Chapter 17: Sources of Industrial Growth  Ali Thompson, Anna Hamm, Lee Sanderson  Objectives:  Industrial Technologies  The Technology of Iron & Steel Production  The Automobile & The Airplane  Research and Development  The Science of Production  Railroad Expansion & The Corporation  Ali Thompson, Anna Hamm, Lee Sanderson  Objectives:  Industrial Technologies  The Technology of Iron & Steel Production  The Automobile & The Airplane  Research and Development  The Science of Production  Railroad Expansion & The Corporation

Industrial Technologies  The Rapid Emergence of new technologies was a major contributor to 19th century industrial growth  In 1866, Cyrus W. Field laid a transatlantic telegraph cable to Europe  Alexander Graham Bell developed the first telephone with commercial capacity  By 1900, there were 1.35 million telephones and by million  The Rapid Emergence of new technologies was a major contributor to 19th century industrial growth  In 1866, Cyrus W. Field laid a transatlantic telegraph cable to Europe  Alexander Graham Bell developed the first telephone with commercial capacity  By 1900, there were 1.35 million telephones and by million

Industrial Technologies  Guglielmo Marconi (an Italian inventor) took the first steps towards the development of the radio in the 1890s  This developed technology quickly found its way to the United States  Other inventions followed -typewriter by Christopher L Sholes (1868) -cash register by James Ritty (1879) -calculating/adding machine by William Burroughs (1891)  Guglielmo Marconi (an Italian inventor) took the first steps towards the development of the radio in the 1890s  This developed technology quickly found its way to the United States  Other inventions followed -typewriter by Christopher L Sholes (1868) -cash register by James Ritty (1879) -calculating/adding machine by William Burroughs (1891)

Industrial Technologies  In the 1870s, electricity as a source of light and power was introduced  Charles F Brush devised the arc lamp for street illumination  Thomas A Edison invented the incandescent lamp, or the lightbulb  After improved generators and large power plants, electric power was becoming commonplace in many locations  High efficiency steam engines helped develop trade and industry by cheapening the prices of important goods  Refrigerated ships made it possible to transport meat from country to country  In the 1870s, electricity as a source of light and power was introduced  Charles F Brush devised the arc lamp for street illumination  Thomas A Edison invented the incandescent lamp, or the lightbulb  After improved generators and large power plants, electric power was becoming commonplace in many locations  High efficiency steam engines helped develop trade and industry by cheapening the prices of important goods  Refrigerated ships made it possible to transport meat from country to country

Iron and Steel Production Technology  The most important technological development was the revolutionizing of iron and steel production because our nation relied so heavily on railroads and urban construction  The demand for iron rails was the main cause of development in iron production throughout most of the 19th century; steel production had hardly developed at all  In the 1870s and 1880s, iron production increased greatly as 40,000 new miles of railroad were created  The production of steel had also made great strides toward its dominance in the metals industry  The most important technological development was the revolutionizing of iron and steel production because our nation relied so heavily on railroads and urban construction  The demand for iron rails was the main cause of development in iron production throughout most of the 19th century; steel production had hardly developed at all  In the 1870s and 1880s, iron production increased greatly as 40,000 new miles of railroad were created  The production of steel had also made great strides toward its dominance in the metals industry

Iron and Steel Production Technology  Henry Bessemer and William Kelly developed a process for converting iron into steel- this was called the Bessemer process  Robert Mushet discovered that ingredients could be added to give the steel additional strength  Abram S Hewitt introduced a new method of making steel- the open hearth process  This made possible the production of steel in large quantities and dimensions for use in manufacturing locomotives, rails, and girders for constructing tall buildings  Steel industry emerged first in western Pennsylvania & eastern Ohio- there was an abundance of iron ore here  There was demand for new kinds of fuel and particularly for the anthracite (or hard) coal-it was plentiful in Pennsylvania  Henry Bessemer and William Kelly developed a process for converting iron into steel- this was called the Bessemer process  Robert Mushet discovered that ingredients could be added to give the steel additional strength  Abram S Hewitt introduced a new method of making steel- the open hearth process  This made possible the production of steel in large quantities and dimensions for use in manufacturing locomotives, rails, and girders for constructing tall buildings  Steel industry emerged first in western Pennsylvania & eastern Ohio- there was an abundance of iron ore here  There was demand for new kinds of fuel and particularly for the anthracite (or hard) coal-it was plentiful in Pennsylvania

Iron and Steel Production Technology  Pittsburgh became the leading steel center of the world  Michigan, Minnesota, and Alabama then became important ore producing centers  New centers came up around them in Cleveland, Detroit, and Chicago  Furnaces were built at 75 ft tall and higher and would produce over 500 tons a week  Pittsburgh became the leading steel center of the world  Michigan, Minnesota, and Alabama then became important ore producing centers  New centers came up around them in Cleveland, Detroit, and Chicago  Furnaces were built at 75 ft tall and higher and would produce over 500 tons a week

