Industrialization 1865-1901

Chapter 9

Industrialization1865-1901

I Can…Identify the effects of expanding population on

industry.

Explain the effects of technological innovations such as the telephone and telegraph on American development.

Section 1: The Rise of Industry

The Industrial Revolution began in the United States in the early 1800s; however, the nation was still largely a farming country when the Civil War erupted. In 1860 out of a population of 30 million, only 1.3

million Americans worked in industry.After the Civil War, industry greatly expands

and millions of Americans left farms to work in mines and factories.

The Civil War challenged industries to make products more quickly and efficiently than ever before.

By 1900 the U.S. was the leading industrial nation.

The Rise of Industry

The United States Industrializes after the Civil War

How?

1. Plenty of raw materials needed for industry: water, wood, coal, iron, copper

2. Large workforce: population tripled between 1860-1910 Due to large families and high immigration levels. Larger population also increased demand for manufactured

goods. 3. The transcontinental railroad brought settlers and

miners to the west and moved resources to the factories in the east.


In 1859, Edwin Drake drilled what became the world’s first oil well in Titusville, Pennsylvania.

Before this, whale blubber had been used for light and fuel. Whaling had become time-consuming and the

whales were becoming scarce.Drilled oil was cheap to produce and easy to

transport. The oil industry will grow quickly and encourage such industries as kerosene and gasoline.


First oil well in Titusville, Pennsylvania.


What is Free Enterprise? Capitalism an economic system that functions without government

interference Laissez-Faire-popular concept in the 1800s (“Let people do as

they choose”) Supply and demand determine prices and wages, not

government. Encouraged foreign investment in the U.S.

What was the government’s role in industrialization? Laissez-faire attitude-kept taxes low, encouraging investment. Few regulations on industry Gave land grants to spur RR growth High tariffs designed to protect American companies from

foreign competition. Ex. Morrill Tariff- one of the highest in U.S. History.


What was the impact of New Inventions?

1865: No electric lighting, ice was expensive, and mail took weeks to get from east to west.

Between 1860-1890: Patent and Trademark Office issued 500,000 patents for innovations.

1900: There were inventions such as the sewing machine, typewriter, phonograph, and vacuum cleaner.

Industrialization makes mass production possible.Mass production is the process of producing

goods in large numbers. By selling more, producers can charge

consumers less money and still make a profit.Depends upon machinery to carry out tasks

that were once done with hand tools.


Telegraph: perfected by Samuel F.B. Morse; Morse code-short impulses to represent letters of the alphabet.

1896-Guglielmo Marconi; invented the wireless telegraph.

Telephone: 1871 Alexander Graham Bell In 1877 Bell and others organized the Bell Telephone

Companyeventually became the American Telephone and

Telegraph Company (AT&T).These inventions made it possible for individuals and

businesses to communicate much easier and on a much broader scale.

Advances in Communication

The Rise of Industry: Advances in Communication

Electric PowerThomas A. Edison- “Wizard of Menlo

Park” inventor of the phonograph, electrical

lighting, and power station and much more.

Supported by wealthy industrialists like J.P. Morgan

Received more than 1,000 patents on new inventions.

Symbol of the new age of technology.The light bulb enabled factory work to continue

after sunset.In 1882 the Edison Electric Illuminating Company

supplied electric power to customers in New York City.

In 1889 several of Edison’s companies merged to form the Edison General Electric Company, today known as GE.

As a result people worked longer hours, the number of US factories increased, and industries produced more goods.

Electric Power

Other inventions also revolutionized society.Thaddeus Lowe-ice machine (basis of the refrigerator).Gustavus Swift- refrigerated railcar; reduced food

spoilage.Bessemer Process- process for purifying iron, resulting

in strong, but lightweight steel. Made it cheaper and easier to remove impurities.Allowed for construction of new buildings.Along with elevators made it possible for building

skyscrapers. Suspension bridges- bridges in which the roadway is

suspended by steel cables. The first suspension bridge was the Brooklyn Bridge.

