Chapter 20, Section 1:Railroads Spur Industry

Main Idea: A boom in railroad building Main Idea: A boom in railroad building encouraged American industry to grow encouraged American industry to grow but gave vast amounts of power to a few but gave vast amounts of power to a few

railroad owners.railroad owners.

A. A Network of Rails After the Civil War, RR companies built all After the Civil War, RR companies built all

over the country (the war showed the over the country (the war showed the importance of RRs for moving troops & importance of RRs for moving troops & supplies).supplies).

Knitting the Nation TogetherKnitting the Nation Together Most early RRs were short & local only (not Most early RRs were short & local only (not

connected = many transfers & interruptions) connected = many transfers & interruptions) In 1886, a standard gauge (width) was In 1886, a standard gauge (width) was

adopted. After this, RRs were networked adopted. After this, RRs were networked (connected) = cheaper & faster shipping & (connected) = cheaper & faster shipping & travel. travel.

Improving Rail TravelImproving Rail Travel New inventions improved rail travel by New inventions improved rail travel by

making it safer, faster & more comfortable.making it safer, faster & more comfortable. Air brakes (George Westinghouse) enabled Air brakes (George Westinghouse) enabled

all cars on the train to stop at same time.all cars on the train to stop at same time. Sleeping cars (George Pullman) allowed Sleeping cars (George Pullman) allowed

passengers to sleep while train continued on.passengers to sleep while train continued on. Dining Cars improved comfort & service for Dining Cars improved comfort & service for

passengers, whose needs were attended to passengers, whose needs were attended to by waiters & porters for a better experience.by waiters & porters for a better experience.

Once the gauge, or width, of tracks was standardized, railroads formed a network, or system of connected lines.

Growth of Railroads

Railroads in 1918Railroads in 1890

Consolidation Brings EfficiencyConsolidation Brings EfficiencyAs RRs grew, they began to As RRs grew, they began to consolidate (combine) so they could consolidate (combine) so they could run more efficiently & save money. run more efficiently & save money. Larger lines bought out smaller ones Larger lines bought out smaller ones or forced them out of business.or forced them out of business.Cornelius Vanderbilt was one of the was one of the best at this. He used his fortune from best at this. He used his fortune from steamships to build a RR empire steamships to build a RR empire between NYC & Chicago.between NYC & Chicago.

Vanderbilt University in Tennessee.Vanderbilt University in Tennessee.He used ruthless tactics to force He used ruthless tactics to force smaller owners to sell to him. If they smaller owners to sell to him. If they refused, he drove them out of business refused, he drove them out of business by not allowing their passengers to by not allowing their passengers to transfer to his lines.transfer to his lines.Eventually, most RR lines were run Eventually, most RR lines were run by a few very rich & powerful men by a few very rich & powerful men who controlled a vast network of rail who controlled a vast network of rail lines across the nation.lines across the nation.

The “Breakers”- Newport, RI

This was a Vanderbilt summer home

Cornelius “Commodore” Vanderbilt

4 minvideo

Cornelius “Commodore” VanderbiltCornelius “Commodore” Vanderbilt“Can’t I do what I want with my

money?”“Can’t I do what I want with my

money?”

Cornelius Vanderbilt and James Fisk are shown in a race for control of New York's rails. Vanderbilt unsuccessfully tried to take over the Erie R.R. by buying out its stock.

Building New LinesBuilding New Lines 3 more 3 more transcontinental

(across the continent) RRs (across the continent) RRs were built after the first was were built after the first was completed in 1869.completed in 1869.

James Hill finished the last James Hill finished the last one in 1893. His Great one in 1893. His Great Northern Railway empire Northern Railway empire spanned the Northwest, spanned the Northwest, which wasn’t very populated which wasn’t very populated back then.back then.

To make profits right away, To make profits right away, he encouraged farmers & he encouraged farmers & ranchers to move to that part ranchers to move to that part of the country & settle near of the country & settle near his rail lines.his rail lines.

He bought them supplies & He bought them supplies & equipment, knowing that equipment, knowing that eventually, they would make eventually, they would make him richer when they use his him richer when they use his RRs to ship things (if they RRs to ship things (if they succeed, he succeeds). succeed, he succeeds).

3 min video

B. Eliminating the CompetitionRebates & PoolsRebates & Pools

Cutthroat competition- Rate wars broke out - Rate wars broke out between rival RRs, forcing everyone to slash between rival RRs, forcing everyone to slash their rates & eventually lose money. their rates & eventually lose money. To compete for business, many RRs offered To compete for business, many RRs offered secretsecret rebates rebates (discounts(discounts)) to their largest to their largest customers, which hurt small businesses & customers, which hurt small businesses & farmers, who now had to pay higher rates as a farmers, who now had to pay higher rates as a result -the rich get richer & the poor get …result -the rich get richer & the poor get …To survive, many RRs established To survive, many RRs established poolspools, in , in which they divided up business in an area, which they divided up business in an area, thereby limiting competition. This would keep thereby limiting competition. This would keep prices (& profits) high for everyone. prices (& profits) high for everyone.

This is known as price fixing &/or collusion.This is known as price fixing &/or collusion.

Extra Burdens for FarmersExtra Burdens for FarmersFarmers were angered by high shipping prices, Farmers were angered by high shipping prices, so many joined the so many joined the Populist PartyPopulist Party, which , which called for government regulation of railroads to called for government regulation of railroads to keep prices fair & reasonable. keep prices fair & reasonable. Some states did pass laws regulating RRs, but Some states did pass laws regulating RRs, but they were often weak because officials were they were often weak because officials were bribed by RRs to not enforce them.bribed by RRs to not enforce them.

3 min video

C. Railroads Fuel the Economy

Despite all the problems they Despite all the problems they caused, RRs made growth of caused, RRs made growth of industry possible- steel and industry possible- steel and iron for tracks, lumber for iron for tracks, lumber for ties, coal for fuel, etc. Many ties, coal for fuel, etc. Many jobs were created as a result.jobs were created as a result.

RRs became models for how RRs became models for how other businesses operated - other businesses operated - departments, managers, departments, managers, chains-of-command, etc.chains-of-command, etc.

RRs connected the country RRs connected the country brought people & businesses brought people & businesses together. They helped settle together. They helped settle the West, developed new the West, developed new communities & made the US communities & made the US an industrial giant.an industrial giant.

Railroads fueled the growing US economy:

1st big business in US. Magnet for financial

investment. Key to opening the

West. Aided development of

other industries.

The “Ripple” Effect