Chapter 14
Steel, Oil and Railroads
The Main Idea
During the late 1800s, new technology led to rapid
industrial growth and the expansion of railroads.
New Industries Emerge
• New technologies
– Electrical power replaced steam and water power.
– Larger factories produced more and more goods.
– Faster transportation moved people and goods more cheaply.
• Dramatic industrial growth
– Period sometimes called the Second Industrial Revolution
New Industries Emerge
Making Steel
• Bessemer Process of purifying steel.
– helped to make America the world’s top producer
– transformed the U.S. into a modern industrial
economy.
– William Kelly created the idea in the United States.
=Construction companies could build bigger bridges and taller
buildings, locomotives and steel rails.
=The low cost of steel made ordinary items affordable.
STEEL
STEEL
• Definition
• Uses /
Innovations
• Process
• Impact of
industry
importance
Steel is an alloy of iron with about 1-2 percent carbon.
IRON
STEEL
CAST IRON
Uses
Chicago
Making Steel
• Bessemer Process of purifying steel.
– helped to make America the world’s top producer
– transformed the U.S. into a modern industrial
economy.
– William Kelly created the idea in the United States.
=Construction companies could build bigger bridges and taller
buildings, locomotives and steel rails.
=The low cost of steel made ordinary items affordable.
Bessemer Process
Changed everything –
cheap consistent steel
IMPACT OF STEEL
Cities went vertical.
Railroads were built everywhere
Vertical
Integration
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Mines
Trains
Ships
Coal
Coke ovens
Steel mills
Andrew Carnegie—STEEL
•Rose from Scottish immigrant child to steel magnate.
•Used profits from various business investments to
found own company and buy out rival steel producers.
•By 1901 the Carnegie Steel Company dominated the
U.S. steel industry. US Steel Corporation.
•After retiring, devoted his time to charity, supporting
education and building public libraries.
Andrew Carnegie
-Made steel process
efficient
Sold company
Become insanely rich---
Gave most away – 90% +
Stevens Point got a library.
…and then tore it down.
Worker unrest
– safety
concerns –
Unions form
You tell me…
Railroads
Cornelius Vanderbilt—RAILROADS
•Vanderbilt began investing in railroads during the Civil War.
•By 1872, he owned the New York Central Railroad.
•At the height of his career he controlled 4,500 miles of track.
•He supported few charities, but gave money to what would come to
be Vanderbilt University.
•He died leaving an estate of $100 million.
Railroads Expand—More Tracks
• 1865 to 1890, the number of miles of
railroad track increased nearly fivefold.
– 1860=30,000 miles
– 1890=180,000 miles
• To aid the growth, the federal
government gave thousands of acres of
land to railroad companies.
TRANSCONTINENTAL RAILROAD
Union Pacific
• Laid tracks westward from Omaha, Nebraska
• Prairie lands and gently rolling hills made for quick
progress.
Central Pacific
• Tracks were laid eastward from Sacramento, California.
• Chinese workers laid tracks through tougher terrain, crossing
deserts and blasting through mountains.
= May 18, 1869= The two lines met. United the country
physically and economically. Golden Spike.
East ---West
Connection
Communication
TIME ZONES - Organization
Corruption
Railroad Productivity
Land Grants
•
The first major railroad
land grants originated with
the 1862 legislation that
enabled the
transcontinental railroad.
At that time, the Union
Pacific and Central Pacific
railroads were granted
400-foot right-of-ways
plus ten square miles of
land for every mile of
track built.
• P.460
•
Depending on sources,
9.5% to 17% of all US
lands were given/
controlled by railroads.
George Pullman—Pullman, IL
•Made his fortune designing and building sleeper cars that
made long-distance travel more comfortable.
•He built a town south of Chicago to house workers in relative
comfort, believing happy workers were more productive.
•The Pullman Company controlled aspects of life in the town,
and criticism was not tolerated.
Effects Of Railroad…
•Promoted trade and provided jobs.
•Boosted steel industry and train
manufacturers.
•Contributed to the growth of the modern
corporation.
•Gave industrialists quick and inexpensive
access to distant markets and distant
sources of raw materials.
Effects Of Railroad…
•Settlement of the West was easier.
•Sparsely populated areas began to fill
with residents.
