The Great West & Gilded Age American History II - Unit 1

Review Why were organizations like the Grange and Farmers’ Alliances significant for farmers in the west? Allowed for social unity to discuss and promote the values, beliefs, and needs of farmers The Populist party became the ______________ voice of the farmer. What 3 main goals did the Omaha Platform outline? Political voice Increase money in circulation, introduce a graduated income tax, have government regulation of railroads How did supporting bimetallism advance Populist beliefs? Bimetallism (backing currency with gold and silver) would increase the money in circulation  prices for products would rise  farmers would make more money Who was the Democratic and Populist candidate for president in 1896? William Jennings Bryan Why did the Democratic and Populist candidate lose the presidential election of 1896? Northern consumers and workers did not want higher prices on goods What 2 legacies did the Populist party leave? The lower class/common man could organize and have a political impact Set the stage for future reform movements in gov’t

1.3 – Expansion of Industry, Railroads, & Big Business https://www.youtube.com/watch?v=COdwYw39MAI

Expansion of Industry

Industrialization Development of industries for the mechanical mass production of goods Shift from making goods individually by hand  mass production using interchangeable parts and factories Led by entrepreneurs – person who organizes, manages, and takes the risk with starting an industry/business Mid 1800s to 1910s – mass production of raw materials using natural resources and technology “Second Industrial Revolution”

Industrialization and Oil 1859 – Edwin Drake developed the first steam engine oil drill Made it possible to extract “black gold” directly from the ground Growth of oil refineries to purify oil (by entrepreneurs)  kerosene and gasoline

Industrialization and Steel Home Insurance Building (1884) 1890s – large iron deposits discovered in Minnesota Iron contains carbon and bends/rusts easily  need to transform it into steel Bessemer process – process to make steel, injecting air into iron to remove carbon and impurities Steel’s uses Infrastructure (transportation systems) – railroad tracks, bridges Barbed wire Farm equipment Architecture – skyscrapers, rise of modern cities

Inventions Promote Change Thomas Edison – incandescent light bulb (1880), later invented a system to producing and distributing electrical power Harnessing the power of electricity  revolutionized American life Inexpensive, convenient Businesses - boom in industries, factories could locate anyway, run machines off electricity Homes - Outward growth of cities, electric appliances Cities – electric streetcars offered cheap travel

Inventions Promote Change Christopher Sholes – typewriter (1867) Changes in the workplace Alexander Graham Bell – telephone (1876) Changes in communication New jobs for women Garment/textile factory work Clerical and secretarial office work

Effects of Industrialization and Inventions Positive Negative Freed some labor from backbreaking work in factories Improved standard of living for workers (shorter days, less dangerous) New consumer markets Harm to environment Depletion of natural resources Mechanization of factories  reduced human worth

Expansion of Railroads

Railroads Continue to Expand 1890s – several transcontinental railroads, east-west coasts linked Increased travel and communication revealed a problem with a national time  “Railroad time” – 24 global time zones – to standardize shipping and receiving times

Railroads Continue to Expand Growth of cities along railroads Cities along tracks would specialize in a particular product to promote trade and interdependence (ex: Chicago – stockyard, meatpacking) George Pullman – invented the sleeping car, founded Pullman, IL (1880) – city based on factory work, contained all the amenities of everyday life Every aspect of life controlled by company – hope to maintain a stable work force 1894 – workers strike in response to pay cuts and high rent

Railroads Continue to Expand Growth of railroads  Increase in iron, coal, steel, lumber, and glass industries, new markets for business and consumers, and high profits  increased corruption 1872 – Crédit Mobilier Scandal Union Pacific stockholders established the construction company called Crédit Mobilier UP stockholders gave CM an overpriced railroad contract and sold shares of the contract to influential Republican congressmen Congressmen approved federal subsides (financial help) to build the overpriced railroad in order to collect the profit from the completed railroad Tarnished the Republican party’s reputation

