T1/3/12; T12/21-W12/22/10

Ch. 18.1 – Industrialization & Labor Strife

(Part 1; pp. 503-515)

Q: What impact did industrialization have on the U.S. in the late 19th Century?

I. Factors in Industrialization• 6 main features to modern industrialization1) new cheap energy source – coal (WV, PA, KY)2) spread of technology & impact on factories3) need for cheap labor4) desire for competition among companies5) rapid deflation6) failure of money supply to keep pace –

devalued money and restricted credit

II. Railroad BuildingA. Corporate Model• provided earliest industrial model• other business would use RR as examples1. Issued Stocks• RR’s were very expensive• stocks depended on success of company2. Use of Technology• esp. telegraph to coordinate RR movement3. Created Organizational Hierarchies• efficiency, departments & hierarchy – greater organization• created time zones; similar gauge sizes

Railroad & Manufacturing

B. Early RR Leaders

1. Jay Gould – RR’s• classic early industrial leader• “robber baron” vs. “captain of industry” • ruthless in business practices • elimination of competition – good or bad?

B. Early RR Leaders (cont.)

2. Cornelius Vanderbilt – RR’s• shipping – “The Commodore”• moved into RRs during C.W.

• great consolidation in RR business• about 7 companies by 1900• RR companies racked up heavy debts• RR’s greatly hurt by Panic of 1893

III. Other Business Leaders

A. J. Pierpont Morgan – finance • investment banking• J.P. Morgan (now w/ J.P. Morgan/Chase Bank)

& Morgan Stanley today)

III. Other Business Leaders (cont.)

B. Andrew Carnegie – steel • immigrant – “rags to riches” example• educated himself, hard working, industrious• began in telegraph moved to steel in 1870s• Carnegie Steel - model of large corporations • 1st billion dollar comp• vertical integration – control most, if not all, aspects

of production• great philanthropist as well

III. Other Business Leaders (cont.)

C. John D. Rockefeller – oil • Standard Oil Co. established in 1870• kept up w/ latest innovations• horizontal integration (90% by 1879)• horizontal – control most, if not all, competitors in a

business• both horizontal & vertical methods were effective in

consolidating corporate power• created Standard Oil Trust in 1882• trusts & holding companies

IV. Early Regulation Laws

A. Interstate Commerce Act• passed in 1887 by Sen. Shelby M. Cullom (IL)• created ICC to oversee RR practices going through

more than one state • relatively weak & ineffective until Hepburn Act of

1906

IV. Early Regulation Laws (cont.)

B. Sherman Anti-Trust Act - 1890• Standard Oil Trust’s example • Became model for other industries (charts p. 511)• Sen. John Sherman (OH) passed new law• outlawed trusts and other contracts that restrained

trade• vague wording of trust and restraint of trade• often used to break up unions• similar weakness to ICC (until Progressive Era)

V. Major Inventors• electricity• refrigerated cars (Gustavas Swift)• new technological advances (Bessemer process, bottle

making, canning, etc.)• sewing machines – now mass-produced – Singer Sewing

Machine Co. – 1860s• telephone – Alexander Graham Bell – 1876• great optimism about power of inventions• allowed for more “free time” • often eliminated skilled labor

V. Major Inventors (cont.)

• Thomas Alva Edison – many big inventions– stock-quotation printer – 1868 (1st big invention)– phonograph – 1877– light bulb – 1879– movie camera & film, microphone

• Edison Plant in Menlo Park, NJ (“Wizard of MP”)• research (R&D departments)• collaboration of science & business• Edison Illuminating Co. – 1882 (ConEd – NYC) • later merged w/ competitors to form GE• worked collaboratively w/ Westinghouse