Chapter 4

1. Chapter 4 U.S. History

2. Chapter 4 section 1 • Objectives: • 1. Identify the effects of expanding population on industry. • 2. Explain the effects of technological innovations such as the telephone and telegraph on American development.

3. entrepreneur – people who invest money in a product or enterprise in order to make a profit • protective tariff – taxes that would make imported goods cost more than those made locally • laissez faire – a policy which allowed businesses to operate under minimal government regulation • patent – a grant by the federal government giving an inventor the exclusive right to develop, use, and sell an invention for a set period of time

4. Thomas Edison – an inventor and creative genius who received more than 1,000 patents for new inventions • Bessemer process – a process for purifying iron resulting in strong, but lightweight, steel • suspension bridge – bridges in which the roadway is suspended by steel cables • time zone – twenty-four zones around the world, one for each hour of the day • mass production – systems that depended on machinery to turn out large numbers of products quickly and inexpensively

5. Chapter 4, Section 1 • Did You Know? • Alexander Graham Bell taught deaf children. He once told his family that he preferred to be remembered as a teacher rather than as the inventor of the telephone. Bell's father, Alexander Melville Bell, taught deaf-mutes to speak and wrote textbooks on correct speech. As boys, Alexander Graham Bell and his brothers helped their father in public demonstrations of Visible Speech, a code of symbols that indicated what position of the throat, tongue, and lips were used in making sounds.

6. The United States Industrializes • With the end of the Civil War, American industry expanded and millions of people left their farms to work in mines and factories. • By the early 1900s, the United States had become the world's leading industrial nation. By 1914 the gross national product (GNP), or total value of goods and services produced by a country, was eight times greater than at the end of the Civil War.

7. Water, timber, coal, iron, and copper are natural resources found in the United States that led to the country's industrial success. Transcontinental railroads increased industrialization by bringing settlers and miners to the West and moving resources to the factories in the East.

8. Petroleum could be turned into kerosene for lanterns and stoves. The demand for kerosene created the American oil industry. In 1859 Edwin Drake drilled the first oil well near Titusville, Pennsylvania. As oil production increased, so did economic expansion. • Between 1860 and 1910, the population of the United States tripled. This provided a large workforce and a greater demand for consumer goods.

9. How did the construction of the transcontinental railroad add to an increase in industrialization? • (The railroads brought settlers and miners to the West to work and moved the resources back to the factories in the East.)

10. Free Enterprise • Laissez-faire, a French phrase that means "let people do as they choose," was a popular idea in the late 1800s. Many Americans believed the government should not interfere with the economy. Instead, they wanted supply and demand to regulate prices and wages.

11. Entrepreneurs risked their capital to organize and run a business. In the late 1800s, entrepreneurs were attracted to manufacturing and transportation fields. As a result, hundreds of factories and thousands of miles of railroad were built.

12. Another important source of private capitol was Europe. Foreign investors saw more opportunity for profit in the U.S. than they did at home. • Why was Europe an important source of private capital? • (Foreign investors saw more opportunities for growth and profit in the U.S. than at home.)

13. Immigration and Industry A great many immigrants to the United States were pushed from their homelands by • political upheaval at home • religious discrimination • crop failures

14. Government's Role in Industrialism • In the late 1800s, state and federal government had a laissez-faire attitude by keeping taxes and spending low and by not imposing regulations on industry. The government did not control wages or prices. It adopted policies to help industry.

15. Since the early 1800s, the northeastern states and southern states debated on economic policies. Northerners wanted high tariffs to protect their industries from foreign competition. Southerners opposed tariffs to keep the cost of imported goods down. The Civil War ended the economic debate. After the south seceded, the Morrill Tariff was passed, which reversed years of declining tariffs.

16. The high tariffs contradicted laissez-faire policies and harmed many Americans. As the United States raised tariffs on foreign products, other countries responded by raising tariffs against American products. American companies who sold goods overseas, especially farmers, were hurt by these high tariffs.

17. Many business leaders and members of Congress felt tariffs were necessary to protect American industry against the already established European factories.

18. By the early 1900s, American industries were larger and highly competitive. Many business leaders began to encourage free trade, believing they could compete internationally and succeed. • What were some problems caused by high tariffs? • (When other countries placed high tariffs against American goods, it hurt American companies selling products overseas. Rural American farmers were especially hard hit by the tariffs, causing many of them to leave farms and take factory jobs.)

19. New Inventions (pages 102) • New inventions increased America's productivity, which in turn produced wealth and job opportunities. • In 1876 Scottish-American inventor Alexander Graham Bell invented the telephone. In 1877 Bell and his associates organized the Bell Telephone Company, which later became the American Telephone and Telegraph Company (AT&T).

20. Major Inventions of the 1800s

21. In the late 1800s, Thomas Alva Edison invented or perfected the phonograph, the light bulb, the electric generator, the dictaphone, the mimeograph, and the motion picture. In 1882 the Edison Electric Illuminating Co. became a new industry and began supplying electric power to customers in New York City.

22. The clothing industry increased productivity with the mid-1800 introduction of the Northrop automatic loom, the power driven sewing machine, and cloth cutters. • Mass production in the shoe industry allowed large factories to produce shoes more cheaply and efficiently than local cobblers. The savings were then passed on to the consumer.

23. How did technology cause the prices of shoes to go down? • (Large factories could mass-produce shoes more quickly and cheaply than local cobblers could, resulting in lower prices.)

