The Rise of Industrial America

1865-1900

Industrial Growth: 1865-1900Causes

•US has wealth of natural resources•Explosion of inventions = better business and manufacturing efficiency•Growing urban population provides workers and markets•RR establish new markets - spur business growth

Effects

•Big business emerges•Business consolidates under monopolies and trusts•Workers endure harsh conditions•Labor unions develop•Major strikes by industrial workers = violence

Industrial Growth

Important individuals in the late 1800s

Growth of Big Business: Causes

• Technological boom

• Heavy investment in technology

• RR encourage expansion of business

• Social Darwinism = favorable public opinion

Railroads Create National Network• After the Civil War

rail tracks started to follow a standard tracks and signals.

• The key event to the rail expansion was the Transcontinental Railroad – Railway that traveled from coast to coast.

• Railroads adopted time zones in 1883.

Thomas Edison

• Menlo Park Laboratory

• Electricity• Electric Light Bulb• General Electric• Power Plants• Grammaphone• Prolific Inventor

The Bessemer Process• Process allowed for

the mass production of steel. • Steel became cheaper

and more available.

• With steel in greater supply new building projects were undertaken.– The Brooklyn Bridge

became the symbol of the new era of American technological innovations.

Henry Bessemer

Growth of Big Business: Methods

• Vertical integration (Carnegie Steel)

• Horizontal consolidation [integration] (Standard Oil)

• Trusts

• Economies of Scale

• Monopolistic tendencies

The Big Business Model• Businesses in the late 1800s

transformed into a completely new form because of many factors:– Larger Pool of Capital (Money)–

businesses needed large amounts of money to run. Turned to private investors.

– Wider Geographic Span – railroads allowed businesses to have operations throughout the country.

– Broader Range of Operations – Became responsible for all stages of operation.

– Revised Role of Ownership – Owning and management became two different things.

– New Methods of Managements – Specialized departments (HR, Accounting, Security, Benefits) were created to manage such large companies.

What it takes to run a large company.

Rockefeller & Carnegie• John D. Rockefeller –

Formed Standard Oil Company in 1870 and soon became one of the world’s richest men. – Business tactics were

questionable.– By the end of his life he gave

$500 million in charity to help fund social well being.

• Andrew Carnegie – Became the main supplier of steel in U.S. in late 1800s.– Believed in “Gospel of Wealth”– Gave away 80% of fortune to

education alone.He was no Santa

Clause

Which one?

• Captains of Industry • Robber Barons

Horizontal Consolidation

Vertical Integration

Growth of Big Business: Features

• Large pools of capital• Wider Geographic reach• Changed role of ownership -

“professional managers”• New administrative techniques• Oligopoly• “Robber Barons” or “Captains of

Industry” --- “Industrial Statesmen”?

Corporate Structure

Growth of Big Business: Government Relations

• Government:– Friendly to big business– Minimal interference (laissez-faire = hands

off)– Sherman Antitrust Act (1890) - first used

against labor unions NOT big business. (Would later change)

Bosses of the Senate

Growth of Big Business: Effects I

• US becomes industrial power internationally

• Many jobs available for immigrants & failed farmers

• Better business efficiency

• Higher productivity

• Business cycles = “Boom” and “Bust”

• Social class of super rich is created

• Income gap grows wider

• Labor Unions increased presence

Growth of Big Business: Effects II

• Increased number of workers = decreased wages (generally)

• Families work• Increased

mechanization = less need for human labor

• No insurance or benefits for most industrial workers

• Child labor• Poor conditions =

bad health of workers

Boom and Bust Cycles

Gradual Shift to Industrialized Labor

Child Labor

Child Labor: 1870-1930

Major Labor Strikes of the Late 19th century (1870s-1890s)

Social Darwinism• Big businessmen began to

adopt “Social Darwinism.”– An extension of Darwin’s

“natural selection” process.

• Social Darwinists argued that society should interfere with competition as little as possible.– Believed government should

stay out of businesses who were most “fit” to succeed and become rich.

– Believed society would benefit from the success of the “fit” by weeding out the “unfit.”