The Incorporation of America

Essential QuestionIndustrialization

increased the standard of living and the opportunities of most Americans, but

at what cost?

Causes of Rapid Industrialization

1. Steam Revolution of the 1830s-1850s.

2. The Railroad fueled the growing US economy: * First big business in the US. * A magnet for financial investment. * The key to opening the West. * Aided the development of other

industries.

Causes of Rapid Industrialization

3. Technological innovations.

* Bessemer and open hearth process

* Refrigerated cars

* Edison “Wizard of Menlo Park” light bulb, phonograph, motion pictures.

Thomas Alva Edison

“Wizard of Menlo Park”

The Light Bulb

The Phonograph (1877)

The Ediphone or Dictaphone

The Motion Picture Camera

Alexander Graham Bell

Telephone (1876)

Alternate Current

George Westinghouse

Alternate Current

Westinghouse Lamp ad

The Airplane

Wilbur Wright Orville Wright

Kitty Hawk, NC – December 7, 1903

Model T Automobile

Henry FordI want to pay my workers so that

they can afford my product!

“Model T” Prices & Sales

U. S. Patents Granted

1790s 276 patents issued.1990s 1,119,220 patents issued.

4. Unskilled & semi-skilled labor in abundance.

5. Abundant capital.6. New, talented group of businessmen

[entrepreneurs] and advisors.7. Market growing as US population

increased.8. Government willing to help at all

levels to stimulate economic growth.9. Abundant natural resources.

Causes of Rapid Industrialization

Iron & Steel Production

• Oil • Mining • Sugar • Steel• Meatpacking• Beef/Cattle • Construction• Telegraph• Telephone

• Railroad• Marketing• Sewing Machine• Vacuums• Typewriters• Automobile • Salt• Coal• Agricultural

New Business Culture1. Laissez Faire the ideology of the

Industrial Age.Þ Individuals should compete freely in

the marketplace.Þ Own their own business and use

their skills to better our culture and make profit for themselves.

Þ No room for government in the market.

Þ Government should allow for natural competition for the betterment of our society.

2. Social Darwinism× British

economist.× Advocate of

laissez-faire.× Adapted

Darwin’s ideas from the “Origin of Species” to humans.

× Notion of “Survival of the Fittest.”

Herbert Spencer

2. Social Darwinism in America

William Graham Sumner

Folkways (1906)

$ Individuals must have absolute freedom to struggle, succeed or fail.

$ Therefore, state intervention to reward society and the economy is futile!

New Business Culture:“The American Dream?”3. Protestant (Puritan) “Work

Ethic” * Horatio Alger [100+ novels]

Is the idea of the “self-made man” a MYTH??

New Type of Business Entities1. Pool

2. Trust John D. Rockefeller

* Standard Oil Co.

FORMATION Organized by associates and legalized through state charter

OWNERSHIP Stockholders, according to number of shares

CONTROL AND MANAGEMENT

Through Board of Directors, elected by the stockholders (usually one vote

per share of stock held)

NET PROFITSAND LOSSES

Dividends: to stockholders = profitsLose: only the amount invested by

stockholders according to number of shares

LIMITED LIABILITY

Conglomerate

A group of unrelated business owned by a single corporation. Still used today by

companies that merge.

PoolCompeting companies that agree to fix

prices and divide regions among members so that only one company 

operates in each area. Outlawed today.

Trust(Monopoly)

Companies in related fields agree to combine under the direction of a single

board of trustees, which meant that shareholders had no say. Outlawed

today.

Holding Company

A company that buys controlling amounts of stock in related companies, thus

becoming the majority shareholder, and holding considerable say over each

company's business operations. Outlawed today.

New Type of Business Entities2. Trust:

* Horizontal Integration John D. Rockefeller * Vertical Integration:

A. Gustavus Swift Meat-packingB. Andrew Carnegie U. S.

Steel

New Type of Business Entities

Standard Oil Co.

U. S. Corporate Mergers

Industrial Consolidation:

Iron & Steel Firms

Captain of Industry

• Monopolized the steel industry• Rags to riches story---came

from Scotland very poor.• Used scientific ideas (Bessemer

Process) to develop a better way to produce steel and sell a

quality a product for an inexpensive price.

• Used Horizontal integration.Carnegie Picture

Captain of Industry• Came from a wealthy family

• Bought a substitute during the Civil War.

• Formed the first modern corporations in the oil industry Standard Oil

• Was the first billionaire in the U.S. by 1900.

• Used Vertical Integration and Horizontal Integration to gain a monopoly in the oil business.

• Formed a steamship company in 1829

• Dominated shipping along the Atlantic

• 1849 established steamship that carried people from New York to San

Francisco in Gold Rush days

• After Civil War Vanderbilt bought most railroad lines from New York to

Chicago

• Worth over $100 million

New Financial Businessman

The Broker: * J. Pierpont Morgan

Wall Street – 1867 & 1900

The Reorganization of Work

Frederick W. TaylorThe Principles of Scientific Management

(1911)

The Reorganization of Work

The Assembly Line

“The Protectors of Our Industries”

The “Robber Barons” of the Past

Cornelius [“Commodore”] Vanderbilt

Can’t I do what I want with my money?

The Gospel of Wealth:

Religion in the Era of Industrialization

Russell H. Conwell

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

“Robber Barons” Business leaders built their

fortunes by stealing from the public.

They drained the country of its natural resources.

They persuaded public officials to interpret laws in their favor.

They ruthlessly drove their competitors to ruin.

They paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.

“Captains of Industry”

The business leaders served their nation in a positive way.

They increased the supply of goods by building factories.

They raised productivity and expanded markets.

They created jobs that enabled many Americans to buy new goods and raise their standard of living.

They also created museums, libraries, and universities, many of which still serve the public today.

“On Wealth”

Andrew Carnegie

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

Philanthropist• Gave millions to

colleges and libraries.• It was the sacred duty

of the wealthy to give back to society who has

given to him.• Stressed education as a

means to better one’s self.

• Carnegie HallCartoon Carnegie

Philanthropist•Gave millions of his money to hospitals and colleges.•University of Chicago•Spellman College•National Parks•United Nations•Williamsburg•Cancer Research

Rockefeller

•Philanthropistdonated $1 million

to Vanderbilt University

BIGGER IS BETTERA trust or monopoly controls an entire

industry•make product cheaper

• lower prices for customer

The Problem w/ Monopolies

• Artificially high prices

• Highly unstable economy– Panics of 1837; 93

• Threatened ability of individual

• Threat to the wage-earning husband

• Class resentment• Gap b/w rich and

poor widening

Wealth Concentration Held by

Top 1% of Households