Post Civil War Post Civil War Industrialization Industrialization

(Market Economy)(Market Economy)

(Post-Bellum)(Post-Bellum) 1865 to 19001865 to 1900

In 1860, just before the Civil War, the USA was the In 1860, just before the Civil War, the USA was the 4th largest manufacturing country in the world4th largest manufacturing country in the world

By 1894 it had reached 1By 1894 it had reached 1stst place. place.

By 1900 the USA was producing seven times more By 1900 the USA was producing seven times more industrial goods than in 1865.industrial goods than in 1865.

What accounts for this dramatic change in the What accounts for this dramatic change in the industrial landscape?industrial landscape?

1.1. Discovery of an abundance of Discovery of an abundance of basic raw materials and energy basic raw materials and energy

sources….esp. coal, iron, sources….esp. coal, iron, wood, petroleumwood, petroleum

ResourcesResources

New deposits of New deposits of iron (Mesabi Range in Minnesota) iron (Mesabi Range in Minnesota) and coaland coal (Pennsylvania) were discovered on East (Pennsylvania) were discovered on East coast: coal production increased from 33m tons in 1870 coast: coal production increased from 33m tons in 1870 to 250m tons in 1900)to 250m tons in 1900)

Huge quantities of Huge quantities of wood / timberwood / timber were available from were available from the West due to improved transportationthe West due to improved transportation

Discovery of a new and valuable energy source - Discovery of a new and valuable energy source - Petroleum or oil. Petroleum or oil.

First used to lubricate machines, then as kerosene for First used to lubricate machines, then as kerosene for oil lamps, later as source of energy for diesel or petrol / oil lamps, later as source of energy for diesel or petrol / gas engines.gas engines.

The first petroleum discoveries were in western The first petroleum discoveries were in western Pennsylvania (Pennsylvania (Titusville) Titusville) in 1859in 1859 (59ers of PA); later (59ers of PA); later discoveries were made in Ohio, and West Virginia. discoveries were made in Ohio, and West Virginia.

Edwin DrakeEdwin Drake was one of the first to realize its potential was one of the first to realize its potential value - estd the first oil well in Penn - people talked value - estd the first oil well in Penn - people talked about "about "Drake's follyDrake's folly". ".

As its importance / value was discovered it became As its importance / value was discovered it became known as known as "black gold” "black gold” (term also previously used for (term also previously used for slaves). slaves).

By end of the 1870's, 40m barrels of petroleum had been By end of the 1870's, 40m barrels of petroleum had been produced; oil had advanced to 4th place among the produced; oil had advanced to 4th place among the nation's exports; annual production reached 20m barrels. nation's exports; annual production reached 20m barrels.

J.D. RockefellerJ.D. Rockefeller came to dominate the oil industry came to dominate the oil industry

Oil was later discovered in Oil was later discovered in AlaskaAlaska, purchased from , purchased from Russia in 1867 for the bargain price of $7.2 million Russia in 1867 for the bargain price of $7.2 million by Andrew Johnson's Sec. of State Seward - was by Andrew Johnson's Sec. of State Seward - was derisively called "Seward's Folly" / "Seward's Ice-derisively called "Seward's Folly" / "Seward's Ice-Box", "Seward's Polar Bear Gardens”, before oil Box", "Seward's Polar Bear Gardens”, before oil was found therewas found there

2. Remarkable technological 2. Remarkable technological inventiveness – “Yankee inventiveness – “Yankee Ingenuity” – which created Ingenuity” – which created machinery, devices, new materials, machinery, devices, new materials, and the productive processes and the productive processes necessary for Industrial growthnecessary for Industrial growth

InnovationInnovation

Very important to the industrial revolution was the Very important to the industrial revolution was the development of new technologies, new devices to bring development of new technologies, new devices to bring speed and efficiency to industry, and new productive speed and efficiency to industry, and new productive processes to produce new materials. processes to produce new materials.

