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Title: Unit 3: Birth of Modern America


1
Unit 3 Birth of Modern America
2
Chapter 9
  • Industrialization

3
Intro to Industrialization
4
I. Introduction to Industrialization
  • Industrial Revolution
  • - the movement from small-scale manufacturing
    to the production of heavy industry, using
    machines to replace human laborers
  • Factors that set the stage for Industrialization
  • 1. Expansion of the West
  • 2. Expansion of Industry pre Civil War
  • 3. Growth of Cities

5
  • Fun Facts about Industrialization
  • 1. What the Brits did in a century, the US
    outdid in ½ the time!
  • 2. By end of 1800s, US was the most
    industrialized nation in the world
  • 3. 1865 2B in goods produced
  • 1900 13B in goods produced
  • 4. moved from 4th to 1st in productivity
    (productivity rose 12 X).

6
Now time for a little economics lesson
7
D. Types of Economic Systems
  • 3 basic economic questions
  • What to make?
  • How much to make?
  • Who to make it for?

8
Traditional Economy (subsistence economy)
  • a. all goods svc produced consumed by the
    family/for family
  • b. Very little surplus or exchange of goods
  • c. Survival drives economic decisions
  • d. Found in poor countries, mostly in rural
    areas

9
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10
Market Economy
  • People freely choose what to buy sell
    according to the laws of supply demand
  • Individuals or companies make decisions about
    production distribution competition
  • Capitalism biz, industries, resources are
    privately owned
  • - Competition leads to the best product at the
    lowest cost!
  • d. In US, govt provides some svc imposes some
    govt regulations
  • Pure capitalism govt plays NO part in economy
  • Profit drives economic decisions

11
Capitalism
12
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13
3. Command Economy
  • Central Govt makes decisions about
    production/distribution - decides what to make,
    where to make it, how much to make, what price
    to charge, what to pay workers
  • Production doesnt necessarily reflect consumer
    demand
  • Communist economy govt owns, operates all major
    farms, factories, utilities, stores
  • Social goals drive economic decisions

14
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15
D. Mixed Economy
  1. Combo of command market economies
  2. Socialism state owns/operates some basic
    industries while allowing pvt enterprise in other
    parts of economy
  3. Belief that wealth should be distributed more
    equally all entitled to certain goods/svcs
  4. welfare states characterized by HIGH TAXES to
    pay for the many social svcs like housing, health
    care, child care, pensions

16
Mixed Economy (Socialism)
Government
Private Enterprise
Laws of Supply Demand
Determine price production
Determine price production
Operates some businesses
Owns some businesses
17
II. Rise of Industry
  • Factors that contributed to rapid
    industrialization
  • 1. Natural Resources
  • a. Western Minerals (access to these thanks to
    settlement of West!), iron, coal, timber,
    copper, water power, etc.
  • b. Could be obtained cheaply
  • c. Little need for imports

18

2. Innovations in transportation and
communication - Infrastructure a. Made for
efficient distribution of products and
information b. Telegraph, Telephone allowed
biz to be conducted quickly across long
distance c. Roads, Canals, RRs allowed mass
distribution of raw materials, farm
produce and products of manufacture
19
  • 3. New Energy Sources
  • a. Steam Engine
  • b. Electric Dynamo
  • c. Petroleum power (internal combustion
    engine)
  • - already in demand as Kerosene
  • - oil fields opened from PA to TX
  • - economy expands with production
    increase

20
  • 4. Business-Friendly Govt
  • a. Republican dominated (became party of big
    biz)
  • b. Govts role in Industrialization
  • - kept taxes/spending low
  • - few costly regs on industry
  • - didnt control prices/wages
  • - protective tariffs
  • - subsidies in land and money
  • subsidy Monetary assistance granted by
    a govt to a person or group in support of an
    enterprise regarded as being in the public
    interest

