The Industrial Revolution 1850-1900

Questions? Which products were introduced to the consumers of the United States after the Civil War that helped re-start the US economy? How do you market a new product? Who were the important business leaders of the Industrial Revolution, and how did they run their businesses?

Questions? How should businesses be regulated? What were the conditions like in the factories that produced these new products, and how were workers treated? How did workers and owners balance power in the workplace?

New Products of the Industrial Revolution

Patents 1790-1860 36,000 issued 1860-1890 500,000 issued License to make, use, or sell an invention 1790-1860 36,000 issued 1860-1890 500,000 issued

Drilling for Oil Needed for factories to run efficiently Drilling was quicker. cheaper, and created a much larger supply than digging ditches or melting animal fat

By 1900, there were 1.5 million telephones in use all over the country, and Western Union Telegraph was sending roughly 63 million messages.

Thomas A. Edison Setup research lab Created a system for producing and distributing electrical power

Edison Perfected the light bulb

Edison Developed the phonograph

Developed the motion picture camera Edison Developed the motion picture camera

Developed a way to transmit it long distances (Transformers) George Westinghouse Made electricity safer and less expensive (AC Current) Developed a way to transmit it long distances (Transformers) More effective air brakes for trains

Electric sewing machine Other Inventions Electric sewing machine Cameras Refrigerator

Meanwhile on the farm… Mechanical Reapers Sod busting plows Mechanized tractors

The Bessemer Process In 1856, Henry Bessemer receives a patent on a process that made steel production easier and less expensive. The Bessemer process made possible the mass production of steel.

The Brooklyn Bridge, designed with steel cables suspended from high towers, was made possible by mass production.

It took another innovation to begin the transformation of cities Elevators

Early Skyscrapers Strong steel plus elevators mean that America’s teeming cities can now grow upwards!

The Railroads On May 10, 1869, the Transcontinental Railroad, extending from coast to coast, was finished with the hammering of a golden spike at Promontory Point, Utah.

Industrial Revolution Business Leaders Business Practices Business Regulations

“Robber Baron” or a “Captain of Industry” 1. Business Leaders Generally classified as either a “Robber Baron” or a “Captain of Industry”

I. Robber Barons Business leaders who made their fortunes by taking advantage of the public They drained natural resources and charged high prices

They persuaded public officials to interpret laws in their favor. They ruthlessly drove their competitors to ruin. They paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.

Adhered to a policy of “Social Darwinism”, as it applied to business practices

Social Darwinism or, Laissez-Faire Based on Darwin’s Theory of Evolution (1859) regarding natural selection and the survival of the fittest Businessmen are justified in using any means necessary to become rich and powerful, and the government should stay out!

Three business practices exemplified the philosophy of Social Darwinism Monopolies Cartels Trusts

Monopoly (Vertical Consolidation) One company completely controls a product or a service, from the means of production, to manufacturing, to transportation, and sales

Controlling the Market Using Vertical Integration, Bob could control the Pizza market in town by controlling many of the costs associated with making his pizza! Bob’s Pizza Bob’s Trucking Company Bob’s Cheese Factory Bob’s Farm

Monopoly (Horizontal Consolidation) One company buys out each of their competitors, and therefore owns every outlet for a certain product

Controlling the Market Bob’s Pizza Delaware Pizza Happy Time Pizza Pizza Pizza Using Horizontal Integration, Bob could control the Pizza market in town by buying the other Pizza shops! Bob’s Pizza Bob’s Pizza Bob’s Pizza Bob’s Pizza

Cartel – a loose association of businesses in a similar field or that make the same product and agree to limit supply to drive up prices

Trust Multiple company’s selling the same product agreed that rather than compete with each other over prices and profits, they would agree to set their prices, and then split the profits evenly

II. Captains of Industry Still practiced the theory of Social Darwinism to a certain extent to increase their fortunes, but: They increased the supply of goods by building factories. They raised productivity and expanded markets, further lowering prices

They created jobs at decent wages and in safe factories that enabled many Americans to buy new goods and raise their standard of living. They also funded museums, libraries, and universities, many of which still serve the public today. Carnegie Hall

III. A Compromise? “The Gospel of Wealth” Philosophy that states a person should be able to make as much money as they can, BUT they should also use their wealth to improve society.

While big business urged the federal government to adopt a Laissez-Faire attitude, many consumers and workers called for a “Social Welfare” policy to be enforced

Social Welfare It is the government’s responsibility to control big businesses in order guarantee quality products at fair prices for consumers, and fair pay and decent hours for workers

Laborers Between 1860 and 1900, almost 14 million immigrants came to the United States Each needed a job, and without knowing the language, having a permanent residence, no wealth, or having the initial skills to succeed in the American economy, most worked in factories doing simple, repetitive tasks

Laborers After the Civil War ended, more than 8 million people left the agricultural business and headed to the cities looking for jobs Without the technical skills needed for higher paying jobs, they competed for the same factory jobs as immigrants

Laborers The rising costs of living in the cities, the increased desire for new goods, and the low paying salaries caused many families to employ everyone, including their children. By 1900, nearly 20% of all children between the ages of 10 and 16 worked in a factory, with most starting around the age of 13 (though as young as 6).

Owners Factory owners needed laborers to work in their factories. The growing supply and demand for new products created the potential for unlimited profits. Since there were millions of potential workers all vying for the same jobs, owners could offer low wages, long hours, and poor conditions, knowing that someone would be willing to take the job.

Owners Owners saved millions of dollars in worker costs, adding to their profits. Strict rules applied, and even stricter overseers were employed to keep workers on task.

Government Regulation of Big Business Gibbons v. Ogden (1824) Asserted that Congress, not the states, has the power to regulate commerce (even interstate commerce), and that Federal law takes precedence over state laws

Government Regulation of Big Business Interstate Commerce Act (1887) Based on the railroad monopolies, the Supreme Court ruled in favor of: Just and reasonable rate changes Prohibiting special rates or rebates for individual shippers Prohibiting preference rates for particular localities, shippers, or products

Government Regulation of Big Business Sherman Anti-Trust Act (1890) Dissolved trusts by making it illegal for businesses to associate in any combination in the form of a trust or otherwise that is in the restraint of trade or commerce among states

Government Regulation of Big Business Keating-Owen Child Labor Act (1916) By 1900, approx. 2 million children were working in mills, mines, fields, factories, stores, on city streets in the United States This act banned the sale of products from any factory, shop, or cannery that employed children under the age of 14 … from any mine employing children under the age 16 …from any facility employing children under the age of 16 at night, or for more than 8 hours a day

The bill was eventually ruled unconstitutional, but was finally passed into law as part of the Fair Labor Standards Act (1938).