Industrialization Chapter 3

The Rise of Industry Lesson 1

Industrial Revolution  The Industrial Revolution began prior to the Civil War  But, most still lived and worked on farms until after the war  By the 1900s the U.S. was the world’s leading industrial nation  Gross National Product (GNP): total value of all goods and services a country produces each year  The Industrial Revolution began prior to the Civil War  But, most still lived and worked on farms until after the war  By the 1900s the U.S. was the world’s leading industrial nation  Gross National Product (GNP): total value of all goods and services a country produces each year

Reasons for Success  Natural resources  Large workforce  New inventions  Free enterprise  Natural resources  Large workforce  New inventions  Free enterprise

Natural Resources  Timber, coal, iron, and copper  Could obtain resources cheaply and did not have to import them  Settling the West and transcontinental railroad  Petroleum  Timber, coal, iron, and copper  Could obtain resources cheaply and did not have to import them  Settling the West and transcontinental railroad  Petroleum

Large Workforce  Between 1860 and 1910 the population almost tripled  Large families and many immigrants  Between 1870 and 1910 there were about 17 million immigrants  Better living conditions resulted in longer life  Between 1860 and 1910 the population almost tripled  Large families and many immigrants  Between 1870 and 1910 there were about 17 million immigrants  Better living conditions resulted in longer life

New Inventions  Thomas Edison  Phonograph in 1877  1879: perfected electric generator and light bulb  Owen Latimer  Worked for Edison  Made cheap, long-lasting carbon filaments for light bulbs making it much more affordable  1899: Several Edison companies merged to form Edison General Electric Company (GE)  Thomas Edison  Phonograph in 1877  1879: perfected electric generator and light bulb  Owen Latimer  Worked for Edison  Made cheap, long-lasting carbon filaments for light bulbs making it much more affordable  1899: Several Edison companies merged to form Edison General Electric Company (GE)

 George Westinghouse  Alternating current system to distribute electricity over long distances  Improved living standards by creating streetlights, electric trolley cars, and electric devices in the home  Still used today  Alexander Graham Bell  1876: Telephone  American Telephone and Telegraph Company (AT&T)  George Westinghouse  Alternating current system to distribute electricity over long distances  Improved living standards by creating streetlights, electric trolley cars, and electric devices in the home  Still used today  Alexander Graham Bell  1876: Telephone  American Telephone and Telegraph Company (AT&T)

Free Enterprise  Entrepreneur: one who risks their capital in organizing and running a business  Foreign investors saw opportunity for profit in the U.S.  Laissez-Faire: “let the people do as they choose”—government should interfere as little as possible  North and South did not agree on this new economic approach  Northern leaders wanted higher tariffs  Southern leaders wanted lower tariffs  After the Civil War the Northern idea of tariffs won  High tariffs hurt the economy because other countries raised tariffs on American goods  Entrepreneur: one who risks their capital in organizing and running a business  Foreign investors saw opportunity for profit in the U.S.  Laissez-Faire: “let the people do as they choose”—government should interfere as little as possible  North and South did not agree on this new economic approach  Northern leaders wanted higher tariffs  Southern leaders wanted lower tariffs  After the Civil War the Northern idea of tariffs won  High tariffs hurt the economy because other countries raised tariffs on American goods

The Railroads Lesson 2

Progress  By 1900 the U.S. had expanded their railroads tremendously  35,000 miles to 200,000 miles of railroad  By 1900 the U.S. had expanded their railroads tremendously  35,000 miles to 200,000 miles of railroad

Transcontinental Railroad  1862: Pacific Railway Act gave the Union Pacific and Central Pacific corporations permission to build a transcontinental railway  Union Pacific and Central Pacific each employed 10,000 workers  $1 a day  Railroad was finished in 4 years  Each mile required 400 rails, each rail required 10 spikes  Central Pacific laid 688 miles and Union Pacific laid 1,086 miles  Helped the economy by spending huge amounts on steel, coal, and timber  1862: Pacific Railway Act gave the Union Pacific and Central Pacific corporations permission to build a transcontinental railway  Union Pacific and Central Pacific each employed 10,000 workers  $1 a day  Railroad was finished in 4 years  Each mile required 400 rails, each rail required 10 spikes  Central Pacific laid 688 miles and Union Pacific laid 1,086 miles  Helped the economy by spending huge amounts on steel, coal, and timber

