The Rise of Big Business The Gilded Age The Rise of Big Business

Essential Question: Was the rise of industry good for the United States?

A Brassy, Flamboyant Age Gilded Age: {Reconstruction (1877) -- Progressive Era (1901)} brassy, flamboyant age dominated by big business values, political corruption, and extremes of wealth and poverty

Major Developments Major Developments: Industrialization Urbanization Immigration

From Agriculture to Industry During Gilded Age, U.S. experienced rapid shift from an agricultural economy to an industrial one 

Relative Share of World Manufacturing

Experienced an industrial revolution, mass immigration, & urbanization USA in the Gilded Age: 1870-1900 The North: Experienced an industrial revolution, mass immigration, & urbanization

Was the rise of industry good for the United States? Essential Question Was the rise of industry good for the United States?

Gilded Age Industrialization During the Gilded Age (1870-1900), the United States experienced an Industrial Revolution: New technology, transportation, efficient mass-production spread ideas & industrial products By 1900, the U.S. was the U.S. the most industrialized country in the world

An Age of Invention U.S. Patents Issued (1850-1899) The Gilded Age was an Age of Invention U.S. Patents Issued (1850-1899) 13

An Age of Invention What is it? What is it? What is it? The Gilded Age was an Age of Invention Cash registers, adding machines, business typewriters Alexander Graham Bell invented the first telephone The Bessemer process transformed iron into stronger, lighter steel What is it? What is it? What is it? 13

An Age of Invention What is it? The Gilded Age was an Age of Invention Thomas Edison (Wizard of Menlo Park) was the greatest inventor of the 1800s In his research lab in New York, he created the 1st audio recorder, phonograph, and batteries His most influential invention was the 1st electric light bulb What is it? 13

The Business of Invention New innovations allowed for increased industrial production New machines were incorporated into the 1st assembly lines that allowed for faster mass production Railroads linked all regions America’s wealth of iron, oil, coal, immigrant labor, & investment capital (money) supplied factories 13

The Industrial Revolution was fueled by 4 industries (R. O. S. E The Industrial Revolution was fueled by 4 industries (R.O.S.E.) Railroads, Oil, Steel, Electricity

Industrial Resources: Iron, Coal, Railroads, & Steel Plants The “Rust Belt”

Eastern RRs were connected to the West by 4 great trunk lines The Railroad Industry America’s first “big business” was the railroad industry: Railroads stimulated the coal, petroleum, iron, steel industries Eastern RRs were connected to the West by 4 great trunk lines 3

Railroad growth fueled industrial development 100,000 miles of track laid between 1877 - 1893 standardization of gauge width of tracks (4 feet, 8 1/2 inches) [encouraged development] time zone adoption allowed U.S. divided into four zones massive grants of American land 131 million acres -- federal 49 million acres -- states

Railroad Construction in the Gilded Age

Oil provided kerosene lighting & lubrication for industrial machinery

Steel Production

Wadsworth Building, NYC Steel Production Steel transformed world industry: Allowed for taller buildings, longer bridges, stronger railroad lines, & heavier machinery Wadsworth Building, NYC

International Steel Production, 1880-1914

Efficiency & Mass Production in Factories

Causes of Rapid Industrialization The Railroad fueled the growing US economy: * First big business in the US. * A magnet for financial investment. * Aided the development of other industries.

Causes of Rapid Industrialization 2. Technological innovations: * Bessemer and open hearth process * Refrigerated cars * Edison  “Wizard of Menlo Park”  light bulb, phonograph, motion pictures.

Causes of Rapid Industrialization Unskilled & semi-skilled labor in abundance. U.S. population 3x from 1860 - 1910 Government aid at all levels to stimulate economic growth High tariffs {hurt exporters (farmers)} Abundant natural resources H2O, timber, coal, iron, copper, and oil

New Business Culture Laissez Faire  an ideology of the Industrial Age Individuals should compete freely in the marketplace. No room for government in the market! French -- "let it be"

New Business Culture Entrepreneurs  (another) ideology of the Industrial Age People who risk their $$$ in organizing and running a business French -- "to undertake"

New Forms of Business Organization Corporation: an organization owned by many people, treated (by law) as a single person People who own the corporation are called shareholders Share of ownership is a stock Limited liability

New Forms of Business Organization During the Gilded Age, business & industry were transformed: Massive corporations replaced small, family businesses Managers were hired to make factories run more efficiently New business models, such as “trusts” integrated various businesses under 1 board of directors

New Business Organization Combinations of Corporations (WHY?) increases efficiency and profits destroyed healthy competition that often makes capitalism a viable economic model

New Business Organization: Board of Trustees (Trust) Company Manager Employees “Trusts” use a board of trustees to manage a company

New Forms of Business Organization Corporations in the Gilded Age used mergers to increase profits Companies used horizontal integration to buy similar companies to reduce competition Vertical integration allowed companies to buy companies that supply raw materials or transportation for their products 13

Vertical & Horizontal Integration

Monopolies Corporate mergers led to giant companies called monopolies: Companies that control nearly all of a particular industry Because most monopolies of the Gilded Age were run by boards of trustees, monopolies became known as “trusts” Monopolies led to a new generation of U.S. millionaires 9

By 1900, 1% of U.S. companies controlled 33% of all industry U.S. Corporate Mergers By 1900, 1% of U.S. companies controlled 33% of all industry

The Monopolists Andrew Carnegie created the Carnegie Steel Company: He converted to the Bessemer process & was able to out-produce his competition & offer better quality steel at lower prices He mastered vertical integration to lower his production costs His company made more steel than all the factories of Great Britain, France and Germany combined

U S U. S. Steel Corporation When he retired in 1901, he sold Carnegie Steel to financier J. P. Morgan for over $400 million dollars. Morgan subsequently reorganized the company into the United States Steel Corporation. U S

Andrew Carnegie’s rise from a poor Scottish immigrant to one of the richest men in the world was the great example of the “American Dream” Carnegie did not pay his employees very much & did not allow unions in his factories… …but he was a philanthropist who gave money to New York City libraries, colleges, & performing arts institutions 9

The Monopolists John Rockefeller created the Standard Oil Company Used horizontal integration to create a petroleum company that monopolized the oil industry, lowered costs & improved quality By 1879, Standard Oil sold 90% of all U.S. oil & sold to Asia, Africa, & South America 12

Rockefeller was labeled a “robber baron” who took advantage of immigrant workers, driving his competition out of business, & used his fortune to influence the national gov’t… …but Rockefeller gave away $500 million to charities, created the Rockefeller Foundation, & founded the University of Chicago

Captains of Industry Entrepreneurs were able to achieve unprecedented wealth and power. 

The “Robber Barons” of the Past “Robber Barons” of the Gilded Age

1889 Duke Tobacco Advertisement Giant Corporations By 1900, 2/3 of all manufactured goods were being produced by giant corporations Swift and Armour dominated meat packing Duke family controlled tobacco Andrew Carnegie took over every aspect of steel production. armour armour Swift Swift 1889 Duke Tobacco Advertisement

Distant Corporations Needs once met by self-sufficient rural folk now met by large corporations usually located in the Northeast

Conclusions Due to the Industrial Revolution: The United States led the world in industry, innovation, & wealth Laissez-faire gov’t policies & new business tactics led to monopolies However, the gap between the wealthy monopolists & their poor immigrant workers grew wider