The Incorporation of America

Essential Question Industrialization increased the standard of living and the opportunities of most Americans, but at what cost?

Causes of Rapid Industrialization Steam Revolution of the 1830s-1850s. 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.

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

Thomas Alva Edison “Wizard of Menlo Park”

The Light Bulb

The Phonograph (1877)

The Ediphone or Dictaphone

The Motion Picture Camera

Alexander Graham Bell Telephone (1876)

Alternate Current George Westinghouse

Alternate Current Westinghouse Lamp ad

The Airplane Wilbur Wright Orville Wright Kitty Hawk, NC – December 7, 1903

Model T Automobile Henry Ford I want to pay my workers so that they can afford my product!

“Model T” Prices & Sales

U. S. Patents Granted 1790s  276 patents issued.

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

New Business Culture 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!

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.” Herbert Spencer

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

New Business Culture: “The American Dream?” Protestant (Puritan) “Work Ethic” Horatio Alger [100+ novels] Is the idea of the “self-made man” a MYTH??

New Type of Business Entities Pool 1887 Interstate Commerce Act  Interstate Commerce Commission created. Trust  John D. Rockefeller Standard Oil Co.

POOLS in a “pool”, competitors of a certain product agree to raise prices collectively so they can receive huge profits Example (s)???: Railroads --1890’s Plasma TV --- 2002 Gasoline --- since 1900

Standard Oil Co.

TRUSTS Trusts are developed by Rockefeller to bring control to former competitors. If competitors refuse to join the “Trust” Rockefeller would put them out of business. Other industries begin to follow example and also start “Trusts”. Sounds like a shakedown

New Type of Business Entities Trust: Horizontal Integration  John D. Rockefeller Vertical Integration: Gustavus Swift  Meat-packing Andrew Carnegie  U. S. Steel Own all aspects of a business from the bottom to the top

Vertical and Horizontal Vertical Integration Form of business organization in which all stages of production of a good, from the acquisition of raw materials to the retailing of the final product, are controlled by one company. A current example is the oil industry, in which a single firm commonly owns the oil wells, refines the oil, and sells gasoline at roadside stations. 1890= (Steel And Carnegie) Horizontal Integration In horizontal integration, by contrast, a company attempts to control a single stage of production or a single industry completely, which lets it take advantage of economies of scale but results in reduced competition. 1890=( Standard Oil Co.)

Iron & Steel Production

New Type of Business Entities

U. S. Corporate Mergers

New Financial Businessman The Broker: J. Pierpont Morgan

Wall Street – 1867 & 1900

The Reorganization of Work Frederick W. Taylor The Principles of Scientific Management (1911)

There is no question that the tendency of the average man (in all walks of life) is toward working at a slow, easy gait, and that it is only after a good deal of thought and observation on his part or as a result of example, conscience, or external pressure that he takes a more rapid pace."There are, of course, men of unusual energy, vitality and ambition who naturally choose the fastest gait, whose up their own standards, and who work hard, even though it may be against their best interests. But these few uncommon men only serve by forming a contrast to emphasize the tendency of the average. "This common tendency to 'take it easy' is greatly increased by bringing a number of men together on similar work and at a uniform standard rate of pay by the day. "Under this plan the better men gradually but surely slow down their gait to that of the poorest and least efficient. When a naturally energetic man works for a few days beside a lazy one, the logic of the situation is unanswerable. 'Why should I work hard when that lazy fellow gets the same pay that I do and does only half as much work?'

The Reorganization of Work The Assembly Line

% of Billionaires in 1900

% of Billionaires in 1918

The Protectors of Our Industries

The ‘Bosses’ of the Senate

The ‘Robber Barons’ of the Past

Cornelius [“Commodore”] Vanderbilt Can’t I do what I want with my money?

William Vanderbilt The public be damned! What do I care about the law? H’aint I got the power?

The Gospel of Wealth: Religion in the Era of Industrialization Wealth no longer looked upon as bad. Viewed as a sign of God’s approval. Christian duty to accumulate wealth. Should not help the poor. Russell H. Conwell

“On Wealth” The Anglo-Saxon race is superior. “Gospel of Wealth” (1901). Inequality is inevitable and good. Wealthy should act as “trustees” for their “poorer brethren.” Andrew Carnegie

Regulating the Trusts 1877  Munn. v. IL 1886  Wabash, St. Louis & Pacific Railroad Company v. IL 1890  Sherman Antitrust Act in “restraint of trade” “rule of reason” loophole 1895  US v. E. C. Knight Co.

Relative Share of World Manufacturing

Modern ‘Robber Barons’??