2. The Rise of Industry

3. Overview Perfect Storm – cheap labor, resources, capital, tech RR’s & new tech spur increase in steel production The dominance of corporations –Trusts, monopolies “Robber Barons” amass big big $ Farmers & workers – declining opportunities

4. Overview Laissez-Faire –Social Darwinism, Gospel of Wealth, Horatio Alger Growing discontent –Populism, unions & alternative economic theories

5. Steel Production

7. Railroads Gov’t subsidies – rampant corruption –Crédit Mobilier RR corporations > consolidation Transcontinental – “Chinamen” States could not regulate interstate commerce > rate fixing > farmers appeal to fed gov. > Interstate Commerce Act Time Zones

8. Inventors & Inventions Samuel Morse Transatlantic cable by 1866

9. Alexander Graham Bell 1876

10. Other Inventions

11. Thomas Edison 1 st modern research laboratory in NJ Phonograph, light bulb, motion picture camera, dynamo > George Westinghouse – transformer to produce AC electricity (1885) > lighted cities, indoor appliances, etc.

12. Consolidation & Corruption – The Rise of Barons Jay Gould – “watering stock” RR’s gave rebates & kickbacks to big customers – raised rates on smaller customers Panic of 1893 – JP Morgan buys up RR industry = more efficient/too much power? Steel, Oil, other industries follow RR model > monopolies

13. Andrew Carnegie Vertical Integration Philanthropy Carnegie Mills out-produced Britain by 1900 Sold of to Morgan > US Steel Corp. –Controlled 3/5 of U.S. steel business

14. John D. Rockefeller Standard Oil Trust Tech & efficiency Controlled 90% of US oil by 1881 Horizontal Integration Control of supply & price = $$$$$$$$$$$$

15. Failing Anti-Trust Movement Grangers – farmers push for reforms but… State reforms fail Sherman Anti-Trust Act (1890) –Prohibited “trust…or conspiracy in restraint of trade” U.S. v E.C. Knight Co. –Sherman ATA only applied to commerce not manufacturing

16. Laissez Faire Capitalism Little gov’t regulation –Violation of economic, scientific, religious principles Low taxes Free markets Adam Smith –Wealth of Nations –The Invisible Hand (Competition)

17. Social Darwinism Based on theory of natural selection Herbert Spencer –Natural selection & survival of the fittest applied to economy –Concentration of wealth is natural –Help for lower classes unnatural

18. Gospel of Wealth Religious justification for polarization of wealth Protestant work ethic Rockefeller – “God gave me riches” Rev. Russel Conwell – Everyone has a duty to become rich Carnegie – Wealthy have responsibility to create civic projects

19. Horatio Alger Myth By 1890 10% controlled 90% of the wealth But… Alger’s novels convinced some that honesty & hard work would lead to riches = Anomalous…upward mobility a myth

20. Labor Discontent Farmers = The Grange, Granger Laws, Populist Party Urban & RR workers = trade & industrial unions Middle-class = progressive movement

21. Competing Economic Theories Laissez Faire Capitalism – Limited Cap – Socialism - Communism –

22. Other Critiques