Chapter 17 Notecards

Front 1

What was the crucial technological development, that relied on railroads for its economy, arose in the Second Industrial Rev.?

Back 1

Perhaps the most important technological development in a nation whose economy rested so heavily on railroads and urban construction was the revolutionizing of iron and steel production in the late nineteenth century. Iron production had developed slowly in the United States through most of the nineteenth century; steel production had developed hardly at all by the end of the Civil War. The story of the rise of steel is, like so many other stories of economic development, a story of technological discovery. An Englishman, Henry Bessemer, and an American, William Kelly, had developed, almost simultaneously, a process for converting iron into the much more durable and versatile steel. The Bessemer Process made large structures like skyscrapers and bridges possible, and revolutionized the railroad industry as well. Pittsburgh became the center of the steel world as well, because of its abundance of iron ore. As the steel industry spread, new transportation systems emerged to serve it. Steel production led to the new and more powerful steam engines to carry and transport iron ore.

Front 2

What other industry arose from the steel industry's need for lubrication for its machines?

Back 2

The steel industry’s need for lubrication for its machines helped create another important new industry in the late nineteenth century - black gold, or oil (which was mainly refined through petroleum reserves). The existence of petroleum reserves in western Pennsylvania had been common knowledge for some time. Later on, in 1860, the first oil well, near Titusville, Pennsylvania, was established and soon began pumping out 500 barrels a month.

Front 3

What breakthroughs allowed the automobile industry to take shape in America?

Back 3

Two technologies were critical to the development of the automobile. One was the creation of gasoline (or petrol). It was the result of an extraction process developed in the late nineteenth century in the United States by which lubricating oil and fuel oil were separated from crude oil. In the 1870s, designers in France, Germany, and Austria–inspired by the success of railroad engines–had begun to develop an “internal combustion engine,” which used the expanding power of that petrol to drive pistons. A German, Nicolaus August Otto, created a gas-powered engine in the mid-1860s, a precursor to automobile engines.

The American automobile industry developed rapidly in the aftermath of these breakthroughs. Henry Ford produced the first of the famous cars that would eventually bear his name and utilized the combustion engine. By 1917, there were nearly 5 million automobiles in America.

Front 4

How had research and development changed dramatically in the Second Industrial Rev.?

Back 4

The rapid development of new industrial technologies encouraged business leaders to sponsor their own research to allow them to keep up with the rapid changes in industry. General Electric, fearful of technological competition, created one of the first corporate laboratories in 1900. The emergence of corporate research and development laboratories coincided with a decline in government support for research. That helped corporations to attract skilled researchers who had once worked for government agencies.

Front 5

How had ideas behind factory production change during the Second Industrial Rev.?

Back 5

By the beginning of the twentieth century, many industrialists were turning to new principles of “scientific management.” Those principles were often known as “Taylorism,” after their leading theoretician, Frederick Winslow Taylor. Taylor urged employers to reorganize the production process by subdividing tasks. This would speed up production; it would also make workers more interchangeable and thus diminish a manager's dependence on any particular employee. Henry Ford was one of the first to use Taylor's ideas for the development of the car with his idea of the moving assembly line. He divided production by giving each worker an interchangeable part to apply to the car; each worker would add on to the product to produce a finished one in the end. His innovation reduced the time it took to build a car from more than 12 hours to two hours and 30 minutes. Enabled Ford to raise the wages of his workers and reduce work time for his workers.

Front 6

How could large, consolidating corporations in America be created during this time period?

Back 6

Businessmen created large, consolidated organizations primarily through two methods. One was “horizontal integration”–the combining of a number of firms engaged in the same enterprise into a single corporation. The consolidation of many different railroad lines into one company was an ­example. Another method, which became popular in the 1890s, was “vertical integration”–the taking over of all the different businesses on which a company relied for its primary function (as in the case of Carnegie Steel). The most celebrated corporate empire of the late nineteenth century was John D. Rockefeller's Standard Oil, a great combination created through both horizontal and vertical integration. Rockefeller tried to increase his oil profits by using vertical integration to keep cost low by buying his own barrel factories, terminal warehouses, and pipelines, and horizontal integration, by buying out other oil refineries in other states.

Front 7

Rockefeller and other industrialists eliminated competition through what other form of consolidation?

Back 7

Rockefeller and other industrialists saw consolidation as a way to cope with what they believed was the greatest curse of the modern economy: “cutthroat competition.” Most businessmen claimed to believe in free enterprise and a competitive marketplace, but in fact they feared the existence of too many competing firms, convinced that substantial competition could spell instability and ruin for all. A successful enterprise, many capitalists believed (but did not say publicly), was one that could eliminate or absorb its competitors - a monopoly.

