Chapter 9
 I Can…
 Identify the effects of expanding population on industry.
 Explain the effects of technological innovations such as
the telephone and telegraph on American development.
 The Industrial Revolution began in the United States
in the early 1800s; however, the nation was still largely
a farming country when the Civil War erupted.
 In 1860 out of a population of 30 million, only 1.3 million
Americans worked in industry.
 After the Civil War, industry greatly expands and
millions of Americans left farms to work in mines and
factories.
 The Civil War challenged industries to make products
more quickly and efficiently than ever before.
 By 1900 the U.S. was the leading industrial nation.
The United States Industrializes after the Civil War
How?
1. Plenty of raw materials needed for industry: water, wood, coal, iron,
copper
2. Large workforce: population tripled between 1860-1910
 Due to large families and high immigration levels.
 Larger population also increased demand for manufactured goods.
3. The transcontinental railroad
brought settlers and miners to
the west and moved resources to
the factories in the east.
 In 1859, Edwin Drake drilled what became the world’s
first oil well in Titusville, Pennsylvania.
 Before this, whale blubber had been used for light
and fuel.
 Whaling had become time-consuming and the whales
were becoming scarce.
 Drilled oil was cheap to produce and easy to transport.
The oil industry will grow quickly and encourage such
industries as kerosene and gasoline.
The Rise of
Industry
First oil well in
Titusville,
Pennsylvania.
 What is Free Enterprise?
 Capitalism
 an economic system that functions without government
interference
 Laissez-Faire-popular concept in the 1800s (“Let people do as they
choose”)
 Supply and demand determine prices and wages, not government.
 Encouraged foreign investment in the U.S.
 What was the government’s role in industrialization?
 Laissez-faire attitude-kept taxes low, encouraging investment.
 Few regulations on industry
 Gave land grants to spur RR growth
 High tariffs designed to protect American companies from foreign
competition.
 Ex. Morrill Tariff- one of the highest in U.S. History.
 1865: No electric lighting,
ice was expensive, and mail
took weeks to get from east
to west.
 Between 1860-1890: Patent
and Trademark Office
issued 500,000 patents for
innovations.
 1900: There were inventions
such as the sewing
machine, typewriter,
phonograph, and vacuum
cleaner.
 Industrialization makes mass production possible.
 Mass production is the process of producing goods in
large numbers.
 By selling more, producers can charge consumers less
money and still make a profit.
 Depends upon machinery to carry out tasks that were
once done with hand tools.
 Telegraph: perfected by Samuel F.B. Morse; Morse code-
short impulses to represent letters of the alphabet.
 1896-Guglielmo Marconi; invented the wireless telegraph.
 Telephone: 1871 Alexander Graham Bell
 In 1877 Bell and others organized the Bell Telephone
Company
 eventually became the American Telephone and Telegraph
Company (AT&T).
 These inventions made it possible for individuals and
businesses to communicate much easier and on a much
broader scale.
 Thomas A. Edison- “Wizard of Menlo Park”
 inventor of the phonograph, electrical lighting,
and power station and much more.
 Supported by wealthy industrialists like J.P.
Morgan
 Received more than 1,000 patents
on new inventions.
 Symbol of the new age of technology.
 The light bulb enabled factory work to continue after
sunset.
 In 1882 the Edison Electric Illuminating Company
supplied electric power to customers in New York City.
 In 1889 several of Edison’s companies merged to form
the Edison General Electric Company, today known
as GE.
 As a result people worked longer hours, the number of
US factories increased, and industries produced more
goods.
 Other inventions also revolutionized society.
 Thaddeus Lowe-ice machine (basis of the refrigerator).
 Gustavus Swift- refrigerated railcar; reduced food
spoilage.
 Bessemer Process- process for purifying iron, resulting
in strong, but lightweight steel. Made it cheaper and
easier to remove impurities.
 Allowed for construction of new buildings.
 Along with elevators made it possible for building
skyscrapers.
