CHAPTER 14:
INDUSTRIALIZATION
Why it Matters:
• Corporations continue to play an important role
• Technology continues to change American Life
• Unions remain powerful in many industries
Created by
Leanne
Reaves
BELLWORK
 October 21 , 1 870: Edison and his team of
workers were too excited to sleep. For weeks
they had worked to create an electric
incandescent lamp, or light bulb, that would
burn more than a few minutes. It was a huge
challenge to create a light source that was
cheaper and safer than candles.
 “ We sat and looked as t he lamp continue to
burn and t he longer it bu rned t he m ore
fascinated we were. We sat and just watched
it burn for 45 hours. If I could m ake it burn
for 40 hours, I can m ake it bu rn a hundred.”
 Question: How has the invention of a light
bulb changed life? How would your life be
altered if you did not have electricity? What
would be the biggest challenge if you no
longer had electricity? Explain.
CHAPTER 14: INDUSTRIALIZATION
 Industrialization: time period of
extensive industrial growth, that
changes the social and economic
status quo of the day.
 A. Industrial Revolution began in the
early 1800s, but America did not have
the people or resources until after the
Civil War.
 B. By the start of the 1900s, America
had transformed into the leading
industrial nation.
 By 1914, the nation’s gross national product
(GNP)– the total value of goods and services
produced by a country– was eight times
what it was prior to the Civil War.
 GDP– Gross Domestic Product (in US ONLY)
INDUSTRIAL REVOLUTION, EUROPE
GDP REAL GROWTH RATE, 2013
GNP, 2012 AND 2013
Rank
2013
2012
1
United States
16,967,740
United States
16,430,393
2
China
8,905,336
China
7,724,734
3
Japan
5,875,019
Japan
6,084,013
4
Germany
3,716,838
Germany
3,632,843
5
France
2,789,619
France
2,749,106
6
United Kingdom
2,506,906
United Kingdom
2,439,784
7
Brazil
2,342,556
Brazil
2,312,072
8
Italy
2,058,172
Italy
2,072,306
9
Russia
1,988,216
India
1,913,178
10
India
1,960,072
Russia
1,824,088
CHAPTER 14: INDUSTRIALIZATION
 Factors that Transformed
Industrial Output in the 1900s
 1. Natural Resources
 Abundance of raw materials that
could be attended cheaply-- water,
timber, coal, iron, copper, petroleum,
and oil
 2. Large Workforce
 Between 1860 and 1910, the
population tripled due to large
families and a flood of immigrants
(over 20 million during this time)
 3. Free Enterprise
CHAPTER 14: INDUSTRIALIZATION
 3. Free Enterprise
 Americans embraced the idea of free
enterprise, or also referred to as laissez-faire.
 Laissez-faire– French meaning, “to let be” or
basically the idea that letting the economy do
its own thing without any government regulation
or interference.
 Idea coined by Adam Smith, which explained his
ideas in his book Wealth of Nations
 Laissez-faire based on supply and demand.
 This idea pushed many entrepreneurs, or people
that risked their capital ($) in running a business
BELLWORK
What were the three elements that were a
necessity for America’s industrial boom, or
industrialization? Explain each as much in
detail as possible.
CHAPTER 14: INDUSTRIALIZATION
Laissez-faire
Today’s Capitalist Economy
No /low taxes, tariffs
Taxes aid in growth of economy, tariffs
control foreign dominance
No government regulations, except to
protect private property rights and
maintain peace
Many government regulations to protect
workers, environment, etc.
Supply and demand
Government influenced markets
Government should be debt free and/or
have low loans
United States government over $17
trillion in debt, which it has racked-up to
protect America and manage our
economy
CHAPTER 14: INDUSTRIALIZATION
 Other Elements to Spur Industrial Growth
New Inventions = New Industries = $$$$
 Examples:
 1) Alexander Bell and the telephone, now AT&T.
 2) Thomas Edison and the light bulb, now GE Power.
 3) Automatic Loom– Ready made clothes with standard sizes.
 4) Cyrus Field and the Trans-Atlantic telegraph line
EXIT SLIP
 Exit Slip: Write in complete sentences.
