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1865 - 1901
• Learning Targets Students will be able to explain the factors
that helped America industrialize Students will be able to explain the factors
contributing to the expansion of the railroads in America
Students will understand the factors in the rise of big business
Students will be able to explain the causes in the development of labor unions
• Although the US began to industrialize in the early 1800’s, it was only after the Civil War that it expanded rapidly
• What are the factors that allowed this to happen?
• Factor 1 – Natural Resources The US has abundant
natural resources - can be obtained more cheaply than through importation
Mountains in West source of many resources – construction of the Transcontinental Railroad allowed movement of settlers/miners and shipment of material east
New resource exploited – petroleum (oil)
Oil used to produce kerosene used to light lanterns, stoves, etc
What was used before kerosene?
First oil strike in Pennsylvania – drilled by Edwin Drake in 1859
• Factor 2 – Large Workforce
US population tripled between 1860 – 1910 High population provided
workers and consumers Population growth caused
by large families and immigration
What are some push & pull factors?
I hate kids
• Factor 3 – free Enterprise System Policy of Laissez-faire Supply and demand Competition causes
lower prices and greater efficiency
Entrepreneurs – people who risk capital seeking profits
Foreign investment
• Factor 4 – Role of Government Government kept
taxes and spending low
Did not impose costly regulations
Imposed high tariffs. Good idea?
• Factor 5 – New Inventions 1876 Telephone –
Alexander Graham Bell
1877 Bell Telephone (AT&T)
Revolutionized business and personal communication
Electricity – Thomas Edison
• 1877 – Phonograph• 1879 – Light bulb,
electric generator• Dictaphone,
mimeograph, and motion picture
• Launched electric power company to supply electricity to cities (GE)
• Other Inventions Ice machine Refrigerated railroad
car Automatic loom Ready-made clothing Sewing machine Shoe-making
machines Canned food Breakfast Cereal
• Factor 6 – Railroads Boom began with Pacific
Railway Act 1862 – Union Pacific & Central Pacific
Union Pacific employed mainly Irish / Central Pacific imported Chinese labor
Transcontinental Railroad completed 1869
Miles of track dramatically expanded after Civil War
Railroads created markets and were a market unto themselves
After construction of major lines, smaller connecting lines were built (consolidation)
The most successful railroad consolidator was Cornelius Vanderbilt
Consolidation = time zones New technology such as
air brakes allowed heavier locomotives
Rail systems so efficient cost for freight dropped
• The Land Grant System Land grants given to
railroads to encourage construction
Railroads sold or mortgaged land to cover construction costs
• Robber Barons Big businessmen
who people believed had gained their wealth through scams, bribes, and cheating
Credit Mobilier Scandal – corrupt construction company owned by railroad investors
• Great Northern Railroad Only transcontinental
railroad to NOT take land grants
Wise business tactics brought profits on both east and west runs
Only railroad to NOT go bankrupt
• Corporation – an organization owned by many people but treated by law as though it were a single person
• Stockholders – people that own shares of the corporation
• Stock – shares of ownership
• America initially distrusted corporations
• Economies of Scale Corporations raise money by selling
stocks They use the money to invest in new
technology, large labor force, lots of machines which greatly increases efficiency
They make more goods more cheaply
• All businesses have two types of costs Fixed Costs – costs a company has to
pay regardless if it is operating or not Operating Costs – costs that occur
when a company is running What advantages does a corporation
have in bad times?
• The Steel Industry The nature of steel Andrew Carnegie –
invested in companies supplying railroads
Bessemer Process – process by which steel could be made cheaply and efficiently
• Vertical Integration - a company owns all the different businesses on which it depends for its operation
• Horizontal Integration – combination of many companies of the same type into one large corporation
• Monopoly – when a single company achieves control over an entire market
• Why would some Americans fear a monopoly? Why would others feel a monopoly was good?
• Trusts Fear of monopolies drove
some states to make them illegal
To get around the law, businesses were merged by having stockholders place their stock under control of a manager (trustee)
Trusts could control companies as if they were merged into a corporation
Standard Oil – John D. Rockefeller
• Holding Companies Does not produce anything It owns the stock of companies that do
produce goods – thus controlling them as if they were one large corporation
• Selling the Product New ways of advertising –
bold display ads Department stores
• Wanamaker, Macy’s
Chain stores – emphasized low prices
• Woolworth 5 & 10 (dime)
Mail-order catalogs• Sears-Roebuck,
Montgomery Ward
• Urban Workers Unskilled labor – long
hours, monotonous, unhealthy or dangerous work environment
Increased living standards – products cheaper
Deflation – prices fell but wages cut
Workers beginning to organize unions
Two types of workers: craft workers and common laborers = skilled and unskilled
Trade Unions – unions limited to people with specific skills
Corporations generally opposed unions
Tactics to fight organization of unions included blacklists, lockouts, and strikebreakers
• Why did the government and the American people oppose Unions? No laws protecting the right to unionize –
some courts saw unions as interfering in business
Marxism and Anarchism - European ideas arriving with immigrants –both espoused radicalism
Americans equated unionism with radicalism – led government to use police and army to crush strikes and break-up unions
• The organizing of Labor Unions Great Railroad Strike of 1877
• Economic recession forced railroads to cut wages
• Workers walked off job and blocked tracks• Other states joined the strike – workers
destroyed equipment and tracks• State governments called out militia –
President Hayes called out army• Violence took >100 lives
• The Knights of Labor First national industrial union Wanted 8 hour workday, equal pay for
women, abolition of child labor Allowed women and minority members Supported arbitration instead of strikes Strikes were used to good effect causing
union to grow in membership Haymarket Riot hurt union’s reputation with
America – membership declined
• The Haymarket Riot Anarchist rally at
Haymarket Square, Chicago
Police hit by bomb / shots fired
7 police / 4 workers killed
Among arrested anarchists was member of Knights of Labor
• The Pullman Strike 1893 American Railway
Union founded by Eugene V. Debs
Pullman workers lived in company town
1893 Depression caused Pullman to cut wages – but not lower rents and prices
Union workers boycotted Pullman cars
Railroads attached US Mail cars to Pullman cars
US government called in troops to break boycott
• American Federation of Labor 1886 Led by Samuel Gompers “Plain and simple” approach to labor relations Rejected socialism and Marxism Three goals:
• Collective bargaining• Closed shops• 8 hour workday
• Working Women Women working outside the home increased after the
Civil War Jobs generally restricted to “women’s work” – 1/3
domestic servants 1/3 teachers, nurses, clerks, salesgirls, secretaries 1/3 industrial workers
Women paid less. Why? Women excluded from unions including AFL 1903 Women’s Trade Union League established –
sought 8 hour workday, minimum wage, end to evening work, and abolition of child labor