The Rise of Industry

1. The Rise of Industry

2. Overview • Perfect Storm – cheap labor, resources, capital, tech • RR’s & new tech spur increase in steel production • The dominance of corporations • Trusts, monopolies • “Robber Barons” amass big big $ • Farmers & workers – declining opportunities

3. Overview • Laissez-Faire • Social Darwinism, Gospel of Wealth, Horatio Alger • Growing discontent • Populism, unions & alternative economic theories

4. Steel Production

6. Railroads • Gov’t subsidies – rampant corruption • Crédit Mobilier • RR corporations > consolidation • Transcontinental – “Chinamen” • States could not regulate interstate commerce > rate fixing > farmers appeal to fed gov. > Interstate Commerce Act • Time Zones

7. Inventors & Inventions • Samuel Morse • Transatlantic cable by 1866

8. Alexander Graham Bell 1876

9. Other Inventions

10. Thomas Edison • 1st modern research laboratory in NJ • Phonograph, light bulb, motion picture camera, dynamo > George Westinghouse – transformer to produce AC electricity (1885) > lighted cities, indoor appliances, etc.

11. Consolidation & Corruption – The Rise of Barons • Jay Gould – “watering stock” • RR’s gave rebates & kickbacks to big customers – raised rates on smaller customers • Panic of 1893 – JP Morgan buys up RR industry = more efficient/too much power? • Steel, Oil, other industries follow RR model > monopolies

12. Andrew Carnegie • Vertical Integration • Philanthropy • Carnegie Mills out-produced Britain by 1900 • Sold of to Morgan > US Steel Corp. • Controlled 3/5 of U.S. steel business

13. John D. Rockefeller • Standard Oil Trust • Tech & efficiency • Controlled 90% of US oil by 1881 • Horizontal Integration • Control of supply & price = $$$$$$$$$$$$

14. Failing Anti-Trust Movement • Grangers – farmers push for reforms but… • State reforms fail • Sherman Anti-Trust Act (1890) • Prohibited “trust…or conspiracy in restraint of trade” • U.S. v E.C. Knight Co. • Sherman ATA only applied to commerce not manufacturing

15. Laissez Faire Capitalism • Little gov’t regulation • Violation of economic, scientific, religious principles • Low taxes • Free markets • Adam Smith • Wealth of Nations • The Invisible Hand (Competition)

16. Social Darwinism • Based on theory of natural selection • Herbert Spencer • Natural selection & survival of the fittest applied to economy • Concentration of wealth is natural • Help for lower classes unnatural

17. Gospel of Wealth • Religious justification for polarization of wealth • Protestant work ethic • Rockefeller – “God gave me riches” • Rev. Russel Conwell – Everyone has a duty to become rich • Carnegie – Wealthy have responsibility to create civic projects

18. Horatio Alger Myth • By 1890 10% controlled 90% of the wealth • But… Alger’s novels convinced some that honesty & hard work would lead to riches = Anomalous…upward mobility a myth

19. Labor Discontent • Farmers = The Grange, Granger Laws, Populist Party • Urban & RR workers = trade & industrial unions • Middle-class = progressive movement

20. Competing Economic Theories • Laissez Faire Capitalism – • Limited Cap – • Socialism - • Communism –

21. Other Critiques