Industrialization & Big Business
Industrialization First began in US during the early 1800s Accelerated during the Civil War By 1900, US had become the world s leading industrial power
Natural Resources US had plentiful natural resources: Water Timber Coal Iron Copper Oil Large workforce, thanks to immigration
Laissez-faire Approach by Government US government supported the free enterprise system Kept taxes low Minimal regulation of businesses Made no effort to control wages or prices Did, however, enact high tariffs to protect US industries from European competition
Steel Used for building railroads, heavy machinery, and skyscrapers and other buildings Stronger, lighter, more durable, and more flexible than iron
Bessemer Process Developed by Sir Henry Bessemer, put into mainstream use in US by Andrew Carnegie New process for making steel more efficiently and cheaply, while also producing steel of a superior quality
Andrew Carnegie 1835 1919 Scottish immigrant Started from poverty, worked his way up through telegraph and railroad companies until he eventually made a fortune investing in his own steel company In 1901, Carnegie sold his steel company for $230 million and began pursuing philanthropic interests. By the time of his death, he had given away nearly $450 million!
Created in 1901 when J.P. Morgan bought out Carnegie and several other large steel manufacturers to create the world s first billion-dollar company U.S. Steel
Oil First major US oil well was drilled in Pennsylvania by Edwin L. Drake in 1858 Richest oil finds of 19 th century would come in Texas and Oklahoma Used at first for making kerosene for lighting, but later used to power and lubricate machinery
John D. Rockefeller 1839 1937 Became rich off his nearmonopoly in the American oil industry First billionaire in US; was worth $1.4 billion when he died (That s about $600 billion in today s dollars) He held a little over 1% of the total wealth of the US!
Standard Oil Company Created in 1870 by Rockefeller and several partners Volume pricing allowed Standard Oil to bankrupt any competitors who refused to sell out Became so powerful a monopoly that it was ordered broken up by the Supreme Court in 1911
Railroads Railroads became the lifeline of all American agricultural and industrial production Moved natural resources to the factories, farm goods to market, and manufactured goods to distributors
Cornelius Vanderbilt 1794 1877 The Commodore Dropped out of school to operate a ferry business which grew into a huge fortune in the shipping and railroad industries Founded Vanderbilt University with a $1 million donation, the largest in US history at that time One of his grandsons built Biltmore House in Asheville, NC
Electricity Vital to new industrial growth, the ability to use electrical power to create light and run machinery allowed factories to run 24 hours a day Electricity also opened up new avenues of entertainment
Thomas Edison 1847 1931 The Wizard of Menlo Park Holder of over 1000 patents Developed the phonograph, the light bulb, and motion picture camera Founder of Edison General Electric Company, which later became General Electric (GE) A better developer of ideas than marketer, many of his inventions would make other people rich
George Westinghouse 1846 1914 Inventor, who developed the air brake and rotary steam engine for the railroads Made his fortune in electricity by backing Nikola Tesla s alternating current (AC) method of electrical distribution over Edison s direct current (DC) method
Westinghouse Electric Company Founded in 1886 Became first commercially successful electric power company Also continued to develop devices that used electricity, like kitchen appliances and lighting fixtures
Banking & Finance Larger and more powerful banking firms were needed to loan money to these new megacorporations Small banks began to merge, just as small corporations had merged into monopolies like US Steel and Standard Oil
J.P. Morgan 1837 1913 Financed the merger of steel companies into the giant US Steel; also financed the merger of electric operators into General Electric Key stakeholder in several other corporations, including International Harvester, AT&T, and numerous railroads Was scheduled to sail on the Titanic, but cancelled his reservation at the last minute
Tactics of Industry Monopolies: control of an entire market or good by a single corporation Trusts: combination of independent corporations under one group of managers Holding companies: ownership of multiple companies by a single controlling company which doesn t actually produce anything itself Interlocking Directorates: when the directors of one company serve on the board of directors of multiple other related companies
Integration Vertical Company buys all of the different businesses on which it depends for its operations Controls all of its suppliers from the natural resources on up Controls all of the companies which transport and distribute its products Horizontal Company buys out all of its competitors to create a larger more efficient corporation Ultimate form of horizontal integration is the creation of a monopoly
Other Key Inventions Alexander Graham Bell s Telephone Elisha Otis Elevator Thaddeus Lowe s Ice Machine Gustavus Swift s Refrigerated Railroad Car Standardization of clothing & shoe sizes