Electric Power

I Can…Discuss ways in which the railroads spurred

industrial growth.Analyze how the railroads were financed and

how they grew.

Railroads

Railroads

Railroads

RailroadsBy the 1900s the US had over

200,000 miles of track.1862: President Lincoln

signed the Pacific Railway Act that provided for the construction of a transcontinental railroad by two corporations, the Union Pacific and the Central Pacific.

To encourage rapid construction, the government offered each company land along the right-of-way.Land Grants

1863: the Central Pacific started laying track eastward from Sacramento, California, while the Union Pacific headed westward from Omaha, Nebraska.

Construction was difficult and expensive.Laborers faced harsh and dangerous

conditions.Many that worked on the railroad were

immigrants. IrishChinese

Met at Promontory Point, Utah.

Railroads

Railroad expansion spurred industrial growth, by increasing markets for new products. It was also a huge consumer itself.

Many railroads started to consolidate in larger companies. Cornelius Vanderbilt was one of the most

famous consolidators. In 1781, he began construction on NY’s

Grand Central Station.Eventually there will be seven giant systems

with terminals in major cities.

Railroads

To make rail service safer, the country was divided into 4 time zones.

Before time was kept independently, so scheduling and safety became a huge concern.

In 1884, delegates from 27 countries divided the globe into 24 time zones.

Railroads played a key role in transforming American industries and business.

They could transport large amounts of goods quickly, cheaply, and efficiently.

Because they linked the nation, they allowed businesses to obtain raw materials easily and to sell finished goods to a larger number of people.

Railroads

2 views:“Robber Barons”: built their fortunes by

stealing from the public. They used bribery, insider-trading, cheating,

and ruthlessness to make their fortunes. (Jay Gould)

Railroads: Robber Barons v. Captains of Industry

“Captains of Industry”: served their nation in a positive way by increasing supply of goods, building factories, raising productivity, and expanding markets.

Robber Baron or Captain of Industry?

Railroads: Robber Barons v. Captains of Industry

Railroads

It was a railroad construction company formed by Union Pacific owners that contracted themselves to build the new railroad at highly inflated prices.

It gave or sold stock at cheap prices to politicians to influence legislation.

Showed the corruption and the power of the Robber Barons.

Many politicians in Washington including Speaker of the House Blaine and future president Garfield were implicated in accepting bribes.

Railroads: Credit Mobilier Scandal

James J. Hill was clearly not a robber baron; he built the Great Northern Railroad from St. Paul Minnesota, to Everett, Washington, without any federal land grants.

It became the most successful transcontinental railroad and the only one not eventually forced into bankruptcy.

Railroads

I Can…Analyze how large corporations came to

dominate American business.Evaluate how Andrew Carnegie’s innovation

transformed the steel industry.

Big Business

Big Business

By 1900 big business dominated the economyBig business would not have been possible without the

corporation.A corporation is owned by many people but treated as though

it were a single person. They can :

own property pay taxes make contracts and sue and be sued.

Stockholders are those who own the corporation. They own shares of ownership called stock.

By issuing stock this allows a corporation to raise large amounts of money while spreading out the financial risk.

Big Business: The Rise

They worked to maximize profit in several ways. Ex., paying workers the lowest possible wages

or paying as little as they could for raw materials.

With the money raised from the sale of stock they could invest in new technologies, hire a larger workforce, and purchase new machines.Economies of scale: means the corporation

makes goods more cheaply because they produces so much so quickly using large manufacturing facilities.


All businesses have two kinds of costs:Fixed- costs a company has to pay, whether or not it is

operating. (loans, mortgages, taxes)Operating- costs that occur when running a company.

(wages, shipping, raw materials)Big corporations had the advantage because of their

low operating costs-they could continue to operate in poor economic times by cutting prices to increase sales.

The changing nature of business organizations and the new importance of fixed costs caused competition to become so severe it forced many small companies out of business.


