Industrialization and the "Gilded Age" Late 1800’s

1. Industrialization and the "Gilded Age"Late 1800’s

2. Economic Growth • During and after the Civil War, the United States started to experience economic growth. • The United States was becoming an industrialized society during the 19th century. • Industrialization: when a country moves away from farming and starts producing goods in factories.

3. Economic Growth • During the first half of the 19th century, the government had done the following things to help businesses: • Started a national bank: this provided capital (money, loans) that businesses needed. • Buying land in the west helped business (Louisiana Purchase, Treaty of Guadalupe-Hidalgo, Oregon, etc) • Raised the tariffs in order to make American goods cheaper than goods coming from other countries. • The Republican Party believed in a strong national government that helped businesses through building railroads, building roads, and starting a national bank. • Democrats, on the other hand, believed in a limited government with states having more power.

4. Transcontinental Railroad • During the Civil War, Republicans in Congress decided to build a Transcontinental Railroad. • Republicans believed in a powerful government that could build railroads, bridges, canals, etc. • Transcontinental meant that the railroad would link the east coast to the west coast. • Because there were no southern Democrats in Congress, the railroad was built primarily in the North. • The transcontinental railroad and railroads in general created a “national market.” • A “national market” means that people in the East could buy things from people in the West.

6. Transcontinental Railroad • The railroads also had a negative effect on Plains Indians. The buffalo were killed to make room for the railroads.

9. Inventions • Samuel B. Morse invented the telegraph, which used electrical currents and “Morse code” to send messages. • Alexander Graham Bell invented the telephone. • Thomas Edison invented the light bulb. This enabled factories to stay open after dark.

16. Henry Ford • Henry Ford improved upon the automobile when he began mass production. • Ford used an assembly line, which allowed him to produce cars at less cost. • This allowed him to sell the cars at a cheaper price that most people could afford.

20. Giants of Industrialization • The railroad industry was one of the first industries to take off around the time of the Civil War. • Railroads made life out west possible by allowing farmers, ranchers, and other settlers access to eastern markets. • A few men got rich building railroads. • Because some of them were known to be crooked in their dealings, they were called “robber barons.” • One key figure in the railroad industry was Cornelius Vanderbilt.

23. Giants of Industrialization • In 1859, oil was discovered in western Pennsylvania. • John D. Rockefeller became one of the nation’s richest and most powerful businessmen due to the discovery. • Rockefeller’s company was called Standard Oil. • It was one of the nation’s first trusts. A trust is when several companies unite to form one big company. • This creates a monopoly, meaning that there is no market competition.

24. Net Worth: 663.4 billion

25. Andrew Carnegie • Andrew Carnegie was another leader in industry. • He became rich by starting his own steel company. • In the 1850s, a man named Sir Henry Bessemer developed a new method for making steel. • This new method was called the Bessemer process. • The Bessemer process made steel much cheaper, and allowed Carnegie to become rich.

27. J.P. Morgan • J.P Morgan was another powerful industry leader. • He was a banker who bought out dozens of banks. • By 1913, all of his companies and associates had assets over $22 billion. • Morgan bought out Carnegie’s steel company and named it U.S. Steel. • He paid $500 million for the company.

29. Vertical Integration • Carnegie’s success was because of a business strategy called vertical integration. • Vertical integration is when a company owns not only the company that produces the finished product, but also the companies that provide the supplies necessary to make the product. • Carnegie owned a steel company. • So, Carnegie purchased railroads (for transporting his steel). • He also purchased iron ore deposits, coke fields, and anything else needed to make steel.

30. Horizontal Integration • John D. Rockefeller used a business strategy called horizontal integration. • In horizontal integration, Rockefeller tried to buy out all of the people who competed with him in the oil industry. • He would price his oil so low that it would drive other companies out of business. • Once the other companies were out of business, he would raise the price to make more profits. • The public became very concerned about the monopoly he was creating. They felt that he was “robbing” them of money.

31. Horizontal Integration • Rockefeller also pressured the railroad companies into allowing him to transport his oil and materials at cheap prices.

32. HorizontalVertical

33. “Robber Barons”

34. “Captains of Industry” • The term “captains of industry” was another term used to describe Rockefeller, Carnegie, etc. • This was a better term because it focused on the positive things that they did. • For example, Carnegie wrote an article called “The Gospel of Wealth.” • Carnegie said that it was the responsibility of the wealthy to use their money to help others.