Iron and Steel Production Technology  Great Lakes steel production was made possible by steam freighters that could transport the ore and also sped up the task of unloading the ore  This encouraged the design of larger and heavier freighters  Railroads and steel companies had an even closer relationship- steel provided for railroads and railroads supported the steel industry  Oil became a important resource because of the need for lubricating of machines  George Bissell showed that oil could be burned in lamps and could also yield things such as paraffin, naphtha, and lubricating oil  Great Lakes steel production was made possible by steam freighters that could transport the ore and also sped up the task of unloading the ore  This encouraged the design of larger and heavier freighters  Railroads and steel companies had an even closer relationship- steel provided for railroads and railroads supported the steel industry  Oil became a important resource because of the need for lubricating of machines  George Bissell showed that oil could be burned in lamps and could also yield things such as paraffin, naphtha, and lubricating oil

The Automobile  The invention of the automobile had one of the farthest reaching impacts on the United States  2 technologies were critical for its development -creation of gasoline (process in which lubricating oil and fuel oil were removed separately from crude oil) -”Internal Combustion Engine” used expanded power of burning gas to drive pistons  Nicolaus August Otto created the gas-powered four stroke engine in the mid 1860s, but didn’t develop a way to untether it from gas lines to be used in machines  The invention of the automobile had one of the farthest reaching impacts on the United States  2 technologies were critical for its development -creation of gasoline (process in which lubricating oil and fuel oil were removed separately from crude oil) -”Internal Combustion Engine” used expanded power of burning gas to drive pistons  Nicolaus August Otto created the gas-powered four stroke engine in the mid 1860s, but didn’t develop a way to untether it from gas lines to be used in machines

The Automobile  Gottfried Daimler, Otto’s former employee, later perfected a usable engine  American auto industry then developed rapidly  Charles and Frank Duryea built the first gas-driven motor vehicle in America in 1903  Henry Ford then produced the “Ford” automobile 3 years after  In 1895, there were only 4 automobiles on highways. However, by 1917, nearly 5 million automobiles were on the roads  Gottfried Daimler, Otto’s former employee, later perfected a usable engine  American auto industry then developed rapidly  Charles and Frank Duryea built the first gas-driven motor vehicle in America in 1903  Henry Ford then produced the “Ford” automobile 3 years after  In 1895, there were only 4 automobiles on highways. However, by 1917, nearly 5 million automobiles were on the roads

The Airplane  In the late 19 th century, engineers and scientists were beginning to experiment with a wide range of aeronautical devices  Balloonists wanted to make dirigibles useful vehicles of transportation.  Some just experimented with kites and gliders  In the late 19 th century, engineers and scientists were beginning to experiment with a wide range of aeronautical devices  Balloonists wanted to make dirigibles useful vehicles of transportation.  Some just experimented with kites and gliders

The Airplane  Wilbur and Orville Wright of Ohio began constructing a glider in 1899 that could be propelled into the air by an internal- combustion engine  4 years later, Orville took a test flight near Kitty Hawk, North Carolina and the airplane took off (on its own) and traveled 120 feet in 12 seconds on its own power, then settled back to earth  In the fall of 1904, the plane had been improved to where it was able to fly 23 miles, and in the following year they began to allow passengers on the flights with them  Despite the first airplane being built in the US, France made most of the progress because they had the right funds  Wilbur and Orville Wright of Ohio began constructing a glider in 1899 that could be propelled into the air by an internal- combustion engine  4 years later, Orville took a test flight near Kitty Hawk, North Carolina and the airplane took off (on its own) and traveled 120 feet in 12 seconds on its own power, then settled back to earth  In the fall of 1904, the plane had been improved to where it was able to fly 23 miles, and in the following year they began to allow passengers on the flights with them  Despite the first airplane being built in the US, France made most of the progress because they had the right funds

The Airplane  National Advisory Committee on Aeronautics (1915) was created 12 years after the Wright Brothers’ flight  American planes became significant during World War 1  Charles Lindbergh’s solo flight in 1912 from New York to Paris electrified the nation and the world, and caused higher expectations for planes used for commercial flight  National Advisory Committee on Aeronautics (1915) was created 12 years after the Wright Brothers’ flight  American planes became significant during World War 1  Charles Lindbergh’s solo flight in 1912 from New York to Paris electrified the nation and the world, and caused higher expectations for planes used for commercial flight

