1. Industrialization
Chapter 19 1865-1901

2. Telegraph
• Samuel Morse invented the
telegraph. It communicated
using a series of beeps (Morse
code).

3. • Alexander Graham Bell
invented the telephone.
telephone

4. Capitalism and
Culture

5. “Allow to be”
Laissez-faire (French, "leave alone"), in economics, is the
doctrine that the best economic policy is to let businesses make
their own decisions without government interference. This
doctrine of noninterference was first enunciated by the French
physiocrats of the 18th century as a reaction against the
restrictionist policies of mercantilism. Linked with the concept
of free trade, it became the basis of Adam Smith’s classical
economics. Later, Jeremy Bentham and John Stuart Mill
applied the economic notions of laissez-faire capitalism to
utilitarian, individualistic political theory, and the Manchester
school economists John Bright and Richard Cobden used them
for
practical
political
purposes.
Laissez-faire principles were strongest in the mid-19th century,
but the increasing practice of monopoly and the social costs of
the Industrial Revolution brought about greater government
regulation through Progressivism. Modern proponents of
laissez-faire stress the importance to economic growth of the
profit incentive and the undeterred entrepreneur. The phrase
has been largely supplanted by such terms as market economy
or free enterprise.

6. Capitalism: Our Economy
Capitalism is an economic system in which the means of production are privately owned.
Business organizations produce goods for a market guided by the forces of supply and
demand. Capitalism requires a financial system that enables business firms to borrow
large sums of money, or capital, to maintain and expand production. Underlying
capitalism is the presumption that private enterprise is the most efficient way to organize
economic activity. Adam Smith expressed this idea in his Wealth of Nations (1776),
extolling the free market in which the businessman is "led by an invisible hand to promote
an
end
which
was
no
part
of
his
intention."
The marketplace is the center of the capitalist system. It determines what will be
produced, who will produce it, and how the rewards of the economic process will be
distributed. From a political standpoint, the market system has two distinct advantages
over other ways of organizing the economy: (a) no person or combination of persons can
control the marketplace, which means that power is diffuse and cannot be monopolized by
a party or a clique; (b) the market system tends to reward efficiency with profits and to
punish inefficiency with losses. Economists often speak of capitalism as a free-market
system ruled by competition. But capitalism in this ideal sense cannot be found anywhere
in the world. The economic systems operating in Western countries today are mixtures of
free competition and governmental controlled regulation, thus negating the spirit of the
economy.

7. Vertical vs. Horizontal
Integration
In microeconomics and strategic management, the term
horizontal integration describes a type of ownership
and control. It is a strategy used by a business or
corporation that seeks to sell a type of product in
numerous markets. Horizontal integration in marketing
is much more common than vertical integration is in
production. Horizontal integration occurs when a firm
is being taken over by, or merged with, another firm
which is in the same industry and in the same stage of
production as the merged firm. The term vertical
integration describes a style of management control.
Vertically integrated companies in a supply chain are
united through a common owner. Usually each member
of the supply chain produces a different product or
(market-specific) service, and the products combine to
satisfy a common need.

8. Philanthropist
Entrepreneurs
• Andrew Carnegie owned US
Steel.

9. Andrew Carnegie
born Nov. 25, 1835, Dunfermline, Fife, Scot. died Aug. 11, 1919, Lenox,
Mass., U.S. Scottish-born American industrialist who led the enormous
expansion of the American steel industry in the late 19th century. He was
also one of the most important philanthropists of his era.
During his trips to Britain he came to meet steelmakers. Foreseeing the
future demand for iron and steel, Carnegie left the Pennsylvania Railroad
in 1865 and started managing the Keystone Bridge Company. From about
1872–73, at about age 38, he began concentrating on steel, founding the J.
Edgar Thomson Steel Works near Pittsburgh, which would eventually
evolve into the Carnegie Steel Company.
In 1889 Carnegie's vast holdings were consolidated into the Carnegie Steel
Company, a limited partnership that henceforth dominated the American
steel industry. In 1890 the American steel industry's output surpassed that
of Great Britain's for the first time, largely owing to Carnegie's successes.
In 1900 the profits of Carnegie Steel (which became a corporation) were
$40,000,000, of which Carnegie's share was $25,000,000. Carnegie sold
his company to J.P. Morgan's newly formed United States Steel
Corporation for $250,000,000 in 1901. He subsequently retired and
devoted himself to his philanthropic activities, which were themselves
vast.
Carnegie's own distributions of wealth came to total about $350,000,000,
of which $62,000,000 went for benefactions in the British Empire and
$288,000,000 for benefactions in the United States.

