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Industrialization 1865-1901
Chapter 14
Section 1: The Rise of Industry
• American industry grew rapidly after the Civil
War, bringing revolutionary changes to
American society.
The United States Industrializes (pages 436-437)
• 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 U.S. had become the world’s
largest leading industrial nation. By 1914 the GNP, was
eight times greater than at the end of the Civil War.
• What was responsible for this growth?
• -3 Factors That Led to the Industrial Boom:
• A wealth of natural resources.
• A growing urban population that provided both cheap
labor and markets for new products.
• Government support for business.
1st Factor Natural Resources: abundance of raw
materials; vast natural resources that industry
depended on; water, timber, coal, iron, and copper.
• These resources were here in America! Less import of
resources now because America had them!
• Most of these resources were located in the mountains
of the West. The settlement of the West helped
accelerate industrialization, as did the transcontinental
railroad by bringing settlers and miners to the West
and moving resources back to the factories in the East.
• *Edwin L. Drake- drilled the first oil well near Titusville,
PA in 1859; oil production increased.
Edwin L. Drake
• Drilled a well in
Titusville, PA and struck
oil
• Harvested kerosene:
threw away the gasoline
2nd Factor Large Workforce:
• Between 1860 and 1910, the population of
the U.S. tripled. This provided a large
workforce and a greater demand for
consumer goods.
• Why the population growth? Large families
and a flood of immigrants.
3rd Factor Government Support for business:
• Laissez-faire economics, popular idea in the late 1800s;
government should not interfere with the economy. Supply
and demand needed to regulate prices and wages.
• Profit motive = entrepreneurs increase; attracted to
manufacturing and transportation fields. Result=hundreds
of factories and thousands of miles of railroad built.
• Foreign investments helped fund the nation’s industrial
buildup.
• Laissez-faire = government low taxes and low spending; no
regulations on industry = all policies to help industry.
• High tariff controversy? Is the U.S. ready to compete by the
early 1800s freely with other nations or do we still nee a
protective tariff?
New Inventions Promote Change: New inventions increased
America’s productivity, which in turned produced wealth
and job opportunities.
• Samuel Morse: 1844 telegraph to send messages; before
telegraph horse and rider
• Elias Howe: 1846 sewing machine
• Elisha Otis: 1852 safety elevator kept elevator cars from
suddenly falling
• George Pullman: 1864 rail sleeping car
• Thaddeus Lowe: 1865 ice machine
• Gustavus Swift: invented refrigerated rail cars for
transporting food
• Alexander Graham Bell:1876 invented telephone
• Thomas Alva Edison: 1879 light bulb; electric generator,
motion picture
The Power of Electricity
• *Thomas Alva Edison- 1876 established the world's first research
lab in New Jersey. There he perfected the incandescent light bulb,
which was patented in 1880. He later invented an entire system for
producing and distributing electrical power.
• -The harnessing of electricity completely changed
the nature of business in America.
Inventions Change Lifestyles
• *Alexander Graham Bell and *Thomas Watson- 1876 invented the
telephone, which opened the way for a worldwide communications
network.
• -Both the typewriter and the telephone created new jobs for
women.
• -In 1870 women made up 5% of the workforce -- by 1910 they
counted for nearly 40% of the clerical workforce.
Section 2: The Age of the Railroads
• After the Civil War, the rapid construction of
railroads accelerated the nation’s
industrialization and linked the country
together.
I. Linking the Nation
• A. After the Civil War, railroad construction
dramatically expanded. In 1862 President
Abraham 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.
B. In 1865 the Union Pacific, under engineer Grenville Dodge,
pushed westward from Omaha, Nebraska. Weather, labor,
money, and engineering problems hampered the project.
The workers included Civil War veterans, Irish immigrants,
farmers, miners, cooks, and ex-convicts. Camp life was
dangerous.
C. 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 Governor of CA, founded Stanford
University, and later became a U.S. Senator.
• *Transcontinental Railroad- in May 1869 the Central
Pacific and the Union Pacific met in Utah to nail the
Golden Spike that marked the nation's first cross-country
railroad.