 Do you think laissez-faire has some valid points? Do
you think that today’s capitalist economy has some
valid points? Do you think a true laissez -faire market
could even exist in today’s world? Explain.
 What inventions have spurred new industrial growth
in America today? Explain its impact on society.
OIL!
BELLWORK
 We already discussed the three elements needed to jumpstart
industrialization in America. How did new inventions also play
a part in industrialization? Explain.
CHAPTER 14: INDUSTRIALIZATION
 Other Elements to Spur Industrial Growth
 Transcontinental Railroad
CHAPTER 14: INDUSTRIALIZATION
Transcontinental RR
 Railroad Consolidation–
400 companies to 7
 Times Zones
 Gov’t gave over 120
millions acres in land
grants to the railroad
companies to aid in their
investments
 Made more money on land
grants than the railroads
themselves
CHAPTER 14: INDUSTRIALIZATION
Robber Barons
 Many railroad entrepreneurs had
made their millions by selling
from investors, taxpayers, bribing
gov’t officials, and cheating on
their contracts and debts.
 These men were called Robber
Barons.
 Example: Jay Gould used insider
trading to manipulate stock prices to
his benefit.
 LOTS of scandal
Gould:
Just like
Martha.
BELLWORK
Railroads changed America in many ways,
which included the expansion of railroads and
the rise of big business. What are the pros
and cons of big, powerful businesses? Explain.
BELLWORK
What three factors
lead to
industrialization?
How did new
inventions and
innovations affect
industrialization?
Define laissez-faire.
BELLWORK
How did railroad
companies use land
grants to their
advantage? Explain.
What is insider
trading (think horse
racing OR Martha
Stewart)? Explain.
CHAPTER 14: INDUSTRIALIZATION
Big Business
 After Civil War, big business dominated the economy, operating
vast complexes of factories, warehouses, offices, and
distribution facilities.
 This lead to the creation of corporations– an organization
owned by many people but treated by law as thought it were a
single person.
 A corporation can own property, pay taxes, make contracts,
and sue and be sued.
 People that own the corporation are called stockholders,
because they own shares of the ownership called stock.
 Many owners allows for the company to invest and expand
with more money (not just one person risking all their own
money).
CHAPTER 14: INDUSTRIALIZATION
 With more money available from the stockholders, companies
could invest in new technologies, hire a large workforce, and
buy new machines, which greatly increased their efficiency.
 Economies of scale– when corporations make goods more
cheaply because they can produce so much so quickly using
large manufacturing facilities.
 Fixed costs: costs that a company must pay, even if not operating.
 Example: loans, mortgages, and taxes
 Operating costs: cost that occur when running a company
 Example: wages, shipping cost, raw materials, power bill.
Fixed
Operating
CHAPTER 14: INDUSTRIALIZATION
 Many companies began creating pools, or
agreements to maintain prices at a certain level.
 Usually did not last long due to one member breaking away
from agreement
 Types of Big Business
 Vertical Integration: when a company owns all of the
different businesses it depends for its operations (it owns all
the STEPS in that business).
 Horizontal Integration: when a company owns many of the
same type of business to create one large corporation.
VERTICAL INTEGRATION
 Example: Chicken, Inc.
Semi-Trucks
Farms &
Chickens
Factories that
kill and
process the
chickens
Freezer SemiTrucks
HORIZONTAL INTEGRATION
 Example: McDonalds
Owning
McDonald
restaurant
Owning
McDonald
restaurant
Owning
McDonald
restaurant
Owning
McDonald
restaurant
BELLWORK
 What are vertical and horizontal integration? What are the
benefits of vertical and horizontal integration? Give an
example of vertical and horizontal integration of a beef
factory. You may use your awesome drawing skills!
BELLWORK
 Examine the
photograph to
the right.
Using
complete
sentences,
answer the
follow
prompts:
 I see…
 I think…
 I wonder…
CHAPTER 14: INDUSTRIALIZATION
 Rockefeller and Standard Oil
 John D. Rockefeller
 Invested in the oil industry and
when oil took off in the late
1800s, he controlled the biggest
oil company trust to date in
history.