11. • Steel Mill at night.

12. Philanthropist
Entrepreneurs
• John D. Rockefeller owned the
the oil industries

13. John D. Rockefeller
American industrialist and philanthropist John Davison Rockefeller, b.
Richford, N.Y., July 8, 1839, d. May 23, 1937, began his career in Cleveland,
Ohio, before the Civil War. In 1863 he and his partners formed an oil
business that eventually absorbed many Cleveland refineries and expanded
into Pennsylvania oil fields to become the world's largest refining concern.
Rockefeller founded (1870) the Standard Oil Company of Ohio; the
Standard Oil Trust, which he formed in order to avoid state controls, was
dissolved (1892) by the Ohio Supreme Court. The division of his operations
into 18 companies--later to include more than 30 corporations--under the
umbrella of Standard Oil of New Jersey (1899) helped him to accumulate a
personal fortune of over $1 billion. In 1911 this venture, however, was
interpreted by the U.S. Supreme Court as "a monopoly in restraint of trade"
and thus illegal according to the Sherman Anti-Trust Act; Standard Oil was
broken up into 39 separate companies. Rockefeller retired the same year but
expanded his efforts in philanthropy, which claimed about one-half of his
vast fortune. He created such institutions as the Rockefeller Foundation, the
General Education Board, and the Rockefeller Institute for Medical
Research; founded the University of Chicago; and presented many gifts to
colleges and churches.

14. John D. Rockefeller & Standard Oil
Wood River Refinery, Illinois, 1908

16. Monopoly
• Carnegie and Rockefeller ran
their competition out of
business.
• A monopoly is when one
company controls the entire
industry.

17. Progressive View of
Statndard Oil

18. Thomas Edison
• The light bulb allowed factories
to work at night.
Night was now banished

19. • Phonograph

20. Led to movie theaters
Edison’s inventions
• Motion picture camera

21. •
Additional
entrepreneurs
•
•
•
•
•
•
Cornelius Vanderbilt- American shipping and railroad
magnate who acquired a personal fortune of more than
$100,000,000.
George Westinghouse- American inventor and
industrialist who was chiefly responsible for the adoption
of alternating current for electric power transmission in
the United States.
George M. Pullman- American industrialist and
inventor of the Pullman sleeping car for use on railroads.
Milton S. Hershey- American manufacturer and
philanthropist who founded the Hershey Chocolate
Corporation and was instrumental in popularizing
chocolate candy throughout much of the world.
Éleuthère Irénée du Pont- The Dupont company was in
Delaware in 1802 to produce black powder and later
other explosives, which remained the company's main
products until the 20th century, when it began to make
many other chemicals as well- nylon, rayon, polyester.
Gustavus F. Swift- founder of the meat-packing firm
Swift & Company and promoter of the railway
refrigerator car for shipping meat.
Philip D. Armour - American entrepreneur and innovator
whose extensive Armour & Company enterprises helped
make Chicago the meatpacking capital of the world.

