INDUSTRIALIZATION

1865-1901

Why It Matters

The rise of the United States as an industrial power began after the Civil War. Many factors promoted industry, including cheap labor, new inventions and technology, and plentiful raw materials. Railroads rapidly expanded. Government policies encouraged growth, and large corporations became an important part of the economy. As industry expanded, workers tried to form unions to fight for better wages and working conditions.

The Rise of

Industry

• When the Industrial Revolution began, the United States was still largely a farming country.

• After the Civil War, industry rapidly expanded. Millions of Americans left their farms to work in mines and factories.

• By the early 1900s, Americans had transformed the United States into the world’s leading industrial nation.

Gross National Product

• 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.

Natural Resources

• 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.

Petroleum

• 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.

Population Explosion!

• Between 1860 and 1910, the population of the United States tripled. This provided a large workforce and a greater demand for consumer goods.

Is that really important?

• Yes, human resources were equally as important as natural resources in the nations rapid industrialization!

Why the increase?

• Two causes!– Large families

• More Kids=More Help– Flood of immigrants

• Economic conditions in China and eastern Europe convinced many people to come to the United States searching for a better life.

Free Enterprise

• 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.

Think for a minute!

• Another important source of private capitol was Europe. Foreign investors saw more opportunity for profit in the U.S. than they did at home.

• How is that different now?

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.

Government’s Role in Industrialism

What you need to know about “laissez-faire”

• Supporters of laissez-faire believed that the government should not interfere in the economy other than to protect private property rights and maintain peace.

• They opposed subsidies and favored free trade.

10 Questions!

This is the end of section 1. Time for a quiz.

We gotta hurry! Still one section to go today!

Isn’t this a FUN CLASS!

WOOOOHOOOOOO!!!!!!!!

The Railroads• The railroad boom

began in 1862 when President Lincoln signed the Pacific Railway Act providing for the construction of a transcontinental railroad by two corporations, the Union Pacific and the Central Pacific Railroad companies.

• Land was offered to each company along its right-of-way to encourage rapid construction.

Union Pacific Railroad

• Under the direction of engineer Grenville Dodge, a former Union general, the UPR began pushing westward from Omaha, Nebraska, in 1865.

• Hard times! Blizzards in the mountains, scorching heat in the desert, angry Native Americans!

• As many as 10,000 employed at a time.

Central Pacific Railroad

• Dream of engineer Theodore Judah

• Sold stock in his company to four Sacramento merchants who became known as the “Big Four.” They made huge fortunes from their investments. One of them later founded Stanford University!

• Chinese immigrants were hired

Railroads Spur Growth

• The expansion of the railroad spurred American industrial growth. By linking the nation, railroads helped increase the size of markets for many products.

What time is it?

• In 1833, the American Railway Association divided the country up into four time zones to make rail service safer and more reliable. The federal government ratified this change in 1918.

Land Grants

• To encourage railroad construction, the federal government gave land grants to many railroad companies. The railroad would then sell the land to settlers, real estate companies, and other businesses to raise the money they needed to build the railroad.

• The Great Northern Railroad from St. Paul, Minnesota, to Everett, Washington, was built without any federal land grants or subsidies.

Quiz Time

• You are still responsible for reading Section Two. There are a few things in it that will be on your TEST, not on this quiz.

Big Business

• Prior to the Civil War, manufacturing enterprises were very small. By 1900, everything changed. Big businesses dominated the economy, operating vast complexes of factories, warehouses, offices, and distribution facilities.

Corporations

• A corporation is an organization owned by many people but treated by law as though it were a single person.

• It is owned by stockholders because they own shares of ownership called stock.

• Issuing stock allows a corporation to raise large amounts of money for big projects while spreading out the financial risk.

Kinds of Costs

• All businesses, regardless of size, have two kinds of costs.

• Fixed costs are costs they pay, whether or not it is operating.– Loans, mortgages, taxes

• Operating costs are costs that occur when running a company– Wages, shipping charges, buying raw

materials and supplies

Poor Little Business…• Compared to their fixed

costs, big businesses had low operating costs.

• If the economy was bad, due to a recession, small businesses often had to close for a period of time. Big businesses could simply drop their prices and still make a profit.

• Small businesses with high operating costs found it difficult to compete against large corporations and were often forced out of business.

Andrew Carnegie and Steel

• Born in Scotland, he was the son of a poor hand weaver. They emigrated to the United States in 1848. He started work at age 12 making $1.20 per week.

• He became superintendent of the Pennsylvania Railroad.

• Learned to invest his money. By buying shares in iron mills and factories, he was making $50,000 a year by the time he was in his 30s.

Where is the money at?

• After traveling often to Europe to sell railroad bonds, he met Sir Henry Bessemer who had invented a new process for making high quality steel efficiently and cheaply.

• He decided to invest in the steel industry.

• In Pittsburgh in 1875 he opened a steel company using the Bessemer process.

I want money, lots and lots of money…

• Vertical integration is when you own all of the different businesses on which you depend for operation.– So for the steel industry, it means….

• Buy the coal mines, limestone quarries, iron ore fields

• Horizontal integration combines many firms engaged in the same type of business into one large corporation

• See diagrams on page 321!

