Goal 5 Part 1 Industry Expansion & Big Business / Labor

Why an INDUSTRIAL BOOM? Wealth of Natural resources (oil, coal, iron ore, water) Without these: Slower growth for America Government support for Business Growing population that provided cheap labor and new markets for products

*Edwin L. Drake “BLACK GOLD” FIRST to successfully use a steam engine to drill OIL near Pennsylvania Who invented the “steam engine?” FIRST “oil well” in America

Bessemer Process / “Cleaning IRON” Problem – Iron (which is turned into steel) has other elements (Carbon = WEAK) In order to make a profit with efficient iron….get the carbon out!!! Developed by Henry Bessemer  POINT: remove the imperfect elements out of the iron  Successful – 90% of the nation’s steel was produced this way!  First used by Andrew Carnegie

New Uses of Steel Railroads (linked isolated cities)  Who did most of the work? Barbed Wire (inventor??) All innovative construction (Brooklyn Bridge -1883) (Skyscrapers…etc.) Innovations promote change…leads to inventions – boosts the economy!

Inventions promote change Thomas Edison – Light bulb Christopher Sholes – Typewriter (women in the workforce) Alexander Graham Bell – Telephone (provides communication & connection)

T.Q. The work of which American inventor had the GREATEST effect on the growth of industry? A. George Westinghouse B. Alexander Graham Bell C. Christopher Sholes D. Henry Bessemer

How did the railroads both benefit from and contribute to the industrialization of the United States? a. the railroads needed government protection and their development helped the government grow b. the R.R. used new inventions and brought people to see the invention c. the R.R. used steel and coal and delivered both to new markets d. the R.R. needed passengers, and passengers needed to get to new markets

Railroads and the Government The Federal Government made HUGE land grants for the development of railroads Promontory Point, Utah (Union and Central Pacific / Iowa to California) = FIRST Transcontinental Railroad Civil War (1865)– America had 30,000 miles of track 1890 – 180,000 miles of track 25 years! Who did most of the work on the railroads? ________________________________________ *Endured Native American attacks! Results: growth of industries, hazardous jobs for railroad workers, an increase in migration to the West

George Pullman Railroad Mogul (railcars) Provided a “COMPANY TOWN” homes, schools, hospitals for his workers Problem: You constantly were in debt / Very controlling! Pullman Strike (later) - raised the rent, but DID NOT give out raises! = leads to violent strike in 1894!

Monopoly One business that “CONTROLS” the market over a particular product or service Characteristics: (1) doesn’t worry about providing good service to the public (2) can charge whatever they want / (3) makes low-quality goods because of NO competition (4) Restrict production and raise prices

Industrial Moguls Examples of Industrialists / Monopolists / Tycoons or “Captains of Industry” (1) Andrew Carnegie (2) John D. Rockefeller (3) J.P. Morgan (4) Cornelius Vanderbilt

Andrew Carnegie WHY HE WAS SUCCESSFUL - (1) Rags to Riches* (younger = poor, older = rich), supported charities *creates the (2) ***GOSPEL OF WEALTH *** - the Monopolist or industrialist millionaires “GIVE BACK” to charities! “ Philanthropy ” – the act of giving back to the community (Carnegie – responsibility) (3) Carnegie “STEEL” Company ” (1899) (4) Social Darwinism (5) Vertical and Horizontal Integration (business strategies) (6) Bessemer Process

** Vertical Integration ** ** Horizontal Integration** Practiced by Andrew Carnegie Vertical Integration : process in which Carnegie “bought out his suppliers” (iron mines, railroad systems)  WHY???? Horizontal Integration: process in which Carnegie “bought out OTHER companies” smaller companies merge into Carnegie Steel Company

Vertical and Horizontal Integration Resources Resources Resources Farms / Forrests Manufacturing Manufacturing Manufacturing Production / Processing Distribution Distribution Distribution Shipping and Transportation

SOCIAL DARWINISM (Social Philosophy) “ Survival of the Fittest ” - Trying to apply biological reasoning to society Some individuals of a species “flourish” and pass their traits to their next generation, while others do not flourish English naturalist Charles Darwin: On the Origins of Species “Natural Selection / Law” Can explain the success of industrialists / tycoons / moguls Why does Laissez Faire SUPPORT Social Darwinism (vice versa)? “Laissez faire” government “allow to do” – NO government regulation of business / economy / “Pure / fair Competition” “unrestricted capitalism” – Answer: to allow the “fittest to survive” NATURALLY without government intervention.

What explains Andrew Carnegie’s Success Rags to Riches Gospel of Wealth Bessemer Process Vertical Integration Horizontal Integration Social Darwinism

John D. Rockefeller creates the “Standard Oil Company” “ROBBER BARON” (RUTHLESS)  Sold his oil at a very LOW price to make people buy the product from him, while other companies had HIGH prices / once you control the market….hike the prices back up!  Richest man in history  Philanthropist

John D. Rockefeller

Cornelius Vanderbilt Captain of Industry Hated Philanthropy Railroad Tycoon

TRUSTS (1880s-early 1900s) - Stockholders from numerous companies (ex. Bob’s company) would hand over their shares / stocks to the a board of trustees (TRUST). - In return, the stockholders make a profit off the success of the business (Standard Oil monopoly) - Dictate prices and charge whatever they want! - (PRICE FIXING) MAIN POINT of a TRUST: To eliminate competition

1899 publication

JP MORGAN

Influence of “Trusts” over Congress

Sherman Anti-Trust Act (1890) - Purpose: an attempt by the federal government to “REGULATE” businesses & to promote FAIR COMPETITION First legislation to attempt to limit trusts by claiming unfair trading options Result of Sherman Anti-Trust Act INEFFECTIVE!!!!!!!!!! (until Teddy Roosevelt and Woodrow Wilson years = CLAYTON ANTI-TRUST ACT) Later: Federal Trade Commission (still used today) (Language too vague to enforce / pressure from fed. gov’t = trusts will get around it and MERGED)

Granger Laws through Sherman Anti - Trust Act - against railroad abuses - More power to the “STATES” and uphold Granger law - “interstate commerce” - Interstate Commerce Commission – Enforce federal control of Interstate commerce - Prohibited monopolies / trusts

Business Boom “BYPASSES” the South Reason: South is still “rebuilding” from Civil War (economic stagnation) Only thing that offered hope – tobacco, textiles, furniture, etc. (Cotton is no longer King! = tobacco) *Result of consolidation of monopolies - Labor Unions / Union Movements are emerging & collective bargaining