HIST - 121- Chapter 18

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Oct 30, 2023

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HIST 121 - Chapter 18 18.1 inventors of age. How ideas/products in late 19 th century inventors contributed to the rise of big business. How inventions changed everyday America life  Entrepreneurial spirit  Americans wanted efficiency and comfort. People working on big ideas.  US patent office in 1790 recorded only 276 inventions. And by 1860, they had issued 60,000 patents. And between 1860-1890 … 450,000 patents were issued.  New inventions fuel the industrial revolution (sewing machines, refrigerated train cars, roller for grinding wheat into flour, typewriter, cash register, vacuum cleaner, toilet, tin cans to store food, frozen food, etc)  In 1880 – ½ of all Americans lived and worked on farms and only 1 in 7 worked in factories.  From 1880-1920 the number in industrial workers quadrupled from 2.5 million to over 10 million, urban populations doubled and was now ½ the US population.  Cooking became easier and less time-intensive with modern inventions like preserved/canned and frozen foods and laid the groundwork for the women’s movement.  Steel is the most important advancement in the era. Henry Bessemer changed the way steel was produced with furnaces and then steel became easier to product and more quickly available and cheaper. In 1860 … 13,000 tons of steel were produced. In 1879 over 1 million tons were produced per year … and in 1900, 10 million tons produced. Steel became cheap and readily available and used by all other industries like construction, automotive and was the primary indicator of growth through the end of WW II.  Alexander graham bell and the telephone – 1859 laid the first transatlantic cable lines. So you can communicate from the US to Europe. Over 100,000 miles of cable Criss-crossed the ocean floor across all the continents. Western Union controlled and owed most of these lines in the US from coast to coast over 200,000 lines.  Telephone was patented in 1876 by Bell. Bell was not the first to invent but was the first to capitalize on it and patent it. Thomas Edison’s version is most like our modern telephone today. Western Union sold Edison’s idea/version to Bell because he had a patent. Then it started a telecom company called the Bell Company, then American Telephone & Telegraph company which still exists today called AT&T.  By 1880 – 50,000 phones were used in the US. By 1900, 1.35 million phones used  Thomas Edison and electric lighting – beyond the light bulb.was likely the greatest inventor of the time. Registers over 1093 patents over his lifetime and ran a lab in Menlo Park with 25 scientist. He hoped to have a small invention every 10 days and a big one every month. He invented the phonograph, the mimeograph machine, the motion picture projector, the Dictaphone, and the storage battery. The incandescent light bulb is what he is most known for in 1879. He was financially backed by JP Morgan and created the Edison Electric Illuminating company. Edison used DC (direct current) power.  George Westinghouse in 1886 and made AC (alternating current) power which could deliver power longer distance and power factories etc., 18.2 from invention to industrial growth - how inventions of the late nineteenth century contributed directly to industrial growth in America. Contributions of Andrew Carnegie, John Rockefeller, and J. P. Morgan to the new industrial order emerging in the late nineteenth century. visions, philosophies, and business methods of the leaders of the new industrial order  RAILROADS AND ROBBER BARONS . the first transcontinental railroad paved the way for rapid railway growth, and growth in the iron, wood, coal.