Research and Development  Rapid development of new industrial technologies persuaded business leaders to sponsor their own research operations  General Electric feared technological competition, and created one of the first corporate laboratories in 1900  These emerging corporate research and development labs coincided with a decline in government support for research by decentralizing the sources of funding  Engineers became interested in these research and development agendas of corporations, and scientists scorned this “commercialization” of knowledge and preferred to stick to basic research  Rapid development of new industrial technologies persuaded business leaders to sponsor their own research operations  General Electric feared technological competition, and created one of the first corporate laboratories in 1900  These emerging corporate research and development labs coincided with a decline in government support for research by decentralizing the sources of funding  Engineers became interested in these research and development agendas of corporations, and scientists scorned this “commercialization” of knowledge and preferred to stick to basic research

The Science of Production  By the turn of the century, many industrialists were embracing the new principles of “scientific management,” often known as “Taylorism” (after its leader Frederick Winslow Taylor)  Argued that scientific management made human labor compatible with the demands of the machine age and increased employer’s control of the workplace  Wanted to “subdivide tasks” to speed up production and made workers more interchangeable, diminishing dependence on one worker  By the turn of the century, many industrialists were embracing the new principles of “scientific management,” often known as “Taylorism” (after its leader Frederick Winslow Taylor)  Argued that scientific management made human labor compatible with the demands of the machine age and increased employer’s control of the workplace  Wanted to “subdivide tasks” to speed up production and made workers more interchangeable, diminishing dependence on one worker

The Science of Production  The emergence of mass production and the moving assembly line were the most important changes in industrial technology  Henry Ford introduced this assembly line in his automobile plants in 1914  The assembly line was both a place and a concept. Workers assembled parts that they specialized in  General Motors later adopted the same philosophy  Automobile production was also reliant on the use of electricity  The assembly line allowed for higher wages and reduce hours while cutting the price of his Model T from $950 (1914) to $290 (1929)  The emergence of mass production and the moving assembly line were the most important changes in industrial technology  Henry Ford introduced this assembly line in his automobile plants in 1914  The assembly line was both a place and a concept. Workers assembled parts that they specialized in  General Motors later adopted the same philosophy  Automobile production was also reliant on the use of electricity  The assembly line allowed for higher wages and reduce hours while cutting the price of his Model T from $950 (1914) to $290 (1929)

Railroad Expansion and the Corporation  The main agent of industrial development in the late 19 th century was railroads  Railroads gave access to distant markets and remote sources of raw materials  The nation’s largest businesses created new forms of corporate organization  They were America’s biggest investors- they stimulated economic growth through their own enormous expenditures on construction and equipment  The main agent of industrial development in the late 19 th century was railroads  Railroads gave access to distant markets and remote sources of raw materials  The nation’s largest businesses created new forms of corporate organization  They were America’s biggest investors- they stimulated economic growth through their own enormous expenditures on construction and equipment

Railroad Expansion and the Corporation  Railroad trackage increased from 30,000 miles in 1860 to 193,000 in 1900  Subsidies from federal, state, and local governments were vital to this expansion  Emergence of railroad combinations were equally important, and many of them were owned by one or two individuals  The achievements of these tycoons became symbols to much of the nation of concentrated economic power  However, railroad development was less significant to the individual barons it created than for its contribution to the growth of a new institution: modern corporation  Railroad trackage increased from 30,000 miles in 1860 to 193,000 in 1900  Subsidies from federal, state, and local governments were vital to this expansion  Emergence of railroad combinations were equally important, and many of them were owned by one or two individuals  The achievements of these tycoons became symbols to much of the nation of concentrated economic power  However, railroad development was less significant to the individual barons it created than for its contribution to the growth of a new institution: modern corporation

Railroad Expansion and the Corporation  The modern corporation emerged as a major force after the Civil War, by then railroad magnates and other industrialists realized that their ventures could not be financed by a single person  Business organizations could raise money by selling stock to members of the public under the laws of incorporation that were passed in many states (1830s)  Investors had “limited liability”, which made these stocks more appealing. The only thing they were putting at risk was the amount of the investment  This allowed entrepreneurs to gather vast sums of capital and undertake great projects  The modern corporation emerged as a major force after the Civil War, by then railroad magnates and other industrialists realized that their ventures could not be financed by a single person  Business organizations could raise money by selling stock to members of the public under the laws of incorporation that were passed in many states (1830s)  Investors had “limited liability”, which made these stocks more appealing. The only thing they were putting at risk was the amount of the investment  This allowed entrepreneurs to gather vast sums of capital and undertake great projects

