The Rise of Industry
1787-1910
What was the Industrial
Revolution?
• The Industrial Revolution refers to vast
changes in the way goods were produced,
using new machines and new sources of
power, rather than producing them by hand.
• The Industrial Revolution began in 18th
Century England with the use of new steam
powered machines to produce cloth items.
These new textile mills were the first
factories, and as the textile industry became
more efficient, their success inspired more
ingenuity.
The Beginning of
Industrialization in the U.S.
• The first textile mill founded
in the U.S. was in Rhode
Island in 1787. By the early
1800’s many other mills
began operating in Rhode
Island, Massachusetts, and
Connecticut.
• These first mills relied on
water power and steam
engines powered by coal
energy.
• Cotton from the South was
brought North to be spun in
these mills.
Other Early Industry in the U.S.
• Iron Works developed in the
United States, especially in
Pennsylvania.
• Factories producing goods
such a shoes, guns, and
tools developed throughout
the Northeast, and
eventually parts of the
Midwest.
• Manufacturing in the U.S.
was aided especially by the
concept of interchangeable
parts.
• As demand for domestic
goods increased, the
number of manufacturers in
the U.S. grew.
Locomotives
• The First Steam Powered
locomotives began operating
in the U.S. in the 1820’s.
• Within a few decades, miles
of tracks were laid
throughout the country,
especially in the North and
Midwest, where they were
used to transport goods and
passengers.
• The ability to transport great
quantities of goods over long
distances led to cheaper
prices.
• The Rail industry increased
the demand for more iron
both for the locomotives
themselves, and the rails
they traveled on.
Coal
• Coal had been mined in
the U.S. on a small
scale since the 18th
century.
• By the mid-1800’s there
was great demand for
coal in industry, and as
a fuel to heat homes,
especially in cities.
• Coal was especially
abundant in Virginia,
Pennsylvania, West
Virginia, and Kentucky.
The Civil War
• The Civil War
created huge
demand for
manufactured goods
in the U.S.
• The clear advantage
industry offered the
North in the war only
increased
industrialization.
The Second Industrial Revolution 1850-1910
• The new Bessemer process for making steel came to America
and by the 1880’s, the U.S. became a major steel producer. This
enabled the building of large bridges, skyscrapers, and much
much more.
• After the Civil War the oil industry grew as demand for fuel,
especially kerosene, increased. Eventually this fuel would power
the new German invention of the automobile.
• Electricity became a major source of power in the late 1800’s.
Thomas Edison used electricity to power his light bulb, and
eventually entire cities were running on electric power.
• Advancements in communications became especially important
during this period, beginning with the telegraph, later the
telephone, and eventually the radio.
• New forms of transportation developed new industries and
increased demand for more industrial products. The automobile
began in Germany, but Henry Ford revolutionized the industry
with the assembly line. The Wright Bothers would build the first
airplane by 1903.
• New methods of manufacturing and mass production of goods
led to decreased prices for goods.
Steel
Steel Production was a
driving force behind the
industrial revolution in
the U.S.
• In the 1850’s, Henry
Bessemer of England,
developed a process for
developing strong, but
lightweight steel. This
process soon came to
the U.S., and by 1890,
American steel
production surpassed
that of the British.
What Steel Made Possible
What Steel Made Possible
What Steel Made Possible
What Steel Made Possible
What Steel Made Possible
What Steel Made Possible
Oil
• Initially, whale oil was
used in the U.S. as a
fuel, especially in
lamps.
• In 1859 the first oil well
was built in
Pennsylvania.
• The new oil industry
grew rapidly and would
help to fuel the Second
Wave of the Industrial
Revolution in the U.S.
Electricity
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Electricity
Electricity
Communications
Transportation
Industrialization Changes
Business
• Traditionally, a business was run by one person, a
family, or a partnership of two owners. The business
would grow as big as the owners ability to invest in it.
A person who takes the risk to open a business is
called an entrepreneur.
• At this time, businesses were usually very localized,
buying and selling to customers who lived nearby.
• As the Industrial Revolution dawned, it became clear
to entrepreneurs, that huge potential profits awaited
people who could find a way to take advantage of the
technological innovations that were becoming
available, or to develop new innovations.
The Rise of Big Business
• Industrialization required a lot of money and capital, usually
more than one individual could afford. Because the potential
profits to be made in the new industries were so substantial,
people began to join together in a group of investors called a
corporation.
• Corporations allowed entrepreneurs to invest in a business
venture with less risk than in an individually owned business.
