Vertical integration Horizontal combination

The Industrial Revolution
Overview Rap
Objective: What made the Second
Industrial Revolution possible?
When was the First IR and how was it different
from the second?
The First Industrial Revolution
Early to mid 1800s
Focused on the shift from hand production
methods to the use of machines
Focused on improving agricultural
Made possible by the use of steam power and
The Second Industrial Revolution
Late 1800s to early 1900s
Focused on the shift to mass production
Focused on improving industry
Made possible by the use of steel and oil
Reason 1: New
Bravo Mr. Bessemer!!
• Method of steelmaking that burned off the impurities in molten iron with a
blast of hot air.
• This method could produce more steel in one day than the older techniques
could turn out in one week.
• The increased availability of steel in the late 1800s resulted in its widespread
use in many industries
Railroad industry replaced iron rails with stronger steel ones.
Builders used steel to construct bridges and buildings.
Ideal material for everyday items such as nails and wire because of its resistance to rust
The Bessemer Process
• Around this time, a process to refine oil was also developed that affected
industrial practices
• Refined oil could be turned into kerosene which could be burned in lamps to
produce light or used as fuel.
Before kerosene, people burned whale oil in lamps, which was much more expensive
and difficult to obtain.
• Oil also proved useful in the early 1900s with the development of
Revolutions in Technology and Transportation
• Communication
• Lightbulb/Electricity
• Transportation
Gasoline-burning internal combustion engine
Reason 2: Mechanized Mass Production
Mechanization Takes Command
• Most important factor of second IR was the application of new
technologies to increase the productivity of labor and the volume of
• Higher productivity depended not only on machinery and technology but on
economies of scale and speed, reorganization of factory labor and business
management, and huge growth of a market for goods of all kinds
• New systems of mass production replaced wasteful and often chaotic
practices and speeded up delivery of finished goods
Example: 1860s-meatpackers set up one of the earliest production lines
Converting livestock to meat began with live animal-a chain around the hind leg whirled the
body to an overhead rail, which carried it to slaughter, then hair and bristles were removed
by scraping machine, carcass shifted to conveyor belt where chest was split and organs
removed, and body placed in cooler. Only took about one minute total
Reason 3: New Business Structures
The Corporation
• New form of business organization
Businesses raise money by selling shares of stock (certificates of ownership) in the
Stockholders (people who buy the shares) receive a percentage of the corporation’s
profits, known as dividends.
• Advantages:
Corporations can raise large sums of money by selling stock to many people.
Stockholders not responsible for corporation’s debt.
Much more stable because it is not dependent on a specific owner for its existence.
Reason 4: Expanded Market for Goods
Mass Marketing!
To distribute growing volume of goods and to create dependable market,
businesses demanded new techniques of merchandising on national and
international scale
Manufacturers of mass produced goods launched massive advertising campaigns
to induce consumers to buy their brands
Founding of marketing/advertising agencies
Mail-order magazines allowed people in remote locations access to the same
goods as people in the cities (Ex= Sears)
Chain stores sprung up (Ex= A&P)
Department stores: raised retailing to new heights (Ex=Macy’s)
Objective: Explain how big businesses were
organized during the IR that allowed them to
gain so much control and make so much
• U.S. operated under economic system known as capitalism
Private businesses run most industries and competition determines how much
goods cost and workers are paid
At this time, entrepreneurs (risk-taking businesspeople) set out to get rich by building
industries that utilized the new technological advances. With the rapid increase in business
ventures and wealth, new ideas emerged that transformed traditional business practices
Business leaders at this time believed in individualism and attributed their success to
their work ethic.
Many leaders supported laissez-faire (let people do as they choose) capitalism
Calls for no government intervention in the economy
Free-enterprise: businesses allowed to compete in free market where supply, demand and
profit determine what and how much businesses produce.
Critics of Capitalism
• Critics argued that rapid industrialization of factory life was
harmful and unjust to the working class.
• Karl Marx proposed a new economic system that would remove
the inequalities of wealth.
• Developed political theory known as Marxism that called for
overthrow of capitalist system.
