8 Your Initials Pg. 530-532 Building the Transcontinental Railroad

8 Your InitialsPg. 530-532

Building the Transcontinental Railroad

ID: In 1865 only 35,000 miles of track, by 1900 up to 192,556 which is more than all of Europe; Government needed to help subsidize the building process

Significance:• Reasons government subsidies were needed for the transcontinental

railroad– It was costly and risky– Unprofitable until areas around it could be built up– Caused advance for military and postal reasons

• Beneficial returns of government grants– Preferential rates for postal service & military traffic– Land grants avoided new taxes– Railroads can profit from selling land– Villages on rail lines become flourishing cities

• Reasons for transcontinental railroad– Binds west coast with rest of the country

• Frontier villages touched by the railroad become flourishing cities• Welded the West Coast more firmly to the Union• Facilitated a flourishing trade with Asia• Penetrated arid barrier of the deserts• Paved way for growth of the West


Union Pacific and Central Pacific Railroad

ID: The two companies chosen to build the first transcontinental railroad. Union Pacific starting in Omaha, NE moving west, Central Pacific moved east starting from Sacramento, CA

Significance:• For each mile of track company gets 20 square

miles of land• Received $16,000 loan for flat land, $48,000

for mountains• Life of railroad builders

– Worked at frantic pace– Fought hostile Native Americans– Lived in tented towns – “hells on wheels”

• “Wedding of the rails” took place on May 10, 1869 – Promontory, Utah just near Ogden


Cornelius Vanderbilt

ID: Made millions in steamboating, turned genius to railroads, controls most of track and amassed $100 Million fortune

Significance:• Expands the older eastern tracks to improve

ability to trade in the west• Offered superior service at lower prices• One of the most powerful of the time

8 Your InitialsPg. 535

Railroad improvements

ID: Spearheaded by Vanderbilt, railroad industry standardizes to the benefit of companies and make other improvements

Significance:• Steel rail

– Safer and more economical than iron• Standard gauge track

– Eliminated expense and inconvenience of numerous changes between lines

• Air breaks• Pullman Palace Cars

– Travel in deadly style• Still fatal accidents occur near-daily


How Railroads spurred industrialization

ID: stitching the country together by rail creates enormous domestic market for American raw materials and manufactured good;

Significance:• Perhaps largest integrated national market area in the

world• Huge empire of commerce beckoned to foreign and

domestic investors alike and businesspeople who could dream on continental scale

• ways the railroads spurred industrialization– Opened up new markets– Generated most orders for new steel industry– Stimulated mining and agriculture

• Farm settlements paralleled railroads– Boon for cities– Stimulates immigration

• Time itself is bent with railroad time– Cities and towns had “local” time– Railroads standardized times for scheduling– Break country into four time zones

8 Your Initials Pg. 536; digitalhistory.com

Jay Gould

ID: master of stock watering, regarded as a master of bribery and insider stock manipulation

Significance:• Boomed and busted stocks of four railroads• Prototype of “robber barons”• Reckless speculator • He paid off President Grant's brother-in-law to learn

the president's intentions about government gold sales;

• he bribed members of New York's legislature; and he tried to corner the gold market.

• he was one of the architects of a consolidated national railroad and communication system.

• One of his major achievements was to lead Western Union to a place of dominance in the telegraph industry.


Stock Watering

ID: Inflating claims of rail’s profitability to lure investors and drive up prices;

Significance:• Favorite device of railroad moguls to

manipulate investors and make money• After driving up prices, they sold stocks

and bonds in excess of the actual value• Public interests was frequented

trampled underfoot as railroad titans waged the brutal wars


Wasbash case

(1886)

ID: Supreme Court rules that individual states had no power to regulate railroads and interstate commerce

Significance:• Farmers and other groups feared the growing

power of the railroad companies and owners at expense of the “little guys”

• Under pressure many Midwestern states begin to try to regulate the railroad monopoly

• The federal government would have to step in and regulate

• Passes Interstate Commerce Act in 1887


Interstate Commerce Act

(1887)

ID: Passed to regulate railroads; prohibited rebates and pools and required that railroads to publish their rates openly; forbade unfair discrimination against shippers; outlaws charging more for a short haul than a long on along the same line; sets up Interstate Commerce Commission (ICC)

Significance:• Provided orderly forum where competiting business interests could

resolve their conflicts in peaceable ways• Country could now avoid ruinous rate wars among the lines• Tended to stabilized, not revolutionize the existing business system• Red – Letter law

