Chapter 6 Section 2 Expansion in American Industry

Chapter Six
Patent: license for an invention Horizontal Consolidation: many firms together in one business

Productivity: goods and Services made Trust: Many companies managed by a board

Transcontinental Railroad: Coast to coast Rail Road Sherman Anti Trust Act: Outlawed Trusts

Bessemer process: Strengthened Steel Piecework: More you do more you get paid

Mass Production: Lots of goods produced Sweatshop: power working conditions, low pay

Social Darwinism: Survival of the fittest Division of Labor: To separate tasks

Oligopoly: Market dominated by a few companies Socialism: Government runs economy

Monopoly : Market dominated by one company Craft Union: organization of skilled workers

Cartel: Loose association of businesses Collective Bargaining: Worker negotiates as a group

Vertical Consolidation : Control of many different businesses Industrial Union: Organized all workers

Economies of Scale: Production increases price falls Scab: Laborer hired for a striker

Anarchist: Oppose all government

1. changes in daily life

1861-1890 500,000 patents

By 1900 American standard of living is one of the highest in the world!

This achievement is a result of the nations growing industrial productivity

2. New forms of Energy

B. Electricity- Thomas Edison, inventor, never had a formal science education.

a. develops the electric light in 1880

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 b. Creates central power stations

C. Electricity improved – George Westinghouse 1885- Alternating current is cheaper and travels
longer distances. Transformers boost power. Westinghouse Electric lights 2 million homes.

D. Electricity’s Impact t on business

a. cheaper

b. Rapid growth of clothing industry

I. Sewing machines

c. Creates Jobs which immigrants fill

d. Refrigerators made possible

3. Advance in Communications

A. The telegraph – Samuel Morris perfects the telegraph and creates the Morris Code

B. Telephone-1876 Alexander Graham Bell. By 1900 1.5 million telephones in the USA.

4. Railroads create a national network before the Civil War; most of the nation railroads tracks
were in short lines that connected cities in the North East.

A. Transcontinental Railroad – Coast to Coast. Central Pacific Railroad and Union Pacific
Rail Road want to connect the East Coast with the West Coast starting in Omaha, Nebraska.
Federal government funds the project. This would strengthen the country’s economies
infrastructure.

a. Most workers were immigrants – Irish in the East and Chinese in the West.

b. Started in 1862 and finished in 1869

B. Railroad Development – By 1870 railroads carries goods and people from coast to
coast.

a. Gauges and signals become standard

b.1869 – George Westinghouse develops air conditioning frate cars

c. Helps develop towns along the Rail Roads tracks

C. Railroads and Time zones – In the 1800’s towns set clocks according to solar time. This
creates confusion.

a. 1883 – Railroads adopts national system of time zones. Still in use today!

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 D. Railroads and Industry

- A faster and more practical means of transporting goods

-Lowers cost of production

-Creation of National Markets

-Model for big businesses

-Stimulation of other industries

5. The Bessemer Project – Henry Bessemer and the Bessemer process made it easier and
cheaper to remove impurities from steel. This made it possible to mass produce steel.

A. Brooklyn Bridge is made using Bessemer Steel. Links Brooklyn to Manhattan. A

Chapter 6 Section 2

The Growth of Big Business

1. Robber Barons or Captains of Industry?

Robber Barons implied that business leaders built their fortunes by stealing from the public.

Captains of Industry gives business leaders of the time credit for increasing supply of goods and
creating jobs. Also establishes museums, libraries, universities!

Both views contain elements of truth!

A. John D. Rockefeller: Standard Oil Company. By the end of his life he gave 500 million to
establish charities and intuitions he believed would help improve humanity. One example is the
University of Chicago.

B. Andrew Carnegie. “Gospel of Wealth” People should be free to make as much money as they
can. After they make it, however, they should give it away. 80% of his fortune went to education.

2. Social Darwinism; Based on Charles Darwin’s theory of Evolution. “Survival of the fittest” It held that
society should do as little as possible to interfere with people’s pursuit of success. Only those “fit”
would become rich. Government must stay away!

3. Business on a larger scale:

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4. Gaining a competitive Edge

A. new market structures

a. Oligopoly: a market structure which is dominated by only a few businesses.

b. Monopoly: a market structure dominated by only one business

c. Cartel; Loose association of businesses that make the same product. They limit supply and
control price.