• Marx argued that capitalism allowed the bourgeoisie (the people who own
the means of production, such as factory owners) to take advantage of the
proletariat (the workers).
• Suggested an alternative to capitalism known as communism
• This economic theory proposes that individual ownership of property
should not be allowed.
• Property and the means of production are owned by everyone in the
community, and the community provides for the needs of all the people
equally without regard to social rank.
And you thought board games weren’t
• Trust: group of companies turn control of their stock over to a common
board of trustees, who run all of the companies as a single business. This
limits over-production and other inefficient business practices by reducing
• Monopoly: when a trust gains exclusive control of an entire industry. This
takes away competition and gives them complete control over price and
quality of a product.
Integration, Combination, and Merger
• From source of raw materials to organization of production, from conditions
of labor to climate of public opinion, business leaders acted shrewdly
• Economic cycles of late 1800s promoted big business
Major economic recessions in 1873 and 1893 wiped out weaker competitors, allowing
strongest firms to rebound swiftly and expand their sales during recovery period
• Businesses grew in two distinct, overlapping ways
Vertical integration
Horizontal combination
Vertical Integration
Firm gained control of production at
every step of the way, from raw
materials through processing, to the
transporting and merchandising of the
finished items
Example: 1899, United Fruit Company
began to build network of wholesale
houses in U.S. Within 2 years it had
opened distribution centers in 21 major
cities. Eventually it controlled an
elaborate system of Central American
plantations and temperature controlled
shipping and storage facilities for its
highly perishable bananas.
Firm became one of the nation’s largest
Horizontal Combination
• Gaining control of the market for a
single product
Creating a monopoly in that industry
Most famous case = Standard Oil
Company, founded by John D.
Rockefeller in 1870
Rockefeller secured preferential
rates from railroads eager to have a
steady supply of oil, then convinced
or coerced other local oil operators
to sell their stock to him
The Standard Oil Trust, established
in 1882, controlled more than 90
percent of the nation’s oil-refining
The Govt. tries to control the trusts…EPIC FAIL
• 1890: Congress passes Sherman
Antitrust Act
Goal was to restore competition by
encouraging small business and
outlawing “every combination in
restraint of trade or commerce”
Courts interpret law in ways that
inhibited unions from organizing and
actually helped the consolidation of
More than 2,600 firms vanished
between 1898 and 1902 alone
Social Darwinism
• Term coined in late 19th century to describe idea that humans, like animals
and plants, compete in struggle for existence in which natural selection
determines survival of the fittest.
• Believed hard work and perseverance led to wealth
• Implied that poverty was a character flaw
Therefore, government should not help the poor
Advocated laissez-faire: hands off policy by government
• Social Darwinists use this argument to develop theories that supported
capitalism, overseas expansion/colonization (imperialism), and racism
Ex: Eugenics and the Nazis
The Gospel of Wealth
Idea of Andrew Carnegie: 1889
Describes how new, upper class self-made rich are responsible for giving back
Best way of dealing with new wealth inequality was for wealthy to redistribute surplus
means in a responsible and thoughtful manner to the greatest benefit of society
Argued against wasteful use of capital
Disapproved of charitable giving that maintained poor in their impoverished state
No extravagance, irresponsible spending, self-indulgence
Encouraged new mode of giving which would create opportunities for beneficiaries of
the gift to better themselves
Carnegie put Gospel of Wealth into practice by funding public libraries throughout the
entire English speaking world
Robber Barons
• Became a derogatory term applied to wealthy and powerful 19th-century
American businessmen
• The term combines the sense of criminal ("robber") and illegitimate
aristocracy (a baron is an illegitimate role in a republic)
• Term was typically applied to businessmen who used what were considered
to be exploitative practices to amass their wealth.
Practices included exerting control over national resources
Accruing high levels of government influence
Paying extremely low wages
Squashing competition by acquiring competitors in order to create monopolies and
eventually raise prices
Schemes to sell stock at inflated prices to unsuspecting investors in a manner which
would eventually destroy the company for which the stock was issued and impoverish
Famous Robber Barons
1. John Jacob Astor
2. Andrew Carnegie
3. James Fisk
4. Jay Gould
5. Andrew W. Mellon
6. J.P. Morgan
7. John D. Rockefeller
8. Leland Stanford
9. Cornelius Vanderbilt
Captains of Industry or Robber Barons?
