the gilded age the rise of big business. essential question essential question: was the rise of...
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The Gilded Age
The Rise of Big Business
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Essential Question:• Was the rise of industry good for the
United States?
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A Brassy, Flamboyant Age
Gilded Age: {Reconstruction (1877) -- Progressive Era (1901)}
brassy, flamboyant age dominated by big business values, political corruption, and extremes of wealth and poverty
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Major Developments
Major Developments:1. Industrialization
2. Urbanization
3. Immigration
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From Agriculture to Industry
• During Gilded Age, U.S. experienced rapid shift from an agricultural economy to an industrial one
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Relative Share of World Manufacturing
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USA in the Gilded Age: 1870-1900
The North:Experienced an industrial revolution,
mass immigration, & urbanization
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Essential QuestionWas the rise of industry good
for the United States?
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Gilded Age Industrialization• During the Gilded Age (1870-1900),
the United States experienced an Industrial Revolution:• New technology, transportation,
efficient mass-production spread ideas & industrial products
• By 1900, the U.S. was the U.S. the most industrialized country in the world
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An Age of Invention• The Gilded Age was an Age of Invention
U.S. Patents Issued (1850-1899)
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An Age of Invention• The Gilded Age was an Age of Invention
• Cash registers, adding machines, business typewriters
• Alexander Graham Bell invented the first telephone
• The Bessemer process transformed iron into stronger, lighter steel
What is it? What is it? What is it?
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An Age of Invention• The Gilded Age was an Age of Invention
• Thomas Edison (Wizard of Menlo Park) was the greatest inventor of the 1800s
• In his research lab in New York, he created the 1st audio recorder, phonograph, and batteries• His most influential invention was the 1st electric light bulb
What is it?
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The Business of Invention• New innovations allowed for increased
industrial production• New machines were incorporated
into the 1st assembly lines that allowed for faster mass production
• Railroads linked all regions• America’s wealth of iron, oil, coal,
immigrant labor, & investment capital (money) supplied factories
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The Industrial Revolution was fueled by 4 industries (R.O.S.E.) Railroads, Oil, Steel, Electricity
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The “Rust Belt”Industrial
Resources: Iron, Coal,
Railroads, & Steel Plants
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The Railroad Industry • America’s first “big business” was
the railroad industry:• Railroads stimulated the coal,
petroleum, iron, steel industries
Eastern RRs were connected to the West by 4 great trunk lines
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Railroad growth fueled industrial development
• 100,000 miles of track laid between 1877 - 1893
• standardization of gauge • width of tracks (4 feet, 8 1/2
inches)
[encouraged development]• time zone adoption allowed
• U.S. divided into four zones• massive grants of American land
• 131 million acres -- federal • 49 million acres -- states
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Railroad Construction in the Gilded Age
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Oil provided kerosene lighting &
lubrication for industrial
machinery
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Steel Production
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Steel Production
Wadsworth Building, NYC
• Steel transformed world industry:• Allowed for taller
buildings, longer bridges, stronger railroad lines, & heavier machinery
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International Steel Production, 1880-1914
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Efficiency & Mass Production in Factories
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Causes of Rapid Industrialization
1. The Railroad fueled the growing US economy: * First big business in the US. * A magnet for financial investment. * Aided the development of other
industries.
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Causes of Rapid Industrialization
2. Technological innovations:
* Bessemer and open hearth process
* Refrigerated cars
* Edison “Wizard of Menlo Park” light bulb, phonograph, motion pictures.
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Causes of Rapid Industrialization
3. Unskilled & semi-skilled labor in abundance.
• U.S. population 3x from 1860 - 1910
4. Government aid at all levels to stimulate economic growth
• High tariffs {hurt exporters (farmers)}
5. Abundant natural resources• H2O, timber, coal, iron, copper, and oil
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New Business Culture
Individuals should compete freely in the marketplace.
No room for government in the market!
French -- "let it be"
Laissez Faire an ideology of the Industrial Age
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New Business Culture
People who risk their $$$ in organizing and running a business
French -- "to undertake"
Entrepreneurs (another) ideology of the Industrial Age
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New Forms of Business Organization
Corporation:an organization owned by many people, treated (by law) as a single person People who own the
corporation are called shareholders
Share of ownership is a stock
Limited liability
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New Forms of Business Organization
• During the Gilded Age, business & industry were transformed:• Massive corporations replaced small, family
businesses• Managers were hired to make factories run
more efficiently• New business models, such as “trusts”
integrated various businesses under 1 board of directors
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New Business Organization
Combinations of Corporations (WHY?)
increases efficiency and profits
destroyed healthy competition that often makes capitalism a viable economic model
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New Business Organization:Board of Trustees (Trust)
Board of Trustees
Company Manager
Employees Employees Employees Employees
“Trusts” use a board of trustees to manage a company
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New Forms of Business Organization
• Corporations in the Gilded Age used mergers to increase profits• Companies used horizontal
integration to buy similar companies to reduce competition
• Vertical integration allowed companies to buy companies that supply raw materials or transportation for their products
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Vertical & Horizontal Integration
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Monopolies• Corporate mergers
led to giant companies called monopolies:• Companies that
control nearly all of a particular industry
• Because most monopolies of the Gilded Age were run by boards of trustees, monopolies became known as “trusts”
• Monopolies led to a new generation of U.S. millionaires
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U.S. Corporate Mergers
By 1900, 1% of U.S. companies controlled
33% of all industry
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The Monopolists• Andrew Carnegie created
the Carnegie Steel Company:• He converted to the Bessemer process
& was able to out-produce his competition & offer better quality steel at lower prices
• He mastered vertical integration to lower his production costs
His company made more steel than all the factories
of Great Britain, France and Germany combined
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U. S. Steel Corporation• When he retired in 1901,
he sold Carnegie Steel to financier J. P. Morgan for over $400 million dollars. Morgan subsequently reorganized the company into the United States Steel Corporation.
USS
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Andrew Carnegie’s rise from a poor Scottish immigrant to one of the richest men in the world was the great example of the “American Dream”
Carnegie did not pay his employees very much & did not allow unions in
his factories…
…but he was a philanthropist who gave money to New
York City libraries, colleges, & performing arts
institutions
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The Monopolists• John Rockefeller created
the Standard Oil Company • Used horizontal
integration to create a petroleum company that monopolized the oil industry, lowered costs & improved quality
• By 1879, Standard Oil sold 90% of all U.S. oil & sold to Asia, Africa, & South America
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Rockefeller was labeled a “robber baron” who took
advantage of immigrant
workers, driving his competition
out of business, & used his fortune to
influence the national gov’t…
…but Rockefeller gave away $500 million to charities, created the Rockefeller
Foundation, & founded the University of Chicago
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Captains of Industry
• Entrepreneurs were able to achieve unprecedented wealth and power.
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The “Robber Barons” of the Past“Robber Barons” of the Gilded Age
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Giant Corporations
• By 1900, 2/3 of all manufactured goods were being produced by giant corporations• Swift and Armour
dominated meat packing
• Duke family controlled tobacco
• Andrew Carnegie took over every aspect of steel production.
Swift armour
1889 Duke Tobacco Advertisement
Swift armour
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Distant Corporations
• Needs once met by self-sufficient rural folk now met by large corporations usually located in the Northeast
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Conclusions• Due to the Industrial Revolution:
• The United States led the world in industry, innovation, & wealth
• Laissez-faire gov’t policies & new business tactics led to monopolies
• However, the gap between the wealthy monopolists & their poor immigrant workers grew wider