he bought up rivals, modernized plants and organized the oil industry on an enduring basis • Gave away over $500 million • Rockefeller foundation • University of Chicago

31. John D. Rockefeller • Rockefeller had a droll, genial personality that masked supreme cunning and formidable self-control. • colluded with railroads to gain preferential freight rates, secretly owned rivals, bribed state legislators and engaged in industrial espionage. • Large profits – didn’t pass along to workers • Low wages and undercut competitors • After controlling market hiked prices back up • Gained rebates and kickbacks from RR companies

32. New Type of Business Entities • Trust: • Horizontal Integration John D. Rockefeller • Vertical Integration: • Gustavus Swift  Meat-packing • Andrew Carnegie  U. S. Steel

33. New Type of Business Entities

34. John Pierpont Morgan • Made his fortune in banking and financing • took over other people's businesses and hated competition. • Known for cut-throat business practices • wanted to absorb their competition by forming giant trusts and monopolies – felt price wars were ruining American economy • Would sell "watered," or over-valued, railroad stock to the public. When people found out their stocks were worth less than they thought, they sold them at a loss, and the railroad went bankrupt

35. New Financial Businessman The Broker: • J. Pierpont Morgan • Purchases Carnegie Steel---U.S. Steel • Combines Edison Electric (DC) with Westinghouse Electric (AC) to create---General Electric (GE)

36. Wall Street – 1867 & 1900

37. The Reorganization of Work Frederick W. Taylor The Principles of Scientific Management (1911)

38. The Reorganization of Work The Assembly Line

39. Model T Automobile Henry FordI want to pay my workers so that they can afford my product!

40. The Protectors of Our Industries

41. The ‘Bosses’ of the Senate

42. The ‘Robber Barons’ of the Past

44. Cornelius Vanderbilt • I have been insane on the subject of moneymaking all my life.—Cornelius VanderbiltYou have undertaken to cheat me. I won't sue you, for the law is too slow. I'll ruin you.—Cornelius Vanderbilt • Law? Who cares about the law. Hain't I got the power?—Comment alleged to have been made by Cornelius Vanderbilt, when warned that he might be violating the law

45. Cornelius [“Commodore”] Vanderbilt Can’t I do what I want with my money?

46. William Vanderbilt • The public be damned! • What do I care about the law? H’aint I got the power?

47. Regulating the Trusts 1877 Munn. v. IL 1886 Wabash, St. Louis & Pacific Railroad Company v. IL 1890 Sherman Antitrust Act • in “restraint of trade” • “rule of reason” loophole 1895 US v. E. C. Knight Co.

48. Relative Share of World Manufacturing

49. Modern ‘Robber Barons’??

50. Labor Movement • If business leaders could consolidate to become more powerful, why shouldn’t workers? • Common abuses by employers: (NO labor laws at this time) • 6 & 7 Day work week • 12 or more hours a day • No sick leave, no reimbursement for injuries sustained on the job, no protection against being unduly fired • In 1882 average of 675 workers KILLED EACH WEEK! • This is why UNIONS form: workers organize to act as one: Boycott, Arbitration, Strike Efforts to Fight “Robber Barons”