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An Industrial Society. Economic Growth during the Gilded Age (1877 -1900) APUSH: KC 6. 1. 1. D Many business leaders sought increased profits by consolidating corporations into large trusts and holding companies, which further concentrated wealth. KC 6. 1. 2. A Some argued that laissez-faire policies and competition promoted economic growth in the long run, and they opposed government intervention during economic downturns.
Bell Ringer • Post your inventions poster on the wall • In a gallery walk, choose three inventions, other than your own, that you feel most impacted the culture and economy of the 19 th century. Answer in your notebook why you feel they were so impactful for the Gilded Age.
Essential Question: • Should the great industrialists of the 19 th Century be considered “captains of industry” or “robber barons”?
Brinkley, pp. 478 -489 • What’s a corporation? Why did it emerge after the civil war as a type of business organization? • What is limited liability? • What is “middle management”? • What are some examples of consolidation?
Big Business during the Gilded Age • Between 1869 and 1899 the U. S. became the world’s leading economic power • the population tripled, • farm production doubled • value of manufacturing grew 6 X • Entrepreneurs recognized growing markets and used techniques of mass production and distribution • These “captains of industry” or “robber barons” formed single companies that dominated an industry (monopolies) or joined forces with competitors to limit competition (trusts) • Poor working conditions, business tactics and “laissez faire” relationship that government had with business would cause the formation of an organized labor movement
U. S. Corporate Mergers
Factors promoting business Growth after the Civil War 1. Availability of natural resources 2. Labor shortage after war caused the invention of high speed, labor saving machinery 3. Railroads/internal improvements encouraged by federal government 4. “laissez faire” 5. High tariffs 6. Immigration/Cheap labor pool 7. Growth of Agricultural sector out west 8. Entrepreneurs/Inventors
U. S. Patents Granted 1790 s 276 patents issued. 1990 s 1, 119, 220 patents issued.
nd Industrial Revolution 2 (Market Revolution) • Centered in U. S. and Germany • Involved 3 developments: 1. National transportation/communication network (National 2. 3. telegraph and railroad system; steamships; undersea telegraph cable connecting U. S. with Europe) Use of Electric Power created industrial efficiency and urban growth (Electric trolleys and subways; production of steel and chemicals) Applying Scientific Research to industrial process • Researches figured out how to refine kerosene and gasoline from crude oil (Edwin Drake) • Technique for refining steel from iron (Henry Bessemer) • New products (telephone, typewriter, adding machine, sewing machine, cameras, elevators, farm machinery) • All lowered consumer prices, which created a mass consumer culture
Entrepreneurs—Captains of Industry or “Robber Barons” Cornelius “Commodore” Vanderbilt • Merged rail lines connecting Albany to Buffalo into a single powerful rail network to New York City • By 1873 he had connected lines to Chicago • When he died in 1877, his son William added 13, 000 miles of line in Northeast
Entrepreneurs—Captains of Industry or “Robber Barons” John D. Rockefeller • Obsessed with order, precision, tidiness • Opened Standard Oil Company of Ohio in 1870; within 6 weeks he had taken over 22 of his 26 competitors • By 1879 he controlled 90 -95% of oil refining business in the U. S. • Became the world’s leading philanthropist; gave away $500 million by the time he died at the age of 98
Entrepreneurs—Captains of Industry or “Robber Barons” James Buchanan Duke • Bull Durham cigarettes began in 1868 with Washington Duke • His son, James Buchanan Duke, took a chance on a new cigarette-making machine in 1870 s • By the late 1880 s, the Duke Company was producing 4 million cigarettes daily. • Next highest competitor had a daily output of 42, 000 cigarettes • Noted for his marketing and advertising • After a "tobacco war" among the five principal manufacturers, Duke emerged as the president of the American Tobacco Company