Many corporate leaders did not like the intense competition that had been forced on them. Many tried to organize pools, or agreements to

maintain the prices at a certain level.However, they broke apart whenever one

member cut prices to steal the market share from another, and allow competition to resume.

By the 1870s, competition had reduced many industries to a few large and highly efficient corporations.


Big Business: The PlayersRailroads are the first

industry to take off in the years following the Civil War.

Key figure in the railroad industry was Cornelius Vanderbilt (the Commodore).

In 1869, he extended his New York Central Railroad to reach Chicago.

Big Business: The PlayersAndrew CarnegieBorn in Scotland, the

son of a poor hand weaver who immigrated to the US in 1848.

Later he will become supervisor of the Pennsylvania Railroad.

He will start to invest in companies that serve the railroad industry.

He will travel to Europe and come into contact with Henry Bessemer.

Bessemer had developed a new method for making steel known as the Bessemer process.Using this process, manufactures could make steel much

cheaper than ever before.This increased production of steel meant faster

expansion of railroads and more construction of buildings.

After meeting Bessemer, Carnegie decided to concentrate his investments in the steel industry.

He opens his company in Pittsburgh and implemented the Bessemer process.

Big Business: The Players

Big Business: The PlayersHe will also use vertical

integration as a way to increase manufacturing efficiency.

A vertically integrated company owns all of the different businesses on which it depends for its operation.

He owned not only the steel mills, but also the necessary iron ore, coal mines, railroads, and ships used in transport.

.

Some businessmen like Carnegie also used horizontal integration.

This is combining many firms engaged in the same type of business into one large corporation.

This takes place as companies compete.


Big Business: The PlayersJohn D.

Rockefeller became one of the nation’s richest and most powerful businessmen.

Standard Oil was the nation’s first trust.A trust is a business

arrangement under which a number of companies unite into one system.

Trusts serve to destroy competition and create monopolies.At one time he owned 90% of the oil refining industry.Manages the companies as a single unit.

Through the trust, Rockefeller was able to dictate prices, eliminate competition, and control the US oil industry.

Much of his success was due to his use of vertical integration.

Rather than pay other producers to supply the materials he needed, Rockefeller’s company made what it needed itself (i.e., its own barrels, cans, and so on).

Rockefeller- “pay nobody a profit.”


Big Business: The PlayersWith the expansion of

business came a new kind of business leader: the finance capitalist.Bankers who exert

economic influence through companies’ stocks and bonds.

The most powerful and influential of the early finance capitalists was J.P. Morgan.

Morgan eventually exercised control over banks, insurance companies, and various stock market operations.

He was so rich he eventually bought out Carnegie’s steel company to form a new company—US Steel.

He paid nearly 5 hundred million dollars for the company.

Supported Edison in his invention of the light bulb.


Many companies start to create a new organization called a holding company.does not produce anything itself.It owns the stock of companies that do produce

goods.By 1904 the US had 318 holding companies.

These giant corporations controlled 5,300 factories and were worth more than $7 billion.


As vast new products were produced by American industry, retailers looked for new ways to market and sell goods.

New forms of advertisements:Large display ads with illustrationsMass advertising in newspapers and

magazines.

Selling the Product

Early Ads

Big Business: Selling the Product

New Ads


Advertising is used to attract customers to new retail businesses, the department store.

This changed the idea of shopping by bring a huge array of different products together in a large elegant building.

Selling the ProductChain stores, a group

of similar stores owned by the same company first appeared in the mid-1800s.

They focused on thrift, offering low prices.

Woolworth’s opened in 1879, and became one of the most successful retail chains in America.


To reach millions of people who lived in rural America, retailers began issuing mail-order catalogs.

Montgomery Ward and Sears, Roebuck were the two largest mail-order companies.

Selling the Product

I Can…Describe industrial working conditions in the

United States in the late 1800s.List the barriers to labor union growth.

Unions

Life for Industrial workers in America was difficult.

