the gilded age mr. williams 10 th grade u.s. history
TRANSCRIPT
The Gilded Age
Mr. Williams10th Grade U.S. History
Causes of Industrialization• Great amount of natural resources• Large work force• High tariffs reduce the import of
foreign goods• National transportation and
communication networks
Pacific Railway Act• Signed in 1862 by Lincoln• Provided for the construction of a
transcontinental railroad by two companies• Union Pacific began westward from
Omaha, Nebraska• Central Pacific Railroad began
eastward from Sacramento, CA
Cornelius Vanderbilt• By 1869 had purchased and merged
three short New York railroads to form New York Central• First railroad to connect N.Y. to Chicago• 1871 began building Grand Central
Terminal in NYC• At time of his death worth an
estimated $100 million
Effects of Railroad• Created many jobs: building
railroad tracks and cars, engineers, firemen, brakemen, mechanics, loaders, machinists, etc.• Increased demand for resources:
coal, steel, timber, etc.• Linked major markets spurring
industry as well
Effects of Industrialization•Workers left farms for factories•Machines replaced hand made
goods• U.S. became world’s leading
industrialized nation• GNP-total value of goods and
services X8 from before Civil War
Types of Economic Systems
• Traditional Economy•Command Economy•Market/Capitalist Economy•Mixed Economy
Capitalism• Economic system in which most
businesses are privately owned (by people not govt.)• Laissez-faire (“Leave Alone” or
“Hands Off”) : companies operate without government interference
Freedom of Enterprise • Individuals own and control the
factors of production• Success is NOT A GIVEN• Government plays a hands off
role BUT places some restrictions on businesses to protect individuals
Freedom of Choice •People can buy what they
want •Demand determines what is
produced•What happens if no one wants
your product?
Competition
•Different people produce similar products and services•How do different companies
compete?
• Entrepreneurs: People who decide to take a risk and start a business • Collect information about
business, factors of production for products, and learn about taxes and laws relating to businesses
Getting Started
• Corporation: organization owned by many people called stockholders but treated by law as a single person• Own property, pay taxes, make
contracts, sue and be sued• Stock: shares of ownership which
allow corporation to raise money
•What was the Industrial Revolution?•Where did this start?•Why?•Effects?
Causes of Industrialization• Great amount of natural resources• Large work force• High tariffs reduce the import of
foreign goods• National transportation and
communication networks
Capitalism• Economic system in which most
businesses are privately owned (by people not govt.)• Laissez-faire (“Leave Alone” or
“Hands Off”) : companies operate without government interference
Andrew Carnegie• Scottish Immigrant came to
America at the age of Twelve• Started out cleaning bobbins
in a factory for $1.20/week. When he retired, he sold company to J.P. Morgan for $480 million.
• Carnegie Steel plant could churn out ten thousand tons a week• Cut the cost of making rails in half
from $58 to $25 a ton• “Cut the prices, scoop the market,
run the mills full; watch the costs and profits will take care of themselves”
How did he do it?
Vertical Integration• All aspects of business were under
Carnegie’s control •Mining of the ore to its transport
to the Great Lakes to the production of crude steel and rails
• “From the moment these crude stuffs were dug out of the earth until they flowed in a stream of liquid steel in the ladles, there was never a price, profit, or royalty pain to any outsider.”
John D. Rockefeller •1870, he incorporated his oil
business, founded the Standard Oil company which is the precursor to Exxon •Owned 90% of oil refining
business by the end of his career
How did he do it?The TRUST• Form of HORIZONTAL
INTEGRATION, where he took over and combined other oil refineries into one large corporation• Board of trustees ran companies
like a single corporation.
•Once Trust gained complete control over an industry, it held a MONOPOLY• Single company achieves
control of an entire market• This could raise prices or lower
quality at will
•Also used Vertical Integration•Acquired companies that
supplied oil business, such as pipelines and railroad cars•Before he died, Rockefeller
became the country’s first Billionaire
Gilded Age• U.S. became world’s leading
industrialized nation• GNP x 8 from before Civil War• Number of millionaires increases-
Carnegie, Rockefeller, Vanderbilt, J.P. Morgan, etc.
• Social Darwinism: Stronger people, businesses, and nations would prosper while weaker ones fail.• Little or no government
interference (Laissez-Faire)• Small businesses could not
compete with the monopolies• Average worker made $500/year
Writing Response-
What has to happen in Capitalism/Free Enterprise for the economy to be efficient (for it to be fair)? Why? During the Gilded Age, the government was strictly laissez-faire. What does this mean? Was this a good thing or bad thing for the country during the time?
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