1. Industrialization and the “Gilded Age”

2. Emergence of the Modern Industrial Economy in the U.S.
Causes of Economic Growth and Industrialization:
Technological Innovations
The Growth of the Railroads
Development of a National Market
Population Growth
New Types of Business Organization

3. Emergence of Modern Industrial Economy in U.S.
Technological Progress:
Bessemer Process in steel production (made steel production more efficient)
Electricity gave birth to new industries
Light Bulb (Thomas Edison-1879)
Communication through telegraph wires
Oil industry replaced whale oil

4. The Transcontinental Railroad
Expansion of Railroads:
Development of the Transcontinental Railroad – first completed in made train travel to California possible.
Development of a national market from coast to coast
Created a demand for steel

5. In the late 19th century, railroads, canals, telegraphs, and telephones linked the different parts of the United States for the first time.
New sales methods developed: department stores, mail order (Sears and Roebuck), chain stores
Advertisements for goods in newspapers and magazines
A National Market

6. Causes for Population Growth:
High birth rate
Large number of European immigrants
Between 1850 and 1900, the population more than tripled! – 23 million Americans 1900 – 76 million Americans

7. New Business Organization: The Corporation
A corporation issues shares in the company known as “stocks”. Owning more stocks in a company represents more ownership in the corporation.
Did you know???
Owners of stock share in the corporations profits in the form of dividends.
A corporation is a company chartered by a state. Corporation raised huge sums of money through the sale of stocks which enabled them to build railroad lines, mines, steel mills, and large mass-production factories that made industrialization possible.

8. Entrepreneurship and Philanthropy
An entrepreneur is a person who starts a business in the hope of making a profit.
Benefits:
Lowered prices of goods
Improved the quality of goods
Concerns:
Made huge profits for themselves
Often exploited workers
Destroyed competition

9. Robber Barons or Captains of Industry?
Favorable term used to describe the businessmen who helped build the modern industrial economy and devoted money to philanthropy.
“Robber Barons”
Critics term for these businessmen who sometimes used ruthless tactics to destroy competition and to keep workers wages low.

10. Andrew Carnegie Founded Carnegie Steel in Pittsburgh
Paid workers low wages and forced them to work 12 hour shifts
Crushed workers attempts to form labor unions
Gave over $350 million to build libraries and universities

11. John D. Rockefeller
Successful entrepreneur who made his fortune refining oil.
Controlled about 90% of the oil refining in the United States by 1879.
He obtained secret, beneficial rates from railroad companies
Gave millions to education, science.

12. The Pros and Cons of Big Business
Large business are more efficient, and lead to lower prices.
A large number of workers can be hired.
Goods can be produced in large quantitites
They can support new inventions and new research.
Cons:
They have an unfair competitive advantage against smaller businesses.
Workers are sometimes treated unfairly.
Pollution
Unfair influence over government policies affecting them

13. Problems Faced by Workers
Difficult conditions in Industrial America
Most workers were unskilled
Boring, repetitive tasks
Long hours, low wages
Poor, sometimes dangerous working conditions
Child labor
Lack of job security

14. Rise of Labor Unions
Knights of Labor: Terrence Powderly-tried to unite all American workers, both skilled and unskilled-not successful
American Federation of Labor: begun by Samuel Gompers; a national federation of different craft unions of skilled workers-fought for higher pay, 8 hour work day and better working conditions
By 1910, less than 5% of American workers were union members
Workers tried to bargain collectively by forming unions, which sometimes went on strike-temporarily refusing to work

15. Government Attitude towards Unions
Political Influence of Big Business:
Business leaders contributed to political campaigns and saw worker demands as greedy.
Protector of Economy: Over 20,000 strikes between 1880 and 1900; government used troops to put down strikes and restore order
Public Opinion:
Most people were in favor of laissez-faire policies. Many people associated unions with violence.
Video: Haymarket Affair of 1886

16. Contribution of Government
Protection of property and enforcement of contracts
Passing of protective tariffs (taxes on foreign goods to protect American business/farmers)
Regulate currency and interstate commerce
System of patents fostered new inventions

17. The Interstate Commerce Act (1887)
Problem:
Railroads often charged farmers more to haul crops short distances than they charge large companies for national routes
Solution:
This federal law prohibited unfair practices by railroads, such as charging higher rates for shorter routes
Created the Interstate Commerce Commission to enforce the act.
The 1st time Congress stepped in to regulate business in America.

18. Sherman Anti-Trust Act (1890)
Problem:
Monopolies were using unfair practices that prevented fair competition in business.
Solution:
Congress passed this law signaling a change in the attitude of Congress towards the abuses of big business.

19. The Key to America’s Industrialization: Free Enterprise
Economic questions:
What should be produced?
How should it be produced?
Who gets what is produced?
Individuals in a free enterprise system decide what to make and sell, and are free to buy and use what they can afford.
Individual business owners hope to make a profit.
Consumers have choices of what to buy.

20. Free Enterprise System
Individuals are free to produce and sell whatever they wish
People go into business to make a profit
Prices are set by supply and demand
Inefficient companies that are unable to compete are driven out of business