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Industrialization
Chapter 24
1865-1900
• The rise of the United States as an industrial
power began after the Civil War.
• Many factors promoted industry, including
cheap labor, new inventions and technology,
and plentiful raw materials.
• Government policies encouraged growth and
large corporations became an important part of
the economy.
• As industry expanded workers tried to form
unions to fight for better wages and working
conditions.
United States Industrializes
• The Industrial Revolution began in the United
States in the early 1800s.
• With the end of the Civil War, American
industry expanded and millions of people left
their farms to work in mines and factories.
• By the early 1900s, the United States had
become the world’s leading industrial nation.
• By 1914 the nation’s gross national product (GNP)
was eight times greater than it had been when the
Civil War ended. What is the gross national product?
• The total value of all goods and services produced by
a country.
• The Gross National Product (GNP) is the total dollar
value of all final goods and services produced for
consumption in society during a particular time
period.
• Its rise or fall measures economic activity based on
the labor and production output within a country.
What was one of the reasons for the
nation’s industrial success?
• An abundance of raw materials.
• What were the natural resources found in the
United States that led to the country’s
industrial success?
• Water, timber, coal, iron and copper
• At the same time what new resource began to
be exploited what was this resource?
• Petroleum
Why was petroleum in high demand?
• It could be turned into kerosene.
What was kerosene used for?
• Used in lanterns and stoves
• In 1859 who drilled the first oil well
near Titusville, Pennsylvania?
• Edwin Drake
• By 1900 oil fields from Pennsylvania
to Texas had been opened.
• As oil production rose it fueled
economic expansion.
• Between 1860 to 1910 the
population of the United States
tripled.
• American industry began to grow
at a time when the social and
economic conditions in China and
Europe convinced many to leave
in search for a better life.
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What was another important factor that enabled
the United States to industrialize so rapidly?
Free enterprise- What is this?
An economic system where few restrictions are placed on
business activities and ownership.
In the 1800s many Americans embraced the idea of what
which meant “let the people do as they choose?”
Laissez-faire
What did the supporters of laissez-faire believe?
Government should not interfere with the economy
other than to protect private property rights and
maintain peace.
• Laissez-faire relies on supply and demand rather
than the government to regulate prices and
wages.
• Supporters claim that a free market with
competing companies leads to greater efficiency
and creates wealth for everyone.
• Supports low taxes to ensure that private
individuals will make most of the decisions
about how the nations wealth is spent.
• They also believed that the government’s debt
should be kept limited since money the
government borrows from banks is not available
to be loaned to individuals for their use.
• There were those willing to take a risk with their
capital to organize and run a business what was
this group of people called?
• Entrepreneurs
• In the late 1800s entrepreneurs were attracted to
manufacturing and transportation fields.
• As a result hundreds of factors and thousands of
miles of railroads were built.
Why was Europe an important source of capital?
• Foreign investors saw more opportunities for
growth and profit in the U.S. than at home.
• In the late 1800s state and federal government
had a laissez-faire attitude by keeping taxes
and spending low and by not imposing
regulations on industry.
New Inventions
• New inventions increased America’s
productivity which in turn produced wealth
and job opportunities.
• What areas would these new inventions
improve?
Transportation, communications which was
vital to the nations industrial growth.
• Led to the founding of new corporations
which produced new wealth and new jobs.
• Technology improved
connections among people.
• In 1866 Cyrus Field laid a
telegraph cable across the
Atlantic Ocean providing
instant contact between the
United States and Europe.
Guglielmo Marconi
• An Italian inventor, proved the feasibility of radio
communication. He sent and received his first radio
signal in Italy in 1895. By 1899 he flashed the first
wireless signal across the English Channel and two
years later received the letter "S", telegraphed from
England to Newfoundland. This was the first
successful transatlantic radiotelegraph message in
1902.
Elisha Otis (1852)
Otis, installed the first
passenger safety elevator in
a New York department
store, and later his
passenger elevator made the
skyscraper feasible.
George Mortimer Pullman
American industrialist and
developer of the railroad
sleeping car.
