1. 1 Big Business and Organized Labor Chapter 6 Bethlehem Steel Works, 1896 Library of Congress

2. 2 Industrialization: Introduction  What made America in the 1880s so different from the 1860s was a new industrial order.  The process of industrialization had begun at least three decades before the Civil War.  Small factories had produced light consumer goods like clothing, shoes, and furniture. They catered to local markets in an economy of farmers and merchants.  They could not meet the demands of the rapidly growing national market.

3. 3 Industrialization: Introduction  After the 1850s the industrial economy matured, with large factories, more machines, greater efficiency, and national markets.  Entrepreneurs developed systems of mass production and distribution. Huge corporations came to dominate the economy.  Ordinary Americans scrambled to adjust and an organized labor movement would emerge.

4. 4 The Second Industrial Revolution  The first had occurred in Britain during the late 18 th century.  Coal-powered steam engine ;Textile machines for spinning thread and weaving cloth; Blast furnaces to produce iron  The second occurred in the the U.S. and Germany during the second half of the 19 th century.  National transportation and communication network that created a national and even international market.  The use of electric power.  The application of scientific research to the industrial process. Example: the production of steel and chemicals. Also inventions.

5. 5 Natural Resources and Industrial Technology

6. 6 National Markets and the Expansion of the Railroad  Railroads helped tie the nation together by lowering transportation costs railroads.  Allowed manufacturers to reduce prices, attract more buyers, and increase business.

7. 7 Railroads: America’s First Big Business  Railroads stimulated economic growth simply because they required so many resources to build – coal, wood, glass, rubber, brass, and steel.  As America’s first big business they devised new techniques of management that would soon be adopted by other companies.  Railroads establish standard time zones (1883)

8. 8 Railroads: America’s First Big Business  Financing the railroads  Built by private companies.  Raised money for construction by selling bonds to American and foreign investors.  Also received federal land grants, as well as loans and tax breaks from federal, state, and local governments.  Cornelius “Commodore” Vanderbilt and others made fortunes on the railroad.

9. 9 Manufacturing and Inventions: Electricity  Thomas Edison invented the first successful incandescent light bulb, making electric light available. (1879)  His company, General Electric, created a unified electrical power system.  By 1898 he had setup 3000 power stations lighting more than 2 million bulbs as well as powering trolley cars, subways, and factory machinery.  Factories no longer had to cluster around waterfalls and coal supplies.

10. 10 Manufacturing and Inventions  Edison also patented the phonograph, the motion picture, and hundreds of other devices.  Alexander Graham Bell invented the telephone in 1876, vastly improving communication.  Even small inventions such as typewriter (1867), mimeograph machines (1892), and carbon paper (1872) helped ease business transaction.

11. 11 Improvements in Industrial Technologies  Steel could be refined from iron (cheaply) (Bessemer process developed in 1850s)  Allowed for the production of telephones, typewriters, adding machines, sewing machines, cameras, elevators, and farm machinery – and lowered consumer prices.  New distilling methods allowed kerosene and gasoline to be refined from crude oil.

12. 12 The Corporation  The growing scale of enterprise led to the use of the corporation, which was a form of ownership.  A corporation could raise large sums quickly by selling “stock certificates” or shares in its business.  It could also outlive its owners.  It limited liability – owners were no longer responsible for corporate debts.  Professional managers now operated complex businesses because owners were no longer responsible for day-to-day management of the company.

13. 13 Finance Capital  As national wealth increased, people began to save and invest more of their money.  The New York Stock Exchange (around since 1792) linked eager investors with money-hungry firms.  By the end of the 19 th century the stock market had established itself as the basic means of making capital available to industry.

14. 14 Entrepreneurs (Robber Barons)  John D. Rockefeller –Standard Oil (oil refiner who took advantage of the Pennsylvania oil rush of the 1860s)  By 1879, he controlled 90 to 95 percent of oil refined throughout the country ( Horizontal growth )  Used vertical integration so that he would not have to depend on the middlemen.  Made its own barrels, cans, and whatever else it needed. “Pay nobody a profit”  Rockefeller made a fortune, but also became a leading philanthropist donating more than $500 million during his 98 year-life.

15. 15 Entrepreneurs (Robber Barons)  Andrew Carnegie  Made his fortune in the steel industry.  Used economic depressions to buyout his competitors and expand.  Carnegie Integrates Steel

16. 16 The Growth of Big Business  J.P. Morgan – financier (investment banker) – bought up railroads during the Panic of 1893  Merger movement - bought out Carnegie’s steel holdings for $500 million and created United States Steel Corporation (1 st billion- dollar corporation)  Richard Sears and Alvah Roebuck dominated the mail-order industry and helped create a truly national market (1890s) The catalog (6 million distributed per year) became second most read book in the nation (Bible was 1 st )

17. 17 The Growth of Big Business  Corporate Defenders  The Gospel of Wealth - “super wealthy demonstrated the superiority of the free enterprise system”  Social Darwinism and “survival of fittest”  Rising standard of living for most  Corporate Critics - Working conditions  Average workweek: 59 hours. (6 – 10 hour workdays). Many worked 12 hours a day, 7 days a week.  Poor health and safety conditions in factories.  1913 – 25,000 factory fatalities & 700,000 injuries that required at least a month’s disability.

18. 18 Labor  1860 – 4.3 million industrial workers  1900 – 20 million industrial workers  The pool of labor came from a huge influx of European immigrants as well as a massive migration of rural Americans.  Also, growing number of women and children.

19. 19 Labor Unrest  It was difficult for workers to organize.  Property rights were respected more than labor rights.  Workers were a diverse group that resisted forming unions.  Disorganized Protest  Even without unions, workers staged spontaneous protests over long working hours and wage cuts.  Often became violent.

20. 20 The American Federation of Labor (AFL)  Crafts unions (skilled workers) organized the AFL in 1886.  A federation of independent crafts unions.  Samuel Gompers served as president until his death in 1924.  Focused on concrete aims rather than politics.  Worked with management for agreements on union recognition.  Closed shops could hire only union members.  1900 – 500,000 members; 1920 – 2 million.