Children left school at age 12 or 13; Children as young as 6 or 7 had to go to work or go hungry.

Many worked 12 hours a day, 6 days a week.Many made less than a quarter and worked

more than 60 hours a week.1868 federal law granted government

employees an 8 hour workday but did not affect private industry.

Many were paid by what they produced—piecework

Strict workplace discipline.

Working Condition in the United States

Division of Labor—separate tasksWomen excluded from most-skilled and highest –

paying jobs.Children made up more than 5% of the workforce.Conditions:

Dangerous-machines lacking safety devicesUnhealthy-fumes, lint, dustPoorly litBadly ventilatedNoisyRepetitiveNo insurance or workers’ compensation.

Working Conditions in the United States







An economic phenomenon of deflation also made relations between workers and employers more difficult.

Deflation: a rise in the value of money.This caused prices to fall, which increased the buying

power of workers.However, companies cut wages regularly, but prices fell

even faster, so that wages were actually still going up in buying power.

Many workers still felt that companies were actually paying them less money for the same work.

This made workers look to organize unions, to bargain collectively to negotiate higher wages and better working conditions.

Working in the United States

Early unions were local and usually limited to people with specific skills. Iron Molders’ International UnionKnights of St. Crispin---shoemakers’ union

Early Unions

Generally employers regarded unions as illegitimate conspiracies that interfered with their property rights.

Most opposed industrial unions that united all craft and common laborers in a particular industry.

Companies used several techniques to prevent unions from forming: Required workers to sign oaths and contracts promising not join

a union. Hired detectives to go undercover and indentify union

organizers. Blacklist-list of “troublemakers.” Once blacklisted it was hard

to find other jobs. Lockout- if workers did form a union, the employers would lock

the workers out of the property and refuse to pay them. Hire replacement workers---strikebreakers or scabs

Early Unions

Workers who wanted to organize faced several problems:There were no laws giving workers the right to organize or

requiring owners to negotiate with them.Courts often ruled against them.Suffered from the perception that they threatened

American institution. This was due to Marxism.In the late 1800s, the ideas of Karl Marx became very

influential in Europe.He said that the basic force shaping a capitalist society

was the class struggle between the workers and owners.He believed that eventually the workers would revolt, seize

control of the factories, and eventually the government.

Early Unions

Believed that after the revolution, the government would seize all private property and create a socialist society, where wealth was evenly divided.

Eventfully he said the state would fade away and leave a Communist society where classes did not exist.

His ideas shaped the thinking of many European unions.Some started to even support anarchy. Anarchists

believe that society does not need government.As the ideas spread in Europe, many left and immigrated

to the United States.People started to associate immigrant workers with

revolution and anarchism, and became increasing more suspicious of union.

Early Unions

Workers attempted on many occasions to create large industrial unions, they were rarely successful. In many cases the confrontation with owners and the government led to violence and bloodshed.

Great Railroad Strike: July 14, 1877 Baltimore and Ohio Railroads announce a 10% wage cut.

This triggers the first nationwide labor protest.The day after the cuts took effect; many workers walked off the

jobs and blocked the tracks. The strike spread until it involved 11 states and 80,000 workers.After violence spreads President Hayes sent federal troops to

put down the strike. 100 dead and millions of dollars of property destroyed. Sparked a new violent era of labor relation.

The Struggle to Organize


After the failure of the Great Railroad Strike of 1877, workers realized they needed to be better organized.

The Knights of Labor was a new organization and was the first nationwide industrial union. Called for:eight-hour work daya government bureau of labor statisticsequal pay for womenthe abolition of child laborcreation of worker-owned factories.

Opposed strikes at first, preferring to use boycotts and arbitration to pressure owners.


1886, nationwide, workers strike to build support for an eight-hour workday.

On May 3, A clash between strikers and police left one striker dead in Chicago.

A rally was held next day at the Haymarket Square in Chicago to protest the police brutality at the strike, by an anarchist group.