22. Crédit Moblier
The federal government in 1864 had chartered a ―Union Pacific Railroad,‖
with $100,000,000 capital, to complete a transcontinental line west from
the Missouri River. It offered to assist it by a loan of $16,000 to $48,000 a
mile according to location, over $60,000,000 in all, and a land grant of
20,000,000 acres, worth $50,000,000 to $100,000,000. Even this offer
attracted no subscribers: it meant building 1,750 miles of road through
desert and mountain, at enormous freight costs for supplies, with frequent
bloody encounters with Indians, and no probable early business to pay
dividends.
In 1867, Dr. Thomas C. Durant was replaced as head of Crédit Mobilier by
Congressman Oakes Ames.[3] In that year Ames offered to members of
Congress shares of stock in Crédit Mobilier at its discounted value rather
than market value, which was much higher. The Congressmen and others
who were allowed to purchase shares at a discount could reap enormous
capital gains simply by, in turn, offering their discounted shares to a
grossly under-subscribed market, that was very eager to own shares of
such a ―profitable‖ company. These same members of Congress voted to
appropriate government funds to cover the inflated charges of Crédit
Mobilier. Ames' actions became one of the best-known examples of graft
POLITICAL CARTOON ILLUSTRATING PEOPLE INVOLVED IN THE SCANDAL BEING
in American history.
SENTENCED TO HARA-KIRI (A FORM OF RITUAL JAPANESE SUICIDE, IN THIS CASE THE
COMPANY GOING BANKRUPT AND CONGRESSMEN INVOLVED GETTING KICKED OUT) BY
UNCLE SAM WHO REPRESENTS THE AMERICAN PEOPLE.

23. Capitalist
Entrepreneurs
Capitalism and
entrepreneurship
Semantic Map
Culture
Industrial
Revolution
Inventions
Results
Capitalism

24. Capitalism and
Entrepreneurship Quiz
1. Give two examples of Industrial
Revolution culture.
2. Give an example of an Industrial
Revolution invention.
3. Name a principle or leader of
capitalism.
4. Name an entrepreneurphilanthropist.
5. Give a result of this phase of the
Industrial Revolution.

25. Immigration

27. • Immigrants come to the USA
for jobs and opportunities.
Pull factors

28. • Pull factors are good ideas to
bring legal immigrants here like
jobs.

29. • Jobs pulled immigrants here.

30. • Free land was a pull factor

31. Push factors
• Push factors are bad reasons that
push immigrants away like war,
famine, or disease. This is
blighted potato that represents
the reason for the Irish potato
famine.

32. • Many immigrants lived in
tenements.

33. tenement

34. Child labor
• Children were expected to
work. Employers also liked
that they could pay a child
less than an adult.
• The first law against child
labor, the Factory Act of
1833.
• Children younger than nine
were not allowed to work
• Children were not permitted to
work at night
• The work day of youth under
the age of 18 was limited to
twelve hours

35. Housing
• Poor people lived in small houses in cramped streets.
These homes would share toilet facilities, have open
sewers and would be at risk of damp. Conditions did
improve during the 19th century as public health acts
were introduced covering things such as sewage,
hygiene and making some boundaries upon the
construction of homes. Not everybody lived in homes
like these. The Industrial Revolution created a larger
middle class of professionals such as lawyers and
doctors. The conditions for the poor improved over
the course of the 19th century because of government
and local plans which led to cities becoming cleaner
places, but life had not been easy for the poor before
industrialization.

36. Popular culture

37. Popular culture
• the culture of the people
• It results from the daily interactions, needs and desires and
cultural 'moments' that make up the everyday lives of the
mainstream.
• It can include any number of practices, including those
pertaining to cooking, clothing, mass media and the many
facets of entertainment such as sports and literature.
• People like to feel a part of a group and to understand their
cultural identity within that group, which tends to happen
naturally in a small, somewhat isolated community.