• Go to the following website for your assignment. Create a fact sheet for
each individual by visiting the websites they provide. And then use that to
answer the prompt in a well-developed 5 paragraph essay.
• Captains of Industry or Robber Barons?
Objective: Evaluate what life was like for
different classes of people in the cities
during the Industrial Revolution
The Urban Frontier
Cities grew in vast quantities in the post-Civil War years
Cities encouraged creation of beautiful and useful structures, but did little to improve
conditions of majority of the population
Rich lived in new mansions and townhouses
Majority of population worked in dingy factories and lived in tenements
• Designed to maximize use of space
• Typical tenement sat on 25 by 100 foot lot and rose five stories
• Four families on a floor, each with three rooms
• By 1890, NYC Lower East Side packed more than 700 people per acre into
Streets followed gridiron pattern
Industrial jobs drew country folks off farms and into cities
City Beautiful Movement: led to creation of new sports ampitheatres, schools, courthouses,
capitols, hospitals, musuems, art galleries, and concert halls
Urban Frontier Continued
Mass transportation allowed metropolitan region to grow dramatically
Creation of suburbs
Created new safety hazards
Waste disposal became new issue in urban age
Criminals flourished like lice
Sanitary facilities could not keep up with population explosion
Impure water, uncollected garbage, unwashed bodies, and droppings from draft animals enveloped cities in
satanic stench
During 1890s, 600 people killed by Chicago’s trains
Breeding ground for tuberculosis, smallpox, and scarlet fever
Unrestricted burning of coal to fuel railroads and heat factories/homes intensified urban air pollution
Noise levels continued to rise
Worst were human pigsties known as slums
Grew more and more crowded and filthy especially after the production of the dumbbell tenement
The New immigration
Immigration reached new high by 1880s
Until 1880s “Old Immigrants” had come from British Isles and western Europe, chiefly Germany and
More than 5 million immigrants came to U.S.
Boasted comparatively high literacy rate and accustomed to some kind of representative
Fitted relatively easily into American society
Most took up farming
In 1880s, “New Immigrants” came from southern and eastern Europe, most of them Italians, Croats,
Greeks, and Poles
Came from countries with little history of democratic government, where opportunities for
advancement were low, they were largely illiterate and impoverished
Preferred to seek industrial jobs in jam-packed cities
Americans feared that these New Immigrants would not or could not assimilate to life in their
new land
Southern Europe Uprooted
• Why were so many immigrants coming to New World?
Population of Old World growing, and many people in Europe uprooted and moved
“America fever”: U.S. painted as land of fabulous opportunity, blessed with freedom
from military conscription and institutionalized religious persecution
Industrialists wanted low-wage labor, railroads wanted buyers for land grants, states
wanted more population, and steamship lines wanted more human cargo
Savage persecutions of minorities in Europe drove many to America
1880s: Russians turned on their own Jews, chiefly in Polish areas
• These refugees made their way to seaboard cities such as New York
Reactions to New Immigration
Federal govt. did virtually nothing to ease assimilation of immigrants into American society
Business of ministering to the immigrants’ needs fell to unofficial “governments” of urban political machines
Traded jobs and services for votes
Boss provided jobs on city’s payroll, found housing for new arrivals, gave gifts of food and clothing to needy, helped get schools, parks,
and hospitals built in immigrant neighborhoods
Claimed loyalty of thousands of followers
Nation’s social conscience awakened to plight of immigrants
Established settlement houses: offered instruction in english, counselors to help adjust to city life, child-care services, and cultural
activities for neighborhood residents
Jane Addams: established Hull House (most prominent American settlement house)
Became centers of women’s activism and social reform
Florence Kelley: one of the most outspoken female social activists
Antiforeignism (nativism): viewed eastern and southern Europeans with disdain
Looked down on them because of their high birthrate; feared that they would quickly outbreed and outvote the original Anglo-Saxons
Laws against immigrants
1882: first federal restriction on immigration; prohibited paupers, criminals, convicts from being admitted into the U.S.
