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Industrialization and Industrialization and the Rise of Big the Rise of Big Business Business Chapter 9 Chapter 9

Industrialization and the Rise of Big Business

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Industrialization and the Rise of Big Business. Chapter 9. Did You Know?. Alexander Graham Bell taught deaf children. He once told his family that he preferred to be remembered as a teacher rather than the inventor of the telephone. His father was a pioneer of Visible Speech. - PowerPoint PPT Presentation

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Page 1: Industrialization and the Rise of Big Business

Industrialization and the Rise Industrialization and the Rise of Big Businessof Big Business

Chapter 9Chapter 9

Page 2: Industrialization and the Rise of Big Business

Did You Know?Did You Know?

Alexander Graham Bell taught deaf Alexander Graham Bell taught deaf children. He once told his family that he children. He once told his family that he preferred to be remembered as a teacher preferred to be remembered as a teacher rather than the inventor of the telephone. rather than the inventor of the telephone. His father was a pioneer of Visible His father was a pioneer of Visible Speech.Speech.

Page 3: Industrialization and the Rise of Big Business

IndustrializationIndustrialization

With the end of the Civil War, American With the end of the Civil War, American industry expanded and millions of people industry expanded and millions of people left their farms to find work.left their farms to find work.

1900 – US had become the world’s 1900 – US had become the world’s leading industrial nationleading industrial nation

1914 – gross national product was 8x’s 1914 – gross national product was 8x’s that at the end of the Civil War.that at the end of the Civil War.

Page 4: Industrialization and the Rise of Big Business

Factors of growthFactors of growth

Natural Resources in the west contribued Natural Resources in the west contribued to industrial growth.to industrial growth.

Transcontinental Railroad increased Transcontinental Railroad increased industrialization by bringing settlers west industrialization by bringing settlers west to work, and by bringing resources east.to work, and by bringing resources east.

Petroleum discovered in Pennsylvania in Petroleum discovered in Pennsylvania in 1859 by Edwin Drake. Used for kerosene.1859 by Edwin Drake. Used for kerosene.

Population tripled between 1860 & 1910.Population tripled between 1860 & 1910.

Page 5: Industrialization and the Rise of Big Business

Laissez FaireLaissez Faire

“ “Let people do as they choose.”Let people do as they choose.”

Defined: Government non-interference in Defined: Government non-interference in the economy.the economy.

In the years after the Civil War, 100s of In the years after the Civil War, 100s of factories built.factories built.

Investors from Europe invested in the Investors from Europe invested in the economyeconomy

Page 6: Industrialization and the Rise of Big Business

Government RoleGovernment Role

Late 1800s, state and fed. Government Late 1800s, state and fed. Government kept taxes and spending low, and did not kept taxes and spending low, and did not impose regulations on business. Example impose regulations on business. Example of Laissez Faire.of Laissez Faire.

One of chief causes of the Civil War was One of chief causes of the Civil War was economic policy = tariffs; After South economic policy = tariffs; After South seceded, US passed Morrill Tariff which seceded, US passed Morrill Tariff which raised tariff level to new high.raised tariff level to new high.

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– – North felt tariffs necessary to protect North felt tariffs necessary to protect businesses; By 1900, most favored free businesses; By 1900, most favored free trade and competition.trade and competition.

Page 8: Industrialization and the Rise of Big Business

New InventionsNew Inventions

Alexander Graham Bell – invented Alexander Graham Bell – invented telephone.telephone.

Thomas Edison – phonograph; light bulb; Thomas Edison – phonograph; light bulb; electric generator; dictaphone, electric generator; dictaphone, mimeograph; motion picture; built electric mimeograph; motion picture; built electric distribution networkdistribution network

Page 9: Industrialization and the Rise of Big Business

New innovations in clothing industry such as New innovations in clothing industry such as power-driven sewing machines, cloth-power-driven sewing machines, cloth-cutter, automatic loomcutter, automatic loom

Mass production reduced cost; savings Mass production reduced cost; savings passed on to consumers.passed on to consumers.

Page 10: Industrialization and the Rise of Big Business

RailroadsRailroads

Pacific Railway Act – provided for federal Pacific Railway Act – provided for federal funds for building of Transcontinental RR.funds for building of Transcontinental RR.Gave land grants for fundingGave land grants for fundingUnion Pacific pushed west from Omaha.Union Pacific pushed west from Omaha.Central Pacific pushed east from Central Pacific pushed east from SacramentoSacramentoWorkers = Civil War vets, Irish immigrants, Workers = Civil War vets, Irish immigrants, farmers, miners, ex-convicts, Chinese farmers, miners, ex-convicts, Chinese immigrants.immigrants.

