1
Background
• Industrialization = the process by which
production shifts from simple hand tools to
complex machines.
• Traditional or Pre-Industrial Society
– Self-sufficient towns (traditional economy)
•
•
•
•
People lived and worked in villages
Farms supplied the food
Family made household items (soap, candles, furniture)
Local craftsmen made utilities (blacksmiths,
shoemakers, tailors)
• Small stores provided rare items (gunpowder, coffee,
tea)
Background
• Causes of Industrialization
– The Agricultural Revolution
• New Farming Innovations eliminated the need for
farmers and forced many to move to cities to find jobs.
– (seed drill, steel plow, crop rotation, fertilizer)
• Improved farming efficiency = increased food supply =
increase in the population.
– Great Britain was the first to industrialize because
it had…
• Abundant resources, a large workforce, stable economy
and government, advanced technology.
Number of man-hours to produce crop
700
600
500
Wheat 100
bushels
Corn 100
bushels
Cotton bale
400
300
200
100
0
1800
1840
1860
1900
4
Increase in amount of agricultural products produced on farms,
1850-1900
45
40
35
30
25
Farm Output
20
15
10
5
0
1850 1860 1870 1880 1890 1900
5
Background
• The First Industrial Revolution (Early 1800s)
– Forged by iron
– Powered by steam
– Driven by the textile industry in England
– By the mid-1800s the industrial revolution spread
outside of Great Britain into Western Europe and
the United States.
• These countries, especially the U.S., industrialize very
quickly – Why?
% of world manufacturing by nations 1870-1913. “Other Nations” means
every other country in the world combined.
40
35
30
25
Great Britain
Germany
U.S.
Other Nations
20
15
10
5
0
1870
1900
1913
7
Expansion of Industry in the U.S.
• After the Civil War the U.S. was still largely an
agricultural nation.
• However, rapid industrialization took place in
the late 1800s- early 1900s due to…
– Abundance of natural resources
– Government support for business
– Growing urban population
Expansion of Industry in the U.S.
• The Oil Boom
– 1859 Edwin L. Drake used a steam engine to drill
for oil in Pennsylvania = oil boom.
• Oil boom spread to Kentucky, Illinois, Indiana , Ohio,
and Texas
– Petroleum refinery industries arose in Cleveland
and Pittsburgh.
• Turned oil into kerosene
– Gasoline, a byproduct of the refining process, was
not considered valuable/useful until the invention
of the automobile.
Expansion of Industry in the U.S.
• Bessemer Steel Process
– Iron was the dominant building material of the
early industrial era but it was soft and broke easily.
– Steel – British engineer Henry Bessemer
developed a process of purifying iron ore to
produce a new substance = steel
– Steel was lighter, harder, more durable, and
cheaper than iron
– Steel became the major material used in tools,
bridges, railroads, farm machines, skyscrapers
– industrialized countries measured their success in
steel output.
The process for making steel was discovered thousands of years
ago
Although steel was superior to
iron it was much harder to make
and did not become widespread
until the second half of the 19th
century.
Many people tried to find a way
to produce steel cheaper but it
was Henry Bessemer, an English
industrialist, who first devised
what became known as the
“Bessemer process” for making
cheap steel.
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Steel Production in millions of tons
35
30
25
France
Germany
Great Britain
U.S.A.
20
15
10
5
0
1913
13
Expansion of Industry in the U.S.
• The Power of Electricity
– 1876 Thomas Edison established the world’s first
research laboratory in New Jersey.
• 1880 – patented the light bulb
• Developed an entire system for producing and
distributing electrical power.
– Significant effects/uses of electricity …
•
•
•
•
•
Ran powerful machines
Invention of time-saving appliances
Improved travel = outward spread of cities
Manufacturers could build a factory anywhere
Businesses could operate around the clock
Thomas Alva Edison (18471931) was one of the most
productive and creative
inventors in history. He was
also a shrewd businessman,
manufacturing and marketing
many of his inventions and
innovations.
Edison’s
voice, 1888
15
Expansion of Industry in the U.S.
• Inventions Change Lifestyles
– 1867- typewriter (Christopher Sholes)
– 1876 – telephone (Alexander Graham Bell)
– These inventions affected office work, improved
communication, and created new jobs for women.
