The Rise of an Industrial America

1. The Rise of an Industrial America 1870-1900

2. All in One Score • From 1880 – 1900 the US became the world’s leading industrial power • Despite experiencing its industrial revolution 30-50 years after the leading powers in Europe • By 1900 US manufacturing output exceeded that of:

3. Combined Great Britain France Germany

4. Why was the U.S. able to make such an impact in such a short period? Coal Iron Copper Lead Oil Timber

5. Why was the U.S. able to make such an impact in such a short period (Cont.)? Abundant Labor Supply = Immigrants

6. Why was the U.S. able to make such an impact in such a short period (Cont.)? Advanced Transportation Network – Canals and Railroads

7. Why was the U.S. able to make such an impact in such a short period (Cont.)? Huge and Continually Growing Natural Population

8. Why was the U.S. able to make such an impact in such a short period (Cont.)?

9. Why was the U.S. able to make such an impact in such a short period (Cont.)? • Labor saving technologies and inventions • Creation of US Patent System

10. Why was the U.S. able to make such an impact in such a short period (Cont.)? Business Friendly Government Policies Such As: TARIFF Subsidizing Low Corporate Taxes Laissez-Faire Policies

11. Why was the U.S. able to make such an impact in such a short period (Cont.)? Talented Businessmen

12. Talented Businessmen Such As: Andrew Carnegie JD Rockefeller Andrew Mellon JP Morgan

13. Andrew Carnegie • Carnegie Steel Company sold to JP Morgan in 1901 and it became US Steel. • Andrew Carnegie – the philanthropist $$ • Carnegie introduced the idea of Vertical Integration: • Controlling all steps in the production of your product – from raw materials to consumer distribution Step 1 Step 2 Step 3 Step 4 All Controlled by the company implementing vertical integration

14. Example: Hamburger

15. Steel Industry Contributions • Bessemer Process • Skyscrapers • Office buildings • Desperately needed residential spaces • Bridges • Subway systems

16. JD Rockefeller • Created and ran the country’s first official monopoly – the Standard Oil Company. • Introduced the concept of horizontal integration • Controlling all of the companies that engage in one specific step in the process of production • Vertical integration Step #4: “Owns the fast food restaurants that sell hamburgers to consumers.” • Horizontal integration is not concerned with steps 1-3, but wants to control all of the restaurants that sell hamburgers to consumers in Step #4.

17. What is the object of the game?

18. The object of the game is to become the wealthiest player through buying, renting and selling of property – TO ELIMINATE THE COMPETITION

19. Example: Hamburger Step #4: Owns the fast food restaurants that sell hamburgers to consumers

20. Company A = A Trust • What is a trust? • How do trusts operate? • What tactics are used? • Are trusts and monopolies the same thing? • Which still exists today – • Horizontal or Vertical Integration? • Specialization

21. Oil Industry Contributions • The monopoly – purpose to eliminate competition • Technological advances • Many companies follow Rockefeller’s lead • Sugar, Tobacco, and Meat packing industries

22. Government’s Response to establishment of trusts: • Laissez Faire Capitalism: • Government does not get involved in the “business of business.” What do aliens have to do with it you ask?

23. Government’s Response to creation of trusts: • The idea of government regulation of business was ALIEN to those living in the 19th century. HOWEVER, • Congress did pass the Sherman Anti-Trust Act in 1890. What did it do?: • Prohibited the creation of trusts, BUT too many loopholes existed. • It was similar to:

24. Sherman Antitrust Act 1890 Using this cute pup as your guard dog. Yeah we have a guard dog, but . . . . .

25. The Business of Railroads • 1865: 35,000 miles of railroad existed in the US • 1900: 193,000 miles of railroad existed in the US • What did the ability to transport goods nationwide encourage? • companies to mass produce • people to mass consume. • Building Railroads stimulated other industries.

26. Railroad Industry • Federal Land Grants: 80 RR companies received 170 million acres of land – WHY? • RR companies ended up with ½ the available land and after the RR was constructed the RR companies sold the land Outrageous Prices

27. Railroad Industry All these railroads – I just can’t compete! Now I have no money!!!!!!!!!!!!!!!!!1 • Business friendly government policies and federal land grants both provided TOO MUCH incentive to would be railroad companies. AS A RESULT: • TOO MANY RR lines were laid during the late 1800s • 1890s were also a time of economic crisis • TOO MANY RR lines combined with economic crisis led many RR companies into bankruptcy.

28. Railroad Industry Business Friendly Government Policies Federal Land Grants Too Many RRs Too Many RRs 1890s Economic Crisis Bankrupt Railroads

29. Railroad Industry • Banks consolidated bankrupt railroads.

30. Railroad Industry American Express Inc. • Angry Consumers & Farmers • Government Slow to Respond

31. Impacts of Industrialization • Emergence of Department Stores & Shopping • Sears, Marshall Fields, Macy’s, Montgomery Ward • Emergence of Packaged Goods • Increased Standard of Living • Created Sharper Class Divisions • Helped the Emergence of a Middle Class • Middle Management • Created an uneven distribution of wealth • 10% of the population controlled 90% of the wealth • 90% of the population shared 10% of the wealth • Horatio Alger Myth = “The Self-Made Man” emerges • Workers worked an average 10 hour day 6 days a week • Immigrants competed for jobs – consequence? • Working women – types of work • Textiles, garments. Food processing, secretaries, operators, typists • Labor Discontent • Skilled v Unskilled labor • Dangerous working conditions • Need for labor unions