 Railroad industry became the nation's first “big business”. By 1890 railroad lines covered every corner of the US and could bring raw materials to factories and finish goods to consumers anywhere. Railroad track grew from 35,000 miles to over 200,000 miles by 1900. Financing for the growth came through private capital and government loans and grants. Federal and state loans of cash and land totaled $150 million and 185 million acres of public land. Railroads listed stock on the New York Stock exchange. People that invested became the wealthiest Americans the country had ever seen.  Midwest farmers were angry at these railroad owners and called them “robber barons”. Because they felt their business practices were shady and exploitative with questionable tactics.  Jay Gould (first to be called a robber baron) was perhaps the first prominent railroad magnate. He bought small rundown railroads and then capitalized on factory owners needs to ship their goods at a lower cost. He worked for the Erie railroad. He drove the company to almost ruin. His model worked better on the American West were railroads were still widely scattered forcing farmers and businesses to pay whatever price he demanded. He also owned the Union Pacific Railroad. He controlled over 10,000 miles of tracks in the US which was about 15% of all the railroad transportation. He died in 1892 and had a personal worth of over $100 million although he was very unpopular.  Commodore Cornelius Vanderbilt was a “robber baron” who truly cared about the success of his railroad enterprise and its positive impact on the American economy. Vanderbilt consolidated several smaller railroad lines, called trunk lines, to create the powerful New York Central Railroad Company, one of the largest corporations in the United States. The consolidation made connections from Midwest suppliers to eastern markets more efficient. By 19107 railroad tycoons controlled over 70% of all operating lines. Vanderbilt's net worth at his death was over $100 million in 1877. He was one of the top three wealthiest individuals in American history.  Steel magnate Andrew Carnegie, oil tycoon John D. Rockefeller, and business financier J. P. Morgan were all businessmen who grew their businesses to a scale and scope that were unprecedented. Their companies changed how Americans lived and worked, and they themselves greatly influenced the growth of the country.  Andrew Carnegie (Steel) - rags-to-riches story. Born in Scotland. Immigrated to Pennsylvania in 1848. He became a telegram messenger boy. Spent a lot of time around the railroad office. Worked his way up into a position of management for the Pennsylvania railroad company. Invested in the company. That investment resulted in him earning over $1,000,000. He used this money to grow the iron and steel industries. He served in the civil war as Superintendent of military railways and Telegraph coordinator for the union forces. His first company was called Jay Edgar Thompson steel works then he bought out homestead steel works from the Pittsburgh Bessemer steel company. He had an annual profit of over $40 million. He was always thrifty with the profits he earned. He used those profits to buy out steel companies at low prices when the economy was bad. He always wanted to increase production and reduce cost. Always had up-to- date machinery and equipment. His famous essay called the gospel of wealth was based upon Herbert Spencer's theory of social Darwinism. Survival of the fittest. Carnegie 's coming from poor roots believed that if you worked hard you could be successful. Rags to riches.  John D. Rockefeller (Oil) - born in 1839 with modest means. His dad sold medicinal elixirs. He helped his mom with lots of chores to earn extra money. Mainly through the sale of family farm products. Then he moved to Cleveland in 1853. He took accounting courses in high school. He learned about Colonel Edwin Drake who had struck “black gold” .. oil . Rockefeller focused on refining crude oil into kerosene which was a good use of energy for heating and lamps. In 1870 he created Standard Oil company of Ohio which was worth $1 million. Rockefeller was a ruthless businessman. Found ways to crush his competitors and create a monopoly in the oil refining

industry. He forged agreements with several large railroad companies to get discounted rates for shipping his product. He used the railroad companies to gather information on his competitors. He could now deliver kerosene at lower prices and drove his competition out of business. Usually bought out their businesses for pennies on the dollar. Through this method of growth by acquiring other companies, called horizontal integration , Standard Oil grew to include almost all the refineries. In 1879 Standard Oil company controlled 95% of oil refining in the country. He wanted to grow even bigger and began to grow his company through quote vertical integration where his company would handle all aspects of the products life cycle from raw materials through the production process to the delivery of the final product. His monopoly he reduced kerosene prices by as much as 80% by the end of the century. Other industrialists quickly followed suit, including Gustavus Swift , who used vertical integration to dominate the U.S. meatpacking industry in the late nineteenth century.  Rockefeller created a new legal entity called a trust . Set up a small group of trustees to possess legal ownership. In 1882, 37 stockholders of Standard Oil gave their stock to 9 trustees who could control and direct all the companies business from this trust. The Ohio Supreme Court ruled that Standard Oil company had to dissolve because it had monopoly control over all oil production and refining. Then Rockefeller created another legal entity called a holding company. This holding company created a central corporate entity that controlled operations of multiple companies. It was not technically a trust and then not beholden to anti-monopoly laws. A lot of other business tycoons followed suit and by 1905 / 300 business mergers had occurred in the US impacting over 80% of all industries. The government passed the Sherman antitrust act in 1890 however by that time 1% of the country's businesses controlled over 40% of the nation's economy  J. P Morgan (Finance/investment) - was born wealthy and became much wealthier as an investment banker. His dad was a London banker and he moved to New York in 1857. He then created the JP Morgan and company financial firm. They bought and sold stock. In return for his investments in industries such as Carnegie’s and Rockefeller’s, Morgan demanded seats on the company's board which gave him more control and power. Ultimately, Morgan’s most notable investment, and greatest consolidation, was in the steel industry , when he bought out Andrew Carnegie in 1901. Carnegie named his price: an outrageously inflated sum of $500 million. Morgan agreed without hesitation, and then consolidated Carnegie’s holdings with several smaller steel firms to create the U.S. Steel Corporation. U.S. Steel was subsequently capitalized at $1.4 billion. It was the country’s first billion-dollar firm. Morgan was blamed his efforts for contributing to the artificial bubble of prosperity that eventually burst in the Great Depression of the 1930s. in 1912, his firm held 341 directorships in 112 corporations that controlled over $22 billion in assets. 18.3 Building Industrial America on the Backs of Labor - qualities of industrial working-class life in the late nineteenth century.Analyze both workers’ desire for labor unions and the reasons for unions’ inability to achieve their goals  The standard of living for many American workers increased. What were the luxuries have become the necessaries of life.  For some Americans, there were also increased opportunities for upward mobility. For the multitudes in the working class, however, conditions in the factories and at home remained deplorable.

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