Government Takes Control of Railroads Railroad industry’s abuses of power Misuse of fed. land grants  sold land to settlers for more $ Fixed prices in certain markets  kept farmers in debt Charged arbitrary high shipping rates The Grangers (members of the Grange) lobbied for laws to regulate the railroad industry  “Granger Laws” (1871) Established maximum shipping and passenger rates

Government Takes Control of Railroads Munn v. Illinois (1877) Railroad industry challenged the constitutionality of the Granger laws SCOTUS ruled in favor of Granger Laws – the fed gov’t has the right to regulate private industries/businesses to serve the public’s best interest Interstate Commerce Act (1887) Established the Interstate Commerce Commission (ICC) Declared the right of the fed gov’t to supervise railroad activity Required railroads to publicize fees and rates Not very effective, railroads blatantly ignored ICC until the Progressive Movement of the early 1900s

Railroads Cause Panic Panic of 1893 – railroad companies went bankrupt  banks collapsed  national depression Industrialists like J.P. Morgan and Cornelius Vanderbilt assumed control of railroads  By 1900, 7 companies controlled over 2/3 of railroads

Expansion of Big Business https://www.youtube.com/watch?v=7RmmdZuSOmI

Fewer Control More Mid-late 1800s – some entrepreneurs and companies grew to consolidate and engulf an entire industry Entrepreneurs – “Robber Barons” – big businessmen of the late 1800s, used ruthless tactics to dominate industries

Fewer Control More How did the Robber Barons dominate industries? Vertical integration – owning all of the steps of producing and selling a good Ex: owning iron mines, steel factories, and railroads for steel distribution Horizontal integration – owning all of the companies that manufactures a good (no competition = a monopoly) Ex: owning all of the steel producing factories Accomplished by merging – buying all of the stock of another company

Andrew Carnegie American industrialist and philanthropist 1873 - founded Carnegie Steel Company using the Bessemer process Practiced vertical integration Constantly updated technology for maximum production Pleased employees – stock options, used other incentives to foster friendly competition among workers

Andrew Carnegie Robber Barons were considered to be ruthless and selfish men, HOWEVER Carnegie is generally considered to have been honest and philanthropic. Basically the only big businessman of the time to NOT earn the Robber Baron title Gave 98% of wealth to various charities (over $350 million) – centered around education advancements, free and public libraries, and global peace 14 of Carnegie’s trusts and organizations still exist today

Robber Barons Consolidate Industries Most Robber Barons attempted horizontal integration through mergers  monopolies. Complete control over its industry, therefore can charge any price for the product. How merge? Use a holding company Form a trust agreement

Robber Barons Consolidate Industries Holding Company Trust Agreement Companies’ stocks are owned by a group of trustees that run all of the businesses in the trust  individual companies earned dividends on trust profits (even though trusts were illegal…) Ex: John D. Rockefeller’s Standard Oil Company in the Standard Oil Trust – controlled 90% of oil processing by 1880 Company that just buys all of the stocks of other companies Ex: J.P. Morgan’s United American Steel company bought all steel companies (including Carnegie Steel)  steel monopoly

Vanderbilt – controlled many railroad companies Rockefeller’s Standard Oil monopoly

Robber Barons’ Ruthless Tactics Rockefeller and other Robber Barons reaped huge profits. Paid workers extremely low wages Drove out any competition that didn’t merge by selling oil at a lower cost than it cost to produce it THEN when market was controlled, prices skyrocketed Critics pressured some industrialists to be philanthropic. Rockefeller kept most assets but gave away over $500 million  Rockefeller Foundation, funds to found the University of Chicago, and a medical institute

Sherman Antitrust Act Fed gov’t concerned that expanding corporations and monopolies would hinder competition in a free market. Sherman Antitrust Act (1890) Illegal to form a trust interfering with free trade between states or other countries Did not clearly define “trust” and corporations found loopholes in the law By 1900, gov’t gave up on trying to stop monopolies

Industrialization Bypasses the South Late 1800s – Post-Reconstruction South remained based in agriculture and struggled to make profits. High tariffs on raw materials and imported goods Lack of skilled workers Fewer railroads Less connectivity for shipping or receiving Less communication Fewer markets