21
  • c. Laissez-Faire Economics theory that govt
    should not interfere in economic affairs
  • - govt role to protect pvt property keep
    the peace
  • - supply demand, not govt regulates prices
    wages
  • - supports belief that govt regs increase
    price and hurt
    society in long run
  • - free market w/ competing co.s leads to
    efficiency wealth
    for all
  • - low taxes ensure that pvt individuals, not
    govt make decision
    on how nations wealth is spent
  • - govt debt should be kept to minimum if
    govt borrows from banks, not available
    for individuals for their own use
  • - entrepreneurs people who risk their
    organizing/running a biz should be free to
    pursue rewards of bldg a biz making a
    profit for themselves
  • d. Govt corruption often took bribes etc.

22

5. Economic Stimuli a. Lots of Capital ()
from Europe, Americans, Western
minerals b. Population Boom immigration (20m
btwn 1870-1910) high birth rate, lrg
families (adv. in med tech, nutrition,
infrastructure lower infant
mortality rate) - Lrg workforce/cheap
labor - created demand for consumer goods
produced by factories
23

c. New ways of selling/organizing - 1st
dept store Macys - 1st chain store A
P - 1st mail order Wards -
advertising/packaging to attract
consumers
Macys NY
A P
24
  • 6. New Technologies - you name it, somebody
    invented it!
  • a. Textile Industry
  • - Factory System Samuel Slater
  • - 1st built the first successful
    water-powered textile mill in America
  • - Cotton Gin Eli Whitney
  • - revived slavery
  • - Sewing Machine Elias Howe
  • - switch from home-made to machine-
    made clothes
  • - Sewing Machine Isaac Singer
  • - challenged Howe for patent
  • - installment plan

25
The Factory System
26
Rise of the Sewing Machine Industry
27
  • b. Railroads
  • - Standardized Gauges John Stevens
  • - width btwn rails 56 ½ contributes to
    completion of Transcontinental RR
  • - Air Brakes George Westinghouse
  • - more precise stopping of trains
  • - Sleeping Car George Pullman
  • - comfortable, luxurious travel

28
Pullman Car
  • Beveled mirrors, ornate carvings, and polished
    brass were the hallmarks of travel in a Pullman
    parlor car, such as the one depicted here from
    1893.
  • First-class passengers enjoyed plush swivel seats
    and could eat their meals in equaling lavish
    dining cars.
  • The wealthiest owned their own luxuriously
    appointed private cars.

29
  • c. Steel
  • - Bessemer Process Henry Bessemer,
    William Kelly
  • - mass production of steel heat iron ore to
    liquid state, blast w/
    hot air to burn out impurities, end product
    steel
  • - Iron RR tracks replaced by steel tracks
  • - Birth of Skyscrapers

30
Bessemer Process
31
Bessemer Process
32
  • - Elevator Elisha Otis
  • - Skyscrapers made practical
  • - Suspension Bridge John Roebling
  • - uses steel cables
  • - London Bridge 1st
  • - Brooklyn Bridge 1st in US
  • - Trolley Car Frank Sprague
  • - early mass transit
  • - runs on steel cables
  • - Light Bulb Thomas Edison
  • - uses a dynamo (primitive electric
    generator)
  • - factories can be built away from natural
    source of power
  • - can work longer hrs

Thomas Edison
33
  • d. Oil
  • - Oil Well Pump Edwin Drake
  • - launched an oil boom nationwide
  • - cheap source of fuel for autos (future)

34
  • e. Business Industry
  • - Telegraph Samuel Morse
  • - Morse code
  • - allows biz to communicate quickly across
    long distances
  • - Telephone Alexander Graham
  • Bell
  • - communication revolution
  • - allows biz to communicate quickly across
    long distances
  • - Transatlantic Cable Cyrus
  • Fields
  • - uses telegraph to send impulses - communicate
    with Europe
  • - Typewriter Christopher Sholes
  • - Cash Register James Ritty