24. Daily life changed dramatically as a result of new technologies. Morse’s telegraph gave rise to a communications revolution. The telephone debuted in 1876, the wireless telegraph in 1896. The Bessemer process, which purified iron to create steel, changed construction. Steel made skyscrapers and suspension bridges possible.

25. Railroads expanded. This led to the physical and economic growth of cities. Chicago, Atlanta, and Pittsburgh became important hubs.

27. America exported grain, steel, and textiles in huge amounts and became a world economic power. Mechanization of farming meant fewer farmers were needed to produce food. Many Americans moved to cities to find work.

28. In response, Congress set aside protected lands. Yellowstone Park was created in 1872. People began to raise concerns about the impact of industrializationon the environment.

29. Linking the Nation (pages 104) • After the Civil War, railroad construction dramatically expanded. In 1862 President Abraham Lincoln signed the Pacific Railway Act, which provided for the construction of a transcontinental railroad by the Union Pacific and Central Pacific railroad companies. To encourage rapid construction, the government offered each company land along its right of way.

30. In 1865 the Union Pacific, under engineer Grenville Dodge, pushed westward from Omaha, Nebraska. Weather, labor, money, and engineering problems hampered the project. The workers included Civil War veterans, Irish immigrants, farmers, miners, cooks, and ex-convicts. Camp life was dangerous.

31. Four merchants known as the "Big Four" invested in the Central Pacific Railroad. They each bought stock in the railroad and eventually made a fortune. One of them, Leland Stanford, became governor of California, founded Stanford University, and later became a United States senator.

32. Because of a labor shortage, the Central Pacific Railroad hired about 10,000 workers from China. • How did the government encourage rapid construction of the railroads? • (The government offered each railroad company land. Competition occurred between the two railroad companies as each tried to get as much land and money as possible.)

33. Railroads Spur Growth • Railroads encouraged the growth of American industry. They linked the nation and increased the size of markets. The railroad industry stimulated the economy by spending large amounts of money on steel, coal, and timber.

34. In the early 1800s, most railways served only local needs, resulting in many unconnected rail lines. Eastern capitalists wanted to create a single rail transit system from the many smaller railroads. Eventually seven systems controlled most of the railroad traffic.

35. The most famous railroad consolidator, Cornelius Vanderbilt, merged three short New York railroads to form the New York Central in 1869. He was the first to offer direct rail service from New York City to Chicago.

36. In 1883 rail service became safer and more reliable when the American Railway Association divided the country into four time zones, or regions, where the same time was kept.

37. Large integrated railroad systems provided increased efficiency, a decrease in time spent in long distance travel, and it united Americans from different regions.

38. What were the benefits of integrated railroad systems? • (Integrated railroad systems were equipped to shift cars from one section of the country to another and made long distance transportation quicker. It also helped unite people from different regions.)

39. Robber Barons • The wealth of railroad entrepreneurs led to accusations that they had acquired their wealth through illegal means. One of the entrepreneurs with the worst reputation was Jay Gould, who used information he obtained as a railroad owner to manipulate stock prices to his benefit.

40. Railroad investors realized they could make more money through land grants than by running a railroad, so many investors bribed members of Congress to vote for more land grants.

41. In 1872 corruption in the railroad system became public with the CréditMobilier scandal. Several stockholders of the Union Pacific set up the CréditMobilier, a construction company. The investors signed contracts with themselves. The company greatly overcharged Union Pacific, and the railroad agreed to pay the inflated bills.

42. When the railroad was completed, the investors had made a fortune, but the railroad was almost bankrupt. Congress agreed to give additional grants to the railroad after several members of Congress were given shares in Union Pacific at a price well below market value. An investigation implicated several members of Congress, including James Garfield, who later became president.

43. Not all railroad entrepreneurs were corrupt. James J. Hill built the Great Northern Railroad without any federal land grants or subsidies. It became the most successful transcontinental railroad and the only one not to go bankrupt.

44. What was the CréditMobilier scandal? • (Several stockholders of the Union Pacific set up the CréditMobilier, a construction company. The investors signed contracts with themselves. The company greatly overcharged Union Pacific and the railroad agreed to pay the inflated bills. When the railroad was completed, the investors had made a fortune, but the railroad was almost bankrupt. Congress agreed to give additional grants to the railroad after several members of Congress were given shares in Union Pacific at a price well below market value. An investigation implicated several members of Congress.)

45. Chapter 4, Section 2 • Big Business • Objectives: • 1. Analyze how large corporations came to dominate American business. • 2. Evaluate how Andrew Carnegie's innovations transformed the steel industry

46. Daily Question • What is an organization owned by many people but treated by law as though it were a single person?

47. Tycoons of Industry

48. The Rise of Big Business • By 1900 big business dominated the economy of the United States. • A corporation is an organization owned by many people but treated by law as though it was a single person. Stockholders, the people who own the corporation, own shares of ownership called stock. Issuing stock allows a corporation to raise large sums of money but spreads out the financial risk

49. All businesses have two kinds of costs. Fixed costs are the costs a company has to pay whether it is operating or not. Examples of fixed costs would be loans, mortgages, and taxes. Operating costs are costs that occur when a company is in operation. These costs include wages, shipping charges, and supplies.

50. Big corporations had an advantage over small manufacturing companies. Big corporations could produce more cheaply, and they could continue to operate even in poor economic times by cutting prices to increase sales. Many small businesses with high operating costs were forced out of business.