Page 11: Industrialization and the Rise of Big Business

Credit Mobilier Scandal – several Credit Mobilier Scandal – several stockholders of the Union Pacific set up a stockholders of the Union Pacific set up a construction company (Credit Mobilier); construction company (Credit Mobilier); Investors contracted themselves – greatly Investors contracted themselves – greatly overcharged the railroad.overcharged the railroad.

Railroad investors made a fortune; Union Railroad investors made a fortune; Union Pacific bankrupt; bailed out by the Pacific bankrupt; bailed out by the governmentgovernment

Page 12: Industrialization and the Rise of Big Business

TermsTerms

CorporationCorporation

Stockholders/StockStockholders/Stock

Economies of ScaleEconomies of Scale

Fixed CostsFixed Costs

Operating CostsOperating Costs

Page 13: Industrialization and the Rise of Big Business

One of the biggest names was Andrew One of the biggest names was Andrew CarnegieCarnegie

Steel Tycoon – Used Bessemer processSteel Tycoon – Used Bessemer process

Believed in Gospel of Wealth – the wealth Believed in Gospel of Wealth – the wealth are chosen of God; are responsible for are chosen of God; are responsible for caring for the poor (philantropy)caring for the poor (philantropy)

Donated millions to build librariesDonated millions to build libraries

Page 14: Industrialization and the Rise of Big Business

What advantage does large corporations What advantage does large corporations have over small businesses?have over small businesses?

Big businesses can produce more cheaply, Big businesses can produce more cheaply, and could continue to operate even in poor and could continue to operate even in poor economic times by cutting prices; Small economic times by cutting prices; Small businesses could not!businesses could not!

Page 15: Industrialization and the Rise of Big Business

Consolidation of IndustryConsolidation of Industry

Competition caused lower prices, but it Competition caused lower prices, but it also cut profitsalso cut profits

Many companies formed pools – Many companies formed pools – agreements to keep prices as certain agreements to keep prices as certain levels; broke apart easily.levels; broke apart easily.

By 1870s, competition had reduced By 1870s, competition had reduced industries to a few highly efficient industries to a few highly efficient corporations.corporations.

Page 16: Industrialization and the Rise of Big Business

Andrew Carnegie worked his way up from Andrew Carnegie worked his way up from a bobbin boy in a mill to head of Carnegie a bobbin boy in a mill to head of Carnegie Steel in 1873. 1Steel in 1873. 1stst mill to use the Bessemer mill to use the Bessemer Process.Process.Used Vertical Integration – a company Used Vertical Integration – a company owns all the different businesses required owns all the different businesses required for operation.for operation.Horizonal integration – owns all Horizonal integration – owns all companies doing similar business (ex. Oil)companies doing similar business (ex. Oil)

Page 17: Industrialization and the Rise of Big Business

Selling the ProductSelling the Product

Department stores changed the idea of Department stores changed the idea of shopping by bringing in large assortment shopping by bringing in large assortment of products in a large glamorous building of products in a large glamorous building (Dillards, Sears, Foleys)(Dillards, Sears, Foleys)

Chain Stores offered low prices instead of Chain Stores offered low prices instead of fancy décor (Wal-mart, Woolworth’s)fancy décor (Wal-mart, Woolworth’s)

Mail order catalogues reached rural Mail order catalogues reached rural Americans (Montgomery Ward, Sears)Americans (Montgomery Ward, Sears)

Page 18: Industrialization and the Rise of Big Business

Rise of LaborRise of Labor

Workers faced monotonous, dangerous Workers faced monotonous, dangerous work; Uneven division of income.work; Uneven division of income.

Deflation in economy – As prices fell, Deflation in economy – As prices fell, wages fell, but cost of living remained wages fell, but cost of living remained same; seemed that employers paid them same; seemed that employers paid them less for the same work.less for the same work.

Workers formed unionsWorkers formed unions

Page 19: Industrialization and the Rise of Big Business

Early UnionsEarly Unions

Craft Workers – special skills and paid Craft Workers – special skills and paid more.more.

Common laborers – few skills and lower Common laborers – few skills and lower wages.wages.