From 1860-1890, 440,000 patents were registered, showing From 1860-1890, 440,000 patents were registered, showing the amount of activity / research / invention among the amount of activity / research / invention among scientists and inventors. scientists and inventors.

Christopher Sholes invented the Christopher Sholes invented the typewritertypewriter, James Ritty the , James Ritty the cash registercash register, William Burroughs the , William Burroughs the calculator (calculator (1870s, 1870s, 1880s1880s)) - all helping with efficiency and organization. - all helping with efficiency and organization.

Many inventions and discoveries were in the field of Many inventions and discoveries were in the field of communicationcommunication. .

Cyrus Field laid a Cyrus Field laid a trans-Atlantic telegraph cabletrans-Atlantic telegraph cable to to Europe in 1858 - this cable went dead after 3 weeks - Europe in 1858 - this cable went dead after 3 weeks - but in 1866 and afterwards he developed heavier cables but in 1866 and afterwards he developed heavier cables which estd. a permanent link between the US and which estd. a permanent link between the US and Europe.Europe.

Bell Bell developed the telephone in 1876 - enormous effect developed the telephone in 1876 - enormous effect on economy and on society - half a million phones in on economy and on society - half a million phones in use in USA by the 1890'suse in USA by the 1890's

There were further developments in communication and There were further developments in communication and transportation around the turn of the centurytransportation around the turn of the century

Beginnings of Beginnings of RadioRadio - Marconi. - Marconi.

First First airplaneairplane and flight - Wright Brothers in Kitty Hawk, and flight - Wright Brothers in Kitty Hawk, N. Carolina, 1903N. Carolina, 1903

Development of Development of automobilesautomobiles - internal combustion engines - internal combustion engines developed in Fr, Ger; also in the USA by Henry Ford who developed in Fr, Ger; also in the USA by Henry Ford who produced the first of his cars - the model T - in 1906 produced the first of his cars - the model T - in 1906

The invention with the greatest impact on industry / life The invention with the greatest impact on industry / life was perhaps was perhaps ElectricityElectricity (1870s) – new source of light (1870s) – new source of light and powerand power

Industry had progressed from reliance on Water power, Industry had progressed from reliance on Water power, to Steam power, to Electricity, to Steam power, to Electricity,

Pioneered and developed by Charles Pioneered and developed by Charles BushBush, and Thomas , and Thomas Edison Edison (light bulb also)..1879. (light bulb also)..1879.

By about 1900, there were 2,774 power stations in By about 1900, there were 2,774 power stations in operation, and some 2 million electric lights were in use operation, and some 2 million electric lights were in use in the country. Electricity was also being used for street in the country. Electricity was also being used for street railway systems, in the elevators of urban skyscrapers, railway systems, in the elevators of urban skyscrapers, and to power machines in factories and to power machines in factories

Another important technological breakthrough was in the Another important technological breakthrough was in the production of production of steel steel (purified Iron - more durable)(purified Iron - more durable)….Carnegie Steel….US Steel Corp…….Carnegie Steel….US Steel Corp…

Efficient, inexpensive purification of large quantities of iron Efficient, inexpensive purification of large quantities of iron ore was made possible by a process developed by ore was made possible by a process developed by Englishman Englishman BessemerBessemer and American William and American William KellyKelly - - blowing jets of air into the boiling iron to burn out the blowing jets of air into the boiling iron to burn out the impurities (carbon and other gases) at a faster rate – to impurities (carbon and other gases) at a faster rate – to reduce costs. (replaced Henry Cort’s puddling and rolling)reduce costs. (replaced Henry Cort’s puddling and rolling)

Steel replaced iron in the manufacture of steam engines, Steel replaced iron in the manufacture of steam engines, railroad lines and in construction….sturdier, more durable railroad lines and in construction….sturdier, more durable

Main centers of steel production were Pennsylvania, Ohio, Main centers of steel production were Pennsylvania, Ohio, Michigan, Minnesota... Michigan, Minnesota...

Steel production rose by 1,000% between 1865 and Steel production rose by 1,000% between 1865 and 1900.1900.