Entrepreneurs—Captains of Industry or “Robber Barons” Benjamin Duke • 1892 -Buck Duke's older brother had launched the family into the textile business • need for water power led the Dukes into the hydroelectric generating business. • In 1905, they founded the Southern Power Company, now known as Duke Power, one of the companies making up Duke Energy, Inc. • Within two decades, this company was supplying electricity to more than 300 cotton mills and various other factories, electric lines, and cities and towns
American Tobacco Historic District, Durham NC
James B. Duke House, 5 th Avenue, New York City
James Duke statue in front of Duke Chapel, Duke University
Marketing-Sears and Roebuck • Richard Sears and Alvah Roebuck began a mail order catalog by the 1890 s • Purpose was to extend the reach of national commerce to the millions of people who lived in isolated areas • By 1900 there were 6 million Sears catalogs distributed a year; it was the most widely read book next to the Bible
Entrepreneurs—Captains of Industry or “Robber Barons” Andrew Carnegie • Emigrated to the United States with his parents from Scotland in 1848 • In 1850, Carnegie became a telegraph messenger boy at the age of 14 in the Pittsburgh Office of the Ohio Telegraph Company at $2. 50 per week • By the 1860 s had investments in railroads, railroad sleeping cars, bridges and oil
Andrew Carnegie-Monopoly • By 1873, he turned his attention to the steel industry; After the Civil War steel was cheap because of the Bessemer Process; Production increased and prices decreased • In 1860 the U. S. had produced 13, 000 tons of steel; by 1880 the U. S. was producing 1. 4 million tons • Built Pittsburgh's Carnegie Steel Company into a monopoly • Sold to J. P. Morgan in 1901 for $480 million, creating the U. S. Steel Corporation. • It was the first corporation in the world with a market capitalization over $1 billion.
Iron & Steel Production
New Type of Business Entities
Andrew Carnegie-Philanthropy • Devoted the remainder of his life to large-scale philanthropy • By 1911, Carnegie had given away over $43 million for the construction of 2811 libraries • The Carnegie Corporation of New York formed to give away $150 million. ; has given large grants to the other Carnegie trusts as well as universities, colleges, schools
Andrew Carnegie-Philanthropy • The Carnegie Endowment for International Peace Founded in 1910 with $10 million, the Endowment is the oldest public policy institution in the United States concentrating on issues of war and peace. • He gave $2 million in 1901 to start the Carnegie Institute of Technology (CIT) at Pittsburgh now part of Carnegie Mellon University
Unequal distribution of Wealth • 1% of the families in America controlled 88% of the nation’s wealth • Problems associated with this unequal distribution?
SAQ • Document 1: Andrew Carnegie’s “Gospel of Wealth” • Document 2: Joseph Keppler’s “Bosses of the Senate” a. Explain the point of view of Document 1. b. Explain the point of view of Document 2. c. Which of the points of view do you agree with more? Use your understanding of Gilded Age arguments for and/or against capitalism and industrial consolidation to answer this question.
Gilded Age: Capitalism and its critics • Pro • “Self made man”-Myth or reality? • Social Darwinism • Herbert Spencer • William Graham Sumner • Gospel of Wealth • Russell Conwell “Acres of Diamonds” • Horatio Alger • Con • • Lester Frank Ward American Socialist Party Henry George “Progress and Poverty” Edward Bellamy
The Gospel of Wealth: Religion in the Era of Industrialization $ Wealth no longer looked upon as bad. $ Viewed as a sign of God’s approval. $ Christian duty to accumulate wealth. Russell H. Conwell
“On Wealth” $ The Anglo-Saxon race is Andrew Carnegie superior. $ “Gospel of Wealth” (1901). $ Inequality is inevitable and good. $ Wealthy should act as “trustees” for their “poorer brethren. ”
Regulating the Trusts 1877 Munn. v. IL 1886 Wabash, St. Louis & Pacific Railroad Company v. IL 1890 Sherman Antitrust Act § in “restraint of trade” § “rule of reason” loophole 1895 US v. E. C. Knight Co.
The Men Who Made America • Watch the episode about one particular “captain of industry”. • Answer the guided questions as you view the episode. • Should this businessman be considered a “captain of industry” or a “robber baron”?