35
  • f. Food Industry
  • - Mechanical Reaper Cyrus McCormick
  • - harvest grain quickly using machines
  • - Steel Plow John Deere
  • - Evaporated Milk Gail Borden
  • - Food Preservation (w/o canning) HJ
    Heinz
  • - Refrigerated RR Car Gustavus Swift
  • - can ship slaughtered meat across long
    distances safely
  • - leads to growth of meatpacking industry
    in Chicago

36
Chicago Stockyards
37
  • - Dried Flake Cereal John Kellog
  • - More cereal CW Post
  • - leads to cereal wars and use of gimmicks
    to sell products

38
  • g. Miscellaneous Inventions
  • - Kodak Camera George Eastman
  • - Airplane Orville Wilbur Wright
  • - revolution in transportation
  • - revolution in warfare

First flight at Kitty Hawk, NC on December 17,
1903
39
III. Railroads
  • Linking the Nation
  • 1. Expansion after Civil War (by 1900, 200,000
    mi of track. Only 30,000 in 1860) 5
    Transcontinental RRs built
  • 2. 1st Transcontinental RR completed 1869
  • a. Pacific Railway Act (1862)
  • b. Transcont. RR built by 2 companies
    Central Pacific from CA used Chinese labor
    Union Pacific From MW used Irish
    immigrants, ex-cons, veterans etc.
  • RRs contribution to Industrial Growth
  • 1. Impact on economy
  • a. increased market for many products by
    linking nation
  • b. stimulated economy by spending lots of on
    steel, coal, timber etc.

40
Railroads
41
Transcontinental RR
42
  • 2. Linking other lines
  • a. lots of unconnected lines a challenge
    to create single rail system
  • b. Large RRs lines take over small.
    Consolidation. Then 7 main systems
    with terminals in major cities w/
    branches to the country
  • c. Cornelius Vanderbilt RR consolidator.
    Merged NY RRs. 1st svc from NYC to
    Chicago
  • 3. Benefits of a National System
  • a. Time Zones before 1880, clocks set by
    suns position in sky at high noon
    (example at 1200 pm in Chicago, it
    was 1250 pm in DC
  • problem with scheduling, pax safety 2
    trains on same track could collide
    from scheduling errors caused by
    time variations
  • solution 1883 4 time zones made RR
    travel safer and more reliable

43
Time Zones
44
  • b. Large integrated RRs benefit US.
  • - increase in efficiency
  • - decrease in time spent on long distance
    travel
  • - united Americans from different regions
  • C. Land Grant System
  • 1. Land Grants given to RRs by govt to
    encourage RR construction
  • 2. RR companies able to cover their
    construction costs by selling land to
    settlers, real estate agencies other
    biz

45
Govt Land Grants to RRs
46
  • D. Robber Barons
  • 1. Some RR entrepreneurs engaged in corrupt
    practices that led to the acquisition of
    great wealth - another way to put it
  • Robber Barons people who loot an
    industry and dont give anything back
  • - used ruthless biz tactics against their
    competitors
  • a. Jay Gould used info to manipulate
    stock prices to his benefit (insider
    trading)
  • b. RR investors realized they could make
    more by selling land grants than by
    running a RR bribed Congress to
    vote for more land grants

47
  • 2. Credit Mobilier Scandal 1872
  • a. Stockholders from UP RR set up CM a
    construction co.
  • b. CM overcharged RR
  • c. Since same investors controlled both
    co.s, RR paid bills
  • d. Investors made millions, RR almost
    bankrupt
  • 3. More corruption
  • a. RR wanted more land grants
  • b. Convinced Congress to issue them by
    giving Congress members shares of UP
    stock at price below market value
  • c. Several Congressmen implicated
    including
  • James Garfield (becomes
    President later)