In other industries, new processes also emerged: new In other industries, new processes also emerged: new methods of methods of milling flourmilling flour made possible the emergence made possible the emergence of large milling companies in the Midwest: of large milling companies in the Midwest:

New methods of New methods of canning foods and condensing milkcanning foods and condensing milk helped established the prepared food industry - were helped established the prepared food industry - were developed by Gale Borden developed by Gale Borden

All of the above developments: devices, technologies, All of the above developments: devices, technologies, transportation, communication, would help transform transportation, communication, would help transform industryindustry

  

3. Development of the ideas of 3. Development of the ideas of Scientific ManagementScientific Management

TaylorismTaylorism

Convinced that industry required more efficiency and Convinced that industry required more efficiency and better management, Frederick Taylor promoted better management, Frederick Taylor promoted "scientific management" (“Taylorism”. )"scientific management" (“Taylorism”. )

He favored increasing employer control of the He favored increasing employer control of the workplace, greater worker efficiency, and less workplace, greater worker efficiency, and less dependence on “skilled workers” – all of which would dependence on “skilled workers” – all of which would increase output, reduce costs, and increase profitincrease output, reduce costs, and increase profit

Subdivision of jobs / tasks, interchangeable workers, Subdivision of jobs / tasks, interchangeable workers, to diminish dependence on any particular employee. to diminish dependence on any particular employee.

““Taylorism” proposed that businesses / factories be Taylorism” proposed that businesses / factories be sub-divided into departments with managers, sub-divided into departments with managers, answering to a general manager, in a hierarchy of answering to a general manager, in a hierarchy of controlcontrol

He also advocated frequent work studies and cost He also advocated frequent work studies and cost accounting accounting

Successful: welcomed by employers Successful: welcomed by employers

Not so popular with workers: work became more Not so popular with workers: work became more tedious and repetitive, and eventually salaries tedious and repetitive, and eventually salaries decreased as a result of the decline in the skill factordecreased as a result of the decline in the skill factor

His methods were a complement to His methods were a complement to Whitney'Whitney's ideas s ideas of mass production and the interchangeability of of mass production and the interchangeability of parts. parts.

Combination of the ideas of Whitney and Taylor - Combination of the ideas of Whitney and Taylor - paved the way for the introduction of the assembly paved the way for the introduction of the assembly line and mass production.... (perfected by Henry line and mass production.... (perfected by Henry Ford)Ford)

4. Extension of Network of 4. Extension of Network of RailroadsRailroads

One of the principal agents (“greatest single factor” – One of the principal agents (“greatest single factor” – text) of the Industrial Revolution was the expansion of text) of the Industrial Revolution was the expansion of the railroads (An Industry in itself and contributed to the railroads (An Industry in itself and contributed to Transportation and Communication) Transportation and Communication)

The total miles of track nationwide increased every The total miles of track nationwide increased every decade;decade;

30,000 30,000 - 1860- 1860 52,000 52,000 - 1870- 1870 93,000 93,000 - 1880- 1880 163,000 - 1890163,000 - 1890 193,000 - 1900193,000 - 1900

Trains were safer now due to improved brakes, steel rails, Trains were safer now due to improved brakes, steel rails, uniform track gauges: also faster and more comfortable uniform track gauges: also faster and more comfortable (Pullman Palace Cars)(Pullman Palace Cars)

The Federal Govt. undertook the Construction of the first The Federal Govt. undertook the Construction of the first Transcontinental Railroad (too big / costly for private Transcontinental Railroad (too big / costly for private ind) – Pacific Railroad Acts of 1862 and 1864ind) – Pacific Railroad Acts of 1862 and 1864

Contracts were given to two companies – paid in land Contracts were given to two companies – paid in land and moneyand money

The Central Pacific began building East from Sacramento The Central Pacific began building East from Sacramento CA. CA.