II. Railroads Spur Growth
• Railroads encouraged the growth of American industry.
They linked the nation and increased the size of
markets. The railroad industry stimulated the economy
by spending large amounts of money on steel, coal,
and timber (natural resources )
• Cornelius Vanderbilt: famous railroad consolidator
• 1883 American Railway Association divided the country
into __4__ time zones, or regions. where the same
time was kept = safety and more reliability = Eastern,
Central, Mountain, and Pacific.
• Large integrated railroad systems provided increased
efficiency, a decrease in time spent in long distance
travel, and it united Americans from different regions.
III. The Land Grant System
• Land Grants were given to railroad companies
by the federal government to encourage
railroad construction.
• Railroad companies like the Union Pacific and
Central Pacific were able to cover all their
building costs by selling land to settlers, real
estate agencies, and other businesses.
IV. Robber Barons-The growth and consolidation of
railroads benefited the nation, but also led to
corruptness and required government regulation.
• 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.
• Robber baron is a pejorative term used for a
powerful 19th century United States businessman
and banker. The term may now relate to any
businessman or banker who used questionable
business practices to become powerful or wealthy.
• Andrew Carnegie (steel)—Pittsburgh and New York
• J. P. Morgan (banking, finance, industrial
consolidation)—New York City
• Jay Gould (railroads)--New YorkCornelius Vanderbilt
(railroads)--New York[8]
John D. Rockefeller (oil), Standard Oil--New York
Cornelius Vanderbilt (railroads)--New York[8]
• 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 Union Pacific at a price well below market
value. An investigation implicated several members of
Congress, including James Garfield, who later became
president Union Pacific had taken up to $23 million
in stocks, bonds, and cash.
Chapter 14, Section 3 Guided Reading Notes:
Big Business
• The Rise of Big Business: By 1900, big
businesses dominated the economy.
– The Role of Corporations
– Big business would not have been possible without the
corporation.
– Corporation: an organization owned by many people but
treated by law as though it were a single person.
– Stockholders/Stocks
– Economies of Scale:
– Money from stock = investment of in new technologies, hiring
a large workforce, and purchase of machines that increase
efficiency
– Economies of scale: corporations making goods cheaply
because they produce so much so quickly using large
manufacturing facilities.
– Criticisms of corporations: using wealth to drive small
companies out of business.
The Consolidation of Industry: To stop prices
from falling (cut in their profits), many
companies formed pools, or agreements to
maintain prices at a certain level. Criticism:
interfered with competition and private
property rights. Companies that formed pools
had no legal protection and could not enforce
their agreements in court. Pools generally did
not last long. Sooner or later competition
resumed.
John Rockefeller
• “Robber Baron”
• Rich from Oil Industry
• Founded Standard Oil
Company in 1870
Andrew Carnegie
• Business tycoon
• Scottish immigrant:
Rags to riches
• Steel industry
– Andrew Carnegie and Steel:
– Built first American steel mills to use the Bessemer Process:
make high quality steel efficiently and cheaply.
– Vertical Integration: (steel industry) company owns all of the
different businesses on which it depends for its operation.
– Horizontal Integration: (oil) combining many firms engaged
in the same type of businesses into one large corporation. =
monopolies; Rockefeller Standard Oil (buyouts)
– Later monopolies would be outlawed by the Sherman
Antitrust Act
Bessemer Process
• Injecting Air into molten
iron to create STEEL
• Made Carnegie
wealthy!
Monopoly
• Owning the majority of a group of companies
in the same business
Selling the Product:
– Advertising Industry Rose: Woolworth’s; Sears, Roebuck
– Mail-order catalogs, chain stores
Chapter 14, Section 4 Guided Reading Notes:
Unions (the other side of the spectrum)
• Working the United States:
– Life for workers in industrial America was difficult.
– Machines replaced skilled labor; work became monotonous.
= little pride in one’s work.