1889 ad to train secretaries
1885 ad for Remington typewriters
17
Growth in telephones 1876-1900 (in
thousands)
1400
1200
1000
800
600
400
200
0
1876
1880
1885
1890
1895
1900
19
Expansion of Industry in the U.S.
• Move to Factory Labor and Industrial Job
Growth
– The invention of interchangeable parts made factory
work faster and more efficient
• Individual parts on machines could be replaced instead of
having to buy a whole new machine (interchangeable parts)
– People were sick of farm labor and the new
technology created the MYTH that factory work was
easy.
– People desired a shorter work day
– People wanted to earn a wage – daily pay
• A guaranteed daily pay never existed before
– Attracted immigrants desperate for jobs to industrial
cities
As the Industrial Revolution got underway, it
triggered a chain reaction:
Growing demand for goods = Inventors
developing new machines to produce large
quantities of goods more efficiently = Supply
of goods increases = Prices fall =More
consumers can now afford the goods=
Further demand for goods = changes in how
people live**
The Age of Railroads
• Growth of the Railroad – railroads drastically changed
business and the lives of the American people.
• May 10, 1869 – the Transcontinental Railroad was complete,
connecting the U.S. coast to coast.
– 1890 - nearly 180,000 miles of track in the U.S.
– Western products like agriculture, coal, and other minerals
could be moved easily to the east coast.
– Passengers and freight from the east coast could reach the
west coast in a matter of days instead of months at cheap
prices.
– Many people began settling in western areas.
– Building this track was dangerous, difficult work.
Meeting of the Union Pacific and Central Pacific at Promontory Mountain
in southern Utah in 1869
25
Railroad track mileage increased at a rapid pace from 1830 to
1910 (United States)
250000
200000
150000
100000
50000
0
1830
1850
1860
1870
1880
Miles of track
1890
1900
1910
27
Chinese laborers
Building the railroad was extremely difficult
labor done mostly by hand. Rail beds were
created with pickaxes, hammers, and
crowbars. Dirt and rock had to be carried
away in baskets and carts. Tree stumps were
rooted out, tracks laid, spikes driven,
aqueducts and tunnels constructed.
The ridges in the Sierra Nevada mountains,
where tracks had to be laid, were 2,000 feet
above the valley. Chinese laborers were
lowered in baskets to hammer at solid shale
and granite and insert dynamite. Much of
the work on this passage was completed
during the winter of 1865-1866, by 3,000
workers who lived and worked in tunnels
dug beneath 40-foot snowdrifts. Accidents,
avalanches, and explosions left an estimated
1,200 Chinese immigrant workers dead.
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The Age of Railroads
• Uniting the Nation
– The railroad united the diverse regions of the
country HOWEVER, each community still operated
on its own time.
– Solution = Time Zones
• Professor C.F. Dowd suggested dividing the earth into
24 times zones (one for each hour of the day).
• The U.S. would contain 4 time zones.
• November 18, 1883 railroad crews synchronized their
watches.
• “Railroad time “ however was not used by all
Americans until 1918 when Congress adopted it as the
standard.
Gauge
George Westinghouse
created a better braking
system based on
compressed air which
revolutionized the train
industry
Four standardized time zones replaced
the original 100 on November 18, 1883,
which made scheduling much easier
30
Operation of railroads depended on the use of the
telegraph to communicate location and prevent collisions
31
The Age of Railroads
• New Towns and Markets
– Railroad promoted trade and interdependence by
linking towns.
– Individual towns began to specialize in particular
products.
• Ex. Chicago became known for its stockyards
– New towns grew along the railroad lines.
The Age of Railroads
• New Towns and Markets - continued
– 1880 George Pullman built a factory for
manufacturing sleepers and other railroad cars in
Illinois.
– The Pullman town developed around this factory
for the employees of the factory.
• Employees were provided clean, well-constructed
homes as well as other services and facilities.
• However, Pullman strictly controlled his employees
believing this would create a stable workforce.
• Eventually his employees will strike!
George Pullman designed a sleeping car including the services of supplying the
linens, housekeeping, and attendants for the sleeping cars, making train travel
much more comfortable. Pullman’s car gained much attention after it housed
President’s Lincoln’s body through 8 states during the funeral procession.
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The Age of Railroads
• Railroad Abuses
– Farmers grew angry at the railroad companies
b/c…
• The RR companies misused government land grants by
selling land to other business instead of settlers.