The Union Pacific began building West from Omaha, The Union Pacific began building West from Omaha, NebraskaNebraska

Their lines joined in Promontory Point, near Ogden, Their lines joined in Promontory Point, near Ogden, Utah, in 1869 Utah, in 1869

See Handout for more details of building of See Handout for more details of building of Transcontinental Railroad………….Transcontinental Railroad………….

In later years, four more transcontinental railroads were In later years, four more transcontinental railroads were build by private investors:build by private investors:

Northern Pacific 1883Northern Pacific 1883Atcheson, Topeka, Santa Fe 1884Atcheson, Topeka, Santa Fe 1884The Southern Pacific 1884The Southern Pacific 1884The Great Northern, 1893The Great Northern, 1893

Led to acceptance of Time zones …. to standardize Led to acceptance of Time zones …. to standardize train schedulestrain schedules

Expansion too on East coast; and consolidation Expansion too on East coast; and consolidation

Among the biggest RR companies were the New Among the biggest RR companies were the New York Central owned by Cornelius Vanderbilt, and the York Central owned by Cornelius Vanderbilt, and the Erie and Kansas Pacific owned by Jay Gould. Erie and Kansas Pacific owned by Jay Gould.

They battled in the “Erie Wars” for control of the Erie They battled in the “Erie Wars” for control of the Erie RRRR

Corruption was widespread among RR companies Corruption was widespread among RR companies and their ownersand their owners

Frequently involving inFrequently involving in

““stock watering" (selling more stock than the stock watering" (selling more stock than the Company was worth…Jay Gould)Company was worth…Jay Gould)

““Cut-throat competition,” killing off or buying out Cut-throat competition,” killing off or buying out their competitors to create huge monopoliestheir competitors to create huge monopolies

creating “pools”: agreement to keep rates high… creating “pools”: agreement to keep rates high… not to compete, no lowering of ratesnot to compete, no lowering of rates

bribing members of the govt., judges, journalists bribing members of the govt., judges, journalists (with money or often with free passes)(with money or often with free passes)

Vanderbilt, Gould, Hill, Stanford, Huntington – Vanderbilt, Gould, Hill, Stanford, Huntington – railroad owners… were among the first to be called railroad owners… were among the first to be called the "Robber Barons" by Mark Twain the "Robber Barons" by Mark Twain

They preferred to call themselves the “Captains of They preferred to call themselves the “Captains of Industry”Industry”

RR’s promoted Industrial Growth byRR’s promoted Industrial Growth by

huge investments by RR companies stimulated economy, was huge investments by RR companies stimulated economy, was an industry in itself, creating thousands of jobs, and creating an industry in itself, creating thousands of jobs, and creating huge demand for steel, coal.. and other materials from other huge demand for steel, coal.. and other materials from other industriesindustries

stimulated other industries / businesses through faster stimulated other industries / businesses through faster transportation of raw materials and finished goods (and transportation of raw materials and finished goods (and communication through the extension of telegraph and communication through the extension of telegraph and telephone systems along the tracks)telephone systems along the tracks)

helped create national markets: emergence of first nationwide helped create national markets: emergence of first nationwide chain stores (Woolworths, Great Atlantic and Pacific); chain stores (Woolworths, Great Atlantic and Pacific);

Refrigerated Cars (Gustavus Swift) helped the meatpacking Refrigerated Cars (Gustavus Swift) helped the meatpacking industry and the producers of fruit and vegetablesindustry and the producers of fruit and vegetables

5. 5. Availability of investment Availability of investment capital / entrepreneurs – Civil War capital / entrepreneurs – Civil War Millionaires inc. "Shoddy Millionaires inc. "Shoddy Millionaires" -Millionaires" -

America's first millionaires emerged during the civil America's first millionaires emerged during the civil war: selling uniforms, shoes, etc. to the army / Govt. war: selling uniforms, shoes, etc. to the army / Govt. (sometimes selling “shoddy goods”)(sometimes selling “shoddy goods”)

These millionaires were willing to take the risk of These millionaires were willing to take the risk of investing in big business (coal, iron, steel, oil, investing in big business (coal, iron, steel, oil, electricity etc…)electricity etc…)

American banks were willing to invest in industry…American banks were willing to invest in industry…J.P. Morgan Bank esp. J.P. Morgan Bank esp.