 Crazy wealthy
 Created Standard Oil Company
 More than 90% of the oil industry
CHAPTER 14: INDUSTRIALIZATION
 Andrew Carnegie and
the Steel Industry
 Born in Scotland very, very
poor
 Bobbin boy at 12 years old–
made $1.20/week
 Meet a man named Sir Henry
Bessemer– he created a
process called the Bessemer
Process, which makes steel
cheaper, faster, and stronger.
 Vertical Integration of steel
industry
CARNEGIE HALL, NYC
CHAPTER 14: INDUSTRIALIZATION
 Henry Ford and the Car
Industry
 Born on an average size farm
in Michigan
 Liked to work for himself,
not others
 Mass produced the Model-T
Car, an affordable car for an
average American.
 Did not invent the
automobile or the assembly
line, but put the two together
to transform industry.
CHAPTER 14: INDUSTRIALIZATION
 JP Morgan
 “John Piermont” was born in
Connecticut to a very rich family
(his father was a banker).
 Will become one of the most
powerful bankers of his era and
financed railroads and helped
organize U.S. Steel, General
Electric and other major
corporations.
 His banking institution still
exists and is called JP Morgan
Chase.
CHAPTER 14: INDUSTRIALIZATION
 Cornelius Vanderbilt
 Vanderbilt was born and raised in New
York City to a working-class family.
 Began work on steamboats and their
design– then became a mega-power
in shipping.
 In his later years, he would invest in
the railroad, but lose it all to an upand-coming man named Rockefeller.
CHAPTER 14: INDUSTRIALIZATION
 Philanthropy: Andrew Carnegie vs. John D. Rockefeller
Year
Newspaper
Carnegie
Rockefeller
1904
The Times of London
$21,000,000
$10,000,000
1910
The New York American
$179,300,0000
$134,271,000
1913
The New York Herald
$332,000,000
$332,000,000
THE 25 RICHEST PEOPLE OF ALL TIME


























#1 Mansa Musa I – Net Worth $400 Billion
#2 The Rothschild Family – $350 Billion
#3 John D. Rockefeller – Net Worth $340 Billion
#4 Andrew Carnegie – Net Worth $310 Billion
#5 Nikolai Alexandrovich Romanov – Net Worth $300 Billion
#6 Mir Osman Ali Khan – Net Worth $230 billion
#7 William The Conqueror – Net Worth $229.5 Billion
#8 Muammar Gaddafi – Net Worth $200 Billion
#9 Henry Ford – Net Worth $199 Billion
#10 Cornelius Vanderbilt – Net Worth $185 Billion
#11 Alan Rufus – $178.65 billion
#12 Bill Gates – Net Worth $136 Billion
#13 William de Warenne – Net Worth $147.13 Billion
#14 John Jacob Astor – Net Worth $121 Billion
#15 Richard Fitzalan 10th Earl of Arundel – Net Worth $118.6 Billion
#16 John of Gaunt – Net Worth $110 Billion
#17 Stephen Girard – Net Worth $105 Billion
#18 A.T. Stewart – Net Wort $90 Billion
#19 Henry Duke of Lancaster – Net Worth $85.1 Billion
#20 Friedrich Weyerhauser – Net Worth $80 Billion
#21 Jay Gould – Net Worth $71 Billion (Robber Barron)
#22 Carlos Slim Helu – Net Worth $68 Billion
#22 Stephen Van Rensselaer – Net Worth $68 Billion
#23 Marshall Field – Net Worth $66 Billion
#24 Sam Walton – Net Worth $65 Billion (Wal-Mart)
#25 Warren Buffett – Net Worth $64 Billion
BELLWORK
 Political Cartoon Analysis
 What is the general
message of this cartoon?
 Who owned Standard Oil
Co.?
 What economic idea does
this cartoon portray?
CHAPTER 14: INDUSTRIALIZATION
 Monopoly– when one company controls an
entire industry.
 A common definition of a monopoly is when a
company has such effective control of its market
that it can set prices and stifle innovation by
depriving competition of any chance of profit.
CHAPTER 14: INDUSTRIALIZATION
Examples:
 NFL (or even the MLB)
 Microsoft
 Windows operating systems
controlled 95% of industry in
2008, with its competition
(Mac) controlling only 5%.