38. Labor Movement and Unionism

39. Labor Reform
At the same time a philosophical movement called the
Enlightenment propagated many new ideas concerning the rights of
mankind in relation to the state. (The American Declaration of
Independence is one of the best statements of Enlightenment
principles in this regard.)
The American and French
revolutions, with their declarations of rights, did much to spread the
notion that individuals have certain rights that governments must
honor.
In this new, more democratic political setting, it became
increasingly obvious to many people that the combinations of
government and those with great wealth would not look out for the
interests of workers unless pressured to do so. Hence, there
emerged the first attempts to organize workers into labor and trade
unions to exert just such pressure on politicians and employers.
For a century or more, these attempts at unionization were regarded
by governments as criminal, communist conspiracies.
Gradually, aided by the efforts of socialist politicians and the selfinterest of employers, unions began to gain recognition. Their
demands for better working conditions, shorter hours, and social
welfare began to be met.
Jean Jaurès addressing workers
under a red flag. Countries with
red as the background for their
flags later became communist
countries.

40. Labor Reform
• Labor unions struggled in the
1800s for better working
conditions (shorter work day,
workers’ comp).

41. U. S. Labor Movement
Walther P. Reuther (CIO) &
George Meany (AFL) Dec1955
Unions are distinctly national institutions that vary in structure and character
from one country to another. Even within a country each has its own peculiar
history and its own unique way of conducting its affairs. A noteworthy difference
between U.S. trade unions and their British counterparts is that U.S. unions have
never achieved a political identity or even clearly associated their individual
interests as "working class." Whether this is attributable to the absence of a
traditional guild legacy in the United States, the greater degree of labor mobility
compared to Britain, the negative impact of early antitrust legislation (which
extended to unions), or the dominance, as late as 1930, of agricultural
employment, the fact is that in 1956, the peak year of U.S. union membership,
slightly less than 25% of all eligible workers were union members.
These data reflect, on the one hand, an ambivalence on the part of workers
about aligning themselves with unions and, on the other, the unions' less-thansympathetic public image. The numbers, however, belie the lobbying
effectiveness that unions have had, at least until the recent past, on social
legislation. Legislative gains in such key areas as minimum wages, safety
regulations, and unemployment compensation are in no small measure
attributable to the success of labor's powerful lobbying efforts in Washington.

43. • Many immigrants put their
children to work ASAP.
Child labor

44. • Shoeshine boys
Child labor

45. • Bowling pin boys
Child labor

46. • Coal miner boys
Child labor

47. • Young miner
Child labor

48. • Girls were preferred over boys.
They were paid less, had
smaller hands.

49. Labor reform
• Unions allied themselves with
communists, socialists, and
anarchists. They went on
strike, and they turned violent
most of the time.

51. Labor unions
• Skilled labor unions were more
successful because they were
harder to replace.

52. • Taylorism – increasing
efficiency through studies of
human motion.

53. Industrial efficiency
• Henry Ford learned that the less
people had to move, the faster
they would work.

54. Ford’s assembly line

55. • The first cars were very
expensive.

56. Model T
• The Model T was the first car
that middle class people could
afford.

57. Model T
• The assembly line lowered the
cost of the Model T from $825
to $300.

58. The Beginning of
Capitalism
The word economics comes from a Greek word that means ―household
management‖—performance of the tasks and services that allow a
family to survive and prosper. Thus economic functions are activities
devoted to satisfying the primary needs of food, clothing, and shelter—
needs that are common to all human beings. Economic functions also
satisfy desires for goods and services that are not genuine needs but that
people in a prosperous country want. Such goods and services are often
called luxuries, but today some luxuries are considered necessities by
many people: such things as automobiles, television sets, cell phones,
and visits to the dentist.
One of the ways goods and services are provided is through an
economic system called capitalism. Other names for this system are free
market economy and free enterprise. All three terms were coined in the
late 19th and the early 20th century to describe economic arrangements
that began developing in Europe several centuries ago.
The word capital refers to what are called factors of production. These
include the money, land, buildings, and machinery that it takes to
operate a factory or farm. The capitalist is the individual—or group of
individuals—who supplies the money to get the enterprise going.
The other two terms, free market economy and free enterprise, put a
slightly different slant on capitalism. They have in common the word
free.

