Chapter 12

1. Industrialization Chapter 12

2. The Rise of Industry • Natural Resources • an abundance of raw materials was one reason for the nations industrial success • timber, coal, iron and copper • Petroleum was in high demand because it could be turned into kerosene

3. Rise of Industry • Oil would be the 1st industry • Edwin Drake would drill the 1st oil well in Titusville, Pennsylvania in 1859

4. Rise of Industry • Between 1860 and 1910 population in U.S. tripled • Population growth stemmed from: large families and immigration • 1. better living conditions • 2. social and economic conditions in Europe and China convinced many to search for a better life • 3. escape oppressive governments and religious persecution • Between 1870 and 1910 more than 17 million arrived in U.S.

5. New Inventions Alexander Graham Bell1876 invites the telephone

6. New Inventions • Thomas Alva Edison • by the time he died he held 1,000 patents • 1877 invented the phonograph • 2 years later perfected the electric generator and light bulb • http://www.history.co.uk/shows/the-men-who-built-america/videos

8. New Inventions • George Westinghouse • an air brake system for railroads • the Alternating Current (AC) system

9. Rise of Industry • Thaddeus Lowe invented the ice machine • Gustavus Swift hired an engineer to develop a refrigerated railroad car

10. Rise of Industry The Northrop automatic loom allowed cloth to be made at a much faster rate

11. Rise of Industry • Cyrus Field laid a telegraph cable across the Atlantic Ocean in 1886

12. Rise of Industry • Another reason U.S. able to industrialized rapidly was its free enterprise system • Americans embraced the idea of laissez-faire • meaning " let people do as they choose ” • relies on supply and demand • Entrepreneurs - were attracted by the prospect of making money in manufacturing and transportation • Congress passed the Morrill Tariff which greatly increased tariff rates • other countries began to increase their tariffs on trade - which would hurt American trade

13. The Railroads The Transcontinental Railroad • railroad boom began in 1862, when President Lincoln signed the Pacific Railroad Act • 2 railroad corporations competed with one another and raced to obtain as much land and money as possible • The Union Pacific • engineer Grenville Dodge • pushed westward from Omaha, Nebraska in 1865 • The Central Pacific • engineer Theodore Judah • hired workers from China

14. Railroad • Completed in 4 yrs • Central pacific laid 688 miles of track • Union Pacific laid 1,086 miles of track • May 19, 1869 - Promontory Summit, Utah • Railroads linked nation and increased markets spurring American industrial growth • huge spending amount of money on steel, coal, timber, and other materials

16. Railroad • 7 railroad systems • Cornelius Vanderbuilt - most successful railroad consolidator • American Railway Association divided country into four time zones in 1883 • help with scheduling and prevent trains colliding with one another

17. Railroads • Government gave land grants to many railroad companies • railroads then sold the land to settlers, real estate companies, and other businesses to raise money to build the railroad • bribery and corruption would consume railroad entrepreneurs • Jay Gould most notorious corrupt railroad owner

18. Railroads • Railroad industry corruption became public in 1872 • Credit Mobilier scandal • construction company set up stockholders of the Union Pacific Railroad • Credit Mobilier overcharged Union Pacific http://www.history.co.uk/shows/the-men-who-built-america/videos/the-men-who-built-america-cornelius-vanderbil

19. Big Business • 1900 - vast complexes of factories, warehouses, and distribution facilities • Corporation ran big business • Stockholders – owners of corporation • Called this because they own shares of ownership called stocks

20. Big Business • Money raised went to new technologies to increase efficiency • could achieve economies of scale • Business has two kinds of costs - fixed and operating costs • fixed - costs a company has to pay whether or not it is operating • operating - costs that occur when running a company

21. Consolidating Industry • There was much competition between business and competitive prices cut into profits • Pools were organized to keep prices at a certain level • did not last long because they were not legally supported by Legislature • competition left only a few larger and highly efficient corporations

22. Consolidating Industry • Andrew Carnegie • invested in companies that served the railroad industry • Opened steel company in Pittsburgh in 1875 • used the vertical integration to help save money and enabled many companies to become even bigger

23. Consolidating Industry • John D Rockefeller • Used horizontal integration • Standard Oil - company he started • By 1880 the company controlled about 90% of the oil refining industry in the U.S. • this would be classified as a monopoly

24. New Business Organizations • Monopolies - charge whatever for its products • Many states made it illegal for one company to own stock in another company • 1882 Standard Oil formed 1st trust • new way of merging businesses that did not violate such laws • holding company - it owns the stock of companies that do produce goods • Manages the companies it owns, effectively merging them into one large enterprise

25. New Business Organizations • Most famous and successful investment banker - J.P. Morgan • Formed the United States Steel Company

26. New Business Organizations • With all these new products retailers were trying to find new ways to attract consumers • N. W. Ayer and Son - 1st advertising company • Created large illustrations ads • Department stores - chain stores - issue mail - catalogs order

27. Unions • Work was difficult • perform dull, repetitive tasks in unhealthy and dangerous working conditions • Division between income • 1900 average industrial worker made 22 cents per/hr and worked 59 hours a week • Deflation between 1865-1897 caused prices to fall, which increased the buying power of workers wages • 2 types of industrial workers • craft workers and common laborers • craft workers formed trade unions

29. Unions • Employers often had to negotiate with trade unions because they represented whose skills they needed • Business leaders opposed industrial unions • Companies tried to stop workers from forming unions • workers who tried to organize unions were put on a black list • workers who formed union, companies used "lock outs” • if a union called a strike, employers would hire replacements • unions could be broke because there were no laws giving workers the right to form unions

30. Unions • Panic of 1873 – recession - companies to cut wages • Railroads cut wages in 1877 • workers walked off job and blocked the tracks • Gun battles between state militia and strikers • Took federal troops 12 days, 100 dead, $10 million in damage

31. Unions • Knights of Labor founded 1869 • Leader Terrence Powderly • opposed strikes preferred boycotts • called for 8 hr workdays, equal pay for women, abolition of child labor, creation of worker-owned factories

32. Unions • Haymarket Riot –Chicago – 1886 • supports of 8 hr workdays called for nationwide strike on May 1st • members marched across city • May 3, police intervened to stop fight at McCormick Harvesting Machine Company • turned violent killing 4

33. Strikes • Homestead Strike – 1892 • Homestead, Pennsylvania • workers belonged to a craft union • manager proposed to cut wages when workers contracts were to expire and blocked workers from entering the mill • state militia ordered to protect replacement workers. • Strike collapsed after 4 months

35. Strikes • The Pullman Strike • Pullman Palace Car Company • owner of the company required workers to live in the town he built and buy goods from the company stores • cut wages which made it difficult to afford living there • strike began • boycott tied up railroads and threatened the economy • to break strike, railroad managers arranged for U.S. mail cars to be attached to Pullman cars • if strikers refused to handle the Pullman cars would be interfering with U.S. mail, a violation of federal law • federal court issued an injunction