 Suspension bridges- bridges in which the roadway is
suspended by steel cables. The first suspension bridge was
the Brooklyn Bridge.
 I Can…
 Discuss ways in which the railroads spurred industrial
growth.
 Analyze how the railroads were financed and how they
grew.
 By the 1900s the US had over
200,000 miles of track.
 1862: President Lincoln signed
the Pacific Railway Act that
provided for the construction of
a transcontinental railroad by
two corporations, the Union
Pacific and the Central
Pacific.
 To encourage rapid
construction, the government
offered each company land
along the right-of-way.
 Land Grants
 1863: the Central Pacific started laying track eastward
from Sacramento, California, while the Union Pacific
headed westward from Omaha, Nebraska.
 Construction was difficult and expensive.
 Laborers faced harsh and dangerous conditions.
 Many that worked on the railroad were immigrants.
 Irish
 Chinese
 Met at Promontory Point, Utah.
 Railroad expansion spurred industrial growth, by
increasing markets for new products. It was also a
huge consumer itself.
 Many railroads started to consolidate in larger
companies.
 Cornelius Vanderbilt was one of the most famous
consolidators.
 In 1781, he began construction on NY’s Grand Central
Station.
 Eventually there will be seven giant systems with
terminals in major cities.
 To make rail service safer, the country was divided into
4 time zones.
 Before time was kept independently, so scheduling and safety
became a huge concern.
 In 1884, delegates from 27 countries divided the globe into 24
time zones.
 Railroads played a key role in transforming American
industries and business.
 They could transport large amounts of goods quickly,
cheaply, and efficiently.
 Because they linked the nation, they allowed businesses to
obtain raw materials easily and to sell finished goods to a
larger number of people.
 2 views:
 “Robber Barons”: built their fortunes by stealing
from the public.
 They used bribery, insider-trading, cheating, and
ruthlessness to make their fortunes. (Jay Gould)
 “Captains of Industry”: served their nation in a
positive way by increasing supply of goods, building
factories, raising productivity, and expanding markets.
 Robber Baron or Captain of Industry?
 It was a railroad construction company formed by
Union Pacific owners that contracted themselves to
build the new railroad at highly inflated prices.
 It gave or sold stock at cheap prices to politicians to
influence legislation.
 Showed the corruption and the power of the Robber
Barons.
 Many politicians in Washington including Speaker of
the House Blaine and future president Garfield were
implicated in accepting bribes.
 James J. Hill was clearly not a robber baron; he built
the Great Northern Railroad from St. Paul
Minnesota, to Everett, Washington, without any
federal land grants.
 It became the most successful transcontinental
railroad and the only one not eventually forced into
bankruptcy.
 I Can…
 Analyze how large corporations came to dominate
American business.
 Evaluate how Andrew Carnegie’s innovation
transformed the steel industry.
 By 1900 big business dominated the economy
 Big business would not have been possible without the
corporation.
 A corporation is owned by many people but treated as though it
were a single person.
 They can :
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own property
pay taxes
make contracts and
sue and be sued.
 Stockholders are those who own the corporation. They own
shares of ownership called stock.
 By issuing stock this allows a corporation to raise large amounts
of money while spreading out the financial risk.
 They worked to maximize profit in several ways.
 Ex., paying workers the lowest possible wages or paying
as little as they could for raw materials.
 With the money raised from the sale of stock they
could invest in new technologies, hire a larger
workforce, and purchase new machines.
 Economies of scale: means the corporation makes
goods more cheaply because they produces so much so
quickly using large manufacturing facilities.
 All businesses have two kinds of costs:
 Fixed- costs a company has to pay, whether or not it is
operating. (loans, mortgages, taxes)
 Operating- costs that occur when running a company.
(wages, shipping, raw materials)
 Big corporations had the advantage because of their low
operating costs-they could continue to operate in poor
economic times by cutting prices to increase sales.
 The changing nature of business organizations and the
new importance of fixed costs caused competition to
become so severe it forced many small companies out of
business.
 Many corporate leaders did not like the intense
competition that had been forced on them.