59. The Beginning of Capitalism (cont’d)
The implication is that people have individual liberty and the
right to own property. They also have the right to do what
they wish with their property, as long as it does not harm
anyone else. These freedoms set capitalism apart from all
other kinds of economic arrangements: all others are topdown, command-and-control political systems in which
personal freedom and the rights of property are sacrificed for
the good of the state.
In the context of capitalism, the term private property has a
specific definition. It signifies the means of production. A
farm as property is the means by which food is produced; and
a factory as property is the means by which durable goods are
produced. As an example of services, a physician’s office and
equipment are the physician’s property and are used in the
treatment of patients. The heart of capitalism is the producer’s
right to make what he wants and the consumer’s right to
choose what to buy.

60. The Railroads
The first transcontinental railroad
The American West

61. Transcontinental RR
• The transcontinental railroad
made travel across the country
faster, cheaper and more
efficient.

63. The Transcontinental Railroad
The transcontinental railroad in North America became a reality on May
10, 1869, when the tracks of the Union Pacific joined those of the Central
Pacific at Promontory, Utah. The event fulfilled dreams of spanning the
continent that were spurred by settlement of the American West and that
dated back to at least 1845. Interest in a transcontinental railroad was
heightened by the acquisition of Oregon (1846) and California (1848) and the
subsequent gold rush. In 1853, Congress appropriated $150,000 to defray
expenses of surveying feasible routes, but the question of the best one quickly
became a matter of sectional controversy.
Once the South left the Union, Congress pushed through the Pacific Railroad
Act (July 1, 1862), which authorized the Central Pacific to build eastward
from San Francisco and the Union Pacific to build westward from
Omaha, Nebr., via South Pass; the two were to join at the California-Nevada
line. Each company was to receive 400 ft (122 m) of right-of-way through
public (or 100 ft/31 m--through private) lands and 10 alternate square-mile
sections of public land for each mile of track laid. Loans of $16,000 to $48,000
per mile--depending on the grade of the terrain--were also available as a first
mortgage on the railroad. In 1864, Congress doubled the land grant and
made the financial subsidy a second lien on the property. Congress yet again
amended the original

64. The Transcontinental
Railroad (cont'd)
legislation in 1866 to allow the Central Pacific to advance
eastward until it met the Union Pacific, thereby turning
the project into a construction race.

65. The Last Spike by Thomas Hill, 1869
Golden spike that was donated by
the governor of Arizona Territory.

66. The Building of the
Railroads
• Built in 1860s
• Two companies
– Central Pacific Railroad Company
– Union Pacific Railroad Company
• Met and joined railroad in Promontory,
Utah
• Date of completion 10 May 1869
• By 1893 there were 6 major railroad
companies

67. Why did America need
Railroads?
• Communication from East to West was
not very good
• Travelling time from East to West took
6 months +
• It would help fulfil ‘Manifest Destiny’
• The U.S. needed to keep up with other
countries
• Trade links with China and Japan
• Help to bring law and order to the West

68. Effect of the Railroads
• Previous methods
– Wagon Train
– Foot
– By boat
– Pony Express
• The railroad
turned a 6 month
journey into a
maximum of 8
days

69. Effect of the Railroads: Cheap land for
people wanting to go West
• Once the Railroads
were built the
Railroad companies
had no use for the
excess land
• Sold land off cheap
• Benefitted
Homesteaders and
Ranchers who came
west.

70. Effect of the Railroads
• Hunters used the
Railroad to go west to
hunt the buffalo
• Hunters were only
interested in buffalo
hides
• 1875 southern buffalo
herds were wiped out
• 1885 northern buffalo
herds wiped out
• Indians depended on
the buffalo, but now
they were almost
extinct!

71. Effect of the Railroads: Helps develop the
Cattle Industry
• Cattle were transported
by the railroads
making it easier to
move them from Texas
to the East
• Cow Towns grew up
around these railroad
stops