– First attempt by Washington to regulate business in the interest of society at large

– Heralded the arrival of a series of independent regulatory commissions in the next century

– Government would commit of monitoring and guiding the private economy

– Foreshadowed the doom of freewheeling business practices and served notice that there was a public interest in private enterprise that the government was bound to protect


Upsurge in Manufacturing

ID: Postwar industrial expansion, partly a result of the railroad network, rapidly began to assume mammoth proportions

Significance:• Four main causes in the upsurge

– Liquid Capital– Natural resources– Massive immigration– American ingenuity


Alexander Graham Bell

ID: Inventor of the Telephone

Significance:• Thought he could make telegraph lines “talk”• America speedily turned into a nation of

“telephoniacs”• Revolutionizes communications


Telephone

ID: new means of communication invented by Alexander Graham Bell, allows for people speak directly to each other at great distances

Significance:• Gigantic communications network built as a

result• Women flood into work place as “number

please” operators on the switchboardsOperators at work

Source: www.americaslibrary.com: 2/3/07;


Thomas Alva Edison

ID: Prolific inventor and director of an “invention factory” New Jersey

Significance:• Responsible for

– Phonograph – mimeograph – Dictaphone – Movies – Light bulb– Electric distribution

• Make electricity safer and cheaper• People used to sleep an average of 9 hours a

day, with light bulbs slept just over 7• Turns night into day


Vertical Integration

ID: Method of developing a monopoly pioneered by Andrew Carnegie

Significance:• Combining all phases of manufacturing

from mining to marketing into one company

• Goal to improve efficiency by making suppliers more reliable, controlling the quality of products at all stages of production and eliminating middlemen’s fees


Horizontal Integration

ID: Method of developing a monopoly pioneered by J.D. Rockefeller

Significance:• Allying with competitors to monopolize a

given market• Used trusts to gain control

– Smaller companies would give stock to larger company’s board of directors

– Board would then be able to control all competition


Bessemer Process

ID: Method of making cheap steel

Significance:• Process to eliminate impurities in steel• Makes steel industry possible• America one of few places in the world

where one could find relatively close together abundant coal for fuel, rich iron ore and other essential ingredients


Andrew Carnegie

ID: The steel king

Significance:• Brought to America by his impoverished parents in

1848 and quickly worked up way up the ladder of success

• Acquired some capital and entered the steel business in Pittsburgh

• Gifted organizer and administrator• Succeeded by picking high class-associates and by

eliminating and middle-men• Was not a monopolist and disliked monopolistic trusts• By 1900 was producing ¼ of Bessemer steel• After being bought out, dedicated the remaining yers

of his life to giving away money for public libraries, pensions for professors and other such philanthropic purposes


J.P. Morgan

ID: the Bankers’ banker, financed the reorganization of railroads, insurance companies and banks

Significance:• Established an enviable reputation for

integrity• Did not believe that “money power” was

dangerous, except when in dangerous hands• Organizes bailout of government under

Cleveland• Symbolized to many people the power and

arrogance of “finance capitalism”


U.S. Steel Corporation

ID: Morgan buys out Carnegie Steel, adds other holdings and launches U.S. Steel

Significance:• Capitalized at $1.4 Billion • America’s first ever billion dollar corporation

– Larger sum that total estimated wealth of the nation in 1800

• Will come to dominate steel industry


Drake’s Folly

ID: The first well in Pennsylvania to pour out oil

Significance:• Almost overnight an industry was born• More wealth to take out of the Earth

– More useful wealth from earth than all of the gold extracted by the 49ers

• Kerosene first major product of the infant oil industry

• Oil business booms in 1870s• Internal combustion engine expands industry


John D. Rockefeller

ID: Dominates the oil industry and organized Standard Oil Company

Significance:• Sought to eliminate the middlemen and

squeeze out competitors• Flourished in era of completely free enterprise• Pursued policy of rule or ruin• Controlled 95% of all the oil refineries in the

country• Showed little mercy• Employed spies and extorting secret rebates

from the railroads, even forced lines to pay him rebates on the freight bills of his competitors


Standard Oil Company

ID: Oil company founded by J.D. Rockefeller, controlled 95% of oil industry

Significance:• Sought to eliminate the middlemen and

squeeze competitors• Turned out a superior product at a relatively

cheap price• Achieved important economies by it’s large-

scale methods of production and distrubtion• Efficient use of expensive machinery called

for bigness and consolidation proved more profitable


“Gospel of Wealth”

