Causes of Rapid Industrialization 1.Steam Revolution of the 1830s-1850s. 2.The Railroad fueled the growing US economy:  First big business in the US.  A magnet for financial investment.  The key to opening the West.  Aided the development of other industries. 1.Steam Revolution of the 1830s-1850s. 2.The Railroad fueled the growing US economy:  First big business in the US.  A magnet for financial investment.  The key to opening the West.  Aided the development of other industries.

The Railroad, Maker of Millionaires Railroad Tracks –1870 = 54,000 miles of track –1900 = 193,000 miles of track Railroad creates a manufacturing economy –1870 = Agricultural production surpassed industrial by $500 million –1900 = Industrial production surpassed agricultural production by $8.3 billion

The Railroad, Maker of Millionaires Transportation changes the economy –Railroads creates growth of large scale factories Transporting raw materials for processing Processed materials transported to manufacturers Manufactured goods transported to consumers all over the country –Railroad made shipping cheaper and more efficient –Regional economies converted to national economy

Causes of Rapid Industrialization 3.Technological innovations.  Bessemer and open hearth process  Refrigerated cars  Edison o “Wizard of Menlo Park” o light bulb, phonograph, motion pictures. 3.Technological innovations.  Bessemer and open hearth process  Refrigerated cars  Edison o “Wizard of Menlo Park” o light bulb, phonograph, motion pictures.

U. S. Patents Granted 1790s  276 patents issued. 1990s  1,119,220 patents issued.

4.Unskilled & semi-skilled labor in abundance. 5.Abundant capital. 6.New, talented group of businessmen [entrepreneurs] and advisors. 7.Market growing as US population increased. 8.Government willing to help at all levels to stimulate economic growth. 9.Abundant natural resources. 4.Unskilled & semi-skilled labor in abundance. 5.Abundant capital. 6.New, talented group of businessmen [entrepreneurs] and advisors. 7.Market growing as US population increased. 8.Government willing to help at all levels to stimulate economic growth. 9.Abundant natural resources. Causes of Rapid Industrialization

New Business Culture 1. Laissez Faire  the ideology of the Industrial Age.  Individual as a moral and economic ideal.  Individuals should compete freely in the marketplace.  The market was not man-made or invented.  No room for government in the market!  Individual as a moral and economic ideal.  Individuals should compete freely in the marketplace.  The market was not man-made or invented.  No room for government in the market!

2. Social Darwinism × British economist. × Advocate of laissez-faire. × Adapted Darwin’s ideas from the “Origin of Species” to humans. × Notion of “Survival of the Fittest.” × British economist. × Advocate of laissez-faire. × Adapted Darwin’s ideas from the “Origin of Species” to humans. × Notion of “Survival of the Fittest.” Herbert Spencer

2. Social Darwinism in America William Graham Sumner Folkways (1906) $Individuals must have absolute freedom to struggle, succeed or fail. $Therefore, state intervention to reward society and the economy is futile! $Individuals must have absolute freedom to struggle, succeed or fail. $Therefore, state intervention to reward society and the economy is futile!

New Type of Business Entities 1.Pool = informal agreements among various conmpanies to set rates and divide markets Began with railroads 2.Trust = A company with no competition, a monopoly, worked to drive competition out of business John D. Rockefeller 1.Pool = informal agreements among various conmpanies to set rates and divide markets Began with railroads 2.Trust = A company with no competition, a monopoly, worked to drive competition out of business John D. Rockefeller  Standard Oil Co.

New Type of Business Entities 2.Trust:  Horizontal Integration: Controlling all competition within a business   Rockefeller 2.Trust:  Horizontal Integration: Controlling all competition within a business   Rockefeller  Vertical Integration: Controlling all levels of production o Gustavus Swift  Meat-packing o Andrew Carnegie  U. S. Steel  Vertical Integration: Controlling all levels of production o Gustavus Swift  Meat-packing o Andrew Carnegie  U. S. Steel

Standard Oil Co.

Iron & Steel Production

U. S. Corporate Mergers

The Reorganization of Work The Assembly Line

% of Billionaires in 1900

The Protectors of Our Industries

The ‘Bosses’ of the Senate

The ‘Robber Barons’ of the Past

Regulating the Trusts 1887  Interstate Commerce Act  gov’t had right to regulate railroads  railroads resisted  Supreme Court did not allow them to set maximum rates 1890  Sherman Antitrust Act  Made it illegal to form a trust that interfered with free trade  Difficult to enforce because they never defined a trust  Did not stop trusts from forming 1887  Interstate Commerce Act  gov’t had right to regulate railroads  railroads resisted  Supreme Court did not allow them to set maximum rates 1890  Sherman Antitrust Act  Made it illegal to form a trust that interfered with free trade  Difficult to enforce because they never defined a trust  Did not stop trusts from forming

Questions Why was the government so ineffective in regulating companies? Is the power of these monoplies and industrialists good for America?