1. Industrialization, Westward Expansion, Immigration, and Urbanization
2-1: Industrialization and Economic ideologies

2. The First and Second Industrial Revolutions
Notes (pgs )
The 1st Industrial Revolution occurred before the Civil War (1830’s-1865), involved industries such as:
Textiles
Manufacturing
The 2nd Industrial Revolution occurred after the Civil War, and stretched into the 20th century, included industries such as:
Railroads (Cornelius Vanderbilt)
Steel (Andrew Carnegie)
Oil (John D. Rockefeller)
Banking (J.P. Morgan)
Auto (Henry Ford)

3. Factors needed for Industrialization
Capital (money to invest)
Manpower (immigrants, people leaving farms, coming to cities)
Raw materials (iron ore, oil, etc.)

4. The birth of the 2nd Industrial Revolution
Notes (pgs )
After the Civil War, industries (previous slide) were able to prosper because of the belief in laissez-faire capitalism:
Businesses are left alone, low taxes, NO government interference
This allowed for entrepreneurs, individuals with money to invest in a business, to start corporations:
Companies that publicly offered stock, so investors could take on the risk of starting a company

5. Carnegie and Vertical Integration
Notes (pgs )
The Bessemer Process, a method for refining steel, made strong, light weight steel (could build taller buildings).
Andrew Carnegie took advantage, built a steel Empire by using the business method of vertical integration:
Business method meant to promote efficiency, where business controls every aspect from raw materials, to manufacturing to shipping and distribution

6. In vertical integration, the business owner owns a company at every stage, from raw materials to sale, increasing efficiency and lowering costs

7. Rockefeller, and Horizontal Integration
Notes (pgs )
John D. Rockefeller employed a more ruthlessly efficient business method known as horizontal integration:
Business method where a company buys up all its competitors, leading to a monopoly, where that company controls all or almost all of one industry

8. In horizontal integration a business owner buys up all his competition, thus increasing efficiency, and lowering costs. This method leads to monopolies however, and a lack of competition

9. Forming, and Controlling the Trusts
Notes (pgs )
Eventually states began passing laws to outlaw monopolies, but business owners like Rockefeller found ways around them
Rockefeller formed trusts:
smaller companies would sell out their stock to a board of directors in return for dividends (stock profit). The board of trustees had complete control over all the companies
The government passed the Sherman Anti-trust Act in the late 19th century to try to break up trusts, but it would not be effective vs. the trusts until later.
EFFECT?: Sherman Anti-trust Act is actually used to break up unions, not the trusts!

10. Competing Economic Ideologies
Economic ideas that existed in the late 19th century:
Laissez-faire capitalism
Socialism: economic system where government controls production to some extent, and regulates business, seeking to bridge the gap between classes.
Communism (Karl Marx’s theory): economic system where government controls all production, and distributes profit evenly among workers
Anarchism: belief in no organized government or business, only chaos.

11. Economic systems, by cows.

12. Labor Disputes
Against the backdrop of competing economic ideas, workers began to protest by forming unions, groups of workers that band together to bargain for better benefits
What, in general, did they want?:
Better pay
Safer working conditions
Shorter working hours

13. Labor Disputes Three of the biggest labor disputes were:
The Homestead Strike: 9 workers at the Homestead Steelworks were shot by Pinkertons after barricading themselves in the factory
The Haymarket Riot: clash between labor protestors and police that killed 11 people, and led to the downfall of the Knights of Labor
Pullman Strike: Rail car workers protest low wages and high food and rent prices in Pullman, Illinois, by striking. The strike is broken up by the U.S. army and the Supreme Court

15. Notable Unions Knights of Labor American Federation of Labor (AFL)
Organized by Terence Powderly
Allowed skilled, unskilled workers to join; women and blacks too.
Wanted an 8 hour workday, better pay, workplace safety, no child labor
Collapsed as an organization because of the Haymarket Riot
American Federation of Labor (AFL)
Organized by Samuel Gompers
Allowed only skilled workers
Wanted 8 hour workday, better pay, workplace safety
Still exists today as part of the AFL-CIO

16. Comprehension Question
Explain the difference between vertical, and horizontal integration, and explain why vertical integration was view more favorably for organizing a business