1865-1914
Railroads Lead the Way!

Essential Question
 How did railroad expansion affect the United
States economy?
Railroad Expansion
 Railroad
expansion is accompanied
by consolidation
 Large companies buy smaller companies
or drive them out of business
 Makes large companies more efficient
 Makes industrial processes more uniform
Railroads Stimulate the Economy
 Railroads
brought major changes to
American industry and American life
 Connect east and west coast
 Railroads stimulate
 Steel Industry
 Lumber Industry
 Coal Industry
Competing for Customers
 Large
railroads offered rebates to
their biggest customers
 Smaller railroads are forced out of
business
 Raised freight rates for farmers and
customers shipping small amounts of
goods
 Railroad
industry business leaders
formed pools
 Combining resources to raise prices

Laissez-faire: Government hands off
the economy!!!!
Answer the Essential Question

How did railroad expansion affect the
United States economy?
~ Railroad expansion allowed a few
powerful individuals to build great
fortunes
~ It benefited coal, iron and steel
industries
~ Opened up the entire United States to
economic growth
Making Connections

How did industrialists and their
companies build their fortunes?
~ By consolidating small companies into
large companies
~ Offering rebates to companies
shipping large amounts of goods
Making Connections

Do you think owners of small farms
supported the rebates given by railroad
companies?
~ No, because the rebates were given
only to large customers and freight rates
increased for small farmers.
Inventions

Essential Questions
 How did the inventions of the late 1800s
revolutionize society?
Inventions

By 1920, Americans in cities drove cars
through streets lit with electric lights.
They went to department stores where
they bought everything from kitchen
sinks to shoes. Americans also could do
their shopping by mail – or pick up the
telephone and order groceries from the
local store. The automobile, the electric
light and the telephone were invented
after 1870.
Inventions

Within a generation, they became part of
everyday life for millions of people.
These new inventions helped people
communicate more quickly over long
distances. Improvements in
communication helped unify the country
and promoted economic growth.
Inventions

Telegraph (1844) – Samuel Morse
 Operators sent messages in morse code
 Offers instant communication
 Connects United States and Europe
Inventions

Telephone (1876) – Alexander Graham
Bell
 Businesses are first to use phones
 Instant communication
 Eventually telephones become common in
homes
Inventions

Electric Light Bulb (1879) – Thomas
Edison “The Wizard of Menlo Park”
 Electric Power Plant
 Factories, trolleys, streetlights, and lamps
are powered by electricity
Inventions

Engine Powered Aircraft (1903) – “The
Wright Brothers” Oliver and Wilbur
 “Broke the bonds of Earth and see the world
in a new way”
 Attracted attention of United States military
in 1911
Inventions

Wright Brothers
Henry Ford’s Automobile
1903 – Henry Ford established his own
auto making company in Detroit,
Michigan and began designing cars
 1908 – Model T is introduced

 Immensely popular
 Affordable and easy to keep in repair


Assembly Line revolutionized industry
Mass production decreased
manufacturing costs so products could
be sold more cheaply
Model T
Assembly Line
Answer the Essential Question

How did the inventions of the late 1800s
revolutionize society?
An Age of Big Business

Essential Question
 How did Americans build fortunes in the oil
and steel industry?
Foundations of Growth
New technology and abundant natural
resources led to economic growth
 1859 – Edwin L. Drake strikes oil by
digging a well in Titusville, PA
 Led to creation of multimillion-dollar
petroleum industry

Factors of Production
 Change
from an agricultural to
industrial economy is possible due to
the “factors of production”
 Land – includes all natural resources
 Labor – Rapid population growth
provides more workers
 Capital – Manufactured goods used to
make other goods and services
○ Examples: machines, buildings, tools,
MONEY
Raising Capital
 Companies
want to expand and to do
so, need to raise capital
 Became corporations by selling shares,
or stock, of its business to the public
 People who invest in the corporation by
buying stock are its shareholders, or
partial owners
 Railroads
were the first to form
corporations
The Oil Business
John D. Rockefeller’s Standard Oil
Company controlled the oil industry
 Rockefeller created a monopoly by
driving his competition out of business

 Lowered prices
 Pressured customers not to deal with rival
companies
 Convinced railroads to give him special rates

