Bridge to the 20th Century

Industry, Immigration, and Reform

What changed?1840’s- production and buying habits.

Instead of producing all they needed they specialized in one or two goods and bought the others from other producers.

Free enterprise based economy grew.Economic system where private businesses and individuals the factors of production.

Advances create new American way of life and business

TelegraphImproved the rate of information exchange across the country.The first “wiring” of the world

Water Transport

SteamshipsThe advent of steam powered boats brought faster more efficient ways to ship goods.

CanalsAmerica dug canals to get waterways to where they wanted them to go.

RailroadsThe railroads will quickly overshadow both of these innovations.

Delta King

Markets Spread and Regions Specialize

Markets SpreadWith new innovations in transportation farmers in Ohio could share their goods with residents of New York City.

Regions SpecializeGeography gives central points in the transportation system special roles.

NYC- becomes link for American agriculture to EuropeChicago- will become beef center due to railroad hub.

The Nature of Work Changes

Production went from being done by skilled workers (masters/journeyman/apprentices) in the shop to being done by the unskilled in the factories.

Working Conditions and Revolt

Many factories employed young women because they could pay them less.

Pay was still better than the women’s alternative choices.

Work area was usually poorly ventilated cramped, and hot for the 12+ hour work day

Revolt

Soon unskilled and skilled workers would unite and protest conditions and wages by striking.

Businesses usually won because they just replaced unskilled labor, often from the large immigrant labor pool.

Soon trade unions were being formed to protect workers interests.

The Supreme Court would validate their right to strikeLater these will become great agents for change in industry.

Immigration

1830-1860 immigration dramatically increased

1845-1855- 3 million came to the US, which had a population of 20 million.

Where are they from?Northern and Western Europe

1.3 million Irish came to the US during the Irish Potato Famine• Were targets for discrimination and

violence for Roman Catholic faith and their willingness to work for cheap.

Expansion of Industry

Transition 1865-1920US goes from being an agricultural society after the Civil War to the leading industrialized nation in the world.

How and Why?

Natural ResourcesOil• Called “Black Gold” crude oil

becomes the fuel of the late 19th and 20th century.• Cars, Ships, etc.

• First practical use was as kerosene for lighting lamps.

• Took a breakthrough of steam engines in 1859 being used to drill for oil before the industry could take off.

Steel Process• Becomes the build block for the

world in the late 19th and 20th century.

• Made of coal and iron • Discoveries of large iron ore

deposits in the US drove this industry to grow.

• Benefits of Steel• Stronger and more flexible than

iron.• Took the invention and

improvement of a cheap and efficient manufacturing process to grow the industry.

• Uses• Railroads• Construction

• Bridges• Skyscrapers

Inventions

Changed the way people and business functioned daily.Electricity

• This cheap and efficient source of energy changed the face of America like no other invention.• Effects

• Powered all sorts of devices• Spurred the growth of the appliance

industry• Made travel cheap• Allowed cities to expand.

• With the advent of streetcars• Allowed business to locate wherever it

wanted to• Enabled industry to grow immensely.

Effect of new innovations

• The people gained power• The expanding population made

people a force in American business as consumers

• Created new industries• Some of which gave women

new jobs- secretary and operators

• Improved the overall standard of living.

The Age of Railroads

Crisscrossing the USBy 1869 railroad tracks crossed the entire US and created a monopolistic business full of greed and corruption.The Transcontinental Railroad

Completed in 1869 it connected the entire US by rail.

DiscriminationEthnic Minorities• The Irish and Chinese were used

and abused in the building of the railroad.

Some ResultsCreated a US market for business• California oranges could be shipped

to NYC for saleTime Zones• Forced the invention of time zones

to coordinate rail schedule.

Opportunity and Opportunists

OpportunityIsolated areas were now linked to the rest of the US promoting trade creating new markets for businesses.

Chicago- Sears and JC Penny’s are located here due to RR.Extortion• LA paid a $600,000 subsidy to the

RR to make sure it ran into LA instead of a more eastern route.

Opportunists

Train car manufacturer who built a town next to his factory for his workers• Why?

• Wanted to create a tightly controlled environment that produced a stable work force.• No alcohol, no loitering.

• Did it work?No. Worker held a violent strike in 1894 (pullman strike).

Reigning in the Railroads

The ProblemsLand Grants

Railroads sold land grants to businesses vs. settlers

Price FixingFarmers got screwed

Different rates depending on whom you were.

How the RR’s did this

BribesFree Passes

Extortion

Reform

Munn v. IllinoisCase where Supreme Court upheld state’s rights to regulate intrastate commerce to protect consumers.

Interstate Commerce Commission-1887It was the federal government’s regulatory arm over interstate commerce.Ineffective till 1906 and Teddy Roosevelt.

Consolidation

Andrew CarnegieWho?

Business entrepreneur (primarily investor) who amasses a tremendous fortune and becomes one of the world’s wealthiest men.

InnovationsManagement Techniques

Improved Production Methods• Searched for the cheapest way to make

better products.Gathered Talent• Attracted the best and brightest to work

for him

Business StrategiesMonopoly• Vertical integration

• Bought and controlled all levels of the manufacturing process, from the raw materials to the transportation.

• Horizontal Integration• Bought out or merged with all

competitors• Created a monopoly that

allowed him to control prices.

Vertical Consolidation

Successful?His company produced 80% of the nations steel in 1901.

Social Darwinism

What is it?Application of Charles Darwin’s theory of evolution to the economic arena.

The fittest, most efficient business will survive in a free enterprise market.Natural selection governs in this theory, and many say government has no right to interfere.

It’s Place in American ThinkingFit in with Protestant work ethic

Individual responsibility and blame.Religion- God’s will

Poor must be lazy and inferior because the selection process passed them by, and they deserved their lot in life.

Captains of Industry or Robber Barons?

ConsolidationOligopoly

Through mergers and acquisitions entire industries came under the control of a few sellers.

MonopolyThis led to monopolies where one or a few companies controlled entire industries.

How to form a monopolyHolding Companies

These were companies that did nothing but buy the stocks of other companies to form monopolies.

TrustsWhere separate companies merged and turned their stocks over to a group of trustees who ran the group as one corporation.Not legal mergers- kind of a gray area.

ProblemsDid not share the wealth

Paid workers poorlyRaised prices to reap profits

Discounts and KickbacksOften would get RR discounts and RR kickbacks

CriticismCharity Defense

The robber barons defended their wealth by saying that they gave vast amounts to charity.• Rockefeller- $500 million

• Rockefeller Center• Funded University of Chicago’s

creation• Carnegie- $325 million- 90% of his

wealth• Carnegie Hall• 3,000 libraries nationwideJd Rockefeller

ReformSherman Antitrust Act- 1890

What?• Made interference with free trade

by forming a trust illegal.Did it Work?• Not really

• Written with too much gray area• Supreme Court struck down

cases brought• Business outsmarted the law.

Workers of the Nation UniteExploitation

Long Hours12+ hours, 6 days a weekNo vacation, sick leave, unemployment, or compensation for injury

Women and ChildrenAll in family had to work to surviveChildren and women were paid less.Children were sacrificing their education

Child Labor

Labor UnionsWhy?

Workers consolidated to gain power, just like the robber barons.

Reflection of SocietySome refused to admit minorities and women.

WomenPush for and get laws protecting women and minors in the workplace

Examples• Fire codes• Age limits for employment

Government vs. the labor unionsSherman Antitrust Act

Companies got the courts to stop strikes by ruling they hurt interstate commerce.