Railroad Expansion and the Corporation  The Pennsylvania Railroad was among the first to adopt the new corporate form of organization- but incorporation quickly spread to things other than railroads  Andrew Carnegie opened his own steelworks in Pittsburgh, and with his associate Henry Clay Frick, bought up coal mines, operated ore ships, and acquired railroads  Carnegie financed this by sale of stocks, and sold out to J. Pierpont Morgan for $450 million, who merged with others and created the United States Steel Corporation- a $14 billion enterprise (controlled two-thirds of all steel production)  The Pennsylvania Railroad was among the first to adopt the new corporate form of organization- but incorporation quickly spread to things other than railroads  Andrew Carnegie opened his own steelworks in Pittsburgh, and with his associate Henry Clay Frick, bought up coal mines, operated ore ships, and acquired railroads  Carnegie financed this by sale of stocks, and sold out to J. Pierpont Morgan for $450 million, who merged with others and created the United States Steel Corporation- a $14 billion enterprise (controlled two-thirds of all steel production)

Railroad Expansion and the Corporation  Gustavus Swift forged a small meatpacking company into a large corporation  Isaac Singer patented a sewing machine and created I.M. Singer and Company- one of the first modern manufacturing corporations  Corporate leaders introduced a set of managerial techniques that relied on systematic division of responsibilities, a hierarchy of control, strict cost-accounting procedures, and a new business executive  Middle Manager- layer of command between workers and owners  This helped make possible another major feature of modern corporation: consolidation  Gustavus Swift forged a small meatpacking company into a large corporation  Isaac Singer patented a sewing machine and created I.M. Singer and Company- one of the first modern manufacturing corporations  Corporate leaders introduced a set of managerial techniques that relied on systematic division of responsibilities, a hierarchy of control, strict cost-accounting procedures, and a new business executive  Middle Manager- layer of command between workers and owners  This helped make possible another major feature of modern corporation: consolidation

Railroad Expansion and the Corporation  Horizontal Integration: combined a number of firms engaged in the same enterprise into a single corporation, such as all railroad lines into one company  Vertical Integration: company takes over all the different businesses on which it relied for its primary function  John D Rockefeller’s Standard Oil was the most celebrated corporate empire of the late 19 th century  Rockefeller eventually expanded both horizontally and vertically. He built his own barrel factories, terminal warehouses, and pipelines  By the 1880s, he served as a leading symbol of monopoly  Horizontal Integration: combined a number of firms engaged in the same enterprise into a single corporation, such as all railroad lines into one company  Vertical Integration: company takes over all the different businesses on which it relied for its primary function  John D Rockefeller’s Standard Oil was the most celebrated corporate empire of the late 19 th century  Rockefeller eventually expanded both horizontally and vertically. He built his own barrel factories, terminal warehouses, and pipelines  By the 1880s, he served as a leading symbol of monopoly

Railroad Expansion and the Corporation  Industries saw consolidation as a way to cope with “cutthroat competition” and many feared that substantial competition could lead to instability and ruin  Pool arrangements were started among railroads- informal agreements among various companies to stabilize rates and divide markets  Many times firms would not cooperate, and the pool arrangements collapsed  Industries saw consolidation as a way to cope with “cutthroat competition” and many feared that substantial competition could lead to instability and ruin  Pool arrangements were started among railroads- informal agreements among various companies to stabilize rates and divide markets  Many times firms would not cooperate, and the pool arrangements collapsed

Railroad Expansion and the Corporation  “Trust” perfected by J.P. Morgan, under an agreement, stockholders transferred their stocks to a small group of trustees in exchange for shares in the trust  New Jersey changed its laws of incorporation to permit companies to buy up rivals  After actual corporation mergers were permitted, the original trusts became unnecessary  Rockefeller created a “holding company”- a central corporate body that would buy up the stock of members and establish direct, formal ownership of them  “Trust” perfected by J.P. Morgan, under an agreement, stockholders transferred their stocks to a small group of trustees in exchange for shares in the trust  New Jersey changed its laws of incorporation to permit companies to buy up rivals  After actual corporation mergers were permitted, the original trusts became unnecessary  Rockefeller created a “holding company”- a central corporate body that would buy up the stock of members and establish direct, formal ownership of them

Railroad Expansion and the Corporation  1% of the corporations in America were able to control more than 33% of the manufacturing by the end of the 19 th century  A system of economic organization was emerging that placed enormous power in the hands of very few men- bankers such as J.P. Morgan and industrial titans like Rockefeller  Along with contributing to substantial economic growth, the industrial giants of the era were also creating the basis for one of the greatest controversies of their era: a raging debate over concentrated economic and political power  1% of the corporations in America were able to control more than 33% of the manufacturing by the end of the 19 th century  A system of economic organization was emerging that placed enormous power in the hands of very few men- bankers such as J.P. Morgan and industrial titans like Rockefeller  Along with contributing to substantial economic growth, the industrial giants of the era were also creating the basis for one of the greatest controversies of their era: a raging debate over concentrated economic and political power