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HIS271 January 16, 2013.doc

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University of Toronto St. George
Erin Black

HIS271 January 16, 2013 Toward Modern America c. 1870-1910 Industrialization and the Rise of Big Business At the close of the American civil war, America is still a rural nation, trailing Britain, Germany and France in production. However, by the 1900s, USA leap frogs over its European counterparts in production, become one of the wealthiest nations. The rapid and widespread adoption of the mechanical means of production, leading to the creation of large factories. THe wage-labour system is the driving force of labour of the nation. Factors leading to industrialization. - the railroad continues to expandand develop, creating trans-continental lines. Evolves the economy by creating a nationwide market for goods. Track mileage by 1900 in the US supersedes that of all the other nations in the world combined. - technological innovations Electricity. Factories can be created anywhere, thanks to the accessibility of electricity. No longer would factories have to be built along rivers where the water would supply the steam-powered machinery. - Patents. Hundreds of thousands of patents are taken out from the telephone, furnaces, automotive technologies, typewriters, cash register. These innovations create new class of workers from clerks to communication workers, etc. The implementation of new business methods in the late 19th century is a new phenomenon that would usher in the stage of corporate america. - Vertical Integration: Carnegie Steel, a scottish immigrant who built himself from modest means. Built his first steel mill churning out 50 tons of steel, 20 years later 10,000 tons. - He was the first to use the method of vertical integration by buying up every tier of production from mining, processing plants, to distribution. In other words, one company owns every process of production from extraction to distribution of the final product. - Horizontal Integration: Standard Oil (Rockefeller) controls 9/10 of the oil refining industry by acquiring all the other producers. In so doing, he becomes a price-setter and therefore ensures his own prices and profit margins by control every means of production. After which, he would also indulge in Vertical Integration. In 1890, the Sherman Anti-trust act was passed to discourage large companies to form, under the pretext of going against free-trade. However, this act is not enforced. Rockefeller becomes America's first billionaire. J.P. Morgan - a banker who becomes America's richest man. He is responsible for creating such industrial giants as General Electric and US Steel. He oversaw the merger of many rail companies, and some smaller steel companies. When Carnegie retires, J.P. Morgan purchases his steel company, and with all the other companies he has a hand in creates US Steel. Carnegie represents the older, individual entrepreneurial order. JP Morgan represents the new order of corporations. The rise of industrial capitalism, given free reign by government who believes that it should not interfere in the market. Labour, naturally impacted by these changes, sees a rise in organization. A rapid growth in the working class, however, wages are going down, working conditions are bad; they are losing grasp. Industrialists are also investing heavily in machinery, which in turns is replacing expensive skilled workers. The Rise of Organized Labour Local union activity was not able to keep up with the growth of capitalism and indistrualization. What was needed was a national, organized union. The Knights of Labour there was a movement towards collective ownership of major industries, ie banking, railroad, steel, etc. A step towards socialism. They also stood for higher wages, better working conditions, etc. The movement fizzles under pressure of employers. The American Federation of Labour (AFL) - d
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