•When a single company achieves control of an entire market, it becomes a monopoly. Many Americans feared monopolies because they believed that a company with a monopoly could charge whatever it wanted for its products. Others believed that monopolies had to keep prices low because raising prices would encourage competitors to reappear and offer the products for a lower price.•Standard Oil came very close to having a monopoly in the United States, but competition with other oil companies throughout the world forced the Standard Oil Company to keep its prices low.•Standard Oil, in 1882, formed the first TRUST, a new way of merging businesses that did not violate the laws against owning other companies.

•Read more about it on page 322-322! But not now, I have told you enough to pass your quiz.

STANDARD

O I L

Examples of advertisements

1900

Change in Shopping Habits

• Department stores changed the idea of shopping by bringing a huge array of different products together in a large, elegant building. They created an atmosphere that made shopping seem glamorous and exciting.

• To reach millions who lived in rural areas, retailers began issuing mail-order catalogs. Montgomery Ward and Sears, Roebuck were the largest mail order companies.

End of Section Three

• QUIZ!

• 10 questions

• YES, YOU ARE GETTING A GRADE! You have been paying attention, as you always do, so I have complete faith you will ace this!

• Only one more section to go today!

Unions

• Deflation is the rise in the value of money. Throughout the late 1800s, deflation caused prices to fall, which increased the buying power of workers’ wages.

• Companies cut wages, and this made people ANGRY!

• Many workers decided that the only way to improve their working conditions was to organize unions.

Two Basic Types of Workers

• Craft Workers has special skills and training. They received higher wages and had more control.– Machinists, iron molders, stonecutters,

glassblowers, shoemakers, printers, carpenters, and more!

• Common Laborers have few skills and received lower wages.

Trade Unions

• In the 1830s, craft workers began to form trade unions. These were unions limited to people with specific skills. The most successful and largest were the Iron Molders’ International Union, the International Typographical Union, and the Knights of St. Crispin, which was the shoemakers union.

Industrial Unions

• Owners of large corporations opposed these unions which united all craft workers and common laborers in a particular industry.

• Employers generally regarded unions as illegitimate conspiracies that interfered with their property rights.

STRIKE!

• Workers in a union would often go on strike, refusing to work until their demands were met.

What is….

Blacklist for Troublemakers

• Employers would require workers to sign oaths or contracts promising not to join a union. They would hire detectives to go undercover and identify union organizers.

• If caught organizing a union, the employee was placed on a blacklist, which made it difficult to get a job elsewhere.

So you’ve been caught…

• As an employer, if I see you made a union, I will simply have a lockout. This is where I lock you out of the property and do not pay you. If you strike, no big deal, I simply hire replacement workers, called strikebreakers.

Marxism• Karl Marx argued that the

basic force shaping capitalist society was the class struggle between workers and owners.

• Workers will eventually revolt, seize control of factories, and overthrow the government.

• After the revolution, the government would seize all private property and create a socialist society where wealth is evenly divided.

• This will lead to a Communist society where classes do not exist.

The Great Railroad Strike of 1877

• In July, 1877, a recession caused several railroads to announce a round of wage cuts.

• This triggered the first nationwide labor protest.

• Workers walked off the job and blocked the tracks.

• 80,000 workers in 11 states affected 2/3 of the nation’s railways.

Violence Erupts!

• Workers smash equipment, tear up tracks, block service in New York, Baltimore, Pittsburgh, St. Louis, Chicago!

• Governors call out militias to stop violence.

• Gun battles erupt.

STOP THE MADNESS!

• President Hayes orders the army to open the railroad.

• Over 100 died, millions of dollars had been destroyed.

Knights of Labor

• Failure of the Great Railroad Strike convinced many labor organizers that workers across the nation needed to be organized.

• Knights of Labor became the first nationwide industrial union by late 1870s.

What did they want?

• Eight hour workday

• Abolition of child labor

• Equal pay for women

• Creation of worker-owned factories

• Supported arbitration, a process in which an impartial third party helps workers and management reach an agreement.

Read about it…

• Make sure you read section 4.

• Good stuff you need to know, but we don’t have time to go into detail on. And since it will not be on the quiz you are about to take, I am skipping it for now!

• But yes, it will be on your TEST.

Haymarket Riot in 1886

• Badly undermined the Knights’ reputation, and led to the decline of the union.

• On May 3, 1886, just two days after some 350,000 workers across the nation struck to achieve the eight-hour day, Chicago police killed two people and wounded several more after violence erupted between strikers and strikebreakers at the McCormick Harvesting Machine Company. Protesting this action, anarchist August Spies held a meeting at Haymarket Square on May 4. When police forcibly dispersed the small crowd, an unidentified assailant threw a bomb that immediately killed one policeman and fatally wounded six bystanders. That summer Spies and seven other anarchists were tried and convicted of murder.

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American Federation of Labor

• Led by Samuel Gompers

• He believed that unions should stay out of politics.

• Rejected socialist and communist ideas.

• AFL should fight for small gains, such as higher wages and better working conditions.

Working Women

• By 1900, women made up more than 18% of the labor force.

• Roughly 1/3 of them were domestic servants. Another 1/3 were teachers, nurses, sales clerks, and secretaries. The remaining 1/3 were industrial workers.

• Paid less for the same job. It was assumed that they had a man helping support her, thus needed less pay.

That’s IT! For now…

• Time for a 5 question quiz.• Video follows this, with worksheets• Review Wednesday• Test Thursday• Paper due Friday• Vocabulary due Friday, Packet Due Friday• Please don’t act like I never told you any of this! • Basically, EVERYTHING IS DUE FRIDAY!