THE RISE OF AN INDUSTRIAL AMERICA

1870-1900

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:

Great Britain France

Germany

Combine

d

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

Coal Iron Copper Lead

Timber

Oil

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

Abundant Labor Supply = Immigrants

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

Advanced Transportation Network – Canals and Railroads

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

Huge and Continually

Growing Natural Population

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

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

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

Business Friendly Government Policies Such As:

Subsidizing TARIFF

Low CorporateTaxes

Laissez-Faire Policies

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

Talented Businessmen

Talented Businessmen Such As:

Andrew Carnegie

JD Rockefeller Andrew Mellon

JP Morgan

Andrew CarnegieCarnegie 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 distributionStep 1

Step 2

Step 3 Step 4

All Controlled by the company implementing

vertical integration

Example: Hamburger

Step 1: Owns the farm that

raises the cows for meat & dairy

Step 2: Owns the factories

that process the meat and dairy

Step 3: Owns the distribution

centers that transport

processed meat to markets

Step 4: Owns the fast food

restaurants that sell hamburgers

to consumers

Steel Industry Contributions

Bessemer ProcessSkyscrapers

Office buildings Desperately needed residential spaces

BridgesSubway systems

JD RockefellerCreated and ran the country’s first official

monopoly – the Standard Oil Company.Introduced the concept of horizontal

integrationControlling all of the companies that engage in

one specific step in the process of productionVertical 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.

What is the object of the game?

The object of the game is to become the wealthiest player through buying, renting and

selling of property –

TO ELIMINATE THE COMPETITION

Example: Hamburger

McDonald’s: Owned & Operated by Company A

Burger King: Owned and Operated by

Company A

Wendy’s: Owned and Operated by Company A

Step #4: Owns the fast food restaurants that sell hamburgers to consumers

Company A = A TrustWhat 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

Oil Industry Contributions

The monopoly – purpose to eliminate competition

Technological advancesMany companies follow Rockefeller’s lead

Sugar, Tobacco, and Meat packing industries

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?

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:

Sherman Antitrust Act 1890

Using this cute pup as your guard dog.

Yeah we have a guard dog, but . . . . .

The Business of Railroads1865: 35,000 miles of railroad existed in the

US1900: 193,000 miles of railroad existed in

the USWhat did the ability to transport goods

nationwide encourage?companies to mass produce people to mass consume.

Building Railroads stimulated other industries.

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

Railroad Industry

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 1800s1890s were also a time of economic crisis TOO MANY RR lines combined with

economic crisis led many RR companies into bankruptcy.

All these railroads – I just can’t

compete! Now I have no

money!!!!!!!!!!!!!!!!!1

Railroad Industry

Business Friendly

Government Policies

Federal Land

Grants

Too Many RRs

Too Many RRs

1890s Economic Crisis

Bankrupt Railroads

Railroad IndustryBanks consolidated bankrupt railroads.

Railroad Industry

American Express

Inc.

• Angry Consumers & Farmers• Government Slow to Respond

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