Industrialization in the United States

Reasons for Rapid Industrialization 1. Available natural resources –Coal, iron ore, copper, lead, timber, oil 2. Labor supply –Natural rate of population increase –Increasing number of immigrants 3. Growing market –Increasing population –Improving transportation & communication systems

Reasons for Rapid Industrialization 4. New Sources of Power –Electricity, Oil 5. Available capital –European & American investors 6. Labor-saving technology increased productivity –Protected by patents & copyrights –Factory system…mass production

7. Government policies created climate for business to grow –Laissez-faire  (most freedom to make a profit w/o gov’t interference) –Protection of private property  (Court cases) –Stable currency  (gold standard; Alaska “strikes”) –Subsidized railroads with land grants & loans  (encouraged expansion and national economy) –Protective tariffs  (helped increase American business profits.) –Wars  increased demand for goods Reasons for Rapid Industrialization

8. Inventions –Communications  – transatlantic cable, telephone –Business becomes more efficient  Typewriter  Cash register  Adding machine –Consumer goods  –Kodak camera,  fountain pen,  Gillette safety razor Reasons for Rapid Industrialization

Inventions that Transform America Edison and Westinghouse Edison’s research laboratory MENLO PARK, NJ –– apply trial and error technique, team approach to research  phonograph, incandescent lamp, mimeograph, motion picture camera, dynamo to generate electric power Westinghouse Westinghouse –air brake for railroad cars, –transformer for high-voltage alternating current  lighting of cities, electric street cars, subways, appliances, & machinery

9. Marketing to large numbers –Department stores  (Macy’s, Marshall Field) –Chain Stores  (Woolworth’s) –Mail order companies  (Sears & Roebuck, Montgomery Ward) –Packaged food  (Kellogg, Post) –Refrigerated railroad cars  (Swift meats) Reasons for Rapid Industrialization

Types of Business Organizations

Business Organizations BEFORE the Civil War Form of Business AdvantagesDisadvantages Proprietorship Owner close to customers & workers Owner close to customers & workers Has total control of management Has total control of management Receives all profits Receives all profits Owner assumes all risks (Unlimited liability) Owner assumes all risks (Unlimited liability) Limited capital Limited capital One manager’s perspective One manager’s perspective

Form of Business AdvantagesDisadvantages Partnership More capital can be raised More capital can be raised Risks are shared Risks are shared More management perspective More management perspective Profits must be shared Profits must be shared Unlimited liability for owners Unlimited liability for owners Dissolves if one partner leaves (limited life span) Dissolves if one partner leaves (limited life span)

BEFORE CIVIL WAR Proprietorships and Partnerships were most common forms of business organizations because most businesses were small-scale operations and these were relatively easy to set up Proprietorships and Partnerships were most common forms of business organizations because most businesses were small-scale operations and these were relatively easy to set up

Business Organizations AFTER the Civil War FormAdvantages Disadvantage s Corporation  Increased capital through sale of stock  Risks shared  Losses limited to investment  Greater number of investors  Ownership transferable  Subject to corporate taxes  Management removed from customers & workers  State & federally regulated

AFTER CIVIL WAR Corporations are “legal persons” and can Corporations are “legal persons” and can –own property –lend and borrow money –sue and be sued –hire and fire people –pay taxes Corporations allowed Corporations allowed –nationwide operations –more efficient access to wider sources of capital –more protection to investors

Industrialization’s Impact by 1900 Regions become: 1.) interconnected 2.) interdependent (need each other) Specialization increases interdependence Through: 1.) communication of ideas 2.) sharing of resources Regions become: 1.) interconnected 2.) interdependent (need each other) Specialization increases interdependence Through: 1.) communication of ideas 2.) sharing of resources

 A mass production society relies upon a mass consumption society. (Need increasing population and wealth of consumers to buy goods!).

 Government incentives (land give aways to RR ; tariffs; etc.) needed to promote industrialization.

 Industrialization brought both positive (wealth) and negative (labor and environmental issues) changes.