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The Gilded Age The Rise of Big Business

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Essential QuestionEssential Question: What factors led to the rise of the American Industrial Revolution from 1870 to 1900? Warm-Up Question:Warm-Up Question: Examine the image on the next slide & answer the question: What important changes took place during the Gilded Age?

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What important changes took place during the Gilded Age? Were these changes good or bad for America? Explain

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A Brassy, Flamboyant Age Gilded Age: {Reconstruction (1877) - - Progressive Era (1901)} brassy, flamboyant age dominated by big business values, political corruption, and extremes of wealth and poverty

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From Agriculture to Industry During Gilded Age, U.S. experienced rapid shift from an agricultural economy to an industrial one

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Major Developments Major developments: 1.Industrialization 2.Urbanization 3.Immigration

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New Types of Organization New types of organization: 1.the corporation 2.labor unions 3. Ethnic neighborhoods

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Essential Question Industrialization increased the standard of living and the opportunities of most Americans, but at what cost?

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Relative Share of World Manufacturing

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U.S. becomes an economic power (GNP) Gross National Product Total value of all goods and services produced

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USA in the Gilded Age: 1870-1900 The North: Experienced an industrial revolution, mass immigration, & urbanization

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Gilded Age Industrialization During the Gilded Age (1870-1900), the United States experienced an Industrial Revolution: New technology, transportation, efficient mass-production spread ideas & industrial products By 1900, the U.S. was the U.S. the most industrialized country in the world

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An Age of Invention The Gilded Age was an Age of Invention U.S. Patents Issued (1850-1899)

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An Age of Invention The Gilded Age was an Age of Invention Cash registers, adding machines, business typewriters Alexander Graham Bell invented the first telephone The Bessemer process transformed iron into stronger, lighter steel What is it?

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An Age of Invention The Gilded Age was an Age of Invention Thomas Edison (Wizard of Menlo Park) was the greatest inventor of the 1800s In his research lab in New York, he created the 1 st audio recorder, phonograph, and batteries His most influential invention was the 1 st electric light bulb What is it?

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The Business of Invention New innovations allowed for increased industrial production New machines were incorporated into the 1 st assembly lines which allowed for faster mass production Railroads linked all regions Americas wealth of iron, oil, coal, immigrant labor, & investment capital (money) supplied factories

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The Industrial Revolution was fueled by 4 industries (R.O.S.E.) Railroads, Oil, Steel, Electricity

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The Rust Belt Industrial Resources: Iron, Coal, Railroads, & Steel Plants

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The Railroad Industry Americas first big business was the railroad industry: Railroads stimulated the coal, petroleum, iron, steel industries Railroad expansion into the West allowed the antebellum market revolution to grow Large companies bought small railroads, standardized gauges & schedules, & pooled cars Eastern RRs were connected to the West by 4 great trunk lines

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Railroad growth fueled industrial development 100,000 miles of track laid between 1877 - 1893 standardization of gauge width of tracks (4 feet, 8 1/2 inches) [encouraged development] time zone adoption allowed U.S. divided into four zones massive grants of American land 131 million acres -- federal 49 million acres -- states

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Cornelius the Commodore Vanderbilt was the most powerful figure in the railroad industry Jim Fisk

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Railroad Construction in the Gilded Age

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Oil provided kerosene lighting & lubrication for industrial machinery

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Steel Production

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Wadsworth Building, NYC Steel transformed world industry: Allowed for taller buildings, longer bridges, stronger railroad lines, & heavier machinery

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International Steel Production, 1880-1914

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Efficiency & Mass Production in Factories

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Causes of Rapid Industrialization 1.The Railroad fueled the growing US economy: * First big business in the US. * A magnet for financial investment. * Aided the development of other industries.

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Causes of Rapid Industrialization 2.Technological innovations. * Bessemer and open hearth process * Refrigerated cars * Edison Wizard of Menlo Park light bulb, phonograph, motion pictures.

