Urbanization

Ways People Got Rich

Turn of the Century Business  Government still believes in: laissez faire  At this point that means that: there are almost NO regulations on businesses  With new technology enhancing productivity and profitability: the opportunity exists to get INCREDIBLY wealthy

Ways People Got Rich  There were 3 main ways people got rich during this time period: 1. Using and incorporating new technology 2. Gaining control of the market for a product 3. Cutting costs on the production of a product

1. Using and incorporating new technology

Way One: Use and Incorporate New Technology  Getting in on a new market: whenever a product is new, the opportunity exists to be the first to capitalize on it, which = lots of money  Example:  John D. Rockefeller: getting in on the oil business early

Way One: Use and Incorporate New Technology  Using new technology to be more productive: being more productive means that you make your product faster and cheaper than anyone else, which means you can undersell your competition.  Example:  Andrew Carnegie: the first to use the Bessemer Process, which allowed him to make steel much faster and cheaper than anyone else.

2. Gaining control of the market for a product

Way Two: Control the Market for Your Product  A monopoly allows a producer to control:  Price  Quality  Quantity  Natural Monopoly: a monopoly that exists and will not be broken up by the government because it is either temporary or for a rarely-used item  Example: 1. Medicines- you have patents that run out 2. A company that sells pink polka-dotted umbrellas All of this puts the consumer at a disadvantage- they can’t “shop-around”

 Horizontal Consolidation: when a company buys up smaller companies that sell the exact same thing they do (their competition)  Example:  John D. Rockefeller’s larger company, Standard Oil, bought up smaller oil companies Way Two: Control the Market for Your Product

 Vertical Consolidation: when a company buys up smaller companies that go into the production of their product. (the ingredients and transportation)  Example:  Andrew Carnegie bought mines, transportation companies, iron facilities, all so that he could control every part of his production and sale of steel Way Two: Control the Market for Your Product

 Trust: “Informal monopoly”- this is when a larger company offers incentives (either money or stock) to smaller companies to allow the larger one to not ‘own’ but ‘run’ the smaller companies. Technically its not a monopoly because the smaller companies still have separate owners, but it has the same effects.  Example:  John D. Rockefeller Way Two: Control the Market for Your Product

3. Cutting costs on the production of a product

Way Three: Cutting Costs During Production  Deals with railroads- large companies would offer railroads deals that would give them cheaper rates than their competition, allowing their good to be cheaper.  Example:  John D. Rockefeller

 Exploitation of workers: ways to cut costs  Cheap labor  Unsafe conditions  Hiring of women, children, and immigrants Way Three: Cutting Costs During Production

4 big industrialists  The 4 wealthiest people in America at this time are:  John D. Rockefeller: Oil Industry  Andrew Carnegie: Steel Industry  Cornelius Vanderbilt: Railroad Industry  JP Morgan: Financial Industry

Captains of Industry

Cornelius Vanderbilt  Popularized steel rail; replaced the old iron tracks of the NY Central RR  Steel safer and more economical since it could carry a heavier load  His grandson, George, commissioned the building of Biltmore Estate

John D. Rockefeller  Oil Industry – Standard Oil Company  Horizontal Integration  Edwin Drake drills using a steam engine  Finds Oil  Oil Refining Industries are started

Andrew Carnegie  Steel  Bessemer Process - Faster and cheaper way to make steel  Uses vertical integration  Sells company to JP Morgan in 1901, but he controlled the largest portion of the nation’s steel  By the time of his death in 1919, Andrew Carnegie had given away about $350 million  Carnegie practiced the Gospel of Wealth – he argued that the wealthy should support institutions such as hospitals and public libraries to improve society

J.P. Morgan  Financier  Bought Stocks as opposed to the companies themselves…gave him control of the way they were run  When the U.S. Government needed money – they often went to Morgan

4 big industrialists  The 4 wealthiest people in America at this time are:  John D. Rockefeller: Oil Industry  Andrew Carnegie: Steel Industry  Cornelius Vanderbilt: Railroad Industry  JP Morgan: Financial Industry

Ways People Got Rich  Gained monopolies  Natural  Horizontal Consolidation: when you buy up companies that are like yours (Rockefeller)  Vertical Consolidation: when you buy up companies that go into the production of your product (Carnegie)  Trust (Informal monopoly)- when someone controls a business but doesn’t own them (Rockefeller)  Incorporated new technology  INDUSTRIAL REVOLUTION!!!

Growth in Technology  : U.S. Patent Office issued: 36,000 patents (a patent is a temporary monopoly on a new technology- measuring the amount of patents issued allows us to measure a growth in new technology)  That equals: 514 patents a year  : U.S. Patent Office issued: 500,000 patents  That equals: 16,667 patents a year  45.6 patents a day

Technology Landmarks  OIL  1858: Edwin Drake is sent by: Pennsylvania Rock Oil Company to attempt to drill and pump oil out of the ground.  Before- they had to dig a hole and wait or use whale oil  Successful in 1859: which makes oil the new energy source

Technology Landmarks  ELECTRICITY  1878: Thomas Edison- aka: the “Wizard of Menlo Park”  Establishes his: invention factory in Menlo Park, NJ  Main goal: is to create affordable, in home lighting  Found a: long burning filament which made a light bulb possible  His electricity is: based on direct current (must be directly connected to an energy source)  1883: New York City becomes the first city to have lights at night in the WORLD!!!!  1890: power stations are set up all across the U.S. to facilitate lighting

Technology Landmarks  Lewis Latimer: creates an even longer-lasting filament, which means a longer lasting bulb  George Westinghouse: bases his lighting on alternating current instead of direct current  It’s cheaper  It allows electricity to travel further distances  COMMUNICATION  Samuel Morse: patents the first telegraph and develops Morse code to use with it

Technology Landmarks  Alexander Graham Bell: invents the telephone  1878: Finances: a test run of 21 phones in Connecticut  1879: 1 st telephone: installed in the White House  1900: 1.5 million: phones in the U.S. are in use- also 69 million telegraph messages are sent that year  Shows: technology overlaps  Just because a new technology is created, doesn’t mean everyone gets rid of the old (think DVDs and Blu-rays)

Technology Landmarks  STEEL  Bessemer Process  Henry Bessemer: develops a faster and cheaper way to make steel  First to use this process is Andrew Carnegie  Makes: the mass production of steel possible  Led to: a new age of building that is now possible with steel- including things like the Brooklyn Bridge

Technology Landmarks InventionInventorWhat was it used for? Light BulbThomas EdisonFactories and homes to have light at night TelegraphSamuel MorseCommunication TelephoneAlexander Graham BellCommunication Bessemer ProcessHenry BessemerMade steel fast and cheaply Mechanical ReaperCyrus McCormickGather crops quickly Steel PlowJohn DeereDig troughs for planting seeds