– Working conditions were unhealthy and dangerous. Workers
breathed in dust, lint, and toxic fumes. High number of
injuries.
– Real wages rose  Standard of living rose
– Uh-oh – Deflation: workers felt like they were being paid less
money for the same amount of work. = many workers
decided to organize.
WORKING CONDITIONS
-low wages
-long hours
-dangerous conditions
-company towns
-child labor
Sweatshops
• Illegal factories where workers work for less
than legal wages
Craft Unions
• Union limited to those who participate in that
type of work
– Ex. All carpenters
Trade Unions
• Used Collective
Bargaining: negotiating
with the strength of
numbers
• All workers for an
employer
Early Unions:
– Trade Unions: unions limited to people with specific skills.
Largest and most successful in 1873: Iron Molders’
International Union.
– Employers were often forced to recognize and negotiate with
trade unions because they represented workers whose skills
they needed.
– However, employers generally regarded labor unions as
conspiracies that interfered with their property rights. They
particurlaly opposed industrial unions: united all craft
workers (special skills and training) and common laborers (few
skills and received low wages).
Techniques used to stop labor unions:
» Oaths and sign contracts promising not to join an union;
hired detectives to go undercover and identify union
organizers; blacklist: a list of “troublemakers”; lockout:
locked workers out of the property and refused to pay
them; hired strikebreakers.
Collective Bargaining
• Negotiation between
labor unions and
employers
Arbitration
• Resolution of disputes
outside of court
Yellow Dog Contract
• Workers agree NOT to
join a union while
employed
– Political and Social Opposition
» Workers wanting to join a union faced several major problems:
• No laws allowing workers the right to organize.
• Owners were not required to negotiate with workers.
• Courts frequently rules against them, referring to
them as conspiracies.
• Perception that they threatened American industries.
• Marxism: basic force shaping capitalist society was
the class struggle between workers and owners;
workers would eventually revolt, seize control of the
factories, and overthrow the gov’t; then gov’t would
seize all private property and create a socialist society
where all property would be evenly divided; leading to
a Communist society.
• Many labor supporters agreed with Marx, and a few
even supported anarchism.
• All of these ideas were driving forces in Euorpoean
unions = immigrants = nativism = attempts at
suppression of unions.
The Struggle to Organize
–The Great Railroad Strike: Circle Map
– The Knights of Labor: Circle Map
– The Haymarket Riot: Circle Map
– The Pullman Strike: Circle Map
The great Railway Strike of 1877
• Response to wages
being cut
• Lasted for 45 days
• Ended by federal troops
Knights of Labor
• The Knights grouped
workers by industry,
regardless of trade or
skill
• First to organize women
Haymarket Riot
• A bomb was exploded
during a Union Labor
Rally in the Haymarket
Square, in Chicago.
• 1886
• 7 policemen were killed
Pullman Strike
• Wages were cut but
rents remained the
same
• Pres. Cleveland: strike
disrupts the mail
• Troops were sent in to
break it up
The American Federation of Labor
– AFL: first leader Samuel Gompers: his approach helped
unions become accepted in American society.
– He believed that unions should stay out of politic; rejected
socialist and communist ideas.
– Gompers felt that the AFL should fight for small gains within
the American system. Gompers was willing to use the strike
method, but preferred negotiations.
– AFL’s 3 main goals under Gompers leadership:
• Tried to get companies to recognize unions and
to agree to collective bargaining.
• Pushed for closed shops: companies could only
hire union workers.
• Promoted an 8-hour workday.
American Federation of Labor
• Largest group of labor
unions
• Founded by Samuel
Gompers
Working Women
– After Civil War women wage earners increased.
– “women’s work” – teachers, nurses, sales clerks, domestic
servants.
– Light industrial jobs
– Paid less than men; most unions, including the AFL excluded
women.
– Mary Kenney O’Sullivan and Leonora O’Reilly: decided to
establish a separate union for women with the help of Jane
Addams and Lillian Ward = WTUL
– WTUL: pushed for creation of minimum wage, an end to
evening work for women, and abolition of child labor.