Chapter 20Chapter 20

The Growth of Business The Growth of Business and Industryand Industry

Chapter objectivesChapter objectives

By the end of this chapter you will be able By the end of this chapter you will be able to…to…

explain how the United States became a explain how the United States became a major industrial power.major industrial power.

explain why some people loved big explain why some people loved big business.business.

explain why some people hated big explain why some people hated big business.business.

name two laws that tried to control big name two laws that tried to control big business.business.

During the Civil War During the Civil War (1861-1864)(1861-1864)

• During the Civil During the Civil War, the U.S. built War, the U.S. built the largest military the largest military in the world. More in the world. More factories were factories were built. Production built. Production got faster and got faster and better. Technology better. Technology increased and new increased and new things were things were invented.invented.

After the Civil War After the Civil War (1865-1900)(1865-1900)

After the Civil After the Civil War, the U.S. War, the U.S. became a world became a world power. Other power. Other countries countries wanted to buy wanted to buy U.S. products U.S. products and technology.and technology.

How did it all begin?How did it all begin?

It all started with the Industrial Revolution. The It all started with the Industrial Revolution. The Industrial Revolution was a change from making Industrial Revolution was a change from making products by hand to making products by products by hand to making products by machine.machine.

Mechanized productionMechanized production

Mechanized production makes products Mechanized production makes products faster and cheaper.faster and cheaper.

Memory checkMemory check

How is mechanized production How is mechanized production different from production by hand?different from production by hand?

How Did the Industrial How Did the Industrial Revolution Start?Revolution Start?

Some people started Some people started using machines to using machines to make cotton into make cotton into thread and cloth. thread and cloth. The new machines The new machines made the cloth made the cloth faster and cheaper. faster and cheaper. The businessmen The businessmen made a lot of made a lot of money from the money from the new machines. new machines. They used their They used their money to buy more money to buy more machines. Soon, machines. Soon, there were many there were many factories with factories with many machines.many machines.

Memory checkMemory check

What was the Industrial Revolution?What was the Industrial Revolution? How did the Industrial Revolution How did the Industrial Revolution

start?start?

There are seven reasons why America There are seven reasons why America became a great industrial nation became a great industrial nation

from 1865 to 1900.from 1865 to 1900.

The first reason is that people The first reason is that people had capital to invest.had capital to invest.

Capital is Capital is money to money to spend on starting spend on starting businesses. businesses. America had many America had many wealthy wealthy businessmen. businessmen. They spent their They spent their money to start new money to start new businesses.businesses.

The second reason is that the The second reason is that the U.S. had a lot of important U.S. had a lot of important

natural resources.natural resources.Natural resources Natural resources

are aare all the things ll the things from the Earth that from the Earth that can be used to make can be used to make products. Iron, coal, products. Iron, coal, and oil are all and oil are all examples of natural examples of natural resources. Iron and resources. Iron and coal are used to coal are used to make steel. Oil is make steel. Oil is used to make used to make gasoline. gasoline.

The third important reason is The third important reason is that the U.S. had energy that the U.S. had energy

sources.sources.In the early days In the early days

they used water they used water power from rivers. power from rivers. Then they started Then they started using steam power using steam power from burning wood from burning wood and later coal. and later coal. Later, oil and Later, oil and electricity became electricity became important. important. Factories need Factories need energy sources.energy sources.

The fourth reason is that the The fourth reason is that the U.S. was building a large U.S. was building a large

railroad system.railroad system.The railroad could move around resources The railroad could move around resources and products.and products.

The fifth reason is the new The fifth reason is the new inventions that helped the inventions that helped the

growth of industry.growth of industry.For example, the For example, the

telegraph and telegraph and telephone helped telephone helped communications. communications. People in one place People in one place could order could order products from a products from a factory in another factory in another place and have place and have them delivered them delivered quickly by railroad.quickly by railroad.

The sixth reason is that the The sixth reason is that the U.S. had a large and growing U.S. had a large and growing

population.population. Because of immigration, there were Because of immigration, there were

plenty of cheap workers, clever plenty of cheap workers, clever inventors, and eager consumers. More inventors, and eager consumers. More people were coming from all over the people were coming from all over the world to become new Americans.world to become new Americans.

The seventh reason is that the The seventh reason is that the U.S. economy was a capitalist U.S. economy was a capitalist

system.system. Capitalism means anyone could start a Capitalism means anyone could start a

business. Competition between companies business. Competition between companies encouraged them to make better products for encouraged them to make better products for cheaper. The competition forced companies cheaper. The competition forced companies to use more machines.to use more machines.

Memory checkMemory check What is capital?What is capital?

What are natural resources?What are natural resources?

Name three energy sources.Name three energy sources.

How did the railroad help development in How did the railroad help development in the U.S?the U.S?

What is capitalism?What is capitalism?

Name seven reasons why the United Name seven reasons why the United States became a major industrial power.States became a major industrial power.

Capitalism also encouraged Capitalism also encouraged consumerismconsumerism

Consumerism means Consumerism means companies find new companies find new ways to sell their ways to sell their products. Some products. Some companies started companies started department stores. department stores. Others started mail Others started mail order catalogues. order catalogues. Many companies Many companies started advertising.started advertising.

