Convenience in
transportation for
large companies
 Efficiency and cost
 River and canal
transportation
limited to areas near
water routes

› Frozen water
prevented their use
during the winter
Width of the rail tracts
(gauge) standardized to
allow trains from different
railroads to switch tracks
 Four standardized time
zones created for the entire
nation in 1883

› Made it possible to create
train arrival and departure
times across the country

Steel rails replaced iron rails
› could carry heavier loads

State and federal
governments gave railroads
huge grants of land (over
180 million acres)
› Provided incentive to build
more lines and encouraged
settlement

George Westinghouse
patented first automatic air
brake, which made train
travel much safer

Land granted to the
railroad companies
often occupied by
Native Americans
› Sabotage

Native Americans were
upset by the hunting of
buffalo and
occupation of their
land

Need for more labor on
Central Pacific Line:
› Silver rush in Nevada
drew away many workers
› White workers often went
on strike for higher wages
› Completion deadline
rapidly approaching

Charles Crocker
convinced his partners to
hire the Chinese, many of
whom had emigrated
during the Gold Rush in
the 1840s
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
 Popular with industrialists


Philosopher Herbert Spencer
applied Darwin’s theory of
evolution and natural
selection to human society
› Darwin had argued that
plants and animals had
evolved throughout the
years and that weaker
species would die out
› Many Christians were
outraged at the conclusions
Darwin made about the
origin of the species

Spencer argued that
society evolved through
competition and the idea of
“Survival of the Fittest”




Idea that a person should
not rely upon others for
success
Evident from the
beginning of United
States history
Author Horatio Alger
made this 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
Big businesses came to be because they
could produce goods more cheaply and
efficiently than small businesses
 Forced many small companies out of
business
 Oil was discovered in Pennsylvania and
Rockefeller created Standard Oil Co. to
cash in on the discovery
 Steel became profitable because of the
Bessemer Process and the demand for
railroads




Andrew Carnegie
emigrated to the US
from Scotland in 1848
He worked his way from
bobbin boy in a textile
factory making $1.20 a
week to making $50,000
a year with a railroad
company and creating
his own business
investing in the steel
industry
Preached a “gospel of
wealth”: make as much
money as you can, but
give it away
200
180
160
140
120
100
80
60
40
20
0
Rockefeller
Carnegie
Vanderbilt
Bill Gates
Jay Gould
JP Morgan
James H. Hill
$ billions $


Borrowed money from parents to buy a
boat that took passengers between Staten
Island and New York City when he was a
teen
Commissioned during the War of 1812 to
transport items for the government around
New City
› made him enough money to buy several
more ships

1829: Formed a steamship company on the
Hudson River and charged lower fares than
his competitors
› Became the most powerful shipping tycoon
in the region and made him a millionaire by
1846, earning the nickname "Commodore"

1860s: Began investing in railroads and
eventually built the first line connecting
New York City and Chicago
› Also built New York’s Grand Central station

Most historians estimate that when he died
he was worth $100 million ($1.7 billion in
today’s dollars)



Sold farm implements, fertilizers and
household goods with partner
In 1862 met and went into business
with Samuel Andrews who had
developed a better and cheaper
way of refining crude petroleum
›
Named the company Standard Oil
›
This allowed him to lower the prices he
charged for oil, his sales skyrocketed, and
in less than a year some of his competitors
went out of business
Rockefeller bought out Andrews for a
million dollars and eventually
monopolized oil refining in Cleveland
Negotiated first major deal to lower
his cost of transporting oil and refined
oil by guaranteeing the railway
company sixty carloads a day
›



Dominated the oil industry across the
nation by putting local companies
out of business
By 1890 Standard Oil was a monopoly
that could fix its own prices and terms
of business
Rockefeller was worth about $9 billion
dollars ($190 billion in 2002 dollars)



Born into a wealthy family
1857: he worked as an accountant in his father’s firm in London
After returning to the U.S. worked for several New York banking
firms until he became a partner in Drexel, Morgan and
Company in 1871
›





