1. The Great West & Gilded Age
American History II - Unit 1

2. Review
Why were organizations like the Grange and Farmers’ Alliances significant for farmers in the west?
Allowed for social unity to discuss and promote the values, beliefs, and needs of farmers
The Populist party became the ______________ voice of the farmer. What 3 main goals did the Omaha Platform outline?
Political voice
Increase money in circulation, introduce a graduated income tax, have government regulation of railroads
How did supporting bimetallism advance Populist beliefs?
Bimetallism (backing currency with gold and silver) would increase the money in circulation  prices for products would rise  farmers would make more money
Who was the Democratic and Populist candidate for president in 1896?
William Jennings Bryan
Why did the Democratic and Populist candidate lose the presidential election of 1896?
Northern consumers and workers did not want higher prices on goods
What 2 legacies did the Populist party leave?
The lower class/common man could organize and have a political impact
Set the stage for future reform movements in gov’t

3. 1.3 – Expansion of Industry, Railroads, & Big Business

4. Expansion of Industry

5. Industrialization
Development of industries for the mechanical mass production of goods
Shift from making goods individually by hand  mass production using interchangeable parts and factories
Led by entrepreneurs – person who organizes, manages, and takes the risk with starting an industry/business
Mid 1800s to 1910s – mass production of raw materials using natural resources and technology
“Second Industrial Revolution”

6. Industrialization and Oil
1859 – Edwin Drake developed the first steam engine oil drill
Made it possible to extract “black gold” directly from the ground
Growth of oil refineries to purify oil (by entrepreneurs)  kerosene and gasoline

7. Industrialization and Steel
Home Insurance Building (1884)
1890s – large iron deposits discovered in Minnesota
Iron contains carbon and bends/rusts easily  need to transform it into steel
Bessemer process – process to make steel, injecting air into iron to remove carbon and impurities
Steel’s uses
Infrastructure (transportation systems) – railroad tracks, bridges
Barbed wire
Farm equipment
Architecture – skyscrapers, rise of modern cities

8. Inventions Promote Change
Thomas Edison – incandescent light bulb (1880), later invented a system to producing and distributing electrical power
Harnessing the power of electricity  revolutionized American life
Inexpensive, convenient
Businesses - boom in industries, factories could locate anyway, run machines off electricity
Homes - Outward growth of cities, electric appliances
Cities – electric streetcars offered cheap travel

9. Inventions Promote Change
Christopher Sholes – typewriter (1867)
Changes in the workplace
Alexander Graham Bell – telephone (1876)
Changes in communication
New jobs for women
Garment/textile factory work
Clerical and secretarial office work

10. Effects of Industrialization and Inventions
Positive
Negative
Freed some labor from backbreaking work in factories
Improved standard of living for workers (shorter days, less dangerous)
New consumer markets
Harm to environment
Depletion of natural resources
Mechanization of factories  reduced human worth

11. Expansion of Railroads

12. Railroads Continue to Expand
1890s – several transcontinental railroads, east-west coasts linked
Increased travel and communication revealed a problem with a national time  “Railroad time” – 24 global time zones – to standardize shipping and receiving times

13. Railroads Continue to Expand
Growth of cities along railroads
Cities along tracks would specialize in a particular product to promote trade and interdependence (ex: Chicago – stockyard, meatpacking)
George Pullman – invented the sleeping car, founded Pullman, IL (1880) – city based on factory work, contained all the amenities of everyday life
Every aspect of life controlled by company – hope to maintain a stable work force
1894 – workers strike in response to pay cuts and high rent

14. Railroads Continue to Expand
Growth of railroads  Increase in iron, coal, steel, lumber, and glass industries, new markets for business and consumers, and high profits  increased corruption
1872 – Crédit Mobilier Scandal
Union Pacific stockholders established the construction company called Crédit Mobilier
UP stockholders gave CM an overpriced railroad contract and sold shares of the contract to influential Republican congressmen
Congressmen approved federal subsides (financial help) to build the overpriced railroad in order to collect the profit from the completed railroad
Tarnished the Republican party’s reputation

