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MODERN AMERICA
Railroads
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The Expansion of IndustryEnd of Civil War – US still largely agriculturalBy 1920 – World’s leading industrial powerWhy?• Natural Resources:
oil boom, coal & iron (steel)• Government support of business• Growing urban population:
cheap labor new markets
• New Inventions
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• Railroads became an important part of the American economy beginning in the 1850’s.
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- Once the gauge, or width, of tracks was standardized, railroads formed a network, or system of connected lines.
Growth of Railroads
Top: Railroads in 1890
Right: Railroads in 1918
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- Farmers and merchants could transport their goods quicker and cheaper.
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Pros and Cons of Railroad
Pros:• Influenced growth of
cities and towns• Created tousands of
new jobs• Opened new markets
for goods• Westward expansion• Unified regions of the
country
Cons:• Unchecked power led to
widespread abuses Ex. Pullman, Ill.• Huge land grants and
loans by government leads to corruption
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Railroads transformed the small farming community of Wanatah, MI, into one of the area's leading market centers. In the early 1900's, the depot was the hub of the city's activities.
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Corruption
• Credit Mobilier Scandal
• Farmers – Granger Laws Supreme Court Munn v. Illinois 1877
• Rebates and Pooling
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- This forced many small railroad companies out of business.
Abuses:
- Railroad companies offered rebates, or discounts, in order to keep or win customers.
- In order to end competition and keep prices high, railroad companies agreed to divide up business in an area and set high prices. This was known as pooling.
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- Large companies bought smaller ones or forced them out of business.
Cornelius Vanderbilt and James Fisk are shown in a race for control of New York's rails. Vanderbilt unsuccessfully tried to take over the Erie R.R. by buying out its stock.
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Panic and Consolidation
ICC was the least of the RR problems, by early 1890’s, many RR on brink of bankruptcy:
• Corporate Abuse• Mismanagement• Overbuilding• Competition
Panic of 1893
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Contemporary Application – Mergers / Consolidation
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