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Causes of Rapid Industrialization 3.Unskilled & semi-skilled labor in abundance. U.S. population 3x from 1860 - 1910 4.Government aid at all levels to stimulate economic growth High tariffs {hurt exporters (farmers)} 5.Abundant natural resources H 2 O, timber, coal, iron, copper, and oil

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New Business Culture Individuals should compete freely in the marketplace. No room for government in the market! French -- "let it be" Laissez Faire an ideology of the Industrial Age

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New Business Culture People who risk their $$$ in organizing and running a business French -- "to undertake" Entrepreneurs (another) ideology of the Industrial Age

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New Forms of Business Organization Corporation: an organization owned by many people, treated (by law) as a single person People who own the corporation are called shareholders The share of ownership is a stock Limited liability

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New Forms of Business Organization During the Gilded Age, business & industry were transformed: Massive corporations replaced small, family businesses Managers were hired to make factories run more efficiently New business models, such as trusts & holding companies, integrated various businesses under 1 board of directors

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New Business Organization Combinations of Corporations (WHY?) increases efficiency and profits destroyed healthy competition that often makes capitalism a viable economic model

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New Business Organization: Board of Trustees (Trust) Board of Trustees Company Manager Employees Trusts use a board of trustees to manage a company

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New Business Organization: The Holding Company Holding Company Company A Company D Company E Company B Company F Company C Company G Company H Holding companies oversee & manage other subsidiary companies

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New Forms of Business Organization Corporations in the Gilded Age used mergers to increase profits Companies used horizontal integration to buy similar companies to reduce competition Vertical integration allowed companies to buy companies that supply raw materials or transportation for their products

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Vertical & Horizontal Integration

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Monopolies Corporate mergers led to giant companies called monopolies: Companies that control nearly all of a particular industry Because most monopolies of the Gilded Age were run by boards of trustees, monopolies became known as trusts Monopolies led to a new generation of U.S. millionaires

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U.S. Corporate Mergers By 1900, 1% of U.S. companies controlled 33% of all industry

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The Monopolists Andrew Carnegie created the Carnegie Steel Company: He converted to the Bessemer process & was able to out-produce his competition & offer better quality steel at lower prices He mastered vertical integration to lower his production costs His company made more steel than all the factories of Great Britain

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U. S. Steel Corporation When he retired in 1901, he sold Carnegie Steel to financier J. P. Morgan for over $400 million dollars. Morgan subsequently reorganized the company into the United States Steel Corporation. U S S

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Andrew Carnegie s rise from a poor Scottish immigrant to one of the richest men in the world was the great example of the American Dream Carnegie did not pay his employees very much & did not allow unions in his factories but he was a philanthropist who gave money to New York City libraries, colleges, & performing arts institutions

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The Monopolists John Rockefeller created the Standard Oil Company He used horizontal integration to create a petroleum company that monopolized the oil industry, lowered costs & improved quality By 1879, Standard Oil sold 90% of all U.S. oil & sold to Asia, Africa, & South America

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Rockefeller was labeled a robber baron who took advantage of immigrant workers, driving his competition out of business, & used his fortune to influence the national gov t but Rockefeller gave away $500 million to charities, created the Rockefeller Foundation, & founded the University of Chicago

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Captains of Industry Entrepreneurs were able to achieve unprecedented wealth and power.

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The Robber Barons of the Past Robber Barons of the Gilded Age

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Giant Corporations By 1900, 2/3 of all manufactured goods were being produced by giant corporations Swift and Armour dominated meat packing Duke family controlled tobacco Andrew Carnegie took over every aspect of steel production. Swift arm our 1889 Duke Tobacco Advertisement Swift arm our

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Distant Corporations Needs once met by self-sufficient rural folk now met by large corporations usually located in the Northeast

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Life Profoundly Changed Allan Nevins & Henry Steele Commanger provide a vivid description of the impact of corporations on these rural folk: The life of the average man, especially if he was a city dweller, was profoundly changed by this development.... When he sat down to breakfast he ate bacon packed by the beef trusts, seasoned his eggs with salt made by the Michigan salt trust, sweetened his coffee with sugar refined by the American Sugar trust, lit his American Tobacco Company cigar with a Diamond Match Company match.

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The Way We Were in The Gilded Age: 1877-1901 Who We WereHow We Lived 188018901900188018901900 Population (millions) 50.263.0 76.0 Gallon of milk $0.16$0.17$0.30 Pop. per sq. mile 16.921.225.6 Loaf of bread $0.02 $0.03 Percent rural71.8%64.9%60.4% New auto N/A $500 Percent urban28.2%35.1%39.6% Gallon of gas N/A $0.05 Percent native born 94.4%87.1%84.4% New house $4,500$5,800$4,000 Percent immigrant 5.6%12.9%15.6% Average income $480$660$637

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Conclusions Due to the Industrial Revolution: The United States led the world in industry, innovation, & wealth Laissez-faire govt policies & new business tactics led to monopolies However, the gap between the wealthy monopolists & their poor immigrant workers grew wider