One such method was the creation of trusts, in which companies would place their stocks in the hold of a small group of trustees, who could make their own decisions but had to exchange the shares made in the trust itself. In a way, the trustees were the directors that regulated competition However, later a third form of consolidation was formed, which literally eliminated the need for trusts and allowed states to form actual corporate mergers. As a result of corporate consolidation, by the end of the 19th century, 1 percent of corporations in America controlled more than 33 percent of the manufacturing.

Congress responded to the formation of trusts with the creation of the Sherman Anti Trust Law, which later expanded to include monopolies as well. It generally barred any form of acts by corporations to purposefully remove competition in the competitive free market.

Front 8

What were other ways companies were able to increase profits and a secure holding as a corporation?

Back 8

Companies also relied on the sale of stocks to increase their profits, in which public investors would buy shares of the company . The sale of stocks was appealing to the public because of its "limited liability" - in which investors would only risk the amount they invested, and are not liable for any debts of the corporation. Another way to increase profits was the rise of consumerism in America as well. With the middle class able to buy a mass array of products from different corporations (some not really needed) for the household, these corporations were able to increase their profits tremendously as a result.

Front 9

What was the industry created by railroads and what were the troubles that arose as a result of the railroads+effects?

Back 9

With the massive construction of new railroads, including the Transcontinental Railroad, in the later half of the 19th century, new industries were created as a result. For example, railroad tycoons were able to control massive tracts of land and railroad, and able to set preferential high rates to corporations for the transport of products. Inevitably, these railroads were bought out by Vanderbilt, who combined into one large corporation. Railroads also created an industry for railroad brakes and seperate passenger railroads as well, both of which became immensely successful.

However, troubles soon arose with the massive development of the railroad industry, as well as other corporations. One example is troubles with the stock market, in which stocks owned by railroad tycoons had massively over inflated values, in an effort to increase the amount of money from investors. In addition, small farmers and corporations were crushed by the rates set to favor the larger corporations, rather than them. The same was being applied by large corporations as well, in an attempt to drive out competition (they were also using corruption as well). All this led to the US Congress passing the first regulatory law against corruption and unfair rates called the Interstate Commerce Act, which formed the Interstate Commerce Commission. The ICC supervised railroad activities and regulated unfair and unethical practices.

Front 10

What is Social Darwinism, who supported it, and what was the response to it?

Back 10

The ideal behind Social Darwinism is one taken up by most of the corporate tycoons and owners of monopolies. They claim that their wealth had purely been attained through their own hard work and dedication, and those who failed had earned their failure because of laziness. It also applied Darwin's theory of evolution and the "survival of the fittest" as well; only the fittest individuals survived and flourished in a capitalist marketplace, which industrialists used as an excuse to completely obliterate competition. In response to Social Darwinism, many tycoons claimed philanthropic efforts to help the poor and the people. Carnegie's "Gospel of Wealth" being an example. A more stricter response came from Americans skeptical of the laissez-faire ideas of Social Darwinists; the Socialist Labor Party was formed in 1894. The People's Party is another example, that inevitably became the political arm of the Populist movement, a movement for the gov't ownership of railroads and telegraphs, a graduated income tax, direct election of US Senators, and shorter work days.

Front 11

What types of factory workers were working in this time period, and how were they treated?

Back 11

Many of the workers working in factories were women, children, immigrants, and African Americans. Children worked to help their poor families get more money, many of whom were immigrants. They, along with women, were paid little to no pay and had to work 12-14 hours a day, so they were liked by factory owners for their cheap pay and long hours. Men were paid a little more, but still cheap labor nonetheless. Factories were extremely dangerous for factory owners, and the machinery was tremendously unsafe. Clothes and limbs often got trapped in the moving machinery if not careful, and could cause fires (Triangle Shirtwaist Factory).

Front 12

What was the response of most of the factory workers to these conditions?

Back 12

In response to the horrible conditions of the factory workers and overall of unskilled laborers, labor unions began to take shape. These labor unions called for safer conditions, higher wages, and shorter work days. To do so, many went on strike, and in response companies fired the workers or hired thugs to beat the strikers up. The worst of these strikes was the Pullman Strike, in which Pullman cut wages by 25% for factory workers, but wouldn't lower the rent of the company housing. The strike got so out of hand that President Cleveland had to shut it down.

One of the major labor unions formed was the Knights of Labor. They held rallies instead of striking, and allowed all workers to join, including women and African Americans. However, the Haymarket Riot gave the Union bad publicity, in which Anarchists ended a rally destructively by setting of bombs, killing policemen and protesters. The labor union eventually disappeared and was replaced with the American Federation of Labor. Only skilled workers were allowed in this group. They used collective bargaining to negotiate managements for workers as a group, instead of rioting. People's Party reflected many of the concerns of farmers and factory workers in America (already explained.