Ch. 24 Ppt industry Comes of Age, 1865-1900 Railroads Come of Age

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Ch. 24 PPT Industry Comes of Age, 1865-1900

Railroads Come of Age

Tmwk Ch 24

  • Pg 531 Map What do the pink squares represent? And the tan squares?
  • Pg 532 picture Why was it difficult to build a transcontinental railroad?
  • Pg 534 picture Describe railroad construction in the Northwest area.

Railroad Building

    • Very 1st big business – became a monopoly.
    • Govt wanted to build transcontinental railroad because:
      • For security of U.S. - transport military quickly in war time.
      • Tie nation together economically – wealthy manufacturing east with gold-rich CA
      • Move products from east to west
      • Traded goods with Asia could make it to the east
      • Postal mail transportation
      • Move natural resources – iron, ore, coal, produce
      • Move people to populate the west – spurring growth of towns/cities along the railroad

Costly and Risky Govt Subsidies

      • To spur railroad building, Federal govt passed Pacific Railroad Act - to subsidize the transportation system without raising taxes, and a way to use land as enticement to get businessmen to profit from building the railroad
        • Issued large tracts of land to 2 railroad companiesUnion Pacific and Central Pacific.
        • For each mile of track built companies granted:
        • 1). builders receive 20 square miles of land 2). a federal loan$16,000 for flat land & up to $48,000 for mountainous land – 155 million acres in total

Union Pacific Railroad

  • Began in Omaha, Nebraska and moved west
  • Credit Mobilier pocketed 73 million: bribed congressmen to continue supporting the Pacific Railroad Act.
  • Irish Paddies were the workers (Irish who had fought in the Union Army)
  • “Hell on wheels”: tented towns sprang up at rail’s end – drinking and debauchery.

Central Pacific Railroad

  • Began in Sacramento, CA and moved east
      • Chinese built the railroad – high death rate due to explosions on mts.
    • Transcontinental Railroad completed 1869
      • Met at Promontory Point, UT
      • No other railroads received loans, but they did receive large land grants.

Effects of Transcontinental Railroad

  • Linked entire continent via railroad and by telegraph, paved way for westward movement
    • Created huge domestic market for U.S. raw materials and manufactured goods.
    • Stimulated creation of new industries of mining, agriculture and ranching
    • Facilitated large influx of immigrants.
    • Led to great exodus to urban areas.
    • Spurred investment from abroad.
    • Creation of distinct time zones.
    • Native Americans displaced and herded onto reservations


  • 4. Pg 537 Political Cartoon Who is William Vanderbilt? What is the cartoon depicting? Is it for or against someone or something?

Railroad Consolidation & Mechanization

  • Cornelius Vanderbilt: owned NY Central Railroad; popularized steel rail - stronger and could carry heavier loads than iron tracks.
    • Jay Gould And Russell Sage: controlled most of Western railroads - hurt other railroads by stock watering and keeping profits rather than reinvesting.
    • Pools createdagreement to divide the business in a given area and share the profits.

Railroads Come of Age

  • Transcontinental RR
  • Pacific Railway Act
  • Union Pacific RR
  • Central Pacific RR
  • Significance

Robber Barrons

    • Leaders of railroad monopolies (Robber Barrons) manipulated business for their own profits at the expense of the public.
    • Paid bribes to corrupt judges and politicians either to look the other way or to pass pro-railroad legislation.
    • Often elected their own to office – funded campaigns.
    • Many gave secret rebates or kickbacks to large corporations
    • Hurt farmers because of uneven pricing – farmers charged more than industrialists to ship goods
    • Economically squashed opponents = monopoly

Railroad Consolidation and Mechanization


  • 5. Pg 538 left paragraph What was the purpose for Congress to pass the Interstate Commerce Act?
  • 5a. Who has the power to regulate trade between states - the States or the federal govt?
  • 6. Pg 539 Political Cartoon What is the cartoon depicting – what is it for or against?

Wabash Case 1886

  • Wabash, St. Louis & Pacific Railroad Company v. Illinois: Supreme Court declared invalid an Illinois railroad law because it was an infringement on the exclusive powers of Congress granted by the commerce clause of the Constitution.
  • Result: denial of state power to regulate interstate rates for railroads- led to creation of the Interstate Commerce Commission.

1887 Interstate Commerce Act

  • Prohibited rebates and pools.
  • Required railroads to publish rates.
  • Forbid unfair discrimination against shippers. Outlawed charging more for short hauls than for a long haul.
  • Set up the Interstate Commerce Commission (ICC) to administer and enforce the Act.
  • The first large scale attempt of the federal govt. to regulate business in the interest of society.