Companies made many new Companies made many new products for people to buy.products for people to buy.

Capitalism also changed the Capitalism also changed the way people organized way people organized

businesses.businesses.

The old ways of organizing businesses The old ways of organizing businesses could not compete. Family-owned could not compete. Family-owned businesses were too small. The new businesses were too small. The new way of organizing businesses was way of organizing businesses was more successful. It was called a more successful. It was called a ccorporation. Corporations orporation. Corporations are are bigger and grow much faster.bigger and grow much faster.

corporationscorporations CorporationsCorporations are businesses that sell are businesses that sell sharesshares

to to shareholdersshareholders. Shares are also called . Shares are also called stockstock. . Owning shares means shareholders own a part Owning shares means shareholders own a part of the corporation. The corporation has no of the corporation. The corporation has no single owner or boss. The corporation uses the single owner or boss. The corporation uses the money from people’s shares to get bigger or money from people’s shares to get bigger or better. For example, railroad companies use better. For example, railroad companies use the money from selling shares to build new the money from selling shares to build new railroads. Steel companies use the money from railroads. Steel companies use the money from shares to build better factories. That is why shares to build better factories. That is why corporations grow much faster than normal corporations grow much faster than normal businesses.businesses.

Memory checkMemory check

What is a corporation?What is a corporation?

Why does it grow faster than other Why does it grow faster than other businesses?businesses?

Inventors and scientists Inventors and scientists helped make America helped make America

successful.successful.

Henry Bessemer invented a Henry Bessemer invented a better way to make steel.better way to make steel.

Iron and steel are similar, but steel is Iron and steel are similar, but steel is stronger than iron. Bessemer stronger than iron. Bessemer found a way to make steel cheaper.found a way to make steel cheaper.

Why is steel important?Why is steel important?

With steel people With steel people can make better can make better ships, bridges, and ships, bridges, and machines. They machines. They can also make can also make skyscrapers and skyscrapers and railroads.railroads.

Granville T. WoodsGranville T. WoodsOne famous One famous inventor was inventor was Granville T. Woods. Granville T. Woods. He made hundreds He made hundreds of important of important inventions. One of inventions. One of his inventions was his inventions was the electric train. the electric train. Electric trains were Electric trains were used in cities used in cities because they made because they made less pollution than less pollution than steam locomotives. steam locomotives. They were They were necessary for necessary for subways, mines, and subways, mines, and any other work in any other work in underground underground tunnels.tunnels.

Elijah McCoyElijah McCoy

In 1872, Elijah McCoy In 1872, Elijah McCoy made the first made the first lubrication systems lubrication systems for trains. These for trains. These systems kept the systems kept the wheels lubricated so wheels lubricated so they could run faster they could run faster and longer. His and longer. His systems also made all systems also made all the factory machines the factory machines work better.work better.

Thomas EdisonThomas EdisonThomas Edison led teams Thomas Edison led teams

of inventors. These of inventors. These teams invented the first teams invented the first electric lights, electric lights, phonographs, movie phonographs, movie cameras and projectors.cameras and projectors.

Nicola TeslaNicola Tesla(Serbian immigrant)(Serbian immigrant)

Nicola TeslaNicola Tesla worked with AC electricity worked with AC electricity and built the first successful power and built the first successful power plants. AC is the kind of electricity we plants. AC is the kind of electricity we use today. AC can travel long distances use today. AC can travel long distances through power lines.through power lines.

Memory checkMemory check Who was Henry Bessemer?Who was Henry Bessemer?

Who was Granville T. Woods?Who was Granville T. Woods?

Who was Elijah McCoy?Who was Elijah McCoy?

Who was Thomas Edison?Who was Thomas Edison?

Who was Nicola Tesla?Who was Nicola Tesla?

Communication got better Communication got better during the Industrial during the Industrial

Revolution.Revolution. In 1837 the telegraph was invented. In 1837 the telegraph was invented.

With a telegraph, people could send With a telegraph, people could send messages quickly. In 1866 the first messages quickly. In 1866 the first transatlantic cable was laid across transatlantic cable was laid across the Atlantic Ocean. Now, people in the Atlantic Ocean. Now, people in England could send messages to England could send messages to people in America. Finally, in 1876 people in America. Finally, in 1876 Alexander Bell invented the Alexander Bell invented the telephone. telephone.

Growth of big businessGrowth of big business

Oil, steel, and railroad companies Oil, steel, and railroad companies became so big, rich, and powerful became so big, rich, and powerful that they had a huge influence over that they had a huge influence over

the government.the government.

Big companies destroyed Big companies destroyed the smaller companies.the smaller companies.

• Some big companies would crush their Some big companies would crush their small competitors by selling their small competitors by selling their product for cheaper. Some would buy product for cheaper. Some would buy their competition. Other big their competition. Other big companies would use corruption to companies would use corruption to stop their competition. Some would stop their competition. Some would even attack and kill their competition. even attack and kill their competition. For example, Rockefeller used to put For example, Rockefeller used to put bombs in his competitors’ oil wells.bombs in his competitors’ oil wells.

