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The NorthImprovements in railroadrailroad systemFarms more heavily mechanized (using
fewer workers to produce more crops)Region spared from fighting during warTranscontinental railroad opened new
markets in the westEconomic growth brought new
immigrants to the regionMany found employment in the
industries of the North
The SouthCivil War ruined the economy and killed
the plantation systemMany farmers and planters sold off land
to pay debts and start overSouthern farmers returned to tobacco
and cotton productionNEW SOUTH – rebuilt railroads, new
textile and steel mills and new industries (oil and coal production)
Although, even with the changes, South still behind the North
Before the Civil War – single landowners and partnerships controlled most American business
After the Civil War – mills and factories now needed great capital (money) for investment that one person or a few partners could raise.
CORPORATIONSPurpose TypeTo raise capital for
expansionIt is a business in which
many investors own shares called stocks
In exchange for their investment, each stockholder receives a dividend, or part of the corporation’s profits
Limits investor losses If a corporation failed,
investor only lost his or her investment
Transportation IndustriesRailroads, urban
transportation, automobiles)
Building materialsSteel
EnergyCoal, oil and electricity
CommunicationsTelegraph and
telephone
What do you see?
What do you think the cartoon is saying about these men?
MONOPOLYPurpose
Company or small group of companies that has complete control over a particular field of business
A monopoly often allowed a company to raise prices to almost any level it desired
OUTCOME: federal legislation required
TRUSTPurpose TypeGroup of corporations in
the same or related fields agree to combine under a single board of trustees that control the actions of all the member corporations
Shareholders in the corporations received dividends from the trust but lost any say in its operation
Standard Oil Trust
Who were the industrial leaders?Andrew Carnegie – Steel
J.P. Morgan – Finance
John D. Rockefeller – Oil
Cornelius Vanderbilt - Railroads
LAISSEZ-FAIRE
Noninterference in businessGovernment should not interfere with
the economic workings of a nationFREE-ENTERPRISE SYTEM – private
individuals make the economic decisionsGovernment inference with business is
minimal during this time
SOCIAL DARWINISMLaissez-faire capitalists found justification in
their beliefs in Social DarwinismBased on Charles Darwin's theory of evolutionSocial Darwinists held that life was a struggle
for the “survival of the fittest”Unregulated business competition would see
weak businesses fail and healthy businesses thrive
Government action would regulate business practices would interfere with the process of natural selection
Also, any government programs to aid the poor or workers would also violate natural “laws”
ROBBER BARONS OR PHILANTHROPISTS?
Those who gained their riches at the expense of the poor and the working class
Lavish lifestyles of the wealthy at this time fed criticism
Many spent freely to show off their wealth
Public criticism and sense of social responsibility led the wealthy to use a part of their wealth to aid society.
Govt Policy towards BusinessExpanding industries industries and growing foreignforeign
trade benefited USGovernment policies were designed to aid the
growth growth of businessLoansLoans and land land grants to large railroad
companies were givenHighHigh tariffs that discouraged foreign
competitionTight limits on amount of money in circulationcirculationFew limits on immigration immigration = more workers= more workers
SHERMAN ANTITRUST ACTWhy:
Most corporations and trusts had eliminated most competitioncompetition and set up monopoliesmonopolies
Public ProtestWhat it did:
Prohibited monopolies. It prevented any business structure that “restrained trade”
Outcome:Corporations formed holdingholding companies
rather than trusts trusts to get around the act
Clayton Anti-Trust ActExpanded the Sherman Anti-Trust Act
It outlawed price-fixing
Exempted unions from the Sherman Anti-Trust Act(will make sense next class)
URBAN AREASDepartment stores –offered customers
wide variety of goodsRURAL AREAS
mail-order catalogs – saved customers trip to the store
NEW INVENTIONSBessemer Process – made making steel
easier and steel strongerTelephone – Alexander Graham Bellelectric light bulb – Thomas EdisonAirplane: Wright Brothers (1900s)Assembly Line manufacturing – Henry Ford