6. Formation of huge Corporations 6. Formation of huge Corporations with large amounts of investment with large amounts of investment capitalcapital

The formation of huge public corporations made great The formation of huge public corporations made great financial resources available to businesses to invest and financial resources available to businesses to invest and expand expand

These Corporations engaged in:These Corporations engaged in:

Vertical IntegrationVertical Integration (Carnegie Steel: “mine to market”: sold to (Carnegie Steel: “mine to market”: sold to Morgan for $250m; enlarged it into US Steel Corp., valued at Morgan for $250m; enlarged it into US Steel Corp., valued at $1.4b, America’s first billion-dollar corporation)$1.4b, America’s first billion-dollar corporation)

Horizontal IntegrationHorizontal Integration (Rockefeller - formation of (Rockefeller - formation of MonopoliesMonopolies, , TrustsTrusts (huge business combination through controlling stock in (huge business combination through controlling stock in other companies or buying them out) – controlled 40 companies other companies or buying them out) – controlled 40 companies and over 84% of oil industry: (Duke family and American and over 84% of oil industry: (Duke family and American Tobacco Company)Tobacco Company)

Interlocking DirectoriesInterlocking Directories (JP Morgan Bank. “bankers bank”): put (JP Morgan Bank. “bankers bank”): put bank officers on the boards of various companies – to bank officers on the boards of various companies – to consolidated, harmonize, prevent competition consolidated, harmonize, prevent competition

These industrialists, esp. Carnegie, believed in These industrialists, esp. Carnegie, believed in Social Social Darwinism…application of Darwinism to business / society… Darwinism…application of Darwinism to business / society… “survival of fittest”“survival of fittest” (developed by English philosopher Herbert (developed by English philosopher Herbert Spencer); promoted in the US by William Graham Sumner of Spencer); promoted in the US by William Graham Sumner of Yale. Yale.

But Carnegie and Rockefeller also promoted the But Carnegie and Rockefeller also promoted the Gospel of Gospel of Wealth…responsibility of the wealthy to give back to the Wealth…responsibility of the wealthy to give back to the Community (libraries, colleges)Community (libraries, colleges): By the time of his death in : By the time of his death in 1919, Carnegie had given away some $350 million ($60m for 1919, Carnegie had given away some $350 million ($60m for libraries) and Rockefeller $500m to philanthropic purposes. libraries) and Rockefeller $500m to philanthropic purposes.

Did not mean helping the poor – being poor was the fault of Did not mean helping the poor – being poor was the fault of those who were poor….Gospel of Wealth involved helping the those who were poor….Gospel of Wealth involved helping the community..community..

Social Darwinism / The Gospel of Wealth was opposed by Social Darwinism / The Gospel of Wealth was opposed by Henry George as hypocritical: he proposed a land taxHenry George as hypocritical: he proposed a land tax

Opposed also by Edward Bellamy: Socialist: who Opposed also by Edward Bellamy: Socialist: who proposed Nationalization of land and industryproposed Nationalization of land and industry

Opposed also by Mark Twain: used terms “Robber Opposed also by Mark Twain: used terms “Robber Barons” and “Guilded Age”Barons” and “Guilded Age”

Author, Horatio Alger: wrote novels promoting Social Author, Horatio Alger: wrote novels promoting Social Darwinism, rags to riches stories: opportunities for wealth Darwinism, rags to riches stories: opportunities for wealth were available for anyone who worked hard, was thrifty, were available for anyone who worked hard, was thrifty, had integrity, followed the rules and had a little luck! had integrity, followed the rules and had a little luck! “Algerisms”“Algerisms”

See readings / handout on See readings / handout on Gospel of WealthGospel of Wealth

7. Increased educational 7. Increased educational opportunities – at high school and opportunities – at high school and college levelcollege level

Fed Govt. expenditure on Education increased from $35m Fed Govt. expenditure on Education increased from $35m in 1860 to $290m in 1900….mostly K-12 in 1860 to $290m in 1900….mostly K-12

The Morrill Act of 1862 helped with the growth of higher The Morrill Act of 1862 helped with the growth of higher education. Set aside grants of public land to build colleges – education. Set aside grants of public land to build colleges – the "land grant colleges".the "land grant colleges".

