Splash Screen. C & E Trans Chapter Menu Chapter Introduction Section 1:Section 1:The Rise of...

Splash Screen

C & E Trans

Chapter Menu

Chapter Introduction

Section 1:The Rise of IndustrySection 2: The Railroads

Section 3:Big BusinessSection 4: Unions

Section 1

The United States Industrializes

Natural resources and a large labor force allowed the United States to industrialize rapidly.

Section 1

• By the late 1800s, the United States was the world’s leading industrial nation.

– By 1914, the nation’s gross national product was eight times greater than it had been in 1865 when the Civil War came to an end.

The United States Industrializes (cont.)

• An abundance of raw materials was one reason for the nation’s industrial success.

Section 1

• At the same time, people began using petroleum.

– In 1859 Edwin Drake drilled the first oil well near Titusville, Pennsylvania.

The United States Industrializes (cont.)

Natural Resource Sites of the United States, c.1890

Section 1

• The human resources available to American industry were as important as natural resources in enabling the nation to industrialize rapidly.

– Population growth stemmed from two causes—large families and a flood of immigrants.

The United States Industrializes (cont.)

Section 1

New Inventions

During the late 1800s, inventions such as the telephone and the lightbulb spurred economic development.

Section 1

• In 1876 a Scottish immigrant named Alexander Graham Bell succeeded in creating the first telephone.

• Thomas Alva Edison invented or improved the following:

New Inventions (cont.)

– Phonograph

– Electric generator

– Lightbulb

American Inventions, 1865–1895

– Motion picture

– Dictaphone

– Battery

Section 1

• Other inventions during the late 1800s:

– Ice machine

– Refrigerated railroad car

– Northrop automatic loom

– Power-driven sewing machine and cloth cutter

New Inventions (cont.)

Section 1

Free Enterprise

Laissez-faire economics promoted industrialization, but tariffs protected American companies from competition.

Section 1

• Another important reason the United States was able to industrialize rapidly was its free enterprise system.

– In many ways, the U.S. practiced laissez-faire economics in the late 1800s.

– In other ways, the government went beyond laissez-faire and introduced policies intended to promote business.

– The profit motive attracted many entrepreneurs .

Free Enterprise (cont.)

Chapter Intro 3

Big Business

Why did captains of industry such as John D. Rockefeller expand their businesses through new ways of organization?

Section 3

The Rise of Big Business

Corporations could produce goods more efficiently, which allowed the rise of big business.

Section 3

• By 1900, big businesses dominated the economy, operating vast complexes of factories, warehouses, and distribution facilities.

• Big business would not have been possible without the corporation.

The Rise of Big Business (cont.)

– The people who own the corporation are called stockholders because they own shares of ownership called stock.

Section 3

– With the money raised from the sale of stock, corporations could invest in new technologies, hire large workforces, and purchase many machines.

– This enabled them to achieve economies of scale.

The Rise of Big Business (cont.)

Types of Business Organizations

Section 3

• Because of economies of scale, big corporations could…– produce more goods cheaply and efficiently.

– continue to operate in poor economic times by cutting prices to increase sales rather than shutting down.

– could also negotiate rebates from railroads, further lowering their operating costs.

The Rise of Big Business (cont.)

Section 3

Consolidating Industry

Business leaders devised new and larger forms of business organizations and new ways to promote their products.

Section 3

• Many companies did not like the intense competition that had been forced on them.

• To stop prices from falling, many companies organized pools to keep prices at a certain level.

Consolidating Industry (cont.)

– However, companies that formed pools had no legal protection and could not enforce their agreements in court.

Section 3

• The remarkable life of Andrew Carnegie illustrates many of the factors that led to the rise of big business in the U.S.

– Born poor, he eventually opened a steel company in Pittsburgh in 1875.

– To make his company more efficient, he began the vertical integration of the steel industry.

Consolidating Industry (cont.)

The Rise of the Steel Industry

Section 3

• Successful business leaders also pushed for horizontal integration.

– A famous industrialist who achieved almost complete horizontal integration of his industry is John D. Rockefeller.

– By 1880, the company controlled about 90% of the oil-refining industry in the U.S.

Consolidating Industry (cont.)

The Rise of the Steel Industry

Section 3

– Standard Oil came close to being a monopoly, but international competition forced the company to keep its prices low.

• In 1882, Standard Oil formed the first trust, a new way of merging businesses that did not violate laws against monopolies.

Consolidating Industry (cont.)

Section 3

• Beginning in 1889, the state of New Jersey further accelerated the rise of big business with a new general incorporation law.

– Many companies immediately used the law to create a new organization, the holding company.

Consolidating Industry (cont.)

• Another increase in the size of corporations began in the mid-1890s, when investment bankers began to help put new holding companies together.

VS 1

Causes of Industrialization

• Abundant natural resources

• Cheap immigrant labor force

• High tariffs reduce the import of foreign goods

• National transportation and communication networks

VS 2

Causes of the Growth of Big Business

• Little or no government intervention

• Development of pools, trusts, holding companies, and monopolies

• Small businesses could not compete with economies of scale of larger businesses

• Practices of some big businesses sometimes limited competition

Figure 1

Figure 5

Figure 6

DFS Trans 3

Vocab1

gross national product 

the total value of goods and services produced by a country during a year

Vocab2

laissez-faire 

policy that government should interfere as little as possible in the nation’s economy

Vocab3

entrepreneur 

one who organizes, manages, and assumes the risks of a business or enterprise

Vocab4

resource 

material used in the production process, such as money, people, land, wood, or steel

Vocab10

corporation 

an organization that is authorized by law to carry on an activity but treated as though it were a single person

Vocab11

stock 

money or capital invested or available for investment or trading

Vocab12

economies of scale 

the reduction in the cost of a good brought about especially by increased production at a given facility

Vocab13

pool 

a group sharing in some activity; for example, among railroad owners who made secret agreements and set rates among themselves

Vocab14

vertical integration 

the combining of companies that supply equipment and services needed for a particular industry

Vocab15

horizontal integration 

combining of many firms engaged in the same type of business into one corporation

Vocab16

monopoly 

total control of a type of industry by one person or one company

Vocab17

trust 

a combination of firms or corporations formed by a legal agreement, especially to reduce competition

Vocab18

holding company 

a company whose primary business is owning a controlling share of stock in other companies

Vocab19

distribution 

the act or process of being given out or disbursed to clients, customers, or members of a group