B. Carnegie Steel: Pittsburgh: Built companies that performed all phases of steel production.

Vertical Consolidation

a. Economies of Scale: As production increases, the cost of each product becomes less.
As Carnegie Steel expanded, its cost per item went down. Hurt smaller companies

c. the Standard Oil Trust: John D. Rockefeller.

a. Horizontal Consolidation-Brings firms in the same business together.

PG 241

b. Trust is created – 1882, the owners of Standard Oil and the companies allied with it agreed to
combine their operations. They would turn over their assets to a board of nine trustees. In return they
would promise a share of profits. Rockefeller controlled the board. This was a way around the law
against monopolies.

D. Sherman Anti- Trust Act: Out lawd any combination of companies that restrained interstate
commerce. Ineffective because the Courts were pro-business!

Section Three Industrialization and Workers!

1. Growing Work Force: 14 Million people immigrated to the United States between 1860-1900 They
come for the work and a better way of life.

A. American move from the country to the cities

2. Factory Work – 1860 is twelve hours a day, six days a week.

A. Piecework: those who work the fastest got paid the most

B. Sweatshops: Long hurts at low wages. Under poor working conditions.

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 C. The Principals of Scientific Management. 1881 Frederick Taylor began a study which looked
at workers, he was trying to see how much time they took to do various jobs. Brooke down each task
into a number of steps to determine how long each step would take.

Helped managers plan the work day a to set goals for production.

Other managers just set up machines to go faster. This is not cool!

Problem was that better efficiency lead to lay offs!

D. Division of Labor: People do the same task over and over. Only work on lone thing all day.
Took the joy out of seeing the finished product.

E. The work Environment; Factory workers ruled by the clock! Discipline is strict!

a. Work place unsafe, very loud, poor lighting and ventilation! No training: lots of
people need work. You do not like it the next fellow will take it!

b. Child Labor: Stunted physical and mental growth.

F. Working Families: 1880 Children make up five percent of the work force. They leave school
at age 12 or 13 . This had to do with Darwinism- The weak will die! No Government relief for families.

Section Four the Great Strikes:

1. Gulf between the rich and the poor. 1890 The richest nine percent of Americans hold 75% of
the nation’s wealth. Average worker only makes a few hundred dollars per year.

A. Socialism: An economic and political philosophy that favors public instead of private
control of property income

B. Karl Marx “communist Manifesto” Denounced the capitalist economic system and
predicted that the workers would one day over throw the rich.

2. Rise of Labor Unions: Unions began by providing help for members in bad times. Soon
became the mouth piece of the workers who wanted batter “stuff.”

A. AFL- American Federation of Labor 1186

a. Craft Union-Organized only skilled workers. Women and African Americans

b. Focused on wages

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 c. Relied on strikes and boycotts

d. collective Bargaining: workers negotiate as a group with employers. More

e. Closed shop: Meant you can not work if you did not join the union.

B. Reaction of Employers: they disliked and feared the unions. They took measures to
stop Unions such as

- Forbidding union meetings

-Firing union organizers

- “Yellow Dog” Contracts that prohibited workers from joining unions

-No collective bargaining

- Did not recognize unions

3. Railroad Workers Organize

A. Strike of 1877 – Workers did not agree with 10% cut in wages

a. prevented trains from running

b. Clash with local militia

c. Attacked rail road property

d. Federal government sends in troops

Industrial unions organized workers from all crafts in a given industry

4. Strikes Rock the Nation

A. Haymarket Riot- May 1, 1886 Workers want eight hour work day.

Scabs, negative term for a worker who is called in by employer to replace striking
laborers, are hired.

Scab Vs. Union Fight May 3

Bomb in Hay market Square is set of May 4 Chicago Ill.

Anarchists help strikers they appose all government rule

B. Homestead, 1892 – Carnegie Steel wants to cut wages

Pinkertons called in to break up the strike

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 Battle ensued in Pittsburgh

Carnegie Steele, latter US Steel, does not have another union until the 1930’s

C. Pullman strike 1894 – Rail Road Industry

- Pullman Town

- 25 % cut in wages and lay offs

- 260,000 Rail Road workers strike- rail road is shut down

- Courts side with Pullman and order workers back!

Government sides with BIG BUSINESS!