• RRs charged different customers different rates.
– Farmers took action…
• 1867 - Formed the Grange, a farmer’s organization ,
and began demanding governmental control over the
railroad industry.
Pacific Railway Acts
In 1862 and 1864 the federal
government passed the Pacific Railway
Acts.
These two acts permitted the
government to make grants of public
land to private corporations for the
construction of a trans-continental
railroad. The grants stipulated that for
every mile of track laid, the government
would grant to private railroad
corporations 20 sections of public land
(12,800 acres). In addition to the land
grants the government guaranteed a
payment of $48,000 for every mile of
track built in mountainous terrain and
promised low interest loans.
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The Age of Railroads
• Early Railroad Regulation
– The Grangers were successful in getting legislation
passed to regulate the railroad industry.
– Interstate Commerce Act of 1887 – established
the right of the federal government to supervise
railroad activities . However, this commission
didn’t have any real power until the early 1900s.
Big Business and Labor
• The Rise of Big Business
– New technologies required investments of large
amounts of money
– To get the money business owners sold stock =
shares of companies to investors.
– By the late 1800s “Big Business” came to
dominate industry.
• Large-scale companies sold hundreds of
thousands of shares to form corporations =
businesses owned by many investors who buy
shares of stock and risk only the amount of $
they invest in the company.
Big Business and Labor
• The Rise of Big Business
– Powerful business leaders created monopolies or
trusts = huge corporate structures that control
entire industries or areas of the economy.
– In pursuit of profit, business leaders destroyed
competition.
• With competition gone they were free to raise
prices and control the market!
Big Business and Labor
• New Business Strategies
– Vertical integration - The process in which several
steps in the production and/or distribution of a
product or service are controlled by a single
company.
– Horizontal integration – when companies
producing similar products merge.
Wealthy business leaders in the 19th
century were glamorized or villanized
One view glorified their abilities and contributions
1. "Captains of Industry”
Industrial leaders were viewed as ingenious and
industrious capitalists who transformed the American
economy with their business skills. These "Captains" were
the heroes of their day who embodied the American dream
of rags to riches.
A second view questioned their tactics and ethics
2. "Robber Barons”
Industrial leaders were viewed as immoral, greedy, and
corrupt, using bribery, illegal business practices, and cruelty
to workers to get ahead. Many of the most respected
industrialists were also feared and hated. While not all of
these men were unethical, many used questionable tactics
to achieve their goals of wealth and power.
43
Robber Barons
Robber Baron is an insult term used to describe a class of
enormously rich businessmen that emerged in the post civil war
era. Today they would be known as billionaires. They were both
admired and hated at the time. They used ruthless, unscrupulous,
and often illegal methods to create monopolies and develop
overwhelming economic power and control over their industries. In
the late 1800’s a handful of these businessmen controlled over 90
percent of total U.S. wealth.
Some of the more commonly known industrial leaders and bankers
who were called Robber Barons include:
 Andrew Carnegie
300
 John D. Rockefeller
250
 Cornelius and William Vanderbilt
200
 Jay Gould
 J. Pierpont Morgan
 Jim Fisk
 Daniel Drew
279
1865
1900
2004
150
100
50
0
3
22
Total number of billionaires
44
Chart shows the comparison in the number
of billionaires from 1865 through 2004
Big Business and Labor
• Famous “trusts” and “robber barons”
– John D. Rockefeller’s Standard Oil Company
dominated the oil industry through horizontal
integration(mergers with competing companies ) and
by 1890 he controlled 90% of the Oil industry.
– (Rockefeller became the richest
man in the world and the first U.S.
Billionaire. He was worth $257 billion
by today’s standards. Rockefeller
gave away $500 million to fund
universities and medical institutes )
46
Big Business and Labor
• Background: Famous “trusts” and “robber barons” –
cont.
- Andrew
Carnegie dominated the steel industry by
buying out his suppliers and owning all aspects of the
production process (vertical integration) and buying out
competing steel producers (horizontal integration).
- (Carnegie was a philanthropist and donated about 90%
of his wealth to fund public libraries, scholarships and
other charities.)
How rich were the “robber barons”
compared to Microsoft founder Bill Gates?