1830s – craft workers formed trade unions 1830s – craft workers formed trade unions (limited to specific skills)(limited to specific skills)

Industrial Unions united all craft workers Industrial Unions united all craft workers and laborers in a common industry (RR)and laborers in a common industry (RR)

Page 20: Industrialization and the Rise of Big Business

Companies went to great length to limit Companies went to great length to limit unions – hired detectives; Organizers unions – hired detectives; Organizers placed on a placed on a BlacklistBlacklist. – hard to get a job.. – hard to get a job.

No laws gave workers the right to organizeNo laws gave workers the right to organize

Marxism (Karl Marx) – Popular in Europe; Marxism (Karl Marx) – Popular in Europe; Theorized a class struggle shaped society; Theorized a class struggle shaped society; Believed a worker’s revolution would Believed a worker’s revolution would evenly distribute wealth and end classes.evenly distribute wealth and end classes.

Page 21: Industrialization and the Rise of Big Business

Many laborers supported Marxism Many laborers supported Marxism

Anarchists (no laws) believed a few acts of Anarchists (no laws) believed a few acts of violence would cause government to violence would cause government to collapse.collapse.

Both very popular in Europe. Many Both very popular in Europe. Many immigrants brought them to the US. immigrants brought them to the US. Associated with immigrants and unionsAssociated with immigrants and unions

Page 22: Industrialization and the Rise of Big Business

Workers attempted to create large unions, Workers attempted to create large unions, but rarely succeeded. Confrontations but rarely succeeded. Confrontations often led to violence.often led to violence.

Page 23: Industrialization and the Rise of Big Business

Great Railroad Strike of 1877Great Railroad Strike of 1877

A recession caused companies to cut A recession caused companies to cut wages. Workers struck in protest.wages. Workers struck in protest.

11stst nationwide labor protest. nationwide labor protest.

Ended when President Hayes called in the Ended when President Hayes called in the army to end violence. 100 killed.army to end violence. 100 killed.

Page 24: Industrialization and the Rise of Big Business

Knights of LaborKnights of Labor

First nationwide industrial unionFirst nationwide industrial union

Demanded 8 hour day, government Demanded 8 hour day, government bureau of labor statistics; equal pay for bureau of labor statistics; equal pay for women; end to child labor; worker owned women; end to child labor; worker owned factories.factories.

Arbitration: impartial 3Arbitration: impartial 3rdrd party helps party helps mediate between worker and mediate between worker and management.management.

Page 25: Industrialization and the Rise of Big Business

Haymarket RiotHaymarket Riot

Caused popularity of K of L to declineCaused popularity of K of L to decline

Resulted from a strike; Anarchists threw a Resulted from a strike; Anarchists threw a bomb and killed several policemen.bomb and killed several policemen.

Blamed on the K of L.Blamed on the K of L.

Page 26: Industrialization and the Rise of Big Business

Pullman StrikePullman Strike

1893 – American Railroad Union 1893 – American Railroad Union unionized the Pullman company.unionized the Pullman company.

A strike after wages were cutA strike after wages were cut

To end the boycott, US government To end the boycott, US government placed mail on Pullman cars.placed mail on Pullman cars.

Injunction – they were holding up the mail.Injunction – they were holding up the mail.

Page 27: Industrialization and the Rise of Big Business

American Federation of LaborAmerican Federation of Labor

Made up of trade unionsMade up of trade unions11stst leader – Samuel Gompers leader – Samuel GompersLimit politics within unionsLimit politics within unionsFought for higher wages and better Fought for higher wages and better conditionsconditions3 goals: 1) recognition of unions; 2) 3 goals: 1) recognition of unions; 2) closed shops; 3) 8-hour workdayclosed shops; 3) 8-hour workdayEven in 1900, majority of workers Even in 1900, majority of workers unorganized.unorganized.

Page 28: Industrialization and the Rise of Big Business

Working WomenWorking Women

Women made up 18% of workforceWomen made up 18% of workforceDomestic servants; teachers; nurses; Domestic servants; teachers; nurses; sales clerks; secretariessales clerks; secretariesPaid less than men – felt men needed Paid less than men – felt men needed higher wages to support familieshigher wages to support familiesMost unions excluded womenMost unions excluded womenWomen’s Trade Union League – 1Women’s Trade Union League – 1stst national association for women’s labor national association for women’s labor issues.issues.