The Gilded Age
Mr. Williams
10th Grade U.S. History
•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
Pacific Railway Act
• Signed in 1862 by Lincoln
• Provided for right-of-way
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
• Built Grand Central Terminal
• 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 coal, steel,
timber, etc.
• Linked major markets spurring
industry as well
Effects of Industrialization
• Workers left farms for factories
• Machines replaced had made
goods
• U.S. became world’s leading
industrialized nation
• GNP-total value of goods and
services X8 from before Civil War
Lesson Goal(s)
• Identify the causes of
industrialization.
• Analyze the reasons for and
impact of the rise of big business.
• Examine the impact of laissez-faire
government.
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
• Govt. 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?
Getting Started
• Entrepreneurs: People who
decide to start a business and
take a risk
• Collect information about
business, factors of production
for products, and learn about
taxes and laws relating to
businesses
• Corporation: organization owned
by many people but treated by
law as a single person
• Own property, pay taxes, make
contracts, sue and be sued
• Stock: people who own the
corporation are stockholders, they
own shares
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.
• Bessemer 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, founding 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
other refineries and combined
them 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
Causes of Rise in Big Business
• Little or no government
interference
• Development of trust and
ultimately monopolies
• Small businesses could not
compete with larger businesses
because of their practices
Gilded Age
• U.S. became world’s leading
industrialized nation
• GNP-total value of goods and services
X8 from before Civil War
• Social Darwinism: Stronger people,
businesses, and nations would
prosper while weaker ones fail.
Writing Response-
What has to happen in
Capitalism/Free Enterprise for the
economy to be efficient? Why?
During the Gilded Age, the
government was strictly laissezfaire. What does this mean? Was
this a good thing or bad thing for
the country during the time?
3.8 Format