chapter 17: industrial supremacy
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Chapter 17: Industrial Supremacy. Sources of Industrial Growth. Abundant Raw Materials Large, cheap labor supply Technological Innovation Rising class of entrepreneurs Business friendly govt. Laissez-faire Expanding domestic market Cheaper goods Rising middle class. - PowerPoint PPT PresentationTRANSCRIPT
CHAPTER 17: INDUSTRIAL SUPREMACY
Sources of Industrial Growth Abundant Raw Materials Large, cheap labor supply Technological Innovation Rising class of entrepreneurs Business friendly govt.
Laissez-faire Expanding domestic market
Cheaper goods Rising middle class
The Rise of New Industry Steel Railroads Oil
1859- First Oil Well 1870- 4th Largest export
Freight Ships
Airplane and Automobile Internal Combustion
Engine Gottfried Daimler-
First independent engine for use in a car
1893- Duryea Brothers First US made gasoline
powered car 1906- Henry Ford
Quadricycle 1895- 4 cars in America 1917- 5 million Began to transform
economic, social, cultural life
Airplane Davinci Wright Brothers
1903- Kitty Hawk, North Carolina
WW1- Combat and Intelligence
Commercial Viability Charles Lindbergh
1920 New York to Paris
R and D Rise of corporate research for profit
Rapidly changing industries needed quick responses
Movement away from govt. research Allowed for more diverse innovation Less centralized control
University and Corporate partnership Europe didn’t develop these relationships
and market driven innovations
The Science of Production “Scientific Management” Frederick Winslow Taylor- “Taylorism”
Division of Labor/Specialization Workers less skilled/ more interchangeable
Easier to train/ Easier to let go Managers less dependent on one worker Greater Efficiency
The Moving Assembly Line Henry Ford Faster production, higher wages ($5/day) Shorter day Affordable cars
Railroads Transformed social and economic life Changed every community that it
reached Allowed greater reach for industry
Time zones- Standardized Time Govt. subsidies helped Gave rise to the Corporation
Captains of Industry or Robber Barons
http://www.newbedford.k12.ma.us/srhigh/calnan/Industrialists.htm
The Corporation Stocks
Improved the raising of capital Limited Liability
Encouraged risk-taking
Andrew Carnegie Poor Scottish Immigrant Bought his first steel mill in 1873 Vertical Integration of the process
Mine to Market 1901- Sold to JP Morgan ($450 Million)
US Steel controlled 2/3 of the nations steel production
New Approach to Management Division of Labor among managers
“Middle Managers” Managerial heirarchy
Modern accounting More efficient at managing large
corporations
Consolidating Corporate America
Horizontal Integration Potential for Monopoly
Vertical Integration Rockefeller and Standard Oil
Both Horizontal and Vertical Feared “cutt-throat competition” Symbolized Monopoly
Controlled 90% of US refined oil Railroad “Pool arrangements”
Cartels created agreements for rates Is this Capitalism?
Trusts and Holding Companies Trusts
Shareholders of smaller companies transferred stocks to “trustees”.
Received “trust certificates” for share of profits Trustees controlled all companies in the trust
Holding Company Central corporate body Bought up control of trusts Created direct ownership and control of corporations in
the trust Helped create more corporate mergers/consolidation 1% of corporations controlled 33% of manufacturing
Accomplishments of Industrialists Good
Economic growth Job creation Cost cutting Industrial infrastructure Creation of new markets Mass production Rising standard of living
Bad Less competition Concentration of economic power Threat to Republicanism and Individualism Corruption and political influence, Crony Capitalism Less chance for “equal opportunity”
The “Self-made Man” Argued
Industrialism has led to more NOT less opportunity for advancement
Carnegie Bobbin boy in a cotton mill
Rockefeller Clerk
E.H. Harriman- Railroad tycoon Office boy
Exemplified in novels written by Horatio Alger
Critics Most not self made Ruthlessness Corruption
Political Influence Political contributions in exchange for
political support Politicians demanded bribes
Reality of Business Most business ventures failed
Tough competition in fragmented industries Monopolistic advantage killed small
competitors “Riches to Rags”
Survival of the Fittest Protestant Work Ethic
Hard work, thrift, intelligence, individualism Protestant Minister
“There is not a poor person in America who was not made poor by his own shortcomings”
Social Darwinism Only the fittest survived in the marketplace Is this true? Herbert Spencer- philosopher
William Graham Sumner- Yale Folkways- 1906 Individuals must have the freedom to:
Struggle Compete Succeed or Fail
Arguments in from industrialists Fit with traditional American values of
freedom and individualism Unions and Government Interference
Could not prevent Natural Law and the Law of Competition.
Fit with Adam Smith and classical economists “The Invisible Hand”- Markets and Supply and
Demand Individuals pursuing their own self-interest
creates the best results and is also inevitable
Supply and Demand Determined all
values in the most efficient way Prices Wages Rents Interest Rates
The Gospel of Wealth Andrew Carnegie
It is the obligation of the rich to help the poor
With great wealth comes great responsibility
Philanthropic institutions would “help the poor to help themselves.”
Acres of Diamonds Russell Conwell
Opportunity is all around you. Seize it!!!
"I say that you ought to get rich, and it is your duty to get rich.... The men who get rich may be the most honest men you find in the community. Let me say here clearly .. . ninety-eight out of one hundred of the rich men of America are honest. That is why they are rich. That is why they are trusted with money. That is why they carry on great enterprises and find plenty of people to work with them. It is because they are honest men. ... ... I sympathize with the poor, but the number of poor who are to be sympathised with is very small. To sympathize with a man whom God has punished for his sins ... is to do wrong.... let us remember there is not a poor person in the United States who was not made poor by his own shortcomings. ..."
Alternate Visions of Industrialism
Lester Frank Ward- Dynamic Sociology Man (using his intelligence) can use govt. to
improve society. “Un-constrained” Vision of Man Modern liberal political thought
Henry George- Progress and Poverty-1879 Complained of unequal wealth distribution Championed the “Single Tax” to redistribute wealth.
Edward Bellamy- Looking Backward Fictional story of a man who wakes up in the future
to find a utopian, socialist society. Competition replaced by “fraternal cooperation”.
Problems of Monopoly Higher prices Lack of competition Unstable economy- production >
demand Threatened individual advancement
Small business Wealth inequality Ostentatious living
Industrial Workers in the New Economy
Benefits Rising Standard of Living
Greater productivity = Real wages rising Afford more goods
Costs Sometimes harsh working conditions Diminished control of own work
Immigrant Workforce Two waves of workers
Rural workers Foreign workers
25 Million between 1865-1915 4 times larger than prior 50 years
Eastern Cities Northern (first waves) and Southern/Eastern Europe, (second waves).
West Asia and Mexico
Push and Pull Factors Poverty and oppression in home country Greater economic opportunity in America
Heightened Ethnic Tensions between groups Lower paid new groups displaced higher paid older groups Do we experience this today?
Working Conditions Higher living standards Job insecurity - Boom and Bust cycles Loss of skilled labor Long hours Sometimes unsafe conditions
Led to Workers Compensation Laws Loss of control of working conditions
Scientific Management Push for greater efficiency
Women and Children at Work Low skilled labor allowed for use of women and
children Lower wages Easier to control\
Social Issue of Working Women Was it proper for women to work? Textile and Domestic Service
Wages- Women as much as 50% less Children and Inneffective Child-labor laws
Did not ban child labor but raised age to 12 and workday to 10 hours. (largely ignored)
The Struggle to Unionize