 Sirius XM Radio
 In 2008, Sirius and XM Radio
merged, creating a company
with NO competition.
PROS AND CONS OF MONOPOLIES
Critical Thinking:
What are the pros and cons of monopolies?
Pros and Cons of Monopolies
Pros
Cons
Set prices lower with little to no competition.
Set prices at whatever they want .
(AT&T prior to government breakup in 1980s)
(American Tobacco Co., 1907)
Under increasing return (making money),
production
by a single firm is technologically more
efficient.
Lack of competition leads to fewer innovations
and ideas.
(Standard Oil (90% of industry)– pipelines,
Vaseline, etc.)
(US Steel (70% of industry)– no innovations or
investments leads to its downfall)
CHAPTER 14: INDUSTRIALIZATION
 Anti-Monopoly Regulations
 Government officials and people were leery of monopolies
and their power. Monopolies made illegal by Sherman
Antitrust Act of 1890.
 New options created to maintain laissez-faire in market
for big businesses:
 A trust is way of merging businesses that did not violate the
laws agonist owning other companies.
 Trusts did not break the anti-monopoly laws created because the
stockholders did not buy the stock, but rather managed it.
 Holding Companies
 Company that does not produce anything, but instead owns the stock
of companies that do produce goods.
BELLWORK
 From what you know about factories and working conditions
during industrialization, what would it have been like to work?
What would your job have been like? Would you have liked
working in a factory during this era? Explain.
CHAPTER 14: INDUSTRIALIZATION
 Selling the Product
 Newspapers: small-type lines
ads
 Retail stores: offer more than
just one department
 Mail-order catalogs: deigned to
reach people in very rural
areas
 Montgomery Ward and Sears,
Roebuck
 Used attractive illustrations and
friendly descriptions to advise
CHAPTER 14: INDUSTRIALIZATION
Working Conditions
 Machines replaced skilled
workers
 Unhealthy, dangerous jobs
 Rise in standard of living but
huge gap between rich and
middle class
 Average worker worked 59
hours per week for .22 per
hour
EXIT SLIP
 The working conditions in the 1900s were, in two simple
words, really bad. For your Exit Slip, you need to describe the
working conditions in the 1900s by writing a letter to
somebody describing your job. I do not care what job you have
or who you are writing to, but make sure you are giving good
detail about your day -to-day happening at work. Use detail!
 5 points for spelling and grammar
 5 points for letter format
 15 points for content
BELLWORK
 Examine the
photograph to the
right. Using complete
sentences, answer
the follow prompts:
 I see…
 I think…
 I wonder…
CHAPTER 14: INDUSTRIALIZATION
Early Unions
 Union– organized group limited to a
specific trade deigned to aid that
trade.
 POWER in NUMBERS.
 Biggest demand– better wages!
 Craft workers and laborer workers
 Major tool of unions– Strike!!
 But companies also had many tactics
to curb the power of unions.
Striker confronts a scab!
CHAPTER 14: INDUSTRIALIZATION
“Tools” of
Management
“Tools” of
Labor
 “scabs”
 boycotts
 PR campaign
 sympathy
demonstrations
 Pinkertons
 lockout
 blacklisting
 yellow-dog contracts
 informational
picketing
 closed shops
 court injunctions
 organized
strikes
 open shop
 “wildcat” strikes
CHAPTER 14: INDUSTRIALIZATION
 Political and Social Opposition
 No laws supporting unions; courts often referred
to unions as “conspiracies of restraint of trade”
 New Ideas in Europe (made people more leery of
unions)
 Marxism– ideas from Karl Marx; working class
would over throw owners and establish a
society with no classes. After this movement,
the gap between rich and poor would be
eliminated (Communist Manifesto).
 Anarchy– people that a few acts of violence
would cripple the government, creating a
society with no law or governing body.
 New Idea in America (created in response to
above ideas)
 Nativism– extreme anti-immigrant feeling
CHAPTER 14: INDUSTRIALIZATION
 Struggles to Organize
 The Knights of Labor
 Formed when the Great Railroad Strike was a failure – needed to
be more organized.