1882: law completely barred the Chinese
1885: prohibited importation of foreign workers under contract
The Rise of Consumer Society
• Growth of industry and spread of cities had huge impact on all regions of US
Standard of living increased, more and cheaper products within reach of all but very
Food from farms became more abundant and varied
Explosion of consumer goods and services promoted huge changes in behavior and
Leisure, play, and consumption became part of new ideal and measure of success
Conspicuous Consumption
• “Gilded Age”: group united in pursuit of money and leisure
• Business leaders often served simultaneously on boards of several
• Intertwined interests by joining same religious, charitable, athletic, and
professional societies
Wives and children vacationed in seashore and mountain resorts while they made deals
in exclusive social clubs and golf courses of suburban country clubs
• Rich created new style of conspicuous consumption
Highly visible displays of wealth and consumption
Mansions with staircases trimmed in gold, butler’s pantries equipped with faucets not
only for hot and cold water, but for iced champagne
Women served as measures of their husbands’ status by wearing jewels, furs, dresses
of latest Paris fashion
Conspicuous Consumption Cont.
• New York: wealthy families hosted dinner parties for dogs or pet monkeys,
dressing animals in fancy outfits for the occasion
• Summer homes of Newport, Rhode Island
Enjoyed polo, rowing, tennis, yachting, golf tournaments
Tour of the Mansions
• Late nineteenth century, public dimension added to high life
NY’s Waldorf-Astoria Hotel’s corridors and restaurants were visible to public through
huge windows
New custom to welcome New Year: opened curtains of Fifth Ave. mansions so
passersby could marvel at the elegant décor
• Wealthy provided bulk of funds for new symphonies, operas, ballet
Self-Improvement and the Middle Class
• New middle class formed during last half of century
• Older middle class composed of owners of small businesses, doctors,
lawyers, teachers, ministers
• New middle class included these but also growing number of salaried
Managers, technicians, clerks, engineers
Long hours of labor earned their families modest status and sufficient income to live
securely in style and comfort, and to separate work and home
• Middle class families lived in suburbs: men commuted to work
• Women devoted large part of day to caring for home
New technological innovations expanded work
Took charge of household budget purchased goods, usually in department stores that
catered to them
Middle class
• WASP: White, Anglo-Saxon, Protestant
• Embraced culture as a means of self-improvement
• Leisure activities for physical and mental discipline
• Leisure became province for middle-class childhood
Removed from factories and shops, free from chores, enjoyed creative play
Summer camps
Toy stores
Children’s literature
Ex: Little Women, Black Beauty
Life in the Streets
Made up of minority groups, immigrants concentrated in districts marked off by racial/ethic lines
Allowed them to maintain Old World customs
Working-class home involved women and children in routines of household labor without aid of mechanical
Used domestic space for work that provided small income
Chinatown, Little Italy
Paid for sewing garments by the piece, wrapping cigars, stringing beads, painting vases
Cooked and cleaned for boarders whose rent supplemented family income
Bought shoddy replicas of products sold to upper classes
Developers realized “wholesome fun” for the masses paid better than upper-class leisure
Transformed Coney Island into magnificent seaside park filled with amusements like water slides,
mechanized horse races, carousels, roller coasters, fun houses
Exotic performers, make-believe trips to faraway places
Allowed millions working-class people to enjoy cheap thrills that offset hardships of working lives
Coney Island
Do Now and Objective
• Do Now:
• Grab a textbook/get your textbook
• On a new sheet of paper, copy this OBJECTIVE for today down in your
• Compare and contrast what life was like in different regions of the
country during the IR.
• Underneath the Objective, create a chart for the different regions of the
United States during the Industrial Revolution (3 regions = Northeast,
West, and South) Fill in all of the important points about what life was
like in the NE and West during the IR: what industries did they have,
what type of people lived there, what was life like, etc. Leave the South
blank for now.
Exit Ticket and Homework…
• Fill in your chart for what life was like in the South during the IR.