• With new methods of transportation, there was an increased
access to goods and resources from far away, along with access
to previously unreachable markets. Thus, corporations became
national, and even international in scope.
• The era of Big Business was beginning.
How a corporation works: The Basics
All businesses want to make a profit, and
corporations try to make a profit for their investors.
To do so they want to sell as much of their product
as possible, for the least expense.
How would they do this?
1.
2.
3.
4.
Find cheap labor (people willing to work for the least wages)
Develop efficient production (Produce your goods or services
faster, and cheaper than your competition).
Advertise the good or service to increase customers.
Follow the laws of supply and demand in regards to what gets
produced, and what is charged for goods and services
(Produce goods or services in demand, and charge what
consumers are willing to pay. If a corporation can charge
much less than the competition for similar goods or services,
and advantage is gained).
Gaining an Edge
In the late 1800’s, many corporations used
methods that were less than honest to gain
an edge on their competition.
How did they do this?
1. Buy out competitors to create a monopoly,
in which the corporation controls all of a
product or service.
2. Undercut competitors prices.
3. Create a cartel by agreeing with the
competition to set certain prices.
Getting an Edge Continued
Horizontal integration- consolidating many firms in the
same business, usually by creating a trust, or a
group of separate companies under the control of a
single managing board (essentially, a large company
would coerce smaller competitors to join in a trust to
create a monopoly that would benefit both sides,
especially the larger company. It was often thought to
be the better choice for the smaller company, than
simply selling out, or being forced out) .
Vertical integration- A system of consolidating firms in all
of the steps of production (For example, controlling
not just the oil company, but the railroads that
transport the oil, the trucks that ship it, the refineries
that turn it into gasoline, etc.)
Captains of Industry
Or, as some would call them,
Robber Barons
John D. Rockefeller
• Founder of Standard Oil
Company
• Used many shrewd
business tactics to
dominate the 90% of
the oil industry.
• Adjusted for inflation, he
is considered to be the
richest man in history.
• He gave over half a
billion dollars to
numerous charities.
Andrew Carnegie
• Founder of the
Carnegie Steel
Company.
• Employed shrewd
business tactics to
dominate the Steel
Industry
• His company hired
strike breakers to
brutally put down the
Homestead Strike in
1892.
• Gave over 400 million
to charity.
Cornelius Vanderbilt
• Shipping and railroad
magnate.
• Used harsh business
tactics to buy out
competitors, and
dominate shipping and
later rail.
• Gave over a million
dollars to Vanderbilt
University, and donated
to many churches.
John Pierpont Morgan
• Financier and founder of J.P.
Morgan Co., responsible for
the creation General Electric,
and U.S. Steel.
• A master deal maker, he
used vast wealth and
influence to create a
monopoly when he bought
out Carnegie Steel to create
U.S. Steel
• He arranged a loan of 6.5
million dollars in gold to the
government when they were
nearly out of reserves.
• Helped arrange a financial
plan to stop the Panic of
1907, rescuing many failed
banks.
Henry Ford
• Founder of Ford Motor
Company.
• Innovated the industrial
world with the assembly
line, making production
more efficient.
• Paid his workers
exceptionally high
wages for his day.
• Broke unions with strike
breakers
What was the relationship of the U.S
Government with business?
• The U.S. had a strong commitment to free market
economics for most of its history, and believed that
government should interfere as little as possible in
business. This is often referred to as a laissez faire,
or hands off approach.
• A strong legal system that protects private property
rights encouraged and protected corporations,
accelerating growth.
• Often times the government enacted high protective
tariffs, or taxes on imported goods, to aid American
business.
• Business leaders have often used their great
influence and power to convince the government to
take certain actions.
Conflict Between Business
and Government
• While the U.S. Government left business alone to
operate with as little regulation as possible, many
people became alarmed at the growing power and
questionable tactics of big business.
• Regulations were developed to try to ensure fair
business practices. Examples include:
Interstate Commerce Commission, designed to regulate
the railroad industry.
The Sherman Anti-Trust Act, which outlawed any trust
that operated in restraint of trade. While this act was
rarely used for a decade, it would eventually be used
to strike down some of the worst monopolies.
Other Implications of the
Industrial Revolution
• While it is clear that American
technology and business changed as a
result of the Industrial Revolution, what
other changes do you think might have
taken place?
Work
• Early in America’s
history most people
lived on farms or
worked as
craftsmen.
• During the Industrial
Revolution, people
began to work in
factories, or in
mines.