1500 people gathered to support the strikers; radical speakers addressed the crowd.

As police tried to disperse the crowd, a bomb was thrown. Shots exchanged.

7 police killed, 4 workers, many injured. Knights of Labor were blamed. Some were convicted and

hanged. Lost membership.

The Haymarket Riot

The Haymarket Riot

Homestead StrikeHenry Frick tries to cut

wages at Carnegie Steel.Frick calls in the

Pinkertons (a private police force known to break up strikes) to end the strike.

Several died and many wounded in the fight with the Pinkertons

Union workers admit defeat.

Pullman StrikeGeorge Pullman, sleeping car

makers, laid off workers and cut wages by 25%.

Workers that protested were fired.

The boycott of the Pullman cars threatened to paralyze the economy.

To break the strike, US mail cars were attached to the Pullman cars. Interfering with the US mail is a violation of federal law.

Pres. Grover Cleveland sent in troops to break the strike.

American Federation of LaborLed by Samuel

Gompers who urged union members to stay out of politics.

Sought to organize only skilled workers.

Focused on workers’ wages, hours, and working conditions.

Used strikes, boycotts, and collective bargaining.

Working Women After the Civil War, the number

of women wage earners began to increase.

The type of jobs women did outside the home reflected society’s idea of what constituted “women’s work.”

Women were paid less, because it was assumed she had a man helping to support her, either her father or her husband.

Early women labor organizers: Kenney O’Sullivan and Leonora O’Reilly. Established Women’s Trade

Union League.

Causes of IndustrializationCivil War

The war encouraged production, innovation, and expansion of railroads.

Natural ResourcesAmple natural resources, including oil, fueled growth.

Growing WorkforceImmigrants willing to work for low wages flowed into the

country.Technology/Innovation

New technology and innovative business practices spurred growth.

Government PoliciesGovernment policies encouraged investment in business and

new technology.

Review

Important Government Policies of the Late 1800sProtective tariffs: Congress enacted tariffs on

imported goods to make them cost more than locally produced goods.

Laissez-faire: The government allowed businesses to operate under minimal government regulations.

Subsidizing railroads: The government gave railroad builders millions of acres of land.

Strike breaking: Government troops routinely helped break up strikes.

Anti-union actions: Courts used legislation like the Sherman Antitrust Act to order unions to stop disruptive free trade.

Review

Important People of the Late 1800s

Review

People Contribution

Thomas Edison Invented new technology, such as electric lighting that stimulated business.

Henry Bessemer Developed process for creating strong lightweight steel for use in construction and railroad.

Andrew Carnegie Use of vertical consolidation influenced the rise of big business; urged businessmen to also be philanthropists.

John D. Rockefeller Use of new business strategies, such as horizontal consolidation, influenced the rise of big business.

Samuel Gompers Formed the AFL, influencing the rise of labor union.

Eugene V. Debs Challenged big business by orchestrating the Pullman Strike

Influential Labor Unions

Review

Name Date Founded SignificanceNational Trades Union

1834 First national union; open to workers from all trades.

Knights of Labor

1869 Sought general ideological reform; open to workers from all trades.

American Federation of Labor

1886 Focused on specific workers’ issues; organization of skilled workers from local craft unions.

American Railway Union

1893 First industrial union; open to all railway workers.

Major Strikes of the Late 1800s.

Review

Cause EffectRailroad strikes, 1877 Response to cuts in

workers’ wages.Set the scene for violent strikes to come.

Haymarket Square, 1886

Part of a campaign to achieve an eight-hour workday.

Americans became wary of labor unions; the Knights of Labor were blamed for the riot and membership declined.

Homestead Strike, 1892

Economic depression led to cuts in steelworkers’ wages

After losing the standoff, steelworker unions lost power throughout the country.

Pullman Strike, 1893 Wages cut without decrease in cost of living in the company town.

Employers used the courts to limit the influence of unions.

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Industrialization 1865-1901

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