48
  • 4. Great Northern
  • a. Success w/o corruption
  • b. James Hill built RR from St Paul, MN
    to Everett, WA w/o any land grants or
    subsidies
  • c. Built along good land passed thru
    towns
  • d. Offered low fares to settlers who
    homesteaded along route
  • e. Carried products to WA for shipment to
    Asia thus, RR earned by
    hauling goods E W
  • f. Most successful TC RR never bankrupt

49
IV. Big Business
  • Rise of Big Biz
  • 1. Role of corporations
  • a. Corporation an organization owned by many
    people but treated by law as if it were a
    single person
  • b. people who own the corporation are known as
    stockholders
  • c. Stockholders own shares of the company
    called stock
  • d. Advantages of incorporating?
  • - can raise from sale of stock invest
    in new tech, hire workforce, buy machines to
    increase efficiency
  • - limit liability spread out financial risk

50
  • 2. Economies of Scale
  • a. Corps ability to make goods more
    cheaply b/c they produce so much so quickly
    using lg. manuf. facilities
  • b. Cost of Biz
  • 1) Fixed Costs cost a biz pays whether its
    operating or not (mortgage, loans, taxes)
  • 2) Operating costs occur when running
    company(wages, shipping, raw materials)
  • 3) Small vs. Large Company
  • small low fixed, high operating costs. If
    biz slow, cheaper to shut down and wait
  • large high fixed, lower operating. Keep
    operating in an economic recession

51
  • c. Advantages of Big Corporations
  • 1) produce goods cheaply efficiently
  • 2) could continue to operate in poor economic
    times by cutting prices to increase sales
    instead of shutting down
  • 3) could negotiate deals/rebates to lower
    operating costs further
  • d. Effect on Small Biz?
  • - some couldnt complete against big biz
    forced out of biz

52
  • B. Consolidation of Industry
  • consolidation the combining of separate
    companies into a single one
  • 1. Falling prices benefited consumers, but cut
    into
  • industry profits
  • a. To stop falling prices, some companies
    organized pools.
  • Pools agreements between companies to
    maintain prices at a certain level
  • b. problem with pools interfered with
    competition and property rights thus not
    supported in courts or legislature
  • c. Usually broke apart when 1 member would
    try to lower prices to steal biz away
    from another

53
  • 2. Andrew Carnegie and Steel
  • a. Idea to make by investing in companies
    that served the RR industry
  • 1) invested in iron mills, sleeping cars, RR
    bridges
  • 2) sold RR bonds in Europe
  • b. Investments in Steel Industry
  • 1) Bessemer Process process for making
    steel efficiently and cheaply
  • 2) opened a steel co. customized his mills
    to use Bessemer process

54
  • 3. Vertical Horizontal Integration
  • - biz often sought to better consolidate
    industries, to bring efficiency and to reduce
    cutthroat competition. Found 2 general
    ways to do this
  • a. Vertical integration ala Andrew Carnegie
    (US Steel)
  • owns all stages of production the diff
    biz on which a company depends for its
    operation
  • - allows biz to save , enables big company
    to get bigger

55
  • b. Horizontal Integration ala Rockefeller
    (Standard Oil)
  • combining smaller biz into one,
    concentrate on the most profitable stage
    of production
  • - Standard Oil controlled 26 similar companies
    gained control of 90 of worlds oil
    refining industry

56
Standard oil..the dangerous monopoly!
57
Vertical Horizontal Integration
Carnegie Rockefeller
58
  • c. If a single company controls an entire
    market, it is a monopoly.
  • The problem with monopolies free to charge
    whatever they wanted! Quality not guaranteed!

