Industrialization (1865-1900)

Causes of Industrialization Natural Resources Population Growth US population tripled b/t 1860 & 1910 31.5 million to 92.2 million Improvements in Transportation Transcontinental Railroad Population Ticker

1st Transcontinental Railroad (1869) Railroads created the need for time zones

“let people do as they choose” Laissez Faire “let people do as they choose” Economic system in which there is no government involvement Only gov’t role is to protect property rights and maintain peace Supply and Demand decide prices and wages Basis of capitalism – our current economic structure in the United States

Adam Smith Wealth of Nations (1776) Invisible Hand Self-interest guides the most effective use of resources in an economy Supply and Demand Economics

Adam Smith (cont.) What people make the most money under this system? Difficult and Dangerous Jobs = $$$ Specialization of Labor

Karl Marx (1818-83) Communism – an ideology that seeks to create a classless society in which the gov’t controls the means of production (economy). COMMAND economy. An equality-based society Community shares wealth Same wages for all occupations

Capitalism-ish or Communism-ish? Mrs. Houser decides to cut a rap album and to sell it in the school cafeteria. The minimum wage Pay for work past 40 hour Federal regulation of housing prices Public schools I sell my own rap albums for $1 in order to put Mrs. Houser out of business and then raise my prices to $20

Economic Terms Corporation – business owned by multiple entrepreneurs Pepsico, Altria, Proctor and Gamble, News Corporation 25 Biggest Corporations Stock – ownership in a business Google, Apple Pools – agreements to maintain prices at a certain level

More Terms Fixed Costs - $$$ a company has to pay all the time Loans, mortgages, taxes Operating Costs - $$$ a company must pay only when producing Wages, utilities, shipping, materials, etc.

Here Come the Rockefellas Vertical Integration A business purchases other businesses that it depends on Andrew Carnegie (US Steel)

Horizontal Integration Combing firms in the same industry under one corporation Buying out the competition More control over prices John Rockefeller Standard Oil

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Changes Brought By Industrialization Machine based factories – less manual labor Poor working conditions Lint, dust, toxic fumes Increase in worker injuries Standard of Living goes up Real wages increase 50% b/t 1860 and 1890 22 cents an hour; 59 hours per week in 1900 Deflation – a rise in the value of money Opposite of inflation Factories tried to lower worker wages

Response to Conditions = Unions Union - an organization of workers, formed to deal/negotiate with employers Workers love ‘em – Employers hate ‘em

Attempts to Prevent Unions Blacklist – union organizers fired and put on a list that was distributed Lockout – union workers locked out of factory and not paid – scabs hired Strikebreakers Courts often ruled in favor of big business

The Great Railroad Strike of 1877 Upset with pay cuts following Panic of 1873’s recession 80,000 workers in 11 states Fights b/t workers and state militias sent to quell the violence 100 dead, millions of $$$ in damage

A better way Arbitration – allowing a third party to help workers and management reach an agreement Wanted… 8 hr work day, no child labor, equal pay for women, worker- owned companies

American Federation of Labor AFL – Samuel Gompers Three goals Convince companies to recognize unions Closed shops 8 hour work day 500,000 members in 1900 AFL-CIO

Thomas Edison The Wizard of Menlo Park