Industrial RevolutionAmerica

The Rise of Big Business

• The Gilded Age• period between the end of

Radical Reconstruction (1877• beginning of the Progressive

Era (1901)• Brassy• Flamboyant• big business values• political corruption• extremes of wealth and poverty.

• United States changed: • from a predominantly rural/

agrarian nation• to an urban industrial one.

Major DevelopmentsEstablished the foundation for 20th century America

• Industrialization• By 1913 America produced

1/3 of the world’s industrial output.

• ½ of all workers worked in factories

• 2/3 of all workers worked for wages

• Urbanization• 11 million moved from

farms to cities• Great Lakes Region

• Immigration• 1870-1920 25 million

immigrants

TechnologyTelegraphTelephoneTypewriterHandheld Camera

• Mass products• Market, production,

distribution, marketing• National Brands• Nation wide companies

• Thomas Edison• Phonograph• Lightbulb• Motion picture• Electricity - power

• Key to economic growth• Reliable

• Flexible

• Cheap

• Electric motor

Took Problems into 20th Century• Problems generated by

the Age of Energy• the unequal distribution

of wealth• large-scale

unemployment• urban crowding• decline of farm income• reckless exploitation of

natural resources• would carry over into the

20th century.

Distant Corporations

• rural communities:• Self-sufficient• Isolated• satisfied people's needs• replaced by distant

corporations.

• Corporations:• Impersonal • located primarily in the

Northeast• Manufactured products• Provided Services• Generated ideas

Controlled Nation’s Economy• Corporations swallowing up

independent companies• Formed trusts

• Controlled food supply• Fashioned clothing• produced household

furnishings & tools• Dominated methods of

transportation• published its books,

magazines, and newspapers.

Life Profoundly Changed• Allan Nevins & Henry Steele Commanger

provide a vivid description of the impact of trusts on the "island community:"  

The life of the average man, especially if he was a city dweller, was profoundly changed by this development. . . . When he sat down to breakfast he ate bacon packed by the beef trusts, seasoned his eggs with salt made by the Michigan salt trust, sweetened his coffee with sugar refined by the American Sugar trust, lit his American Tobacco Company cigar with a Diamond Match Company match.

Standardization

• Then he rode to work on a bicycle built by the bicycle trust or on a trolley car operating under a monopolistic franchise and running on steel rails made by United States Steel. . .

Rapid Industrialization

• By 1890, the value of industrial goods and services, for the first time, exceeded that of agricultural products.

Captains of Industry

• Entrepreneurs with the talent, vision, and willingness to take risks were able to achieve unprecedented wealth and power. 

Standard Oil Trust

• In 1882, John D. Rockefeller formed the Standard Oil Trust and consequently dominated 95% of the production, refining, and marketing of oil in the United States.

Horizontal Consolidation

• The merger of competing companies in one area of business, like oil refining, was known as horizontal consolidation.

Raw material Independent Companies

Horizontal Consolidation

ManufacturingRefineries, 

pipelines, tankers Standard Oil Trust

Product Distribution

Fuel, kerosene,oil, tar

Independent Companies

Vertical Consolidation

• It was often accompanied by vertical consolidation of industries, in which a firm would strive to control all aspects of production from acquisition of raw materials to final delivery of finished products. 

VerticalConsoli-dation

Raw material

U.S. SteelManufacturing

Product Distribution

Giant Corporations

• By 1900, two-thirds of all manufactured goods were being produced by giant corporations. Swift and Armour dominated meat packing, the Duke family controlled tobacco, and Andrew Carnegie took over every aspect of steel production.

Swift armour

1889 Duke Tobacco Advertisement

Swift armour

U. S. Steel Corporation• When he retired in 1901,

he sold Carnegie Steel to financier J. P. Morgan for over $400 million dollars. Morgan subsequently reorganized the company into the United States Steel Corporation.

USS

Equal Protection of the Law• In 1886, the Supreme

Court set a precedent that has been interpreted to mean that corporations have the same rights as living persons under the Fourteenth Amendment to the Constitution.*

on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."

* Before oral argument took place in Santa Clara County v. Southern Pacific Railroad Company, Chief Justice Waite announced: "The court does not wish to hear argument

Corporate Personhood• From that point on, the 14th

Amendment, enacted to protect rights of freed slaves, was used routinely to grant corporations constitutional "personhood." Justices have since struck down hundreds of local, state and federal laws enacted to protect people from corporate harm based on this premise. Armed with these "rights," corporations increased control over resources, jobs, commerce, politicians, even judges

Citizens United• In Citizens United v.

Federal Election Commission (2010), the Supreme Court ruled that the government may not ban political spending by corporations in candidate elections.

Federal Regulation of Trusts

• The Sherman Antitrust Act  of 1890 outlawed all contracts, combinations, or conspiracies in restraint of trade, and all monopolies

Theodore Roosevelt: Trust Buster• President Theodore

Roosevelt was successful in cases against the Northern Securities Company, the meatpacker trust, the tobacco trust, and the Standard Oil Company. 

Discriminatory Practices

• Rebate: a partial kick back of a large company's shipping costs in exchange for all of its freight business.

• Long and Short Haul Abuses: a short journey where no competition existed cost more than a long one where two or more lines competed.

• Graft: officials bribed public officials by giving out free train passes.