59
  • 4. Trusts
  • a. due to fear of monopolies and mistrust of
    lg corps, laws passed making it illegal
    for one company to own stock in another
    w/o permission from state leg.
  • b. to skirt around these laws, TRUSTS were
    formed a group of companies whose stock
    is controlled by a central board of
    directors
  • - a way to merge companies w/o breaking the
    law
  • - instead of buying another co. outright, co.
    gives stock to board of trustees. These
    stockholders receive a portion of
    trusts profits. Since they just managed the
    stock, didnt own it, they were not
    violating the law

60
  • 5. Holding Companies
  • a. Holding companies do not produce anything
    they own the stock of companies that do
    produce the goods
  • b. control all companies it owns sort of
    merging them into one large company

61
  • Unions
  • A. Working in the US
  • 1. Repetitive tasks, unhealthy dangerous
    working conditions
  • a. lint, dust, toxic fumes in the air
  • b. lack of safety devices caused injury
  • 2. Rise in standard of living
  • - but growing division of income btwn wealthy
    working class
  • 3. Deflation (1865-1897) a rise in value of
  • a. Caused prices to fall so companies cut
    wages
  • b. A call for union organization

62
So what is a UNION?
Higher Wages Shorter Hours, Better Working
Conditions
  • an organization of workers formed for the purpose
    of advancing its members' interests in respect to
    wages, benefits, and working conditions

63
Status of Industrial Workers
  • With the machine age the growth of industry,
    the status of US workers changed from that of
    artisans owning their own tools to employees
    running their bosses machines. Problems grew

64
Problems
  • Alienation personal relationships btwn owners
    employees vanished as corporate execs replaced
    owner-managers. Concern for workers welfare
    diminished, as did workers loyalty to employers
  • Job insecurity technical changes
    layoffs/unemployment
  • Physical Danger accident rate high b/c of
    complicated machinery, noise, dust
  • Loss of communityworkers with machines only
  • Low wages 1.00 - 1.50/day
  • Long Hrs10-14 hr/day, 6 days week

65
Changes in the workforce
Total work force Workers in manufacturing
1870 12,920,000 2,130,000
1900 29,070,000 6,250,000
  • Sources of Labor
  • farmers were main source of industrial labor as
    farm machines increased production with fewer
    workers

Agricultural workers Non-agricultural workers
1870 6,207,634 4,325,116
1900 10,911,998 18,161,235
  • Immigrants were the 2nd most important source of
    industrial labor. Almost 12 m came
  • btwn 1870-1900. By 1880, immigrants 13 of
    population 32 of work force
  • Women children were hired as workers b/c they
    could be paid less. Most women
  • worked in factories. Most children worked in
    textile mills, coal mines, meat-packing plants

Women Children (lt15)
1870 1,900,000 750,000
1900 5,300,000 1,750,000
66
  • B. Early Unions
  • 1. Type of industrial workers in 1800s craft
    workers vs. common labor
  • a. craft workers special skills training.
  • - higher wages
  • - control of time
  • - formed trade unions. Limited to people
    w/ specific skills
  • b. common labor few skills
  • - lower wages

67
  • 2. Industry opposes unions
  • a. employers regard unions as conspiracies.
  • - interfered w/ property rights
  • b. lrg corps opposed Industrial Unions (those
    that united craft common laborers in a
    particular industry)
  • c. Actions taken to prevent unions from
    forming
  • 1) sign oath/contract promising not to join
    union
  • 2) undercover agents identify union organizers
  • 3) workers blacklisted list of
    troublemakers, made it difficult to get
    another job
  • 4) lockouts locked union members out of
    property refused to pay them
  • 5) if strike? Hired strikebreakers
    (replacement workers

68
  • 3. Political Social Opposition
  • a. difficult to organize
  • - no legal rights
  • - courts ruled against them
  • b. perceived as a threat to American
    institutions
  • - seen as MARXIST
  • - Marxism belief that basic force shaping
    capitalist society was the class struggle
    btwn workers owners
  • - Marx believed workers would eventually
    revolt, take over factories, seize the
    govt, seize pvt property, divide wealth
    evenly.
  • - result? A classless society

