1. Industrial Growth

2. As we view the achievements of aggregated
capital, we discover the existence of trusts,
combinations and monopolies, while the
citizen is struggling far in the rear or is
trampled to death beneath an iron heel.
Corporations, which should be the carefully
restrained creatures of the law and servants of the
people, are fast becoming the people’s masters.
President Grover Cleveland, 1888

3. Industrial America By 1900 US leading industrial power.
4% annual growth of economy.
Manufacturing output larger than Britain, France and Germany.

4. Rapid Growth
Due to:
Abundance of natural resources – coal, iron ore, copper, lead, timber, oil.
Abundance of labor – supplemented by immigrants.
Growing population + transportation = largest market.
Capital plentiful – domestic and foreign investors.

5. Laborsaving technologies increased productivity – 440,000 new patents between 1860-1890.
Government policies protected private property, subsidized railroads with land and loans, high protective tariffs, low business taxes, little regulation.
Talented entrepreneurs.

6. Railroads

7. First big business.
1865: 35,000 miles.
1900: 193,000 miles.
Created a national market.
Encouraged mass production, mass consumption, and economic specialization.

8. Promoted growth of other industries – coal and steel.
American Railroad Association divided the country into four time zones in 1883.
Railroad time became standard time for Americans.
Created the modern stockholding corporation and the development of complex structures in finance and business management.

9. Eastern Trunk Lines.
Prior to Civil War railroads different gauges and incompatible equipment.
After Civil War railroads consolidated and integrated into “trunk lines.”
“Commodore” Cornelius Vanderbilt merged local railroads into the New York Central Railroad (1867) – 4,500 miles of track.
Linked eastern cities to Chicago.

10. Western Railroads. Problems.
Promoted settlement and created national market.
Federal Land Grants.
170 million acres of land.
Sell the land to finance construction.
Problems.
Hasty and poor construction.
Widespread corruption.
1880s protests against land grants after it was discovered railroads owned half the land in some states.

11. Transcontinental Railroads.
Union Pacific – built westward across the Great Plains from Omaha, Nebraska.
Central Pacific – built eastward across the Sierras from Sacramento, CA.
Used War veterans, Irish and Chinese immigrants.
Came together on May 10th, 1869 at Promontory Point, Utah.
By 1900 – four more transcontinental railroads.

12. Promontory Point, Utah, May 10th, 1869

14. Industrial Empires After Civil War – “Second Industrial Revolution.”
18th C. – 19th C. : textiles, clothing and leather products.
Late 19th C. : heavy industry, steel, petroleum, electric power, industrial machinery to produce other goods.

15. The Steel Industry
1850s – Henry Bessemer discovered new process for making steel – blasting air through molten iron.
The Great Lakes region - coal and iron ore - developed as leading producer of steel.

16. Andrew Carnegie. Scottish immigrant.
1870s started manufacturing steel in Pittsburgh.
Vertical Integration: Company controlled every stage of industrial process – mining to finished product.
Carnegie Steel : 20,000 employees.
Produced more steel than all British Steel Mills.
Philanthropist – moral question?

17. U.S. Steel Corporation. Carnegie sold company in 1900.
Steel Combination - JP Morgan.
First billion-dollar company.
Employed 168,000 people.
Controlled 3/5ths of US steel business.

18. The Oil Industry First U.S. oil well – Edwin Drake, 1859, PA.
1863 – John D. Rockefeller founded Standard Oil.
Standard Oil.
Applied latest technologies and efficient practices.
Extorted rebates from railroad companies.
Under-cut competition.
By 1881 – Standard Oil Trust – controlled 90 % of the oil refinery business.

19. A combination – various companies Rockefeller controlled.
Horizontal Integration – former competitors brought under a single corporate umbrella.
Controlled supply and prices.
Rockefeller wealthiest American ever!

22. Antitrust Movement
1880s – Middleclass citizens feared trusts’ unchecked power.
“Old wealth” resented “new wealth.”
Sherman Antitrust Act, 1890.
Prohibited any “contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce.”

23. Vaguely worded –failed to stop trusts in 1890s.
United States v. E.C. Knight Co (1895) – Sherman Antitrust Act applied only to commerce not manufacturing.

24. Laissez-Faire Capitalism
Economic Theories.
1776 – Adam Smith – Wealth of Nations.
Business should be regulated by “invisible hand” (economic forces) of supply and demand.
Business motivated by own self-interest to offer improved goods and services at low prices.

25. American industrialists used laissez-faire to justify their methods – although they accepted government subsidies and high tariffs.
Rise of monopolistic trusts in 1880s undercut competition needed for “natural” regulation.

26. Social Darwinism. Hebert Spencer.
Applied Darwin’s theory of natural selection to the marketplace.
Concentration of wealth in the hands of the “fit” – beneficial to the human race.
William Graham Sumner (Yale) – helping the poor is going against nature and preserving the “unfit.”

27. Gospel of Wealth Religion to justify wealth.
“Protestant work ethic” – hard work and material successes signs of God’s favor – Puritan).
Rev. Russell Conwell preached that everyone had a duty to become rich.
Carnegie – God-given responsibility to be philanthropic – gave $350 million to public institutions.

28. Technology & Innovations
Inventions.
Telegraph – Samuel F.B. Morse (1844).
Transatlantic cable (1866).
By 1900 cables linked the world.
Telephone – Alexander Graham Bell, 1876.
Typewriter (1867).
Cash register (1879).
Calculating and Adding machine (1887/88).
Camera (1888).
Fountain Pen (1884).
Razor (1895).

29. Edison, Westinghouse, and Tesla.
Edison Lab in Menlo Park, 1876.
Introduced concept of “research laboratory.”
Phonograph, light bulb, dynamo, mimeograph, motion picture camera.
Tesla/Westinghouse - alternating current (1885) – could light cities and operate streetcars, subways and electrical appliances.
Light bulb we use today (the long lasting ones!).

30. Marketing Consumer Goods. Large Department Store:
R.H. Macy, New York.
Marshall Field in Chicago.
Five and Ten Cent Store:
Woolworths.
Brought nationwide chain stores to urban areas.
Mail-order companies:
Sears, Roebuck and Montgomery Ward.
Used railroad to ship goods to customers.

31. Canning allowed mass-produced meat and vegetable products.
Packaged Food.
Kellogg, Post.
Canning allowed mass-produced meat and vegetable products.
Advertising created consumer culture.
“going shopping.”