  • Alexander Graham Bell: telephone – giant communications network was built. Women took jobs as switchboard operators.
  • Thomas Edison: dictaphone, phonograph, moving picture, electric light bulb
  • Others: cash register, stock ticker, typewriter
  • Alexander Graham Bell

Eliminating Competition

  • Andrew Carnegie: integrated his steel-making operation – his miners mined the ore, his ships transported the ore, his railroad delivered it to his steel making factory.
  • Thus the 1st to pioneer “vertical integration,” which combined all phases of manufacturing into one organization and eliminated middle men’s fees.

John D. Rockefeller & Trusts

  • John D. Rockefeller developed the “Trust” by 1882= stockholders in smaller oil companies assigned their stock to board of directors of his company (“horizontal integration”) & the Standard Oil Company, which controlled the oil (petroleum) industry: bought out competition, underselling, differential pricing, and secret transportation rebates
  • 1870: organized Standard Oil Company and by 1877 he controlled 95% of all oil refineries in U.S. & dominated the oil industry

The Emergence of Trusts

Steel is Supreme

  • By 1900 – U.S. produced as much steel as Britain and Germany combined.
  • Due to abundance of natural resources of coal for fuel, iron ore, good labor supply, and other ingredients for making steel.
  • Bessemer Process – method of making cheap steel (use cold air to eliminate impurities)
  • Andrew Carnegie – by 1900, he was producing ¼ of the nation’s bessemer steel.


  • 7. Pg 540 Quote What did Andrew Carnegie believe about leaving heirs an inheritance of great wealth?

J P Morgan: Banker and Financier

  • Financed the reorganization of railroads, insurance companies, and banks.
  • Morgan bought out Carnegie for over $400 million. (Philanthropist: Carnegie donated millions)
  • 1901 launched the larger U.S. Steel Corporation = America’s 1st billion dollar corporation.

Reason for Wealth

  • Gospel of Wealth: Essay written by Andrew Carnegie - described responsibility of philanthropy by the self-made rich. Wealthy, entrusted with society’s riches, had to prove themselves morally responsible. (God had given them wealth)
  • Social Darwinism: Survival of the fittest – Wealthy were “naturally selected” since they are intelligent and more fit.
  • Book, Wealth of Nations by economist Adam Smith: argues that free market economies are more productive and beneficial to their societies.


  • 8. Pg 543 Cartoon What is the cartoon depicting – what is it for or against?

The Wealthy Ones

  • J P Morgan
  • Banker and Financier
  • Andrew Carnegie: steel
  • John D. Rockefeller: Oil

1890 Sherman Anti-Trust Act

  • Federal govt to investigate and pursue trusts: companies/organizations suspected of violating the Act.
  • Forbid and opposed the combination of entities that could potentially harm competition, like monopolies.
  • Used to curb labor unions.
  • “Against conduct which unfairly tends to destroy competition itself
  • Proved ineffective as corporations would find ways to get around the law.

Labor Unions

  • 1866 National Labor Union: skilled and unskilled workers and farmers - Wanted 8 hr work day (won 8 hr work day for federal employees)
  • 1869 Knights of Labor: Skilled/unskilled workers - campaigned for economic and social reform: codes for safety and health, 8 hr workday. Chinese prohibited from joining. (May Day strikes)
  • 1886 Haymarket Square Riot: A rally to support striking workers at Haymarket Square in Chicago. Dynamite bomb thrown at police. Bomb blast/gunfire caused deaths of 8 police officers and civilians. 8 anarchists tried for murder; 5 convicted, 4 executed and 1 committed suicide in prison. (none of the defendants had thrown the bomb)

AFL: American Federation of Labor

  • Began 1886 - Samuel Gompers served as Pres from 1886-1924 (except for 1 year)
  • Broke away from Knights of Labor - An association of self-governing national unions, each with its independence, but with AF of L unifying the strategy.
  • Major goal: “trade agreement” authorizing the “closed shop” = employer agrees to hire union members only, so have only all-union labor.
  • Sought better wages, hrs, working conditions. Used walkouts, boycotts, and “we don’t patronize” signs.
  • Dominated and composed of skilled craftsman (carpenters, bricklayers, etc.)

Rise of Unions

Industrial Workers: Child Labor


  • 9. Pg 546 Chart What is happening to cotton manufacturing?
  • 10. Pg 547 Map Name two states that had chief manufacturing cities. What natural resource is found in Western states?

The South During Industrial Era

  • Efforts to Industrialize South fails
  • South becomes “colonized” economically
  • Exceptions: Tobacco & Cotton Industry

Government Response to Railroad

  • Laissez-faire, corporate welfare, or regulation?
  • Adam Smith, The Wealth of Nations
  • Slaughterhouse Cases, 1873
  • Munn v. Illinois, 1877
  • Wabash Case, 1886
  • Interstate Commerce Act, 1887-ICC

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