Industrialization 1865 – 1901
Natural Resources
Large Workforce
Free Enterprise
New Inventions
The United
States Becomes
an Industrial
Natural Resources
Water, timber, coal, iron &
– Transcontinental Railroad
played a part
1859 – Edwin Drake
drills first oil well in
Titusville, Pennsylvania
Large Workforce
US population triples
between 1860-1910
– 30 million to 90 million
– Increased demand for
goods and services
– 1870 to 1910 20
million immigrants
Free Enterprise
Laissez-faire – “let people do as they choose”
– No government intervention
– Free Markets
Entrepreneurs – risk takers and innovators
– In late 1800’s invested in manufacturing
Pacific Railway Act (1862) – construction
of transcontinental railroad
– Union Pacific
10,000 workers – Civil War vets, Irish Immigrants,
farmers, miners, ex-cons
– Central Pacific
10,000 Chinese workers
– Met at Promontory, Utah
Railroads (cont)
Railroads linked the nation
– Larger markets for goods
– Stimulated the economy
Spent money on steel, coal,
timber, etc.
Railroads (cont)
1883 – American Railway Association
divided country into four time zones
Railroad Abuses (Corruption)
Land Grants – free land given to railroad
companies to encourage construction
– Railroads sold the land to settlers, real estate
agencies, and others
Price Fixing – agreements between
companies to set prices
– Kept farmers in debt
Railroad Abuses (cont)
Credit Mobilier – owned by Union Pacific
– Awarded UP’s contracts, then overcharged UP
Money went into the pockets of the UP investors
– Union Pacific almost went bankrupt
Congress gave more land grants
– Investigation implicates many members of congress
Railroad Abuses (cont)
Interstate Commerce Act
– Tried to stop railroad abuses and corruption
– Federal govt oversees railroads
Rise of Big Business
By 1900 big businesses dominated economy
– Corporation –organization owned by many
people, but treated by law as if a single person
– Owners buy shares of stock and are called
Allows a corp. to raise large sums of money
Corporations vs. Small
Manufacturing Companies
Small Manufacturing Companies
•Low Fixed Costs
•High Fixed Costs
•High Operating Costs
•Low Operating Costs
•Shut down during poor economies
•Lots of money to maintain factories
during poor economies
The Shoe Cobbler
Nike Shoe Corp.
Consolidation of Industry
Small companies were forced out of
business-designed to eliminate or reduce
competition, so are Corporations
Monopoly – when a single company
controls an entire market
Consolidation of Industry
Vertical Integration
– company that owns all the
different businesses it
depends on for operation
Consolidation of Industry
Horizontal Integration
– combining many firms doing the same type of
business into one large corporation
Consolidation of Industry
(to eliminate or reduce competition)
Trusts – allows one person to
manage another’s property
– Standard Oil forms first trust
– Controlled 90% of refining
Holding Company – Owns
stock of other companies, does
not produce anything
Robber Baron – Capitalist
who became wealthy through
exploitation or Captains of
Industry…i.e. Andrew Carnegie
-Steel/John D. Rockefeller-Oil
Consolidation of Industry
Andrew Carnegie
– Poor Scottish immigrant who
became very rich
– Made early money in railroad
– Invested in Carnegie Steel
company in 1873
– Known for his work in the steel
– Donated 90% of his total
wealth to charity and the arts,
“The Gospel of Wealth”
Consolidation of Industry
Sherman Antitrust Act – made it
illegal to interfere with free trade
Labor Unions
Between 1865 – 1897, the U.S. experienced
deflation – rise in the value of money
– Prices fell
– Companies cut wages
Workers begin to organize labor unions
Labor Unions (organize)
Reasons for Unions
– Long hours,
12+ hours/day, 6 days/week
– Low Wages
– Poor, Unsafe conditions
– No job security
Labor Unions (cont)
Child Labor
– Long hours, Less pay
– More Danger
Labor Unions (cont)
Trade Unions – formed by craft
workers limited to those with a
specific skill
– By 1873, there were 32 trade unions
Industrial Unions –united craft
and common laborers
– Companies outwardly opposed them
Labor Unions (cont)
Strategies vs. Unions
– Contracts promising not to join a union
– Hiring private detectives (Pinkertons)
– Blacklists – preventing troublemakers from
getting new jobs in their industry
– Lockouts – Workers were locked out of the
worksite and not paid
– Strikebreakers – workers hired to replace strikers
Also called “scabs”
Labor Unions (cont)
Karl Marx “The Communist
– World history was a class
struggle between the oppressing
owners and the oppressed
– The proletariat (working-class
oppressed) would overthrow the
bourgeoisie (middle-class
oppressors) in a violent
revolution and set up a
Produce a society without classes
Labor Unions (cont)
American Federation of
– Large trade union
– Samuel Gompers was first leader
Wanted to have unions accepted in
– Three goals:
Have companies recognize unions
 Closed shops – can only hire union
 8 hour workday
Labor Unions (cont)
Knights of Labor
– 8 hour workday
– Equal pay for women
– End of child labor
– Worker-owned factories
– Favored arbitration – third
party helps workers and
management come to an
Labor Unions (cont)
By 1900, women were 18% of
– Paid less than men
– Not allowed in unions
Women’s Trade Union League
(WTUL) – first union dedicated to
women’s labor issues
– Created by Mary Kennedy O’Sullivan &
Leonora O’Reilly
Labor Unions (cont)
Great Railroad Strike
– 1877-Railroad workers
strike to protest wages
being cut
80,000 workers in 11
 Destroyed railroads and
 Violence erupted
– President Hayes forced
to call out the army to
stop it
Labor Unions (cont)
Haymarket Riot
– 1886-Chicago-Protest against police brutality
– Clash between strikers and police involving a bomb
and gunfire
– 7 police and 4 workers killed
Labor Unions (cont)
Homestead Strike-”The River Ran Red”
– The Homestead Strike was an industrial lockout and
strike which began on June 30, 1892, culminating in
a battle between strikers and private security agents
on July 6, 1892.
– The dispute occurred at the Homestead Steel Works
in the town of Homestead, Pennsylvania, between
the Amalgamated Association of Iron and Steel
Workers (the AA) and the Carnegie Steel Company.
– The final result was a major defeat for the union and
a setback for efforts to unionize steelworkers.
Labor Unions (cont)
Pullman Strike
– 1894-The American Railway Union (ARU) led by
socialist Eugene Debs strikes against the Pullman
Palace Car Company
– Turned violent after company hired strikebreakers
Effects of Industrialization
Growth of large corporations
New and plentiful manufacturing goods
Poor working conditions in factories and
Increased labor activism