Used “horizontal integration” to help
Standard Oil grow wealthy and powerful
 Combined competing companies into one
corporation
Standard Oil
The Steel Business
 New
processes for making steel
created an important industry
 Bessemer Process
 Open hearth process
 Pittsburgh,
PA; Cleveland; Chicago,
Detroit became important hubs in
steel production
Andrew Carnegie
– Andrew Carnegie dominates
the steel industry
 Company becomes powerful through
“vertical integration”
 1890
 Acquiring companies that provided
equipment and services needed
 By
1900, Carnegie Steel Company is
producing 1/3 of the nation’s steel
Answer the Essential Question
 How
did Americans build fortunes in
the oil and steel industries?
○ Formed corporations
○ Used methods of vertical and horizontal
integration
○ Formed trusts and monopolies
Attitudes Toward Business

Industrialization and the changes
associated with it caused American
attitudes toward business to alter in the
late 1800s.
Attitudes Toward Business

***The tremendous wealth some
entrepreneurs gained during the late
1800s, as well as the cut-throat
business methods they used, led some
Americans to rethink their ideas on the
meaning of business success. New
philosophies tried to explain and justify
both the accumulation of wealth and the
practices used to achieve it.***
Attitudes Toward Business
 Two
ways people viewed business in the
19th century:

Laissez Faire
○ What is it?
 Hands off the economy!
 Social
Darwinism
 What is it?
○ Survival of the fittest, only the strong survive (leads to
monopolies)
 How is Social Darwinism applied to business
competition?
○ Big businesses will conquer smaller, weaker businesses
Attitudes Toward Business

Robber Barons vs. Philanthropists?

The philosophies described above and the
growing gulf between the rich and poor led
some Americans to criticize the laissez-faire
policies and those who profited from them.
Instead of viewing wealthy entrepreneurs as
Horatio Alger heroes, critics condemned
them as robber barons – steal from the
poor and keep the money
Attitudes Toward Business

Philanthropist: Person who gives their
wealth back to the community.

Example: Rockefeller Library, Carnegie
Hall
Attitudes Toward Business

WHAT DO YOU THINK? WERE THE
ENTREPRENUERS ROBBER BARONS
OR PHILANTHROPISTS? WRITE ONE
PARAGRAPH ANSWERING THIS
QUESTION AND EXPLAIN YOUR
ANSWER USING SPECIFIC
EXAMPLES AND DETAILS.
Corporations Grow Larger
 Many Americans
admired the
efficiencies of large business
 Others argued that a lack of
competition hurt consumers
 No reason to improve
 No reason to keep prices low
 1890 – Sherman Antitrust Act
 Prohibited monopolies and pools
 Rarely enforced, ineffective
Sherman Antitrust Act

Did the Sherman Antitrust Act support
competition?
Labor Organizations (Unions)

Business growth in the late 1800s
brought generally higher wages to
American workers. Yet periodic
unemployment and poor working
conditions remained a fact of life for
workers. In addition, employers held
enormous power over the lives of their
workers and could lower wages and fire
employees at will.
Labor Organizations
To improve conditions, increasing
numbers of American workers formed
labor unions beginning in the late 1820s.
As working conditions changed with
industrialization, many more workers
became interested in unions.
 What is collective bargaining?


Negotiating between union workers and
owners
Labor Organizations
Knights of Labor
 Founder: Terrence Powderly
 Characteristics

 Skilled/unskilled workers, women and
African Americans
 Reforms:
○ 8 hour work day
○ End child labor
○ Equal opportunities for women
Labor Organizations
American Federation of Labor (AFL)
 Founder: Samuel Gompers
 Characteristics

 Collection of unions and skilled workers in
similar trades
 Reforms:
○ Higher wages
○ Better working hours
○ Better working conditions
Labor Organizations
International Ladies’ Garment Workers
Union (ILGWU)
 Founder: Samuel Gompers
 Characteristics

 Workers in cloth manufacturing industry
 Sweat shops
 Worked with AFL
Triangle Shirtwaist Factory Fire
Labor Conflict

If collective bargaining failed, labor
unions often used strikes, or work
stoppages, to achieve their aims.
Strikes sometimes ended in union
victories; often, however, they led to
violence as business owners sought
state and even federal support to end
walkouts.
Labor Conflict

Conflict
 Great Railroad Strike

What happened?
 Pay cuts
 Troops sent in to end strike

Who won?
 Union
Labor Conflict

Conflict
 Hay Market Riot

What happened?
 Labor rally held by Chicago anarchists
 First time violence is used

Who won?
 No clear cut winner
Labor Conflict

Conflict
 Homestead Strike

What happened?
 strike at Carnegie Steel plant to protest a
wage cut

Who won?
 Management – 75% of workers lose jobs
Labor Conflict

Conflict?
 Pullman Strike

What happened?
 Government called in by management to put
down strike

Who won?
 Management