Land Grants  Land grants were given to many railroad companies by the federal government, as it was extremely expensive to build the railways  The land given to the companies would only produce profit if they could sell it, so had to promote moving to the West  Many railroad entrepreneurs acquired much wealth which led people to question them  Accusations arose that they had swindled investors and taxpayers, bribed officials, and cheated on their contracts and debts  Land grants were given to many railroad companies by the federal government, as it was extremely expensive to build the railways  The land given to the companies would only produce profit if they could sell it, so had to promote moving to the West  Many railroad entrepreneurs acquired much wealth which led people to question them  Accusations arose that they had swindled investors and taxpayers, bribed officials, and cheated on their contracts and debts

Corrupt Railroad Owners  Jay Gould  Practiced insider trading and manipulated stock prices  Bribery occurred frequently  Railroad investors discovered they could make more money by selling free government land grants than by operating a railroad and some bribed political representatives to vote for more grants  Jay Gould  Practiced insider trading and manipulated stock prices  Bribery occurred frequently  Railroad investors discovered they could make more money by selling free government land grants than by operating a railroad and some bribed political representatives to vote for more grants

Credit Mobilier Scandal  Construction company set up by several stockholders of the Union Pacific Railroad including Congressman Oakes Ames  Ames convinced Congress to vote for more land grants by selling shares way below value  1872 election: Newspaper printed names of the members of Congress that had bought these shares  Construction company set up by several stockholders of the Union Pacific Railroad including Congressman Oakes Ames  Ames convinced Congress to vote for more land grants by selling shares way below value  1872 election: Newspaper printed names of the members of Congress that had bought these shares

Great Northern Railroad  James J. Hill  Created his railroad without receiving any land grants  Became one of the most successful companies  James J. Hill  Created his railroad without receiving any land grants  Became one of the most successful companies

Big Business Lesson 3

Corporations  A corporation is an organization owned by many but treated as though it were one person  Stockholders own corporations through shares of ownership called stocks  These stocks are sold to bring profit while also spreading the financial risk  This type of business was made possible by laissez-faire  Economies of scale: cost of manufacturing is decreased by producing goods quickly and in large quantities  A corporation is an organization owned by many but treated as though it were one person  Stockholders own corporations through shares of ownership called stocks  These stocks are sold to bring profit while also spreading the financial risk  This type of business was made possible by laissez-faire  Economies of scale: cost of manufacturing is decreased by producing goods quickly and in large quantities

Fixed Costs v. Operating Costs  Fixed Costs  Costs a company pays whether they are operating or not (Ex: loans, taxes, etc.)  Operating Costs  Costs created by running a company (Ex: wages, shipping, buying materials, etc.)  Small companies would have a small fixed cost and high operating costs while large companies would have a large fixed cost and small operating costs  This would lead small companies to struggle to compete with larger companies  Fixed Costs  Costs a company pays whether they are operating or not (Ex: loans, taxes, etc.)  Operating Costs  Costs created by running a company (Ex: wages, shipping, buying materials, etc.)  Small companies would have a small fixed cost and high operating costs while large companies would have a large fixed cost and small operating costs  This would lead small companies to struggle to compete with larger companies

Laissez-Faire  What is it?  What would be positives of this?  One negative aspect of laissez-faire was that the government could not control competition and deals companies started to make with one another  What is it?  What would be positives of this?  One negative aspect of laissez-faire was that the government could not control competition and deals companies started to make with one another

Andrew Carnegie  Scottish immigrant  Worked his way up from a worker in a textile factory to a superintendent  Met Sir Henry Bessemer in Europe who knew how to make steel efficiently and cheaply  Carnegie started his own company in the U.S. using these methods  Cut out the middle man and purchased coal mines, limestone quarries, and iron ore fields  Scottish immigrant  Worked his way up from a worker in a textile factory to a superintendent  Met Sir Henry Bessemer in Europe who knew how to make steel efficiently and cheaply  Carnegie started his own company in the U.S. using these methods  Cut out the middle man and purchased coal mines, limestone quarries, and iron ore fields

John D. Rockefeller  Achieved horizontal integration  Combining many firms into one large organization  Oil industry  By 1880 he controlled 90% of the oil refining industry in the U.S.  Achieved horizontal integration  Combining many firms into one large organization  Oil industry  By 1880 he controlled 90% of the oil refining industry in the U.S.

