IndustrializationIndustrialization

1860 - 19141860 - 1914

Capitalist MythologyCapitalist Mythology

• Mix of free-labor ideology & Mix of free-labor ideology & Social DarwinismSocial Darwinism– Democratic version: society Democratic version: society

composed of competing composed of competing interests; morally neutralinterests; morally neutral

– Hierarchical version: elites Hierarchical version: elites naturally rule, & middle-class naturally rule, & middle-class Christian morals are normChristian morals are norm

• ““Rags-to-Riches” mythRags-to-Riches” myth– Horatio AlgerHoratio Alger– Andrew CarnegieAndrew Carnegie

• ““Laissez-faireLaissez-faire” – gov’t ” – gov’t should not regulate should not regulate businessbusiness Andrew Carnegie

Legal BasisLegal Basis

• Limited liability corporationLimited liability corporation– Investor only liable for amount invested, Investor only liable for amount invested,

not entire debt of companynot entire debt of company– Between 1850-1900, average capital Between 1850-1900, average capital

investment increased from $700,000 to investment increased from $700,000 to $1.9 million$1.9 million

• Corporation considered to be a Corporation considered to be a person with rightsperson with rights

• Freedom of contractFreedom of contract– Each worker free to negotiate termsEach worker free to negotiate terms– Meant no collective bargaining by unionsMeant no collective bargaining by unions

Playing MonopolyPlaying Monopoly

John D. Rockefeller and John D. Rockefeller and Standard OilStandard Oil

• 1860 – began refining oil in Penn.1860 – began refining oil in Penn.• 1872 –created cartel to fix railroad 1872 –created cartel to fix railroad

ratesrates• Bought out competitionBought out competition

– controlled 90% of refining by 1879controlled 90% of refining by 1879

• 1882 – created investment trust1882 – created investment trust– Stockholders put shares in Stockholders put shares in trusttrust– Held stock in separate state co.sHeld stock in separate state co.s

• 1892 – Standard Oil of Ohio trust 1892 – Standard Oil of Ohio trust dissolved by Ohio Supreme Courtdissolved by Ohio Supreme Court

• 1899 – Standard Oil of NJ – 11899 – Standard Oil of NJ – 1stst holding companyholding company

John D. Rockefellerin 1872

Standard Oil’s Cleveland Standard Oil’s Cleveland refinery, 1899refinery, 1899

Tycoon CartoonTycoon Cartoon

The House of MorganThe House of Morgan

• J. Pierpont MorganJ. Pierpont Morgan channeled European capital channeled European capital into U.S. businessesinto U.S. businesses

• Father was partner in Father was partner in London banking houseLondon banking house

• Demanded seats on boards Demanded seats on boards of companies whose of companies whose investments he handled investments he handled ((interlocking interlocking directoratesdirectorates))

• 1901 - Morgan bought out 1901 - Morgan bought out Carnegie for $500 million, Carnegie for $500 million, creating U.S. Steelcreating U.S. Steel

Corporate MergersCorporate Mergers

Inventions & InnovationsInventions & Innovations

• Alexander Alexander Graham BellGraham Bell invented telephone invented telephone in 1876in 1876– Bell Telephone Co. Bell Telephone Co.

organized in 1877 organized in 1877 (later became AT&T)(later became AT&T)

– Bought out Edison’s Bought out Edison’s patent for carbon patent for carbon microphonemicrophone

Bell makes first long-distance call,Chicago to New York, 1892

The Wizard of Menlo ParkThe Wizard of Menlo Park

• Thomas EdisonThomas Edison::– Phonograph (1877)Phonograph (1877)– Incandescent lightbulb Incandescent lightbulb

(1879)(1879)– mimeographmimeograph– Direct current electric Direct current electric

transmissiontransmission– Motion pictureMotion picture

Inventions (cont.)Inventions (cont.)

• George WestinghouseGeorge Westinghouse developed alternating developed alternating current (1886)current (1886)– Could transmit electricity over Could transmit electricity over

long distanceslong distances– Czech immigrant Czech immigrant Nikolas Nikolas

TeslaTesla invented AC motor invented AC motor

• Granville T. WoodsGranville T. Woods had had 35 patents35 patents– Automatic circuit breakerAutomatic circuit breaker– Electromagentic brakeElectromagentic brake

Westinghouse AC motors atChicago’s World Fair, 1893

Nikolas Tesla

Railroad ExpansionRailroad Expansion1870-18901870-1890

Industrial AmericaIndustrial America

Value Added by Sector,Value Added by Sector,1869 - 18991869 - 1899

Mechanization & Mechanization & SpecializationSpecialization

• Frederick W. TaylorFrederick W. Taylor was most famous was most famous efficiency expertefficiency expert– Broke down jobs into Broke down jobs into

separate motionsseparate motions– Designed equipment to Designed equipment to

maximize efficiency & maximize efficiency & minimize time for each minimize time for each motionmotion

Mechanization & Mechanization & Specialization, cont.Specialization, cont.

• Henry FordHenry Ford introduced moving introduced moving assembly line (1913) assembly line (1913) - further isolated - further isolated taskstasks– Each worker remains Each worker remains

stationary & stationary & performs same task, performs same task, over & overover & over

– 1908 = 10,000 Fords 1908 = 10,000 Fords sold; 1914 = 248,000 sold; 1914 = 248,000 Fords soldFords sold

Reducing Labor CostsReducing Labor Costs

• 1880-1900: 1880-1900: employed women employed women went from 2.6 million went from 2.6 million to 8.6 millionto 8.6 million

• 1890: 18% of kids 1890: 18% of kids between 10-15 between 10-15 employedemployed

• Accidents common, Accidents common, even after safety even after safety equipment installedequipment installed