1. The Gilded Age Mr. Williams 10 th Grade U.S. History

2. Causes of Industrialization Great amount of natural resources Large work force High tariffs reduce the import of foreign goods National transportation and communication networks

5. Pacific Railway Act Signed in 1862 by Lincoln Provided for the construction of a transcontinental railroad by two companies Union Pacific began westward from Omaha, Nebraska Central Pacific Railroad began eastward from Sacramento, CA

8. Cornelius Vanderbilt By 1869 had purchased and merged three short New York railroads to form New York Central First railroad to connect N.Y. to Chicago 1871 began building Grand Central Terminal in NYC At time of his death worth an estimated $100 million

9. Effects of Railroad Created many jobs: building railroad tracks and cars, engineers, firemen, brakemen, mechanics, loaders, machinists, etc. Increased demand for resources: coal, steel, timber, etc. Linked major markets spurring industry as well

10. Effects of Industrialization Workers left farms for factories Machines replaced hand made goods U.S. became world’s leading industrialized nation GNP-total value of goods and services X8 from before Civil War

11. Types of Economic Systems Traditional Economy Command Economy Market/Capitalist Economy Mixed Economy

13. Capitalism Economic system in which most businesses are privately owned (by people not govt.) Laissez-faire (“Leave Alone” or “Hands Off”) : companies operate without government interference

14. Freedom of Enterprise Individuals own and control the factors of production Success is NOT A GIVEN Government plays a hands off role BUT places some restrictions on businesses to protect individuals

15. Freedom of Choice People can buy what they want Demand determines what is produced What happens if no one wants your product?

17. Competition Different people produce similar products and services How do different companies compete?

20. Entrepreneurs: People who decide to take a risk and start a business Collect information about business, factors of production for products, and learn about taxes and laws relating to businesses Getting Started

21. Corporation: organization owned by many people called stockholders but treated by law as a single person Own property, pay taxes, make contracts, sue and be sued Stock: shares of ownership which allow corporation to raise money

22. What was the Industrial Revolution? Where did this start? Why? Effects?

23. Causes of Industrialization Great amount of natural resources Large work force High tariffs reduce the import of foreign goods National transportation and communication networks

24. Capitalism Economic system in which most businesses are privately owned (by people not govt.) Laissez-faire (“Leave Alone” or “Hands Off”) : companies operate without government interference

26. Andrew Carnegie Scottish Immigrant came to America at the age of Twelve Started out cleaning bobbins in a factory for $1.20/week. When he retired, he sold company to J.P. Morgan for $480 million.

27. Carnegie Steel plant could churn out ten thousand tons a week Cut the cost of making rails in half from $58 to $25 a ton “Cut the prices, scoop the market, run the mills full; watch the costs and profits will take care of themselves”

28. How did he do it? Vertical Integration All aspects of business were under Carnegie’s control Mining of the ore to its transport to the Great Lakes to the production of crude steel and rails

30. “From the moment these crude stuffs were dug out of the earth until they flowed in a stream of liquid steel in the ladles, there was never a price, profit, or royalty pain to any outsider.”

32. John D. Rockefeller 1870, he incorporated his oil business, founded the Standard Oil company which is the precursor to Exxon Owned 90% of oil refining business by the end of his career

33. How did he do it? The TRUST Form of HORIZONTAL INTEGRATION, where he took over and combined other oil refineries into one large corporation Board of trustees ran companies like a single corporation.

36. Once Trust gained complete control over an industry, it held a MONOPOLY Single company achieves control of an entire market This could raise prices or lower quality at will

38. Also used Vertical Integration Acquired companies that supplied oil business, such as pipelines and railroad cars Before he died, Rockefeller became the country’s first Billionaire

40. Gilded Age U.S. became world’s leading industrialized nation GNP x 8 from before Civil War Number of millionaires increases- Carnegie, Rockefeller, Vanderbilt, J.P. Morgan, etc.

42. Social Darwinism: Stronger people, businesses, and nations would prosper while weaker ones fail. Little or no government interference (Laissez-Faire) Small businesses could not compete with the monopolies Average worker made $500/year

44. Writing Response- What has to happen in Capitalism/Free Enterprise for the economy to be efficient (for it to be fair)? Why? During the Gilded Age, the government was strictly laissez- faire. What does this mean? Was this a good thing or bad thing for the country during the time? 3.8 Format