MonopoliesMonopolies

Once they had Once they had eliminated their eliminated their competition, competition, they would have they would have a a monopolymonopoly. A . A monopoly is monopoly is when a when a business has no business has no competition. competition. Monopolies can Monopolies can charge any charge any price they like!price they like!

truststrusts

Some companies would join together Some companies would join together to make monopolies called “to make monopolies called “truststrusts”. ”. For example, if there were five oil For example, if there were five oil companies, instead of competing companies, instead of competing with one another, they would join with one another, they would join together and stop competing.together and stop competing.

Memory checkMemory check

Describe some of the ways big Describe some of the ways big businesses eliminate their businesses eliminate their competition.competition.

Famous businessmenFamous businessmen

Cornelius VanderbuiltCornelius Vanderbuilt Vanderbuilt Vanderbuilt

controlled most of controlled most of the railroads in the the railroads in the U.S.U.S.

John D. RockefellerJohn D. Rockefeller

Rockefeller Rockefeller controlled nearly controlled nearly all of the oil in the all of the oil in the U.S.U.S.

Andrew CarnegieAndrew Carnegie

Carnegie Carnegie controlled most of controlled most of the steel.the steel.

People had different feelings People had different feelings about these famous about these famous

businessmen.businessmen.Some people loved these famous Some people loved these famous

millionaires, because they built schools, millionaires, because they built schools, libraries, hospitals, and churches.libraries, hospitals, and churches.

Other people hated them. They hated Other people hated them. They hated them because they didn’t allow them because they didn’t allow competition and charged unfair prices. competition and charged unfair prices. They also hated them because they They also hated them because they corrupted the government.corrupted the government.

Memory checkMemory check

Who was Andrew Carnegie?Who was Andrew Carnegie?

Who was Cornelius Vanderbuilt?Who was Cornelius Vanderbuilt?

Who was John D. Rockefeller?Who was John D. Rockefeller?

While some people were While some people were very rich, many others were very rich, many others were

very poor.very poor.

There were different views There were different views on the problem of big on the problem of big

business.business. Some people believed in Some people believed in laissez-fairlaissez-fair

economics. Laissez-fair means no regulation by economics. Laissez-fair means no regulation by government. They believed that capitalism was government. They believed that capitalism was so perfect that it would solve its own problems so perfect that it would solve its own problems if left alone.if left alone.

Some people believed that big businesses had Some people believed that big businesses had to be regulated in order to protect the people to be regulated in order to protect the people from bad businesses. Those people were called from bad businesses. Those people were called reformersreformers..

Some people believed that capitalism itself was Some people believed that capitalism itself was bad. They thought workers should take over bad. They thought workers should take over the companies and share the wealth. This the companies and share the wealth. This belief was called belief was called communismcommunism..

communismcommunism

Some people wanted Some people wanted to fight against big to fight against big business and business and capitalism. They capitalism. They wanted the workers wanted the workers to take control of to take control of the companies. the companies. They wanted the They wanted the workers to start a workers to start a revolution.revolution.

Karl Marx

In 1877 the government In 1877 the government started trying to control big started trying to control big

business.business.The first law was the Interstate Commerce The first law was the Interstate Commerce

ActAct. This law said that railroads must charge . This law said that railroads must charge fair rates. In other words, they couldn’t fair rates. In other words, they couldn’t charge too much to customers.charge too much to customers.

The second law was the Sherman Antitrust The second law was the Sherman Antitrust Act. Act. This law made monopolies and trusts This law made monopolies and trusts illegal. It tried to force large companies to illegal. It tried to force large companies to break up into smaller companies and break up into smaller companies and compete.compete.

Both of these laws were not very successful.Both of these laws were not very successful.

The Supreme Court stopped the The Supreme Court stopped the government from controlling big government from controlling big

business.business. When the congress passed laws to control When the congress passed laws to control

big business, the big companies took the big business, the big companies took the government to court. The Supreme Court government to court. The Supreme Court took the side of the companies. The Court took the side of the companies. The Court said that a corporation is a person, and said that a corporation is a person, and according to the 14according to the 14thth Amendment, the Amendment, the government cannot take away the rights of government cannot take away the rights of any person. In other words, they said that any person. In other words, they said that congress did not have the power to control congress did not have the power to control big business because it was taking away big business because it was taking away corporations’ rights.corporations’ rights.

Memory checkMemory check

What were the three different views on What were the three different views on how to solve the problem of big how to solve the problem of big business?business?

Why did some people hate big business?Why did some people hate big business?

What two laws were passed to control What two laws were passed to control big business and how effective were big business and how effective were they?they?

summarysummary

America grew to be a very powerful America grew to be a very powerful country after the Civil War.country after the Civil War.

Technology advanced rapidly.Technology advanced rapidly. Big business grew and began to Big business grew and began to

influence the government.influence the government. In the U.S. some people were In the U.S. some people were

extremely rich while others were extremely rich while others were extremely poor.extremely poor.