ID: wealthy, entrusted with society’s riches had to prove themselves morally responsible

Significance:• Theory of Andrew Carnegie to justify growing

size of the uber-wealthy


Social Darwinism

ID: survival of the fittest theory used by defenders of wide-open capitalism to justify of wealthy, created by Herbert Spencer and William Graham Sumner

Significance:• Millionaires are a product of natural selection• Self-justification by the wealthy involved contempt for

the poor• Many rich, especially newly rich, were self-made men• Concluded poor must be lazy and lacking enterprise• “Acres of Diamonds” lecture by Reverend Russell

Conwell charges “there is not a poor person n the United States who was not made poor by his own shortcomings”


Sherman Anti-Trust Act

(1890)

ID: Law passed by Congress which forbade combinations in restraint of trade, without any distinction between “good trusts” and “bad trusts”

Significance:• Bigness, not badness, was the sin• Law proved ineffective, largely because it had only

baby teeth or no teeth at all• Contains legal loopholes through which clever

corporate lawyers could wriggle through• Unexpectedly effect in one respect: used to curb

labor unions or labor combinations that were deemed to be restraining trade, contrary to original intent

• Threatened iron grip of monopolistic corporations• Revolutionary new principle takes hold: private greed

must be subordinated to public need


Obstacles in the path of southern industrialization

ID: South remains mostly rural despite industrialists attempt to into factories but with only modest success; Railroad rates limit chances

Significance:• Regional rate setting by railroad• Better rates for manufactured goods going south and

raw materials coming north• Pittsburgh plus pricing system in the steel industry

– Steel made in Birmingham AL was charged as if it was sent from Pittsburgh, driving up prices

• Some success in textile mills– Low taxes– Cheap labor

• Rural southerners come to work in mill towns• Paid half as much as northerners• Paid in credits to company stores• Kept in debt to company

– Employment seen by most as salvation


Gibson Girls

ID: a magazine image of an independent and athletic “new women” created in the 1890s by the artist Charles Dana Gibson

Significance:• Romantic ideal of the age• Represented new economic and social

opportunities– Telephone switchboard– Stenographers

• Women delay marriage• Smaller families• Lower pay

Source: www.content.cdlib.org: 2/4/07

Gibson Girl


National Labor Union

ID: Organized in 1866; included 600,000 members of skilled, unskilled and farm workers

Significance:• First large scale union• Lasted 6 years• Excluded Chinese• Minimal effort to include women and blacks

– Blacks organize Colored National Labor Union

• Agitated form the arbitration of industrial disputes and eight-hour workday

• Dealt a knock out blow by panic of 1873


Knights of Labor

ID: New large scale union that seized the torch from the National Labor Union

Significance:• Tried to unite workers into one big union• Barred non producers

– Liquor dealers, lawyers, bankers and stock brokers

• Campaigned for economic and social reforms– 8 Hour work day

• Hurt by including skilled and unskilled workers– Skilled workers in better bargaining

positions• Lose support after failed strike movements

and Haymarket square riot– Seen as anarcists


Haymarket Square Riot

(May 4, 1866)

ID: Strikes break out in Chicago and Chicago police advanced on a meeting called to protest alleged brutalities by the authorities, foreign anarchists throw a dynamite bomb into the crowd which injured and killed several dozen people

Significance:• Undermines the Knight of Labor, which called

for initial strikes– Now seen as anarchists


Samuel Gompers

ID: founder and creator of the American Federation of Labor;

Significance:• Adopted a down-to-earth approach to

engineer social reform• Had no quarrel with capitalism, but demanded

a fairer share for labor• Promoted “pure and simple” unionism

– Better wages, hours and working conditions• Major goal was a trade agreement authorizing

a “closed shop”– All union labor

• Chiefly used walk-outs and boycotts

8 Your InitialsPg. 553, 555

American Federation of Labor

(AF of L)

ID: Labor union founded by Samuel Gompers; composed of skilled craftsman

Significance:• True federation

– It was a organization of existing labor groups

• Demanded fairer share of business for labor– Sought better wages, working conditions

and hours• Used walkout and boycotts

– Established war chests for walkouts• Willing to let unskilled labor, women and

blacks to fend for themselves

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8 Your Initials Pg. 530-532 Building the Transcontinental Railroad