Industrialization and the Rise of Big Business

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Industrialization and the Rise of Big Business

• Chapter 9

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Did You Know?

• Alexander Graham Bell taught deaf children. He
  once told his family that he preferred to be
  remembered as a teacher rather than the inventor
  of the telephone. His father was a pioneer of
  Visible Speech.

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Industrialization

• With the end of the Civil War, American industry
  expanded and millions of people left their farms
  to find work.
• 1900 US had become the worlds leading
  industrial nation
• 1914 gross national product was 8xs that at
  the end of the Civil War.

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Factors of growth

• Natural Resources in the west contribued to
  industrial growth.
• Transcontinental Railroad increased
  industrialization by bringing settlers west to
  work, and by bringing resources east.
• Petroleum discovered in Pennsylvania in 1859 by
  Edwin Drake. Used for kerosene.
• Population tripled between 1860 1910.

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Laissez Faire

• Let people do as they choose.
• Defined Government non-interference in the
  economy.
• In the years after the Civil War, 100s of
  factories built.
• Investors from Europe invested in the economy

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Government Role

• Late 1800s, state and fed. Government kept taxes
  and spending low, and did not impose regulations
  on business. Example of Laissez Faire.
• One of chief causes of the Civil War was economic
  policy tariffs After South seceded, US passed
  Morrill Tariff which raised tariff level to new
  high.

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• North felt tariffs necessary to protect
  businesses By 1900, most favored free trade and
  competition.

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New Inventions

• Alexander Graham Bell invented telephone.
• Thomas Edison phonograph light bulb electric
  generator dictaphone, mimeograph motion
  picture built electric distribution network

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• New innovations in clothing industry such as
  power-driven sewing machines, cloth-cutter,
  automatic loom
• Mass production reduced cost savings passed on
  to consumers.

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Railroads

• Pacific Railway Act provided for federal funds
  for building of Transcontinental RR.
• Gave land grants for funding
• Union Pacific pushed west from Omaha.
• Central Pacific pushed east from Sacramento
• Workers Civil War vets, Irish immigrants,
  farmers, miners, ex-convicts, Chinese immigrants.

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• Credit Mobilier Scandal several stockholders of
  the Union Pacific set up a construction company
  (Credit Mobilier) Investors contracted
  themselves greatly overcharged the railroad.
• Railroad investors made a fortune Union Pacific
  bankrupt bailed out by the government

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Terms

• Corporation
• Stockholders/Stock
• Economies of Scale
• Fixed Costs
• Operating Costs

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• One of the biggest names was Andrew Carnegie
• Steel Tycoon Used Bessemer process
• Believed in Gospel of Wealth the wealth are
  chosen of God are responsible for caring for
  the poor (philantropy)
• Donated millions to build libraries

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• What advantage does large corporations have over
  small businesses?
• Big businesses can produce more cheaply, and
  could continue to operate even in poor economic
  times by cutting prices Small businesses could
  not!

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Consolidation of Industry

• Competition caused lower prices, but it also cut
  profits
• Many companies formed pools agreements to keep
  prices as certain levels broke apart easily.
• By 1870s, competition had reduced industries to a
  few highly efficient corporations.

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• Andrew Carnegie worked his way up from a bobbin
  boy in a mill to head of Carnegie Steel in 1873.
  1st mill to use the Bessemer Process.
• Used Vertical Integration a company owns all
  the different businesses required for operation.
• Horizonal integration owns all companies doing
  similar business (ex. Oil)

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Selling the Product

• Department stores changed the idea of shopping by
  bringing in large assortment of products in a
  large glamorous building (Dillards, Sears,
  Foleys)
• Chain Stores offered low prices instead of fancy
  décor (Wal-mart, Woolworths)
• Mail order catalogues reached rural Americans
  (Montgomery Ward, Sears)

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Rise of Labor

• Workers faced monotonous, dangerous work Uneven
  division of income.
• Deflation in economy As prices fell, wages
  fell, but cost of living remained same seemed
  that employers paid them less for the same work.
• Workers formed unions

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Early Unions

• Craft Workers special skills and paid more.
• Common laborers few skills and lower wages.
• 1830s craft workers formed trade unions
  (limited to specific skills)
• Industrial Unions united all craft workers and
  laborers in a common industry (RR)

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• Companies went to great length to limit unions
  hired detectives Organizers placed on a
  Blacklist. hard to get a job.
• No laws gave workers the right to organize
• Marxism (Karl Marx) Popular in Europe
  Theorized a class struggle shaped society
  Believed a workers revolution would evenly
  distribute wealth and end classes.

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• Many laborers supported Marxism
• Anarchists (no laws) believed a few acts of
  violence would cause government to collapse.
• Both very popular in Europe. Many immigrants
  brought them to the US. Associated with
  immigrants and unions

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• Workers attempted to create large unions, but
  rarely succeeded. Confrontations often led to
  violence.

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Great Railroad Strike of 1877

• A recession caused companies to cut wages.
  Workers struck in protest.
• 1st nationwide labor protest.
• Ended when President Hayes called in the army to
  end violence. 100 killed.

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Knights of Labor

• First nationwide industrial union
• Demanded 8 hour day, government bureau of labor
  statistics equal pay for women end to child
  labor worker owned factories.
• Arbitration impartial 3rd party helps mediate
  between worker and management.

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Haymarket Riot

• Caused popularity of K of L to decline
• Resulted from a strike Anarchists threw a bomb
  and killed several policemen.
• Blamed on the K of L.

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Pullman Strike

• 1893 American Railroad Union unionized the
  Pullman company.
• A strike after wages were cut
• To end the boycott, US government placed mail on
  Pullman cars.
• Injunction they were holding up the mail.

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American Federation of Labor

• Made up of trade unions
• 1st leader Samuel Gompers
• Limit politics within unions
• Fought for higher wages and better conditions
• 3 goals 1) recognition of unions 2) closed
  shops 3) 8-hour workday
• Even in 1900, majority of workers unorganized.

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Working Women

• Women made up 18 of workforce
• Domestic servants teachers nurses sales
  clerks secretaries
• Paid less than men felt men needed higher wages
  to support families
• Most unions excluded women
• Womens Trade Union League 1st national
  association for womens labor issues.