Monopoly  When a single company achieves control of an entire market  People were scared of these because it eliminates competition allowing companies to charge what they want for their product  Others argued that if they did raise prices it would allow other companies an opening for competition again  When a single company achieves control of an entire market  People were scared of these because it eliminates competition allowing companies to charge what they want for their product  Others argued that if they did raise prices it would allow other companies an opening for competition again

Trust  Legal arrangement that allows one person to manage another person’s property  This was a way around it being illegal to own stock in another company  Person managing property is called a trustee  Legal arrangement that allows one person to manage another person’s property  This was a way around it being illegal to own stock in another company  Person managing property is called a trustee

Holding Company  A company whose primary business is owning a controlling share of stock in other companies  Manages the companies it owns  Doesn’t produce anything itself  A company whose primary business is owning a controlling share of stock in other companies  Manages the companies it owns  Doesn’t produce anything itself

Investment Banking  Helped create holding companies  Company would sell large blocks of stock to investment bankers at a discount  Would then be sold to investors for a profit  J.P. Morgan  Helped create holding companies  Company would sell large blocks of stock to investment bankers at a discount  Would then be sold to investors for a profit  J.P. Morgan

Advertisement  Became a much bigger deal during this time  Why?  Became a much bigger deal during this time  Why?

Unions Lesson 4

Why did they start?  Working conditions in factories and mines were difficult and often dangerous  With no regulations governing workplace safety or training requirements, workers had no resources when they were poorly treated  Although income was rising, uneven division of income caused resentment among workers  The average worker made 22 cents per hour and worked 59 hours per week  Working conditions in factories and mines were difficult and often dangerous  With no regulations governing workplace safety or training requirements, workers had no resources when they were poorly treated  Although income was rising, uneven division of income caused resentment among workers  The average worker made 22 cents per hour and worked 59 hours per week

 Deflation: rise of the value of money  Many conclude that they needed a union to bargain for higher wages and better working conditions  At this time there were craft workers and common laborers  Craft workers were trained in a specific area  By the 1830s craft workers began to form unions  Deflation: rise of the value of money  Many conclude that they needed a union to bargain for higher wages and better working conditions  At this time there were craft workers and common laborers  Craft workers were trained in a specific area  By the 1830s craft workers began to form unions

Results  Employees opposed unions because they would represented a whole group of workers that were needed by the companies  Lockout: Company tool to fight union demands by refusing to allow employees to enter its facilities to work  At the time, the government supported the businesses over the unions as the idea seemed to reflect Marxist ideas  Employees opposed unions because they would represented a whole group of workers that were needed by the companies  Lockout: Company tool to fight union demands by refusing to allow employees to enter its facilities to work  At the time, the government supported the businesses over the unions as the idea seemed to reflect Marxist ideas

Great Railroad Strike  Panic of 1873  Severe recession  Baltimore and Ohio Railroad said they were cutting wages for third time  80,000 railroad workers across the country left their job and strikes began  By the end of the strike 100 were killed and $10 million in railroad property damage  Panic of 1873  Severe recession  Baltimore and Ohio Railroad said they were cutting wages for third time  80,000 railroad workers across the country left their job and strikes began  By the end of the strike 100 were killed and $10 million in railroad property damage

The Knights of Labor  Arbitration: settling a dispute by agreeing to accept the decision of an impartial outsider  Opposed strikes in favor of boycotts and arbitration  Included women and African Americans  Most unions did not  Arbitration: settling a dispute by agreeing to accept the decision of an impartial outsider  Opposed strikes in favor of boycotts and arbitration  Included women and African Americans  Most unions did not

American Federation of Labor (AFL)  Dominant labor organization of the late 1800s  Willing to use strikes but preferred negotiation  3 goals  Convince companies to recognize unions and agree to collective bargaining  Pushed for closed shops (company that would hire only union members)  Promoted 8 hour work days  500,000 members by 1900  Did not include women or African Americans  Dominant labor organization of the late 1800s  Willing to use strikes but preferred negotiation  3 goals  Convince companies to recognize unions and agree to collective bargaining  Pushed for closed shops (company that would hire only union members)  Promoted 8 hour work days  500,000 members by 1900  Did not include women or African Americans

Industrial Workers of the World (IWW)  Known as Wobblies  Labor radicals  Many were socialists  Wanted to organize by industry, not by skill  Known as Wobblies  Labor radicals  Many were socialists  Wanted to organize by industry, not by skill

Women  By 1900 women made up more than 18% of the labor force  Mostly consisted of domestic jobs, what was considered “women’s work”  Women made less money even if they were doing the same job as a man  The idea was that a man should be the provider for the family and needed to make more money than women  By 1900 women made up more than 18% of the labor force  Mostly consisted of domestic jobs, what was considered “women’s work”  Women made less money even if they were doing the same job as a man  The idea was that a man should be the provider for the family and needed to make more money than women