Catherine Poirier
APUSH Period 1
12/19/10
C17 KTs p. 464-477
New Steel Production Techniques (464): Henry Bessemer & William Kelly; new process for steel –
blowing air through the molten iron to take out impurities; added ingredients to make it steel; the openhearth process introduced by Abram Hewitt was widely used.
Pittsburg (464): New techniques made it possible to use soft bituminous coal and turn it into coke and
use it to fuel steel furnaces; Pittsburg became the center of the steel world, western PA was abundant in
this stuff)
Pride of the Petroleum Industry (464): Steel industry’s need for lubrication – 1850’s George Bissell
discovered it could be burned in lamps, and could make paraffin, naphtha, and other lubricating oil;
1859 they began drilling and the first well was in Titusville, PA.
Henry Ford (465): 1906; produced the first Ford automobile; by 1910 the company became a huge force
in the industry; reshaped social and cultural life in America; 1895 – only 4 automobiles, by 1917 – 5
million.
Corporate Research and Development (467): GE – first laboratory in 1900; by 1913 Bell Telephone,
DuPont, General Electric, Eastman Kodak, and 50 more companies were spending hundred of thousands
each year for their own engineers and scientists to do research – keep up with the changes in industry;
decline in government support for research
Transformation of Higher Education (467): Faculties of Universities started to receive funding from
corporations for research of interest to them; a partnership developed between the academic world and
the commercial world, continued until the 21st century.
“Taylorism” (467): Leading theoretician, Frederick Winslow Taylor; new principles of “scientific
management”; reorganize the production process by subdividing tasks, making workers more versatile;
diminishing the employers dependence on one worker; reduced the need for highly trained workers;
increased employers control, made working people less independent.
Moving Assembly Line (467): mass production; introduced by Ford in 1914; cut time from 12.5 hours to
1.5 hours; rose wages and reduced the hours of his workers, while cutting the base price of the Model T
to a third of the original price.
Rapid Expansion of the Railroad (468): 1860 – 30,000 mi; 1880 – 93,000 mi; 1900 – 193,000 mi; subsidies
from local and federal government were important during this time; these undertakings required much
more capital than private business owners could have.
Limited Liability (469): Stock investors only risked the amount they invested originally, not liable for the
debts of the corporation beyond that; appealed to investors.
Andrew Carnegie (469): A Scottish immigrant; steel tycoon; worked his way up from “modest
beginnings”; 1873 opened his own steel company in Pittsburg; cut prices by striking deals with the RRs
and bought out rivals; controlled from mine to market; used the sale of stock to finance the company;
1901 – sold out for $450 million to J. Pierpont Morgan.
New managerial techniques (470): result of need for systematic structures; relied on the division of
responsibilities, a carefully deigned hierarchy of control, modern cost accounting procedures, and a new
breed of business executive: the “middle manager” (layer of authority between workers and owners)
Horizontal and Vertical Integration (470): ‘horizontal integration” – combination of multiple firms to
form one corporation. “Vertical integration” – the taking over of all of the businesses a company relied
on for function (Carnegie Steel)
Rockefeller’s Standard Oil (471): A combination of vertical and horizontal integration; launched refining
company in Cleveland after the Civil War; began buying out competition; 1870 – formed the Standard
Oil Company of Ohio; owned 20/25 refineries within 5 years; built his own barrel factories, terminal
warehouses, and pipelines; owned its own freight cars too.
The Trust Agreement (471): Pioneered by Standard Oil in 1880s, perfected by J.P. Morgan – “Trust”; a
term for any great economic combination, a particular kind of organization; stockholders in individual
corporations transferred their stocks to a small board of trustees in exchange for shares of the trust; no
direction control over the decisions, just received some of the profits.
Rapid Corporate Consolidation (471): by the end of the nineteenth century, 1% of corporations were
able to control 33% of the manufacturing; gave power to few people, J.P. Morgan (great NY banker), and
Rockefeller (gained control of a major bank)
Myth of the “Self Made” Man (472): by 1892 there were 4,000 millionaires in America; most claimed to
be “self made” men, working their way up to where they were now, but most began their careers from
positions of wealth.
Social Darwinism (473): Assumptions like you made yourself be who you are; poor or rich, it’s your own
doing = basis for the revival of social Darwinism; the fittest only survived and flourished in the market
place; business liked this because it confirmed their virtues
Justifying the Status Quo (473): Social Darwinism justified the business men’s tactics; insisted attempts
to raise wages by forming unions would fail, because economic life was controlled by natural law
Russell Conwell (474): A Baptist minister; spokesman for the idea of great wealth being available to
everyone; delivered his “Acres of Diamonds” lecture over 6,000 times between 1880 and 1900; told true
stories of those who made their way to the top.
Horatio Alger (475): Most popular promoter of the success story; originally a minister in MA; was driven
from their due to a sexual scandal; moved to NY & wrote more than 100 books; all the same message –
poor boy from a small town goes to the big city & seeks his fortune.
Lester Frank Ward (476): Sociologist; challenged corporate ethos & capitalism; a Darwinist, rejected the
application of those laws to human society; civilization was not governed by natural selection but by
human intelligence, could shape society.
Henry George (476): from CA, a radical; tried to explain why poverty existed among the wealth created
by modern industry; progress cannot be real or permanent.
Looking Backward (477): Rival of George in popularity was Edward Bellamy; published in 1888;
described the experience of a young man from Boston, who went into a hypnotic sleep in 1887 and
woke up in 2000 to find a new social order; no want, vices, or politics; emerged from a peaceful
evolutionary process.
Increasing Inequality (477): four-fifths of Americans lived in modesty, and at least 10 million lived below
the poverty level; while other lived in disgusting amounts of luxury; the standard of living was raised for
everyone, but the gap between the rich and poor grew tremendously.