Chapter 20: The Industrial Age I. Railroads Spur Industry

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Unit 6

Transforming the Nation

Chapter 20: The Industrial Age

I. Railroads Spur Industry

A. A Network of Rails –The Civil War showed the importance of railroads by moving troops and supplies more quickly and cheaply.

       1. After the war railroads began connecting the nation.

a) Railroad companies created a network, or system of connected lines, across the nation and a standard gauge, or width, was implemented so that trains could use any company’s rails.

b) Three more transcontinental railroads were built.

2. Improving rail travel

a) The addition of sleeping and dining cars helped increase the ease and comfort of travelers and led to an increased number of passengers.

b) George Westinghouse invented the airbrake which allowed the engineer to stop all railroad cars at once. This increased safety and allowed for longer and faster trains.

3. Consolidation, or combining smaller lines, brings efficiency

a) Larger companies bought up smaller lines or forced them out of business.

b) The Pennsylvania Railroad consolidated 73 companies into its system.

4. Cornelius Vanderbilt built a Railroad empire that controlled 4,500 miles of track and linked New York to the great lakes region.

a) Vanderbilt consolidated many small railroad companies.

b) He used any means necessary to crush other railroad businesses.

c) Vanderbilt attempted to create the first real monopoly were one company controls all or most of a particular industry.


B. Eliminating the Competition

  1. In a rush to get into the profitable railroad business too many railroads were built.

    1. There were too few people, and too many lines, for rails to make a profit.

b) Fierce competition force lower and lower prices.

c) Big railroads began to secretly offer rebates (discounts) to large companies.

d) Larger railroad companies formed pools, where several railroads agreed to divide up business and fix prices at a higher rate.

2. Farmers began to organize themselves into cooperatives (the National Grange) to combat the tactics of the railroad barons.

a) The Populist party called for the regulation of railroad rates.
C. Railroads Fuel the Economy

1. Building rail lines created thousands of jobs.

a) Lumber is needed for railroad ties.

b) Coal is needed to fuel the engines.

c) Steel rail lines replaced iron.

d) Workers were hired to build the lines and work on the lines as engineers, conductors, waiters, porters, etc.

e) Companies began building passenger, dining, and sleeping cars.

II. The Rise of Big Business

  1. The Growth of the Steel Industry

1. The Bessemer process allows steel makers to make stronger, cheaper steel.

a) Steel replaces iron as the basic building material.

b) Steel girders supported the great weight of the new “skyscrapers”.

c) Steel mill sprang up throughout the U.S. Pittsburg became the steel making capital.

2. Andrew Carnegie made his fortune in the steel industry.

a) Carnegie used profits from his first mill to buy out his rivals.

b) He also bought iron mines, railroad and steamship lines, and warehouses.

c) vertical integration – gaining control of all steps used to change raw materials into finished products.

B. The Corporation and the Bankers

1. After the railroad boom, large factories put small, local factories out of business because they could distribute their goods to nationwide markets more cheaply.

2. These growing factories needed capital, or money for investment, to pay for their workers, raw materials, etc.

a) The corporation, a business owned by many investors, was created.

b) Corporations sold stocks, or shares of the company to investors. Then they used the money to make their business grow.

c) In return for their investment, stockholders hope to receive dividends, or shares of the corporation’s profit.

3. Corporations also borrowed millions of dollars from banks.

a) These loans helped American industry grow and made the banks huge profits too.

4. J.P. Morgan was the most powerful banker of his day. He used his banking profits to gain control of major corporations.

a) Morgan gained control of most railroad and steel industries including Carnegie’s U.S. Steel.

b) He directed companies in ways to avoid competition and increase profits.
I like a little competition, but I like combination (consolidation) more.”

-J.P. Morgan


C. John D. Rockefeller’s Oil Empire

  1. In the 1859 Americans discovered the value of oil.

    1. The first strike was in western Pennsylvania and prospectors soon followed ready to drill wells in search of oil.

    2. Instead of drilling for oil, Rockefeller realized that oil had little value until it was refined, or purified to make kerosene.

  2. Rockefeller used horizontal integration (take control of one aspect of an entire business) to increase his wealth.

    a) Rockefeller bought or took over almost every oil refinery in the United States.

b) He named his company Standard Oil and put his rivals out of business by slashing prices, pressuring customers, receiving huge rebates from railroads, and eventually would buy out the struggling refineries.

    c) He then created Standard Oil trust in 1882. A trust is a group of corporations run by a single board of directors.

d) The board of Standard oil trust was controlled by Rockefeller, who now managed all of the companies. This created a monopoly of the oil industry.

e) A monopoly controls all or nearly all the business of an industry.


D. The Case for and Against Trusts 

  1. The case against trusts.

    1. Leaders of giant corporations were abusing the free enterprise system, where businesses are owned by private citizens.

    2. Monopolies reduced competition

    3. There was no reason for companies to keep prices low or to improve their products.

    4. It was hard for new companies to compete.

    5. Some accused millions of “buying” favors from politicians.

    6. Congress approved the Sherman Antitrust Act in 1890, which banned the formation of trusts and monopolies. However it was too weak to be effective.

  1. The case for trusts.

    1. Andrew Carnegie published articles arguing that too much competition ruined businesses and put people out of work.

    2. Others argued that giant corporations brought lower production costs, lower prices, higher wages, and a better quality of life for millions of Americans.