 First nationwide industrial union
 Called for 8-hour work day, equal pay for women, end of child
labor, and the creation of worker-owned factories.
 Used arbitration– or third parties to work out deals
CHAPTER 14: INDUSTRIALIZATION
 Struggles to Organize
 Great Railroad Strike of 1877
 2/3 of RR shut down– Hays brought in army
 Haymarket Riot
 Hurt the KOL bad–one of men convicted was in the KOL union
 Homestead Strike
 Carnegie's steel plant
 Pullman Strike
 ARU (American Railroad Union) ran by Eugene Debs
CHAPTER 14: INDUSTRIALIZATION
 Unions United Despite Problems






American Federation of Labor (AFL)
First leader– Samuel Gompers
Fight for small gains and stay out of politics
Believed in strikes, but rather negotiate
Pushed for closed shops, or companies could only hire union workers
Over 500,000 members in 1900, but less than 15% of workers
 Women in Industry




In 1900s, women made up 18% of work force
Women always paid less
Not allowed in unions, even AFL
1903– formed Women’s Trade Union League (WTUL)
 Pushed for minimum wage, 8-hour days, no evening work for women, and
the end of child labor.
OTHER STUFF
:)
EXIT SLIP
Who had more power– unions (the laborers) or
the management (the companies)?
Explain your answer using at least four of the
ideas/terms used in the word sort. Explain the
ideas/terms used in your answer.
BELLWORK
 What are a few tools of
management that they could
use against union
workers/strikes? Explain.
 What are a few tools that
union workers or laborers
could use against the
management or factory
owners? Explain.
BELLWORK
What are unions?
What are some of
the general goals
of unions?
Why do companies
and company
owners not like
unions? Explain.
Teachers’ Union Strike, Chicago 2012
BELLWORK
 Political Cartoon Analysis
 What is the general
message of this cartoon?
 Who owned Standard Oil
Co.?
 What economic idea does
this cartoon portray?
BELLWORK
 Let’s recap the major strikes of the 1900s!
 Great Railroad Strike of 1877
 Haymarket Riot
 Homestead Strike
 Pullman Strike
 To recap these ideas, you need to think of SOMEWAY
to memorize these events. Anything! A song, a saying,
a picture, anything!
EXIT SLIP
 What three factors led to industrialization in the
United States?
 What is laissez-faire? Who coined this term? Does
America today have laissez-faire economics? Why or
why not? Explain.
 What were the effects of all of the inventions that
were being created in the United States in the
1900s?
BELLWORK
 How did Andrew Carnegie
and his life symbolize the
Industrial Age and ideals?
Explain.
 Briefly recap and describe
Carnegie's life.
Sir Henry
Bessemer
BELLWORK
 The nineteenth century was an era of great inventions in the
United States. Look at the list of inventions below and order
them from most to least important (in your opinion). Then
explain why you ranked the top three inventions as most
important.
 1834: Refrigerator invented by Jacob Perkins
 1837: Morse code invented by Samuel Morse
 1851: Ice cream invented by Jacob Fussell
 1853: Elevator invented by Elisha Graves Otis
 1870: Gum invented by Thomas Adams
 1873: Typewriter invented by Christopher Latham Sholes
 1876: Telephone invented by Alexander Graham Bell
 1879: Light bulb invented by Thomas Edison
 1893: Breakfast cereal invented by William Kellogg
 1893: Zipper invented by Whitcomb Judson
 1893: Gasoline-powered car by Frank and Charles Duryea
BELLWORK
 This political cartoon is
referring to the Pullman
strike– refer to page 458.
 First, recap the Pullman
Strike.
 What is this image trying to
get across or tell the
readers?
 Does the cartoonist support
the workers or the
management of the
Pullman company?
JOHN D. ROCKEFELLER
 Assignment:
 Read information about Rockefeller’s life.
 After reading the information, write a 300-word essay on what
you have inferred from the reading and about his life.
 Basically, you need three paragraphs with supporting detail
from the information page. Underline the information that is
taken directly from the information page.
 Below are some guiding questions to use during your writing:
 What kind of childhood did Rockefeller have?
 What kind of work ethic did he have?
 What obstacles did he overcome as a person and
businessman?