• For homework: Finish information Scavenger Hunt and chart if you did not
do so in class
Type answers into a Google Doc with your group
• Create an account and join my class (Directions will be posted
as a Homework Assignment on my website). One person from your group
should upload your group’s document with the answers to the scavenger
hunt onto Edmodo. (Be sure the document has the names of everyone in
the group on it)
Do Now:
• Summarize what you read yesterday about
the changes that took place during the
Industrial Revolution to wage labor, and how
the South was affected by the IR
The Wage System
• Growth of industry and mechanization of production
Changed employer-employee relations
Created new categories of workers
Fostered competition among workers
Created conditions hazardous to health
• Skilled workers replaced with “green hands”
Immigrants with little training who could operate machines at cheaper rates of pay
• Garment industry
Employed many young immigrant women in factories
Utilized outwork system: families worked in their homes
Companies relied on “sweating” system fostered extreme competition between
groups by increasing daily production quotas
Both groups paid by the piece
Wage System Cont.
• Largest portion of workers came from Europe or Asia
• Industrial expansion offered new opportunities for women to work outside
English-speaking white women: clerical work
Black women: domestic work
• Black men: excluded from most fields, replaced by immigrant workers
• Discrimination fell hardest on Chinese
1882: Chinese Exclusion Act passes: suspended Chinese immigration
Unhealthy, Dangerous Workplace
• Meatpacking
Damp, sharp blades, noxious odors
• Factories
Owners failed to mark high-voltage wires, locked fire doors, allowed emission of toxic
fumes, fast machines caused people serious injuries that put them out of work
• Mines
Air could turn poisonous, cave-ins deadly
• Tedious: performing repetitive tasks for hours each day (10-12 hours)
• Less than 3% of the workforce formed unions to combat this
Knights of Labor
• Led by Terence V. Powderly
• Largest labor organization in 19th century
• Included skilled and unskilled workers, male and female, all ethnicities
Except Chinese
• Reform measures:
Restriction child labor, graduated income tax, more land set aside for homesteading,
abolition of contract labor, monetary reform, 8-hour league
• Promoted producers’ cooperatives as alternative to wage system
Workers collectively made all decisions on prices and wages and shared all profits
• Knights of Labor crushed by Haymarket Square Bombing
American Federation of Labor
• Led by president Samuel Gompers
• Included only skilled workers
Disregarded unskilled workers, racial minorities, and immigrants
• Accepted wage system
Bargained with employers for better working conditions, higher wages, shorter hours
In return, offered compliant firms benefit of good day-to-day relations
• Provided support for strikers, gathered votes for prolabor political
candidates, sponsored social activities, published weekly newspapers
• By end of century represented 10% of working Americans
The New South
Southern economy held back by
Legacy of slavery
Modern textile mills operated efficiently and profitably, close to sources of raw goods, expansive
fields of cotton, plentiful and cheap supply of labor, unrestricted by unions or legal limitations on
employment of children
Promoted industrial development and welcomed northern investors
South became internal colony to North
Continued reliance on cotton production
Some southerners envisioned “New South”
Dependence on northern finance capital
Railroad companies in north controlled track in south, northerners protected investments from
southern competition, controlled cotton crop
South used for iron, steel, and textiles
Remained extractive and rural: produced raw materials for consumption/use in north,
perpetuating economic imbalance between sections
New South reinforced, rather than diminished region’s status as nation’s internal colony
Southern Labor
• Blacks: made up more than 1/3 of South’s population
Limited to unskilled, low-paying jobs
Segregated in factories
Refused membership in trade unions
Men earned at or below poverty line of $300 per year
Women rarely earned more than $120
• Wages low for both black and white in south
Southern mill workers earned as little as 12 cents per hour
White women: $220 per year
Lowest paid workers were children
Mainstay of southern labor
System of convict labor also thrived in south
Transformation of Piedmont Communities
• Impact of New South greatest in Piedmont
Region extending from southern Virginia and central Carolinas into northern Alabama
and Georgia
After 1870, long established farms and plantations gave way to railroads, textile factories,
mill villages
Worked in mill towns
Northern employer/manufacturer controlled everything
People paid in paper money that was only good in company stores
Poverty/health hazards/disease flourished
• Strengthening community ties through intermarriage
• Customs of incorporation: complex of intimate economic, family, community ties of mill