    3. By 1900, Americans enjoyed the highest standard of living in the world.

III. Inventions Change the Nation

A. Speeding up communication- The telegraph had been used since 1844 in the U.S.

1. Communicating Across the Atlantic

a) 1866 – Cyrus Field laid a transatlantic (across the Atlantic) cable linking the U.S. and Europe.

b) Alexander Graham Bell formed the Bell Telephone Company in1877. The pace of business speeded up even more.

B. The Wizard of Menlo Park

1. In 1876, Thomas Alva Edison opened a research laboratory in Menlo Park, N.J. There, teams of experts worked on Edison’s ideas and translated them into practical inventions.

a) Edison invents the filament for the light bulb, the phonograph, storage batteries, a motion picture projector, and many other useful devices.

b)   Edison will say that “Genius is one percent inspiration and ninety nine percent perspiration.”

c) One of his most important inventions was the electric power plant, built in New York City in 1882.
C. Technology Takes Command

1. As technology increases, business became more efficient and life became easier.

a)1880’s- Gustavus Swift invents the refrigerated rail car. Now beef could be shipped all over the country even during summer.

b)  1888 - George Eastman invents the Kodak camera making it possible for the average family to take photos.

c) 1868 - Christopher Sholes perfected the typewriter
2. African American Inventors

a) Granville T. Woods found a way to send telegraph messages between moving railroad trains.

b) Elijah McCoy created a special device that oiled machines automatically.
3. Henry Ford revolutionizes the automobile industry with the assembly line, allowing for mass production of cars.

a) assembly line – workers stay in one place as products edge along a moving belt. Workers at each station are responsible for one task.

b) mass production – making large quantities of a product quickly and cheaply.

c) As prices dropped, more people could afford to buy cars. In 1900, only 8,000 Americans owned cars; By 1917, there were more than 4.5 million cars in America.

  1. The First Flight – Orville and Wilbur Wright owned a bicycle shop in Dayton, Ohio. After trying hundreds of designs, the Wright brothers tested their first “flying machine” on Dec. 17, 1903 in Kitty Hawk, North Carolina.

    1. By 1905 they had a plane that could turn, and remain in the air for up to half an hour.

IV. The Rise of Organized Labor
A. A New Workplace
1. Early factories were small, family run businesses that required both skilled and non–skilled workers. By the 1880’s, most factories where owned by large corporations and consisted of many workers tending to machines all day.

a) Because their skills where easily replaced, most workers were forced to work for low wages.

b) sweatshop- a workplace where people (mostly women and children) labor long hours in poor conditions for low pay.
2. Children at Work

a) 1900 -2 million children under the age of 15 worked.

b) 12 hour days, 6 days a week

c) no time for school – no chance for a better life as a result

3. Hazards at Work

a) textile mills – lung damaging dust filled the air

b) mines- cave-ins and gas explosions

c) steel mills – vats of molten metal spilled without warning

d) some workers had their health destroyed

e) others were severely injured or killed

B. The Rise of Organized Labor

  1. The Knights of Labor, led by Terence Powderly, allowed all people (women, African Americans, immigrants, and unskilled workers) to join the union.

    1. Powderly didn’t believe in strikes. He relied on rallies and meetings to win public support.

    2. Goals of the union – a shorter work day, an end to child labor, and equal pay for men and women.

    3. Powderly also wanted workers to share ownership and profits.

    4. 1885 – Some members had a strike that resulted in wages that had been cut being restored.

  1. In 1886, the Haymarket Riot broke out and weakened the union due to anti-labor sentiment.

    1. Striking workers clashed with strikebreakers, or replacement workers. Police opened fire and 4 workers were killed.

    2. Thousands of workers protested in Haymarket Square the next day. The rally was led by anarchists, people who oppose all forms of organized government. A bomb exploded at the rally killing seven police officers.

    3. As a result, membership in the Knights of Labor dropped sharply.

3. In 1886 Samuel Gompers formed the AFL, American Federation of Labor, which allowed only skilled laborers to join the union.

a) Workers joined trade unions, a union of workers working in the same trade. Then, the trade union joined the AFL.

b) The AFL’s goals included shorter hours, higher pay, and improved working conditions.

c) It led the fight for collective bargaining, the right of unions to negotiate with management for workers as a group.

d)Since African Americans, immigrants, and unskilled workers were not welcomed in most trade unions, they could not join the AFL.

4. ILGWU – In 1900, men and women formed the ILGWU, the International Ladies Garment Workers Union, and they would use strikes to gain attention.

a) After a strike in 1909, they gained better pay and shorter hour .

b) Still, most women with factory jobs did not join unions, and worked for low pay in unsafe conditions.


5. The Triangle Fire - In 1911, the Triangle Shirtwaist Factory burnt down killing over 150 people, mostly young women, because the doors had been locked.

a) The government reacted by passing new factory safety laws.

  1. Hard Times for Organized Labor - With rapid industrial expansion and fierce competition, the economy swung wildly between good times and bad.

1. Strikes - Each time a recession occurred, corporations fired factory workers or cut their pay.

a) 1877 – Railroad workers went on strike because of pay cuts, shutting down rail lines across the country. In some places rail lines were burned and track was ripped up.

b) 1870’s -Miner’s strike in the West.

c) Government almost always sided with businesses during strikes, often sending in troops to break up the strike.

      d) Judges ordered workers back to work with legal injunctions against strikes.

  1. The Pullman Strike- In 1893, George Pullman cut the pay of workers at his railroad car factory but did not reduce the rent his workers paid for their company owned houses.

    1. Workers went on strike

    2. A federal judge ordered Pullman workers back to work.

    3. Strike leaders were put in jail for violating the Sherman Anti-Trust Act. The court said that the strikers were limiting free trade.

Chapter 20 Notes

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