The 2 nd Industrial Revolution. Understanding the Economy Define Economy: a system for producing and...

The 2nd Industrial Revolution

Understanding the Economy

Define Economy:

a system for producing and distributing products and services in society.

What type of Economic System do we have in the United States?

Capitalism

The basic ideas of capitalism• Economic growth can best be achieved by private choices

“free enterprise” Private ownership of property and businesses.

Individual choice – consumers, investors, workers. Private profit – as an incentive to achieve.

Bottom line: all economic decisions should be made by individuals.people are free to work hard, take risks and create wealth.

The government’s role in a Capitalist System

To stay out of private economic decisions

“leave alone…hands off” “Laissez-Faire”

Benefits for people and business?

Dangers for people and business?

What does industrial mean?

• What do you notice about the picture?

• How would you define the term industrial?

Factories, machines, technology, production, manufacturing

What is a revolution?• A Major Change• The 2nd Industrial

Revolution – a period of rapid growth in the U.S. manufacturing in the late 1800’s.

#1 Causes of the Industrial Revolution: Land and ResourcesCause

•Homestead Act of 1862 – Gave 160 acres of cheap land west of the Mississippi River to anyone who applied

Effect

• Increased population West

•Growth of western cities (Kansas City, Chicago)

•New markets (place where goods are bought and sold)

• Improved economy

#1 Causes of the Industrial Revolution: Land and Resources

An abundant supply of natural resources

CopperNickelGold & Silver

New Building Materials

New Power Sources:

(raw materials)

Concrete Steel

Oil (Kerosene, gasoline, diesel fuel)Electricity

Bessemer Sparks a RevolutionSteel is Iron made stronger by heating it and adding other metals. Henry Bessemer created a process that created steel in minutes instead of the old way that could take up to a day or more. Lower price for steel led to:• Growth of cities (up and out)• Improved infrastructure (Bridges,

nails, wires, pipes)• Railroad Cars and tracks (30,000

miles of track in 1860 to 193,000 miles by 1900)

# 2 Causes of the Industrial Revolution

Cause

New Inventions

Effect

Over 1,000 inventions – revolutionized American life.• Stock ticker• Phonograph • Microphone• Incandescent light bulb• Power generation station• Telephone• Airplane

Thomas Edison “Wizard of Menlo Park”

http://www-tc.pbs.org/wgbh/amex/edison/sfeature/songs/maryhadlamb.mp3

Alexander Graham Bell

Telephone, typewriter, printing technology

#3 Causes of the Industrial RevolutionCause

A Large Industrial Work Force

Where did this large work force come from?

Effects

•Cities Grow•New Factory Jobs

Civil War veteranscraftsmen became industrial workers.Rising population – increasing birth rates.

# 4 Causes of the Industrial Revolution: Building the Transcontinental Railroad

Why Build a Transcontinental Railroad?• Growth of West Coast• West Coast gold and silver

• Connect East with West for business

• Solidify the Union• Achieve Manifest Destiny

Significance of the Railroad

Biggest and best engineering project of its timeMade the country smallerHelped spur interest in Homestead ActImproved communicationLed to other transcontinental railroads and

shorter branches

Railroad Routes – 1870 & 1890

# 5 Causes of the Industrial Revolution: Growth of CorporationsUnderstanding Capitalism

• Capital = $$$

• Corporation –

• Stockholder –

• Dividend

A business that is formed by selling shares of ownership (stock).

person who owns a part of a corporation

Money paid by a corporation to its stock holders

# 5 Causes of the Industrial Revolution: Growth of Corporations

1. How are corporations operated?• They must receive a legal charter by a state

government. • Stockholders elect a Board of Directors.

2. What are the advantages of “incorporating?” • Selling stock allows a business to raise large amounts

of capital (money) very quickly.• It spreads the risk of owning a business among all of

the stockholders.

# 6 Causes of the Industrial Revolution: Government Support of Big BusinessHow did the Federal government help businesses expand?• Kept taxes on business low.

• Passed tariffs on imported goods (which raised their prices).

• Policies of open immigration (cheap labor)

• Loans, subsidies and land grants to railroad companies.

• Refusing to pass laws to regulate the behavior of big businesses.

# 7 Causes of the Industrial Revolution: Business Entrepreneurs• Created and owned new kinds of businesses…

…by combining the other factors of production.

Cornelius Vanderbilt: Railroads

Andrew Carnegie –

Carnegie Steel Co.

John D. Rockefeller – Standard Oil

James Pierpont Morgan: Banking and Steel

monopolyOne company controls the

production, distribution and sale of a product throughout an entire

region (or country).

The Problem with a Monopoly

• Competition between businesses eliminated… small business crushed.

• Wages and hiring conditions were fixed.

• Markets were controlled – production levels and prices were fixed…

• Consumers had little or no real choice!

Why didn’t the Federal

Government act to pass laws to

regulate the actions of these

large and powerful

companies?

Corruption!

Early attempts to restraint big business

Interstate Commerce Act (1887)American towns, businesses and farms were at the mercy of railroad companies.

• The first attempt to regulate the railroad industry:- outlawed secret rebates- rates were regulated- Interstate Commerce Commission (ICC) created to enforce the law and investigate complaints.

Early attempts to restraint big business

The Sherman Anti-trust Act

(1890)Meant to prohibit

monopolies

…any business action “in restraint of trade” was illegal.