Philanthropic businessmen donated millions to set up Philanthropic businessmen donated millions to set up private universities - Cornell, Stanford, Chicago private universities - Cornell, Stanford, Chicago (Rockefeller). (Rockefeller).

There was a new emphasis on technical education, on There was a new emphasis on technical education, on engineering, science and on business – a move away from engineering, science and on business – a move away from the traditional / classical / humanities based educationthe traditional / classical / humanities based education

More education opportunities and the new focus on More education opportunities and the new focus on science, engineering, business….contributed to science, engineering, business….contributed to industrial expansion…more expertise……and better industrial expansion…more expertise……and better educated workerseducated workers

8. Government Policy8. Government Policy

The Republican Party became “the party of big-business”, supporting The Republican Party became “the party of big-business”, supporting investment and expansion…many industrialists were affiliated with investment and expansion…many industrialists were affiliated with the Party, some were representatives / held office (Gov. Stanford)the Party, some were representatives / held office (Gov. Stanford)

Supported Supported Laissez Faire EconomicsLaissez Faire Economics: non- interference: supported : non- interference: supported free enterprise system and open competition. free enterprise system and open competition.

Protection of industry through Tariffs - the Protection of industry through Tariffs - the Morrill Tariff, Morrill Tariff, and thenand then the the McKinley Tariff Act, of McKinley Tariff Act, of 1890, which increased rates to an 1890, which increased rates to an average of 48% (Wilson-Gorman Tariff)average of 48% (Wilson-Gorman Tariff)

Some small attempts to restrict monopolies through the Interstate Some small attempts to restrict monopolies through the Interstate Commerce Act / Commission (RR’s) and the Sherman Anti-Trust Act Commerce Act / Commission (RR’s) and the Sherman Anti-Trust Act – but they were not effectively enforced, and had many loopholes – but they were not effectively enforced, and had many loopholes (more on these later)(more on these later)

9. A large and growing supply of 9. A large and growing supply of labor and consumerslabor and consumers

Population Increase:Population Increase:

18611861 31m31m 18701870 40m40m 19001900 80m80m

Population increase and huge migration from rural to urban Population increase and huge migration from rural to urban areas…..source of labor and consumers areas…..source of labor and consumers

Between 1870 and 1890 the population of the major cities Between 1870 and 1890 the population of the major cities had tripled: NY had a pop. of 3.5 m (now the 2had tripled: NY had a pop. of 3.5 m (now the 2ndnd largest city largest city in the world behind London). Chicago, Philadelphia had in the world behind London). Chicago, Philadelphia had over 1m.over 1m.

Increase in immigration contributed: esp. from Southern and Increase in immigration contributed: esp. from Southern and Eastern Europe (New Immigration) in the 1880sEastern Europe (New Immigration) in the 1880s

25m immigrants arrived between 1865 and 191525m immigrants arrived between 1865 and 1915

SummarySummary 1. Resources / Raw Materials: old and new types1. Resources / Raw Materials: old and new types 2. New Technology, Inventions2. New Technology, Inventions 3. Scientific Management: Taylorism3. Scientific Management: Taylorism 4. Transportation: RR’s4. Transportation: RR’s 5. Investment Capital: Shoddy M’s5. Investment Capital: Shoddy M’s 6. Corporations6. Corporations 7. Improved Education7. Improved Education 8. Govt. Policy: Laissez Faire8. Govt. Policy: Laissez Faire 9. Increased Population / Supply of Labor, 9. Increased Population / Supply of Labor,

ConsumersConsumers