 Many tried to organize pools, or agreements to
maintain the prices at a certain level.
 However, they broke apart whenever one member cut
prices to steal the market share from another, and allow
competition to resume.
 By the 1870s, competition had reduced many industries
to a few large and highly efficient corporations.
 Railroads are the first
industry to take off in the
years following the Civil
War.
 Key figure in the railroad
industry was Cornelius
Vanderbilt (the
Commodore).
 In 1869, he extended his
New York Central
Railroad to reach
Chicago.
 Andrew Carnegie
 Born in Scotland, the
son of a poor hand
weaver who immigrated
to the US in 1848.
 Later he will become
supervisor of the
Pennsylvania Railroad.
 He will start to invest in
companies that serve the
railroad industry.
 He will travel to Europe and come into contact with Henry
Bessemer.
 Bessemer had developed a new method for making steel
known as the Bessemer process.
 Using this process, manufactures could make steel much
cheaper than ever before.
 This increased production of steel meant faster expansion of
railroads and more construction of buildings.
 After meeting Bessemer, Carnegie decided to concentrate
his investments in the steel industry.
 He opens his company in Pittsburgh and implemented
the Bessemer process.
 He will also use vertical
integration as a way to
increase manufacturing
efficiency.
 A vertically integrated
company owns all of the
different businesses on which
it depends for its operation.
 He owned not only the steel
mills, but also the necessary
iron ore, coal mines, railroads,
and ships used in transport.
 .
 Some businessmen like Carnegie also used horizontal
integration.
 This is combining many firms engaged in the same
type of business into one large corporation.
 This takes place as companies compete.
 John D. Rockefeller
became one of the
nation’s richest and most
powerful businessmen.
 Standard Oil was the
nation’s first trust.
 A trust is a business
arrangement under
which a number of
companies unite into
one system.
 Trusts serve to destroy competition and create
monopolies.
 At one time he owned 90% of the oil refining industry.
 Manages the companies as a single unit.
 Through the trust, Rockefeller was able to dictate prices,
eliminate competition, and control the US oil industry.
 Much of his success was due to his use of vertical
integration.
 Rather than pay other producers to supply the materials he
needed, Rockefeller’s company made what it needed itself
(i.e., its own barrels, cans, and so on).
 Rockefeller- “pay nobody a profit.”
 With the expansion of
business came a new
kind of business leader:
the finance capitalist.
 Bankers who exert
economic influence
through companies’
stocks and bonds.
 The most powerful and
influential of the early
finance capitalists was
J.P. Morgan.
 Morgan eventually exercised control over banks,
insurance companies, and various stock market
operations.
 He was so rich he eventually bought out Carnegie’s
steel company to form a new company—US Steel.
 He paid nearly 5 hundred million dollars for the
company.
 Supported Edison in his invention of the light bulb.
 Many companies start to create a new organization
called a holding company.
 does not produce anything itself.
 It owns the stock of companies that do produce goods.
 By 1904 the US had 318 holding companies.
 These giant corporations controlled 5,300 factories and
were worth more than $7 billion.
 As vast new products were produced by American
industry, retailers looked for new ways to market and
sell goods.
 New forms of advertisements:
 Large display ads with illustrations
 Mass advertising in newspapers and magazines.
Early Ads
New Ads
 Advertising is used to
attract customers to new
retail businesses, the
department store.
 This changed the idea of
shopping by bring a
huge array of different
products together in a
large elegant building.
 Chain stores, a group of
similar stores owned by
the same company first
appeared in the mid1800s.
 They focused on thrift,
offering low prices.
 Woolworth’s opened in
1879, and became one of
the most successful retail
chains in America.
 To reach millions of
people who lived in rural
America, retailers began
issuing mail-order
catalogs.
 Montgomery Ward and
Sears, Roebuck were
the two largest mailorder companies.
 I Can…
 Describe industrial working conditions in the United
States in the late 1800s.
 List the barriers to labor union growth.
 Life for Industrial workers in America was difficult.
