Industry Comes of Age 1865 - 1900
An Empire of Rails • At the end of the Civil War the U.S. had 35,000 miles of railroad east of the Mississippi River • Mostly localized & built to protect local commerce
By 1900: 192,256 miles of track – more than all of Europe combined • Much of the new construction was west of the Mississippi
Railroad Construction 1830 - 1920 1911 - 1920 1901 - 1910 1891 - 1900 1881 - 1890 1871 - 1880 1861 - 1870 1851 - 1860 1841 - 1850 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
Expansion of Railroads • 1869, 30,000 miles of track • 1900, 200,000 miles of track • Distribution System to the marketplace • Symbol of growth
Civil War showed the value of long distance transportation • Ended the debate between North & South over construction
Pacific Railway Act (1862) • Congress authorizes the construction of the first transcontinental railway • The Union Pacific will build west from Omaha, Nebraska& the Central Pacific will build east from Sacramento, California
1863: Construction begins • Meet at Promontory Point, Utah, May 10, 1869 • Significance: • Linked continent • Stimulated western growth & Far East trade • Monumental achievement
Federal government, citing military & postal needs, funds the railroads through Land Grants & subsidies
Land is granted to Railroads at 20 squaremiles(640 acres)either side of railsin alternatesections (checkerboard) • 155,000,000 acres given to railroads
Millions of dollars received in loans from federal & state gov’t • Funding gives rise to Credit Mobilier Scandal
The “Big Four” • Leland Stanford, Collis Huntington, Charles Crocker, & Mark Hopkins • Built the Central Pacific railroad were never shown to be involved in scandal
Union Pacific built by many Irish immigrants (“paddies”) • Central Pacific built by many Chinese immigrants (“coolies”) • Four other Transcontinental Railroads built in 1800's
1883: Northern Pacific - Duluth, MN to Tacoma, WA • 1884: Atchison, Topeka & Santa Fe = Kansas - San Francisco • 1884: Southern Pacific - New Orleans to Los Angeles • 1893: Great Northern - Duluth to Seattle by James G. Hill (best)
New Technologies • Bessemer steel rails • Safer & more economical • Cornelius Vanderbilt replaces NY Central's iron rails
“Law! What do I care about the Law? Hain’t I got the power?” Cornelius Vanderbilt
Standard gauge of 4' 8½" rail increases efficiency • Air brakes & couplers increased safety • Refrigerator cars increased profits
Pullman Palace cars made traveling more comfortable • Telegraph, double tracking, block signals, & switches increase safety
Passengers have to change their clocks some 20 times in making a transcontinental trip • General Time Convention created in 1883, creating four standard time zones • Mandated by the federal Standard Time Act of 1918
The “Robber Barons” • Enormous profits lead to corruption & greed • Jay Gould, financier • Stock watering & other shady financial practices to inflate the value of stock to cheat out greater profits
Rate wars &control of routes • Charge more for shorter routes • Offer special rates to big shippers • Use rebates = secret reductions for certain customers
Inability of competitors to cooperate & results of huge debts led to the formation of “Pools” • Agreements to share profits in areas
Many railroads collapsed in the Panic of 1893 • Led to takeover by bankers • J.P. Morgan & a few others took over the railroad industry • Eliminated "wasteful competition"
Government Regulations • Some state legislatures, under pressure from farm groups such as the Grange, began to try to regulate the railroad monopolies
Wabash v. Illinois (1886) • Supreme Court decided that a state has no power to control interstate commerce within its own borders • Overturned Munn v. Illinois (“Granger Laws”)
Interstate Commerce Act (1887) • Prohibited rebates & pools, & forces railroads to publish all rates • Created the 5 man Interstate Commerce Commission
Does not act to give strong government control over business, but does set a precedent of government regulation
Quickwrite How and why did transportation developments spark economic growth during the period of 1860-1900 in the United States?
At the start of the Civil War the US lagged behind the European industrial nations Germany, France, GreatBritain
By 1900, US had vaulted into the lead, with a manufacturing output that exceeded the combined output of its three European rivals
Reasons for Expansion: • Abundant natural resources • coal, oil, iron, timber, water power
Government supported transportation network • Abundant source of cheap labor - native & immigrant • Massive internal market - largest free-trade market in the world
Government stability & the use of power to protect business through tariffs, but not to regulate • Encouraged foreign & domestic investors
Technological progress & invention • 1876: Alexander Graham Bell developed telephone • Thomas Edison developed electric light, phonograph, moving pictures, etc.
1790s 276 patents issued. • 1990s 1,119,220 patents issued. • Gave an inventor the right to make and sell an invention.
Rise of the Industrialists • “nouveau riche” • Social Darwinism • Herbert Spencer’s idea • “Millionaires a product of natural selection.” • Divine Providence • “Acres of Diamonds” lectures
Andrew Carnegie(1835 - 1919) • Sold railroad bonds to build Bessemer process steel plant in Pittsburgh in 1872
1880's converted the Homestead Steel plant to making steel beams for "Sullivan" skyscrapers • Making $40 million a year by 1900 - largest industrial company in the world
Vertical integration • Control all stages of development in production process • Improve efficiency • Eliminate middleman fees
The Gospel of Wealth • His wealth was given to him in "trust“ • Through his superior administrative abilities he should wisely give back to the community & "help those who would help themselves"
Gave away $350 million before his death to libraries & other philanthropic endeavors