Thaddeus Lowe,
Experimented with the cooling
properties of compressed gases
and developed a Carbon Dioxide
cooled commercial ice-making
machine in 1866.
Alexander Graham Bell
Alexander Graham Bell,
American inventor and
teacher of the deaf,
most famous for his
invention of the
telephone.
Thomas Alva Edison
Thomas Alva Edison was the most
prolific inventor in American
history. He amassed a record 1,093
patents covering key innovations
and minor improvements in wide
range of fields, including
telecommunications, light bulb
electric power, sound recording,
motion pictures, primary and
storage batteries, and mining and
cement technology.
James Ritty
In 1871, Ritty became a saloon owner in
Dayton. Unfortunately for Ritty, some of his
employees stole money from the business.
In 1878, while on a ship bound for Europe,
Ritty saw a machine that counted the
number of times that the ship's propeller
completed a revolution. He returned to the
United States, and with the assistance of his
brother, a mechanic, he invented the first
cash register.
Jan E. Matzeliger
Inventor of the shoe-lacing machine,
Jan Matzeliger not only
revolutionized the shoe industry but
made Lynn, Massachusetts, the
"shoe capital of the world." Born in
South America, Matzeliger at
eighteen came to the United States to
work in a shoe factory where he
conceived of a machine that would
do the work of more than a dozen
workers.
Granville T. Woods,was
known as the "Black
Edison”- invented more
than a dozen devices to
improve electric railway
cars and many more for
controlling the flow of
electricity.
Charles and Frank
Duryea
America's first gasoline powered commercial car
manufacturers were two brothers, Charles Duryea (18611938) and Frank Duryea. The brothers were bicycle
makers who became interested in gasoline engines and
automobiles. On September 20 1893, their first automobile
was constructed and successfully tested on the public
streets of Springfield, Massachusetts. Charles Duryea
founded the Duryea Motor Wagon Company in 1896, the
first company to manufacture and sell gasoline powered
vehicles. By 1896, the company had sold thirteen cars of
the model Duryea, an expensive limousine, which
remained in production into the 1920s.
Other Inventions
Air Brake- George Westinghouse
Electric Voting Machine- Thomas Edison
Cable Street Car- Andrew S. Hallide
Carpet Sweeper- Melville Bissell
Electric Iron- Henry W. Seely
Fountain Pen- Lewis E. Waterman
Electric Welding Machine- Elihu Thomas
Safety Razor with throwaway blades-King C.
Gillette
Motor driven vacuum cleaner- John Thurman
Linking the Nation
• After the Civil War, railroad construction
dramatically expanded.
• In 1862 President Lincoln signed the Pacific
Railway Act which provided for the construction
of a transcontinental railroad by the Union
Pacific and Central Pacific railroad companies.
• To encourage rapid construction the government
offered each company land along its right of
way.
• In 1865 the Union Pacific
under the engineer Greenville
Dodge pushed westward
from Omaha, Nebraska. The
laborers faced blizzards in the
mountains, scorching heat in
the desert and Native
Americans.
• Four merchants known as the
“Big Four” invested in the
Central Pacific Railroad.
• They each bought stock in the
railroad and eventually made a
fortune.
• One of them Leland Stanford
became the governor of
California founded Stanford
University and later became a
United States Senator.
“Big Four”
• Theodore Dehone Judah sold railroad
stock to his declining Central Railroad
Company to four merchants
• Charley Crocker- Shop Owner
• Mark Hopkins- Hardware Store Owner
• Collis P. Huntington- Hardware Store
Owner
• Leland Stanford- Grocery Store Owner
Railroads Spur Growth
• Railroads encouraged the growth of
American Industry.
• The transcontinental railroad was the
first of many lines to crisscross the
nation after the Civil War.
• In the early 1800s most railways
served only local needs, resulting in
many unconnected rail lines.
• One of the most famous and
successful railroad consolidators
was Cornelius Vanderbilt, a former
steamboat captain who built the
largest steamboat fleet in America.
• By 1869 Vanderbilt had purchased
and merged three short New York
railroads to form the New York
Central.
• He was the first to offer direct rail
service from New York to Chicago.