69
Marxism
70
  • c. some workers advocate anarchism
  • - belief that society doesnt need any govt
  • d. Marxism/Anarchism spreading in Europe. At
    same time, Europeans immigrating to US
  • - scared Americans

71
  • C. Struggle to Organize
  • 1. Great Railroad Strike of 1877
  • a. Panic of 1873 led to wage cuts followed by
    NATIONWIDE labor protest biggest in the
    US to date
  • b. RR workers across country walked off jobs
  • - involved 80,000 workers in 11 states
    affected 2/3 of US RRs
  • c. Workers smashed equip., tore up tracks,
    blocked rail svc
  • d. States send militias. Gun battles erupted
  • e. President Hayes sent army. Restored order,
    but 100 people dead property destroyed

72
The Great Railroad Strike of 1877
July 21- 22, 1877, rioters destruction in
Pittsburgh, PA
73
  • 2. The Knights of Labor
  • a. 1st nationwide industrial union
  • b. demands
  • - 8 hr workday
  • - equal pay for women
  • - abolition of child labor
  • - creation of worker-owned factories
  • c. Supported arbitration (impartial 3rd party
    workers and mgmt reach agreement
  • d. Began using strikes by 1880
  • - successful
  • - membership rose

74
  • 3. The Haymarket Riot Chicago, Haymarket
    Square May 1886
  • a. demanded 8 hr workday organizers called
    strike to show support for it on May Day
  • b. strikers police clash 1 striker killed
  • c. Anarchists organize meeting, 3000 people.
    Police come, bomb is thrown, police fire,
    workers fire,
  • - 7 police dead
  • - 4 workers dead
  • d. 8 arrested. 7 are German immigrants who
    anarchism
  • e. All 8 convicted, 4 executed
  • f. 1 convicted was Knights of Labor member
    reputation ruined

75
Haymarket Riot
76
  • 3. The Pullman Strike
  • a. American Railway Union (ARU) organized in
    1893
  • b. Pullman Co made Pullman RR cars
    forced workers to live in Pullman, IL and buy
    goods from company stores
  • c. Depression of 1893. Pullman slashed wages.
    Workers had trouble paying rent paying
    high prices at the company stores

Pullman, IL (George Pullmans company town)
77
Pullman, IL
78
  • d. workers who complained were fired. Strike
    began
  • e. ARU members nationwide stopped handling
    Pullman cars. Threatened to paralyze US
    economy
  • f. US Mail cars attached to Pullmans to
    interfere w/ mail is violation of federal law
  • g. Court ordered halt to boycott. Strike
    ARU
  • collapsed

79
The Pullman Strike
  • In 1898, the Illinois Supreme Court ordered
    Pullman Town sold off, ruling that a company town
    was incompatible with the spirit of America.

Violence in Chicago escalated when federal troops
came to break the 1894 Pullman factory strike, as
illustrated in this drawing from Harper's Weekly.
More than one thousand rail cars were destroyed,
and 13 people were killed. (Photo Courtesy of
Chicago Historical Society)
80
  • D. American Federation of Labor
  • 1. organized 20 trade unions, led by Samuel
    Gompers
  • a. believed unions should stay out of politics
  • b. rejected socialist/communist ideas c.
    Fought for higher wages/better working
    conditions
  • d. Strikes ok, negotiate better
  • 2. Goals
  • a. recognize unions/agree to collective
    bargaining
  • b. push for closed shops companies hire only
    union workers
  • c. 8 hr workday

81
American Federation of Labor
  • Samuel Gompers

82
  • E. Working Women
  • 1. by 1900, women 18 of labor force
  • a. 1/3 domestic servants 1/3 nurses,
    teachers 1/3 industrial (garment/food
    processing)
  • b. wages less than men for same job (men had
    to support the family)
  • 2. Womens Trade Union League (WTUL)
    organized to promote womens labor issues
  • a. 8 hr day
  • b. Create minimum wage
  • c. No evening work for women
  • d. Abolish child labor
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