35. Social Darwinism • The ruthless strategies that the business leaders used was often justified by Social Darwinism. • Social Darwinism is when Charles Darwin's’ ideas are applied to human society. • In other words, life is “survival of the fittest.” • So, businesses that survived were thought to be the strongest, while those who didn’t were weak. • These weak businesses deserved to die out based on this idea.

36. Laissez-Faire Capitalism • Those who believed in Social Darwinism also believed in laissez-faire economics. • Laissez-faire means “hands off” in French. • So, what the businessmen believed was that the government should be “hands off” of the economy. • Since the strongest always survive (according to Social Darwinism), then the government should not interfere with business. • They believed in letting the market take its natural course.

37. The Gilded Age • During the late 1800s, a few people got very wealthy. (Carnegie, Rockefeller, Morgan, etc) • But many people in the rest of the country still lived in poverty. • They also labored in harsh working conditions for low pay. • For this reason, the time period was called “The Gilded Age.” • This means that everything looked golden on the outside, but on the inside there were huge problems.

38. Farmers • As more farmers moved west, they produced an abundance of cash crops. • With the new farming technologies (steel plow), farmers were able to produce a lot more. • Eventually, SUPPLY was greater than DEMAND. • Farmers had more crops than they could sell. This is called overproduction. • To top it all off, farmers had to pay high prices to pay railroad owners high prices to transport their crops.

39. Farmers • Farmers wanted change. They wanted the following things to happen: • They wanted the government to regulate the railroads and set prices that were cheaper. • Agricultural subsidies: they wanted the government to pay them when they lost money. • They wanted for soft (paper) money to be circulated. • Bimetallism: they wanted the dollar to be backed by gold AND silver – not just gold.

40. Government Regulation • For the most part, the government was on the side of the big business leaders, not the poor. • But in the 1880s, some laws were passed to regulate business. • In 1887, the Interstate Commerce Act was passed. It created the Interstate Commerce Commission (ICC). • The ICC made sure that prices set for railroad rates going between states were fair. • In 1890, Congress passed the Sherman Antitrust Act. • This law made monopolies illegal. • Despite this law, monopolies still continued.

41. The Grange • To deal with the problems they were facing, farmers organized a group called The Grange. • In the Grange, local farmers pooled their resources and purchased new equipment. • They also worked together to demand that the railroad companies lower their prices. • Some states passed laws called Granger Laws to help farmers.

42. Effects of Industrialization • Because of industrialization, income inequality increased. Income inequality means that there is a large gap between the rich and the poor. • The rise of big business was not all bad for regular people. • The standard of living rose in the second half of 1800s. • Standard of living means how well people are living based on money, comfort, etc. • Also, new inventions meant that people were able to buy consumer goods for the first time.

43. The Populist Party • The Populist Party was created in the late 1800s to respond to the demands of farmers. • The populist Party focused on trying to help the “common man.” • Its main support was farmers and factory workers in the northeast.

44. The Populist Party • The Populist Party supported the following things: • Regulation of railroads • Bimetallism – gold AND silver • Popular election of Senators: Senators were chosen by state legislatures. The Populist Party wanted the people to vote on Senators. • Secret voting ballots • Graduated income tax – meaning the rich pay more taxes • An 8- hour work day, instead of 10, 12, or 14 hour workdays.

45. The Election of 1896 • In the 1890s, the country was in on the worst economic depressions ever. • The election was between Democrat William Jennings Bryan and Republican William McKinley. • The election was a debate about bimetallism. • William Jennings Bryan supported bimetallism (both silver and gold) while McKinley only supported the gold standard. • Bryan also supported “soft” (paper) money, while McKinley only supported “hard” (coin) money. • Farmers wanted both gold and silver standard and soft money.

46. The Election of 1896 • William Jennings Bryan delivered a very famous speech in which he told his opposition to the gold standard. • This speech is called “The Cross of Gold” speech. • “You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold!” • Despite his amazing speech, William Jennings Bryan lost the election. • Factory workers were afraid that Bryan’s policies would raise the price of food. • The Populist Party ended after this election.

49. Urbanization • During the late 1800s, cities began to grow exponentially. • Cities in America began as trade/port centers and then shifted to centers of transportation because of trains and canals. • Then, with the invention of electricity, cities became centers of industrial production. • The elevator, electric trolley cars, and subways allowed cities to grow “up” and “out.” • Cities also grew because of the bad situation affecting farmers. • As farmers defaulted on their loans, they had to move to the cities to work in the factories. • Despite the huge growth of cities, the majority of Americans lived outside the cities until 1920.