Land Grant System
• Building and operating railroads lines
especially across the vast unsettled regions of
the West often required more money that most
private investors could raise on their own.
• To encourage railroad construction what did
the federal government do?
• Gave land grants- land given to railroads by
federal government to sell to settlers, real
estate companies and other businesses to raise
money they needed to built railroads.
Robber Barons
• The wealth of railroad
entrepreneurs led to
accusations that they had
acquired their wealth
through illegal means.
• One of the entrepreneurs
with the worst reputation
was Jay Gould who used
information he obtained as
a railroad owner to
manipulate stock prices to
his benefit.
• Railroad investors realized they could make
more money through land grants than by
running a railroad so many investors bribed
members of Congress to vote for more land
grants.
• In 1872 corruption in the railroad system
became public with the Credit Mobilier
scandal.
• Several stockholders of the Union Pacific
set up the Credit Mobilier a construction
company.
• The investors signed contracts with themselves.
• The company greatly overcharged Union Pacific
and the railroad agreed to pay the inflated bills.
• When the railroad was completed the investors had
made a fortune but the railroad was almost
bankrupt.
• Congress agreed to give additional grants to the
railroad after several members of Congress were
given shares in the Union Pacific at a price below
market value.
• An investigation implicated several members of
Congress including James Garfield.
• Not all of the entrepreneurs were
corrupt.
• James J. Hill built the Great
Northern Railroad without any
federal land grants or subsidies.
• It became the most successful
transcontinental railroad and the
only one not to go bankrupt.
Big Business
• After the Civil War, big business
assumed a more prominent role in
American life.
• By the 1900 big business dominated the
economy of the United States.
• Big business would not have been
possible without the corporation.
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• What is a corporation?
• A corporation is an organization owned
by many people but treated by law as
though a single person.
• A corporation can own property, pay
taxes make contracts and sue and be sued.
• The people who own corporations are
called what?
• Stockholders
The Consolidation of Industry
• Competition between corporate leaders
caused lower prices for consumers, but it also
cut into profits.
• To stop prices from falling, companies
organized pools or agreements to keep prices
at a certain level.
• Pools usually did not last long.
• As soon as one member cut prices, the pool
broke apart.
• By the 1870s, competition had reduce
industry to a few large highly efficient
corporations.
• Andrew Carnegie a poor Scottish
immigrant worked his was up from
a bobbin boy in a textile factory to
the president of the Pennsylvania
Railroad.
• He invested much of his money in
railroad-related businesses and
later owned his own business.
• He opened a steel company in
1875 and quickly adapted his steel
mills to use the Bessemer Process.
Started at a $1.20 a
week, worth close to
2 billion at his death.
• Carnegie began the vertical
integration of the steel industry.
What is a vertical integration
company?
• A company which owns all the
different businesses it depends on
for operation.
• This not only saves money but also
makes a big company bigger.
Ace Meat Industries
Delivery Vehicles
Meat Packing Plants
Cooled Warehouses
Refrigerated Rail Cars
Slaughterhouse
Cattle
Vertical
Integration
Company
• Business leaders also pushed for horizontal
integration- combining many firms doing
the same business into one large
corporation.
• A monopoly occurs when one company
gains control of an entire market.
• In the late 1800s, Americans became
suspicious of large corporations and feared
monopolies.
• Many states made it illegal for a company
to own stock in another company without
permission from the state legislature.
Purchase of
Competing
Companies in
Same Industry
Horizontal
Integration
U.S. Oil Company
Independent Oil Refineries
Monopoly
• In 1882 Standard Oil formed the first trust, which
merged businesses without violating laws against
owning other companies.
• A trust allows a person to manage another person’s
property.
• A holding company did not produce anything itself.
• Instead it owned the stock of companies that did
produce goods.
• The holding company controlled all the companies it
owned, merging them all into one large enterprise.
Why did Americans fear monopolies?
• Americans feared monopolies because a
company with a monopoly could charge
whatever price it wanted for a product.
Selling the Product
• Retailers looked for new
ways to market and sell
their goods.
• Advertising changed
with illustrations
replacing small-type line
ads.
• N.W. Ayer and Son of
Philadelphia developed
bold new formats for
advertising.
