THE RISE OF INDUSTRIAL

AMERICA:The Industrial Titans

Mr. Phipps

U.S. History

California State Standards

11.1.4. Examine the effects of the Civil War and Reconstruction and of the industrial revolution, including demographic shifts and the emergence in the late nineteenth century of the United States as a world power.

11.2 Students analyze the relationship among the rise of industrialization, large-scale rural-to-urban migration, and massive immigration from Southern and Eastern Europe.

11.2.1. Know the effects of industrialization on living and working conditions, including the portrayal of working conditions and food safety in Upton Sinclair's The Jungle.

11.2.2. Describe the changing landscape, including the growth of cities linked by industry and trade, and the development of cities divided according to race, ethnicity, and class.

11.2.4. Analyze the effect of urban political machines and responses to them by immigrants and middle-class reformers.

11.2.5. Discuss corporate mergers that produced trusts and cartels and the economic and political policies of industrial leaders.

11.2.6. Trace the economic development of the United States and its emergence as a major industrial power, including its gains from trade and the advantages of its

physical geography.

Era Characteristics Strong and rapid growth of industry, mass production,

mechanization, and the factory system Consolidation of wealth and creation of an American

aristocracy Political and corporate corruption and laissez-faire/hands

off approach to government involvement Exploitation of cheap, immigrant labor The creation of the American city and the expansion and

urbanization of the West Rapid population growth (natural and migratory) Increased social, racial, and labor tension The beginning of social, political, and labor reform

movements

Vocabulary

Monopoly: Control of one one business, able to set the market price for an item

Trust: Group of owners, controlling multiple related business, able to set the market price for an item

Free Enterprise: a.k.a. “Capitalism” The idea that society benefits from free competition in the market price, yielding individual profit, a better/cheaper product, and wide availability of goods

Urbanization: The creation and construction of cities, including its infrastructure

Demographics: The study of populations--how they grow, change, move, and are characterized (by age, gender, crime, behavior, diet, customs, language, etc.)

Nativism: Expressed racism toward a group considered “un-American”

STEELOIL

RAILROADS

The Industrial Giants

The Titans J.D. Rockefeller--

Standard Oil J.P. Morgan--

Investment banking and financier

Andrew Carnegie--U.S. Steel

Cornelius Vanderbilt, Jay Gould, and Jay Fiske--Railroads

Mechanization and Mass Production

The U.S. GNP (measures manufacturing) grew from #4 (1860) to #1 (1894): the largest producer in of manufactured goods in the world

Full exploitation of natural resources

Use of machines, steam and electric power, for manufacturing

Encouraged by federal aid and land grants

Use of immigrants for cheap labor Carnegie’s U.S. Steel Plant and factory

town, Homestead, Pennsylvania (1890s)

Carnegie and U.S. Steel Based corporate model on

“vertical integration”--controlling all aspects of a business (mining, transportation, refining, and sale)

Symbolized the “American Dream” Started as a poor Scottish

immigrant Worked as a telegrapher for rail

road Used creativity, genius, and

charisma to problem solve Purchased stock and aggressively

bought out competition Use of intellect, timing, and will to

achieve wealth

Carnegie’s Beliefs Believed that God’s will and his

unique ability made him rich Wealth should not be inherited Believed that the rich were socially

obligated to share wealth with poor Provided money and endowments to

libraries, music centers, churches, and schools

Became a model for philanthropy and charity

Believed that competition was essential for American growth (no monopolies)

Sold U.S. Steel to J.P. Morgan, who launched the first billion dollar company

Bessemer Steel Process, Homestead, PA

Homestead Steel Plant and Smokestacks, Homestead, PA

Williamsburg Bridge, NYC

Flat Iron Building, NYC (1901).

Considered to be the first modern

urban skyscraper

Rockefeller and Standard Oil Based corporate model on

“horizontal integration”--controlling one aspect of an industry (only refining)

Bought out competition to form a monopoly of refined oil

Controlled over 90% of refining After anti-trust laws, Standard Oil was

broken up into smaller pieces (including Exxon), with Rockefeller on the Board of Directors for each

Strategic control of refining forced the market price for drilling (pre-refining), and sale (post-refining), effectively controlling the market

Rockefeller’s Beliefs Believed that individual

accomplishment resulted in success

Believed in eliminating competition Less competition made a

more efficient business Laissez-faire increased the

ability for a business to operate effectively

Abhorred charity, considering it a sign of weakness of spirit Frank Norris’ cartoon, The Octupus: Standard Oil

Pioneer Run, Titusville, PA (1859)

Coal Mining, Michigan

Coal Mining, Michigan

Controlling a Business: Horizontal v. Vertical

OIL RETAIL AND SALE

OIL BARRELING AND TRANSPORTING

OIL REFINING

OIL DRILLING

CONTROL OF INDUSTRY

10 20 30 40 50 60 70 80 90

CONTROL OF MARKET (SHARES)

VERTICAL INTEGRATION

HORIZONTAL INTEGRATION

The Backbone of Industry: The Steel RailsCreating a Transcontinental

Railroad Increased miles of rails 35K

(1865) to 200K (1900) Subsidized by federal grants Required relocation of Indian

tribes Contradicted laissez-faire

policy; gov’t invested, promoted, funded, and advertised rail expansion

Spread American-ness Brought prosperity to areas

and towns through support services

Spread population across continent

A Mechanism for Manifest Destiny

Major Rail Lines: The West Union Pacific Railroad (1862)

Nebraska to California Received bad press from

Credit Mobilier Scandal Built by Irish

Central Pacific Railroad (1869) Utah to California Constructed by the “Big

Four”: Stanford, Huntington, Crocker, and Hill

Built by Chinese Finished at Promontory Point

The Steel Road

Major Rail Lines Transcontinental Railroad:

Joined at Promontory Point, UT Northern Pacific (1893)

Chicago to Seattle

Southern Pacific (1883) New Orleans to Los Angeles

Santa Fe (1884) New Mexico to California

Great Northern (1884) Minnesota to Washington

Creating a United States

200, 000 + Miles of Track

Creating a Rail System

Used corporate model of consolidation and trusts

Combined rail lines Forced industries to use the

only available rail line and set the price for transportation

Gave rebates to “friendly” industries

Refused service to “unfriendly” industries

Rail Inventions Steel Rails: stronger

standardized rail gauge making transport safer and faster

Westinghouse air brake: increased safety

Pullman cars: luxurious travel cars

Armour Cars: refrigerated meat cars (i.e. Armour hot dogs)

Time Zones: provided consistency for delivery

Telegraph: increased communication down rail lines

In Sum

Carnegie and Rockefeller differed in their approach to business: Carnegie favored competition and charity; Rockefeller favored monopoly and rugged individualism

The oil, steel, and railroad industries helped each other grow and depended on each other for success

In less than 30 years, the U.S. became the leading manufacturer, transporter, and richest country in the “civilized” world