 Children left school at age 12 or 13; Children as young
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as 6 or 7 had to go to work or go hungry.
Many worked 12 hours a day, 6 days a week.
Many made less than a quarter and worked more than
60 hours a week.
1868 federal law granted government employees an 8
hour workday but did not affect private industry.
Many were paid by what they produced—piecework
Strict workplace discipline.
 Division of Labor—separate tasks
 Women excluded from most-skilled and highest –paying
jobs.
 Children made up more than 5% of the workforce.
 Conditions:
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Dangerous-machines lacking safety devices
Unhealthy-fumes, lint, dust
Poorly lit
Badly ventilated
Noisy
Repetitive
No insurance or workers’ compensation.
 An economic phenomenon of deflation also made
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relations between workers and employers more difficult.
Deflation: a rise in the value of money.
This caused prices to fall, which increased the buying
power of workers.
However, companies cut wages regularly, but prices fell
even faster, so that wages were actually still going up in
buying power.
Many workers still felt that companies were actually paying
them less money for the same work.
This made workers look to organize unions, to bargain
collectively to negotiate higher wages and better working
conditions.
 Early unions were local and usually limited to people
with specific skills.
 Iron Molders’ International Union
 Knights of St. Crispin---shoemakers’ union
 Generally employers regarded unions as illegitimate
conspiracies that interfered with their property rights.
 Most opposed industrial unions that united all craft and
common laborers in a particular industry.
 Companies used several techniques to prevent unions from
forming:
 Required workers to sign oaths and contracts promising not join a
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union.
Hired detectives to go undercover and indentify union organizers.
Blacklist-list of “troublemakers.” Once blacklisted it was hard to
find other jobs.
Lockout- if workers did form a union, the employers would lock
the workers out of the property and refuse to pay them.
Hire replacement workers---strikebreakers or scabs
 Workers who wanted to organize faced several problems:
 There were no laws giving workers the right to organize or
requiring owners to negotiate with them.
 Courts often ruled against them.
 Suffered from the perception that they threatened American
institution. This was due to Marxism.
 In the late 1800s, the ideas of Karl Marx became very
influential in Europe.
 He said that the basic force shaping a capitalist society was
the class struggle between the workers and owners.
 He believed that eventually the workers would revolt, seize
control of the factories, and eventually the government.
 Believed that after the revolution, the government would
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seize all private property and create a socialist society,
where wealth was evenly divided.
Eventfully he said the state would fade away and leave a
Communist society where classes did not exist.
His ideas shaped the thinking of many European unions.
Some started to even support anarchy. Anarchists believe
that society does not need government.
As the ideas spread in Europe, many left and immigrated to
the United States.
People started to associate immigrant workers with
revolution and anarchism, and became increasing more
suspicious of union.
 Workers attempted on many occasions to create large industrial
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unions, they were rarely successful. In many cases the
confrontation with owners and the government led to violence
and bloodshed.
Great Railroad Strike: July 14, 1877 Baltimore and Ohio Railroads
announce a 10% wage cut.
This triggers the first nationwide labor protest.
The day after the cuts took effect; many workers walked off the
jobs and blocked the tracks.
The strike spread until it involved 11 states and 80,000 workers.
After violence spreads President Hayes sent federal troops to
put down the strike.
 100 dead and millions of dollars of property destroyed.
 Sparked a new violent era of labor relation.
 After the failure of the Great Railroad Strike of 1877,
workers realized they needed to be better organized.
 The Knights of Labor was a new organization and
was the first nationwide industrial union. Called for:
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eight-hour work day
a government bureau of labor statistics
equal pay for women
the abolition of child labor
creation of worker-owned factories.
 Opposed strikes at first, preferring to use boycotts
and arbitration to pressure owners.
 1886, nationwide, workers strike to build support for an
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eight-hour workday.
On May 3, A clash between strikers and police left one
striker dead in Chicago.
A rally was held next day at the Haymarket Square in
Chicago to protest the police brutality at the strike, by an
anarchist group.