15. Government Takes Control of Railroads
Railroad industry’s abuses of power
Misuse of fed. land grants  sold land to settlers for more $
Fixed prices in certain markets  kept farmers in debt
Charged arbitrary high shipping rates
The Grangers (members of the Grange) lobbied for laws to regulate the railroad industry  “Granger Laws” (1871)
Established maximum shipping and passenger rates

16. Government Takes Control of Railroads
Munn v. Illinois (1877)
Railroad industry challenged the constitutionality of the Granger laws
SCOTUS ruled in favor of Granger Laws – the fed gov’t has the right to regulate private industries/businesses to serve the public’s best interest
Interstate Commerce Act (1887)
Established the Interstate Commerce Commission (ICC)
Declared the right of the fed gov’t to supervise railroad activity
Required railroads to publicize fees and rates
Not very effective, railroads blatantly ignored ICC until the Progressive Movement of the early 1900s

17. Railroads Cause Panic
Panic of 1893 – railroad companies went bankrupt  banks collapsed  national depression
Industrialists like J.P. Morgan and Cornelius Vanderbilt assumed control of railroads  By 1900, 7 companies controlled over 2/3 of railroads

18. Expansion of Big Business

19. Fewer Control More
Mid-late 1800s – some entrepreneurs and companies grew to consolidate and engulf an entire industry
Entrepreneurs – “Robber Barons” – big businessmen of the late 1800s, used ruthless tactics to dominate industries

20. Fewer Control More How did the Robber Barons dominate industries?
Vertical integration – owning all of the steps of producing and selling a good
Ex: owning iron mines, steel factories, and railroads for steel distribution
Horizontal integration – owning all of the companies that manufactures a good (no competition = a monopoly)
Ex: owning all of the steel producing factories
Accomplished by merging – buying all of the stock of another company

22. Andrew Carnegie American industrialist and philanthropist
founded Carnegie Steel Company using the Bessemer process
Practiced vertical integration
Constantly updated technology for maximum production
Pleased employees – stock options, used other incentives to foster friendly competition among workers

23. Andrew Carnegie
Robber Barons were considered to be ruthless and selfish men, HOWEVER Carnegie is generally considered to have been honest and philanthropic.
Basically the only big businessman of the time to NOT earn the Robber Baron title
Gave 98% of wealth to various charities (over $350 million) – centered around education advancements, free and public libraries, and global peace
14 of Carnegie’s trusts and organizations still exist today

24. Robber Barons Consolidate Industries
Most Robber Barons attempted horizontal integration through mergers  monopolies.
Complete control over its industry, therefore can charge any price for the product.
How merge?
Use a holding company
Form a trust agreement

25. Robber Barons Consolidate Industries
Holding Company
Trust Agreement
Companies’ stocks are owned by a group of trustees that run all of the businesses in the trust  individual companies earned dividends on trust profits (even though trusts were illegal…)
Ex: John D. Rockefeller’s Standard Oil Company in the Standard Oil Trust – controlled 90% of oil processing by 1880
Company that just buys all of the stocks of other companies
Ex: J.P. Morgan’s United American Steel company bought all steel companies (including Carnegie Steel)  steel monopoly

26. Vanderbilt – controlled many railroad companies
Rockefeller’s Standard Oil monopoly

27. Robber Barons’ Ruthless Tactics
Rockefeller and other Robber Barons reaped huge profits.
Paid workers extremely low wages
Drove out any competition that didn’t merge by selling oil at a lower cost than it cost to produce it THEN when market was controlled, prices skyrocketed
Critics pressured some industrialists to be philanthropic.
Rockefeller kept most assets but gave away over $500 million  Rockefeller Foundation, funds to found the University of Chicago, and a medical institute

28. Sherman Antitrust Act
Fed gov’t concerned that expanding corporations and monopolies would hinder competition in a free market.
Sherman Antitrust Act (1890)
Illegal to form a trust interfering with free trade between states or other countries
Did not clearly define “trust” and corporations found loopholes in the law
By 1900, gov’t gave up on trying to stop monopolies

29. Industrialization Bypasses the South
Late 1800s – Post-Reconstruction South remained based in agriculture and struggled to make profits.
High tariffs on raw materials and imported goods
Lack of skilled workers
Fewer railroads
Less connectivity for shipping or receiving
Less communication
Fewer markets