• The department store
changed the idea of
shopping by bringing in
a huge assortment of
products in a large
glamorous building.
• Chain stores like
Woolworth’s focused
on offering low prices
instead of special
services or fancy décor.
• Mail-order catalogs
were created to reach
rural Americans.
• Montgomery Ward and
Sears, Roebuck were
two largest catalog
retailers.
How did department stores change the idea
of shopping?
• Department stores brought
a huge assortment of
products into one building.
• They made shopping seem
glamorous and exciting.
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John D. Rockefeller
• By the 1880s the Standard
Oil Company, under the
direction of John D.
Rockefeller and his
associates had gained control
of more than 90% of the oil
refining business in the
United States.
Unions
In an attempt to improve their
working conditions industrial
workers came together to
form unions in the 1800s.
• Life for workers in industrial America was
difficult.
• Dangerous working conditions and the income
difference between the wealthy and the workers
caused resentment.
• Between 1865 and 1897 the United States
experienced deflation or a rise in the value of
money.
• Relations between workers and employers were
made more difficult by deflation.
• Deflation caused prices to fall and
companies to cut wages.
• To the workers it seemed their
company wanted to pay them less for
the same work.
• Workers felt the only way to improve
their working environment was to
organize unions.
Early Unions
• Two types of workers were part of industrial
America.
• Craft workers had special skills and were
generally paid more.
• Common laborers had few skills and as a result
received lower wages.
• In the 1830s craft workers formed trade unions
which were unions limited to people with
specific skills.
• By 1873 there were 32 trade
unions in the United States.
• Employers opposed industrial
unions which united all craft
workers and common laborers in a
particular industry.
• Companies went to great lengths to
prevent unions from forming.
• Companies would have workers take oaths
to sign contracts promising not to join
unions.
• They would also hire detectives to identify
union organizers.
• Workers who organized a union or strike
were fired and put on a what?
• Blacklist- What is a blacklist? A list of
troublemakers.
• Once blacklisted a worker could get a job
only by changing trade, residence of his or
her name.
• If a union was formed companies used a
what?
• Lockout
• Workers went without pay and were locked
out of the property.
• If the union did strike employers would hire
replacement workers called strikebreakers
also known as scabs.
• There were no laws that gave workers the
right to organize.
The Struggle to Organize
• Workers attempted to create large
unions, but rarely succeeded.
• Many times confrontations between
owners and government ended in
violence.
• The Great Railroad strike of 1877
occurred after severe recession in
1873 forced many companies to cut
wages.
• The failure of the great
railroad strike led to a need
for better organized laborers.
• By the late 1870s the first
nationwide industrial union
called the Knights of Labor
was formed.
• The riot would hurt the reputation of the
union and people started to drop out.
• In 1893 railroad workers created the
American Railroad Union (ARU)
• They unionized the Pullman Palace Car
Company in Illinois.
• After recession caused the company to cut
wages, a boycott of Pullman cars occurred
across the United States.
• It tied up the railroads and threatened the
economy.
The American Federation of Labor
• In 1886 delegates
from over 20 of the
nation’s trade union
organized the
American Federation
of Labor.
• The AFL’s first leader was
Samuel Gompers whose plain
and simple approach to labor
relations helped union
become accepted.
• Gompers wanted to keep
unions out of politics and to
fight for small gains such as
higher wages and better
working conditions.
• Under Gompers leadership the AFL had three
goals: to get companies to recognize unions and
agree to collective bargaining to pushed for
closed shops where companies could only hire
members and to promote an eight-hour
workday.
• By 1900s the AFL had over 500,000 members.
• The majority of workers however were still
unorganized.
Working Women
• By 1900 women made up more than 18%
of the labor force.
• Women worked as domestic servants,
teachers, nurses, sales clerks and
secretaries.
• Women were paid less than men.
• It was felt that men needed a higher wage
because they needed to support a family.
• Most union excluded women.
• A separate union for women
was created by Mary Kenney
O’Sullivan, Leonora O’Reilly.
Jane Addams and Lillian Waldthe founders of the settlement
house movement and helped
to form the Women’s Trade
Union League.