1500 people gathered to support the strikers; radical
speakers addressed the crowd.
As police tried to disperse the crowd, a bomb was thrown.
Shots exchanged.
7 police killed, 4 workers, many injured.
Knights of Labor were blamed. Some were convicted and
hanged.
Lost membership.
 Henry Frick tries to cut
wages at Carnegie Steel.
 Frick calls in the
Pinkertons (a private
police force known to
break up strikes) to end the
strike.
 Several died and many
wounded in the fight with
the Pinkertons
 Union workers admit
defeat.
 George Pullman, sleeping
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car makers, laid off workers
and cut wages by 25%.
Workers that protested were
fired.
The boycott of the Pullman
cars threatened to paralyze
the economy.
To break the strike, US mail
cars were attached to the
Pullman cars. Interfering
with the US mail is a violation
of federal law.
Pres. Grover Cleveland sent
in troops to break the strike.
 Led by Samuel Gompers
who urged union members
to stay out of politics.
 Sought to organize only
skilled workers.
 Focused on workers’ wages,
hours, and working
conditions.
 Used strikes, boycotts, and
collective bargaining.
 After the Civil War, the number
of women wage earners began to
increase.
 The type of jobs women did
outside the home reflected
society’s idea of what constituted
“women’s work.”
 Women were paid less, because
it was assumed she had a man
helping to support her, either
her father or her husband.
 Early women labor organizers:
Kenney O’Sullivan and Leonora
O’Reilly.
 Established Women’s Trade
Union League.
 Causes of Industrialization
 Civil War
 The war encouraged production, innovation, and expansion of
railroads.
 Natural Resources
 Ample natural resources, including oil, fueled growth.
 Growing Workforce
 Immigrants willing to work for low wages flowed into the country.
 Technology/Innovation
 New technology and innovative business practices spurred growth.
 Government Policies
 Government policies encouraged investment in business and new
technology.
 Important Government Policies of the Late 1800s
 Protective tariffs: Congress enacted tariffs on imported
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goods to make them cost more than locally produced goods.
Laissez-faire: The government allowed businesses to operate
under minimal government regulations.
Subsidizing railroads: The government gave railroad
builders millions of acres of land.
Strike breaking: Government troops routinely helped break
up strikes.
Anti-union actions: Courts used legislation like the
Sherman Antitrust Act to order unions to stop disruptive free
trade.
 Important People of the Late 1800s
People
Contribution
Thomas Edison
Invented new technology, such as electric
lighting that stimulated business.
Henry Bessemer
Developed process for creating strong
lightweight steel for use in construction
and railroad.
Andrew Carnegie
Use of vertical consolidation influenced the
rise of big business; urged businessmen to
also be philanthropists.
John D. Rockefeller
Use of new business strategies, such as
horizontal consolidation, influenced the
rise of big business.
Samuel Gompers
Formed the AFL, influencing the rise of
labor union.
Eugene V. Debs
Challenged big business by orchestrating
the Pullman Strike
 Influential Labor Unions
Name
Date Founded
Significance
National Trades
Union
1834
First national union; open
to workers from all trades.
Knights of Labor
1869
Sought general ideological
reform; open to workers
from all trades.
American
Federation of
Labor
1886
Focused on specific
workers’ issues;
organization of skilled
workers from local craft
unions.
American Railway
Union
1893
First industrial union; open
to all railway workers.
 Major Strikes of the Late 1800s.
Cause
Effect
Railroad strikes, 1877
Response to cuts in workers’
wages.
Set the scene for violent
strikes to come.
Haymarket Square, 1886
Part of a campaign to
achieve an eight-hour
workday.
Americans became wary of
labor unions; the Knights of
Labor were blamed for the
riot and membership
declined.
Homestead Strike, 1892
Economic depression led to
cuts in steelworkers’ wages
After losing the standoff,
steelworker unions lost
power throughout the
country.
Pullman Strike, 1893
Wages cut without decrease
in cost of living in the
company town.
Employers used the courts
to limit the influence of
unions.