Chapter 18: The Rise of Industrial America

I. Industrialization takes hold Unlike South, North emerged undamaged in 1865 Reconstruction eliminated Southerners as political

rivals Depressions in 1873-1878, 1882-1884, 1893-1896

but industrial production doubled every 12- 14 years

A. Natural and Human Resources1. Huge deposits of natural resources

a. coal- Appalachian Mountains Pa- Alb. Iron ore- deposits in Michigan and Wisconsini. Soo Canal finished in 1855 between Superior

and Huronii. iron ore could now move to steel mills on

lower Great Lakes2. Abundant human resources

a. mobile laborersb. population doubled between 1860-189031 million to 75 million (14 million immigrants)

"The New Colossus" by Emma Lazarus.

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B. Public Policies and Private Investments1. Unlike Europe, American Industry developed within a

free enterprise system (laissez-faire)2. Some government policies encouraged Industrializationa. entrepreneurs- business organizers, received special

favors from Congressb. liberal immigration lawsc. high protective taxesd. government sold lands with resources for cheape. paid 1/3 of cost for railroads ($700 million)3 .Making money was the goal4. Europe invested in America as well

C. Science and Technology1. Inventions increased productivity

a. Transportation and communicationb. Universities influenced by German educators, began

research2. America impressed with inventors

a. C. Latham Sholes – 1868 – typewriterb. Alexander Graham Bell – 1876 – Telephonec. Thomas Alva Edison- more of an innovator than

inventori. improved typewriter, light bulb, telephone, and

telegraphii. invented phonographiii. Menlo Park, New Jersey – 1876- research lab

3. Technology felt almost everywherea. canningb. textile and clothing industry

i. Northrup automatic loom- bobbins changed automaticallyii. standard cloth sizesiii. department stores and mail orderiv. power-driven sewing machines and cloth cutters

c. shoe makingi. economies of scale- ability of large businesses to operate more cheaply and efficiently than smaller ones, resulting in

lower per unit costs for the products of large companies.ii. by 1900, local cobblers nearly disappeared

d. steel making (Bessemer process)e. oil industry (oil lubricated machine tools)f. railroad industry

i. Bessemer steel replaced weaker iron railsii. Westinghouse air brake – cars and locomotives stop at the same timeiii. Kerosene lamps and better headlights for night travel

  D.Railroad Building

1. largest factor in growth of industry1865- 35,000 miles 1875 – 70,000 1890 > 140,0001900 – 200,000 miles 40% of world’s tracks2. standardized track width – time zones3. required steel, coal, lumber, iron, petroleum4. consolidation of smaller line in MW. E. & S important as well5. corruption and fraud plagued railroad companies (Jay Gould)6. Cornelius Vanderbilt – famous and most successful railroad consolidatora. little respect for law or public interestb. “insider trading”7. set examples for other companies

II The Growth of Big Business* Railroads were America’s first “Big Business” and

were organized into corporations- or a company formed by a organized group of

investors who each receive a share of ownership in proportion to the amount they invested.

A. Benefits of Big Business1. supply the national market2. better products at a lower cost3. separate departments - research created

more efficiency

B. Advantage of Big Business shown in meat packaging

1. refrigerated railroad car enabled huge companies to sell across the

country ( Swift &Armour)2. so highly organized and so many

products- they could sell meat at a loss

3. took advantage of their competitors and the public

C. Problems caused by Big Business1. corruption2. destroyed labor unions3. devastated environment4. closed local businesses5. corrupting influence of wealth and

power

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D. The Role of Corporations1. American law allowed & conditions encouraged

corruptions2. sold stocks and bonds to raise capital3. holding companies - one that gains control of other

companies by buying their stock4. trusts- combination of companies to gain control of

an industry and reduce competition5. horizontal integration- joining of business together

that are engaged in similar business activities or processes

6. vertical integration- joining of businesses together that are involved in different but related activities