Prior to Industrialization most people lived on farms.
During the Industrial Revolution many people moved from
Rural areas to urban areas, a process known as urbanization
The urban areas were often tightly congested and over crowded
Often times the poorest of the new industrial working class
Lived in dilapidated tenements in neighborhoods called slums.
Many of the slums were unsanitary and had terrible
living conditions for the inhabitants.
The slums could also be dangerous, and crime was
common.
Many industrial areas began to be heavily polluted.
Towns around coal mines would develop in which the coal
company would own all of the houses and all of the stores.
Often times working conditions could be dangerous.
Many times children worked in dangerous conditions.
Labor
• As you have seen, working conditions in many of the
industries were unsafe and unsanitary.
• Most early industrial workers worked 12 hours a day,
six days a week.
• Wages were usually quite low, as most of the
unskilled laborers had few options.
• As immigration was booming, there was always an
ever growing number of people willing to work, so
laborers were easy to replace.
Labor Unions
• As early as the 1820’s factory workers began to form
groups of workers to demand better wages and
working conditions from their employers.
• Forming a group to negotiate for higher wages, better
working conditions, and better hours is called
collective bargaining.
• When management refused to meet the demands of
the workers, the workers would refuse to work. This
tactic is called a strike.
• Although these early organizations were influential to
future laborers, none of them lasted for more than a
few years.
The First Labor Unions
• The first labor union in the U.S. was the National
Trades Union, organized in 1834 and made up of
workers in all trades, lasted only a few years, but
succeeded in getting the work day shortened to 10
hours in some regions.
• The Knights of Labor was formed in 1869 by Uriah
Smith Stephens, and also included workers from any
trade, from any background, worked to expand the
rights of workers to check the power of wealthy
industrialists. The Knights were influenced heavily by
socialist philosophy, which called for the means of
production to be controlled by society as a whole, not
individuals.
Knights of Labor
• Under the leadership of Terence Powderly,
the Knights of Labor increased their
membership to as many as 700,000 men and
women.
• They launched a series of strikes and
boycotts designed to gain the changes they
wished to see.
• The strikes were largely unsuccessful, and
the Knights were increasingly viewed as too
radical. By the 1890’s this union had largely
disappeared.
The American Federation of
Labor
• In 1886 Samuel Gompers formed the AFL, a union of
skilled tradesmen.
• Instead of fighting for societal changes like the
Knights of Labor, the AFL worked for specific
changes like improved wages, shorter work hours,
and better conditions.
• The AFL also fought for closed shops, or businesses
that only hired union labor.
• Membership in the AFL was restricted to skilled
workers, and often times excluded minorities and
women, if not in policy, in practice.
Eugene V. Debs
• The organizer of the
American Railway Union,
and later a key founder of
the International Workers of
the World, a more socialist
leaning union.
• He was imprisoned for his
role in the Pullman Strike, for
interfering with interstate
trade.
• Debs was highly influential in
the labor movement and
even ran for president as a
socialist.
Important Strikes
• Great Railroad Strikes of 1877, in which workers fought wage
cuts. Strike breakers, militia, and federal troops were used to
end the strike. Dozens were killed throughout the country,
especially in Maryland, Chicago, and Pittsburgh.
• Haymarket Square Incident of 1886, which was part of a
campaign for an 8 hour work day. Violence on both sides was
furious, but some of the strikers used bombs on police, giving
unions and workers a bad name for years to come.
• Homestead Strike of 1892, in which steel workers called for a
strike to protest cuts in wages. Private strike breakers were used
to break the strike, along with militia and federal troops. Like the
Haymarket Incident, an attempt to assassinate figure in
management hurt the image of the strikers, despite the violent
tactics of the company.
• Pullman Strike of 1893, in which workers protested cuts in
wages, and the conditions in their company town. President
Grover Cleveland used federal troops to put down the strike.
Management Response
• Most people in management resented the rise of
these early workers organizations and would refuse
to let organized workers into their factories or mines.
This management tactic is called a lock out.
• Strike breakers, often Pinkerton Detectives (who
were sometimes just hired thugs), would be used to
violently put down strikes.
• Management used the courts to stop strikes, which
they did to protect the property rights of the company.
Ironically, the Sherman Anti-Trust Act was often sited,
as the Unions were accused of “restraint of trade”.
Initial Government Response
• As we have seen, the federal government
almost always sided with business interests in
these early labor disputes.
• Federal troops were used many times to
protect business interests.
• Presidents Cleveland and McKinely were
famous for putting down strikes.