In 1895 he reorganized the company into J.P. Morgan and Company
Made a huge amount of money by financing railroad
companies that were in financial trouble
Hated competition and instability in the economy and
dedicated his career to brokering and financing deals that
yielded consolidations in the electric and steel industries
1901: created U.S. Steel, the world's first billion-dollar corporation
By the early 1900s, Morgan controlled almost all of the major
industries in the U.S. and had a large stake in the financial and
insurance industries
Morgan was an avid art and book collector
Buying all of the different businesses
that the operation of a company
depends upon
 Example:
Vertical Integration

› A clothing company would own the
trucks to distribute, the factory, the
cotton farm, etc.
Horizontal Integration


Buying several small businesses to create
one large business
Example:
› Independent oil companies combine to create
the US Oil Company


When a single company controls an entire
market it becomes a monopoly
Many Americans feared monopolies
because they could charge whatever price
they wanted to

Working conditions
were not very
regulated
› Workers breathed in
toxic fumes, lint,
and dust
› The average
industrial worker in
1900 made 22 ¢ per
hour and worked 59
hours per week
Alexander Graham
Bell – Telephone
 Christopher Latham
Sholes – Typewriter
 Thomas Edison – DC
(Direct Current)
electric generator,
phonograph,
incandescent light
bulb
 Nicola Tesla – AC
(Alternating Current)
electric generator,
hydroelectric power








First patent was in 1868 for an
Electrical Vote Recorder
1869: Received patents for an
improved stock ticker and several
other devices
Between 1872 and 1876 he
invented the motograph,
automatic telegraph systems,
paraffin paper, the electric pen
(mimeograph machine), and
many other useful machines
1876-1877 he invented the carbon
telephone transmitter "button",
which made telephony a
commercial success
First phonograph was made in
Edison’s lab
1879 he invented the first
commercially practical
incandescent electric lamp and
later invented the machinery for
the commercial use of electricity
Altogether Edison obtained almost
1100 patents and developed the
first research lab at Menlo Park, NJ


Business entity designed to create a monopoly over an industry
Some formally organized under the law
› They were created when corporate leaders convinced, often through
coercion, the shareholders of all the companies in one industry to turn over
their shares of a corporation to a board of trustees, in exchange for dividendpaying certificates
› The board would then manage all the companies in "trust" for the
shareholders
› This translated to an emphasis on the elimination of competition in the
process of managing all of the companies in order to maximize profits

Eventually the term was used to refer to monopolies in general
Many workers thought the way to improve working
conditions was to form unions and bargain for
better working conditions and higher wages
 Unions were opposed by company owners
because they saw them as illegitimate
conspiracies that interfered with their property
rights
 To prevent unions from forming companies
required workers to sign contracts against unions,
hired detectives to identify union organizers, and
blacklisted workers who tried to unionize
 Companies would lock workers out of their
property and refuse to pay them until they broke
up the union




Marxism (a set of ideas
of Karl Marx) started to
scare people in the
capitalist US
Marx believed that
workers would revolt
and seize control of
factories
Many European
immigrants had heard
the ideas of Marx and
when they came to the
US nativism (antiimmigrant feelings)
started to spread

The recession that
started in 1873
continued into 1877
› Railroad workers
across the country
walked onto the
tracks and refused to
move
› After property had
been destroyed and
people killed,
President Hayes sent
the army out to stop
the strike

Pullman Strike
Workers at the Pullman
Factory who had been
required to live in a company
town went on strike because
of slashed wages and the
firing of 3 workers who
complained
› Workers across the country
boycotted Pullman cars and
refused to handle them, tying
up railroads and threatening
to paralyze the economy
› Railroad managers arranged
for US mail cars to be
attached to Pullman cars
because the workers would
then be interfering with the US
mail (violation of federal law)
and President Grover
Cleveland sent in troops
›

Haymarket Riot
› Movement for 8 hour
›
›
›
›
›
workday gained support
A nationwide strike took
place on May 1, 1886
In Chicago, a clash
between strikers and
police left one striker
dead. The next day a
protest was organized in
Haymarket Square
Police entered the
square and someone
threw a bomb
Police opened fire and
workers shot back
8 German men were
arrested, though the
evidence was weak, and
4 were executed