200
180
160
140
120
100
80
60
40
20
0
Rockefeller
Carnegie
Vanderbilt
Bill Gates
Jay Gould
JP Morgan
James H. Hill
$ billions $
48
The millions made by the robber barons is at the expense of the workers
49
Big Business and Labor
• Social Darwinism – scientific explanation for
the success of these wealthy business men.
– Grew out of Charles Darwin’s theory of biological
evolution - survival of the fittest.
– Herbert Spencer used Darwin’s theory to explain
the evolution of human society.
– Economists used this theory to justify laissez faire
economics – the belief that the economy should
not be regulated by the government or anyone.
Herbert Spencer
“Social Darwinism”
Spencer, an Englishman, was a philosopher who
is best remembered for his ideas that have
become known as “Social Darwinism”.
Social Darwinism advocated laissez-faire
capitalism, an economic system that allows
businesses to operate with little government
interference. Spencer believed that competition
was “the law of life” and resulted in the “survival
of the fittest”, a phrase he used years before
Darwin. Spencer argued in his various writings
that society is best served when its fittest
members operate without opposition.
Unlike Darwin, Spencer also believed that
individuals genetically pass on their learned
characteristics to their children. This meant the
fittest persons inherited positive qualities such
as intelligence, the desire to own property, and
the ability to accumulate wealth. On the other
hand, the unfit inherited laziness, stupidity, and
immorality.
“Each individual should be allowed
to do as he or she wills as long as
it doesn’t infringe on the rights of
another person.”
Spencer argued that the number of unfit would
eventually disappear because of their inability to
effectively compete with the fit. He was against
any government aid to the poor because 51
it
interrupted the correct evolution of civilization.
Laissez faire
■Term originated in France
during the Enlightenment
■Based on the idea that the
government should not
intervene in business or the
economy; instead natural law or
market forces would regulate
■Adam Smith popularized the
term and concept in his book
Wealth of Nations in 1776
■This approach was embraced
by industrialists during this era
who did not want the
government to regulate them in
any way
52
Individualism
The idea that a person should not
rely upon others for success
This philosophy was evident from
the beginning of United States history
Author Horatio Alger made this
concept the theme of his books in
which a poor young man is able to
create wealth and success through his
hard work
Later the term “rugged
individualism” becomes popular
Horatio Alger
53
Big Business and Labor
• Rise of Labor Unions:
– Workers tried to improve the harsh conditions of
industrial life through mutual-aid societies = selfhelp groups to aid sick or injured workers.
– They were later called labor unions.
– Why? Workers were Exploited
• Long hours (12+ hour workdays, 6-7 days per week)
• No vacation, sick leave, unemployment compensation,
or reimbursement for injuries on the job
• Hazardous working conditions
• Low wages
Big Business and Labor
• Rise of Labor Unions - continued:
– Biggest and Most influential Unions in the U.S.
were …
• National Labor Union (NLU), Knights of Labor, and
American Federation of Labor
– Goals:
• Legalize the eight hour day, equal pay, settlement of
disputes between workers and employers by an
impartial person, higher wages, safety regulations,.
– Collective bargaining – group negotiations to
reach agreements between workers and
employers
Big Business and Labor
• Rise of Labor Unions:
– Labor Activism
• Labor unions often organized strikes that resulted
in violence and death.
• The Haymarket Strike of 1886 – (wanted a shorter
work day)
– Police killed a striker at another plant the day before
– In response, 1,200 people gathered at Haymarket Square in
Chicago to protest
– Someone threw a bomb from the crowd and a riot began
– Police fired into the crowd
– 7 police officers were killed and several rioters
– 8 suspected strikers were arrested, 4 were hanged and one
committed suicide in prison
Big Business and Labor
• Rise of Labor Unions:
– Labor Activism
• The Pullman Strike 1894 (wanted higher wages)
–Pullman Railway Company laid off
thousands of workers and cut wages during
the economic panic of 1893
–Workers went on strike and set train cars on
fire and fought police
–Federal government got involved – sent
troops to end the strike
»Leaders were jailed, strikers fired and
many workers were blacklisted
Big Business and Labor
• Rise of Labor Unions:
– Labor Activism
• Result
– federal government had to get involved
–union membership declined
–union members fired
–employees forced to sign “yellow dog”
contracts – employees promise not to join a
union .
–People began to turn against the labor
movement