•New towns were founded and existing
ones expanded.
•Led to the adoption of standard time.
New Industries Emerge
Oil industry begins
• Oil was a key commodity as a fuel source and for
lubrication.
• Edwin L. Drake drilled the first commercial oil well.
Oil prospectors, or Wildcatters, looked for oil in
other regions.
• Major sources of energy from oil fueled a revolution
in transportation and industry.
OIL
•
•
•
•
Historical Origins / uses
US origins
Impact / Innovation
Problems
347 AD
First oil
1846 – first
mechanical well
First oil
Titusville
Signal Hill
Spindletop
By introducing the world's
first commercial oil well in
1859, Edwin Drake
launched an oil boom in
Western Pennsylvania
comparable to the
California gold rush of '49.
First uses
• 3,000 years of
use –
–
–
–
–
Lamp oil
Medicine
Seal boats
Generally a
nuisance
• 150 years
modern oil
industry
Impact – New energy economy
• 20 to 1 energy ratio
• Nothing like it.
Kerosene, not gasoline- first oil
use
Products today
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Petrochemicals (Plastic)
Asphalt
Diesel fuel
Fuel oils
Gasoline
Kerosene
Liquefied petroleum gas (LPG)
Lubricating oils
Paraffin wax
Tar
•
Some of biggest
companies in the world
John D. Rockefeller—OIL
•Starting with an oil refinery and superb business sense,
used both vertical and horizontal integration to capture
90% of the U.S. oil refinery business by 1879.
•Standard Oil Trust—consisted of 40 corporations that
controlled every phase of oil refining.
– 1913 gave away over half of his fortune to charity.
– He donated millions to education and good works through his
Rockefeller Foundation.
John D. Rockefeller
Started Standard Oil
Created refinery monopoly
Also insanely rich
from oil
How rich is insanely rich?
•
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Name: John D. Rockefeller
Age at Highest Earnings: 74
Age at Death: 97 (died May 23, 1937)
Net Worth: ▬ 329.9 Billion $USD
Original Net Worth: US$1 Billion (September 29 1916)[2]
US$900.0 Million (1913-eve of WWI) [3]
• Origin: United States
• Main Source of Wealth: Standard Oil
• Other Achievements: First Billionaire (Globally-USD)[4] and
The Rockefeller Foundation (Created:1913)[5]
The Auto Industry- Car Culture
Highway system
Car culture
Suburbia-
Daily Gas
usage by
country
Relative
Gas Prices
Future of Oil
Problems
•
•
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Non-renewable
Major pollutant
Most “not” in US
No price controls
WE NEED IT!!!!!!
A Mixed Legacy
Critics
– Business tycoons were “robber barons” who
profited unfairly by squeezing out competitors.
– They lived lavish lifestyles from their ill-gotten
rewards.
Proponents
– Business tycoons were “captains of industry”
who used their business skills to make the
American economy more productive.
– That in turn made the American economy
stronger.
A Favorable Climate for Business
Free Markets
• Capitalism= competition determines prices and wages,
and most industries are run by private businesses.
• In the 1800s, business leaders believed in laissez-faire
capitalism with no government intervention.
• Entrepreneurs risked their money and
talents in new ventures.
Proprietorships and Partnerships
– Small businesses were run by individual
proprietors or had more than one owner in a
partnership.
– In either case, owners are personally responsible
for all business debts and obligations.
Corporations
– As industries grew, the structure of ownership
changed.
– Businesses were owned by stockholders; decisions
made by a board of directors, with day-to-day
operations run by corporate officers.
– Investment money was raised by selling stock, and
investors were bound only by the amount of their
investment.
Trusts and Monopolies
– Some companies merged and turned their stocks over
to a board of trustees who ran the group of
companies as a single entity.
– Sometimes a trust gained a monopoly, having
complete control of an industry.
– With no competition, prices could be raised or
lowered at will.
Social Darwinism
• Economic life was controlled by the natural law
of competition (survival of the fittest)
• Agreed with the well-known economist, Adam
Smith’s ideas of the law of supply and demand.
• Businessmen liked the ideas of capitalism, they
actively sought to eliminate competition and
control the free market.
• John Rockefeller and Andrew Carnegie.