CHAPTER 17 INDUSTRIAL SUPREMACY APUSH 1 Sources of Industrial Growth a Industrial Technologies i Most impt tech developments were the new iron steel production techniques Henry Bessemer and William Kelly invented process to turn iron to steel possible to produce large quantities and dimensions for construction RRs ii Steel industry emerged in Pennsylvania and Ohio Pittsburgh notably iron industry existed fuel could be found in PA coal iii New transportation systems emerged to serve the steel industry freighters for the Great Lakes and RRs used steel to grow transported it sometimes merged w one another The oil industry also grew b c of need to lubricate mill machinery b The Airplane and the Automobile i Development of automobile dependent upon growth of two technologies creation of gasoline from crude oil extraction and 1870s Eur development of internal combustion engine By 1910 car industry major role in economy ii First gas car built by Duryea brothers 1903 Henry For began production 1906 iii Search for flight by Wright Bros lead to famous 1903 flight US govt created National Advisory Committee on Aeronautics 1915 to match Eur research c Research and Development i New industrial technologies lead companies to sponsor own research General Electric established first corp lab 1900 marked decentralization of govt sponsored research At same time cnxn began btwn university research needs of industrial economy partnership btwn academic commercial d The Science of Production i Principles of scientific management began to be employed fathered by Frederick Taylor who argued employers subdivide tasks to decrease need for highly skilled workers increase efficiency by doing simple tasks w machines ii Emphasis on industrial research led to corporate labs e g Edison s Menlo Park iii Most impt change in production was mass production assembly line First used by Henry Ford in automobile plant 1914 cut production time prices e Railroad Expansion i Industrial development b c of RR expansion gave industrialists access to new markets raw materials spent large sums on construction and equipment ii Possible b c of govt subsidies investment capital from abroad and combinations of RRs by Cornelius Vanderbilt James Hill Collis Huntington f The Corporation i Modern corp emerged after Civil War when industrialists realized no person or group of limited partners able to finance great ventures ii Businesses began to sell stock appealing b c limited liability meant lost only amt of investment not liable for debts allowed vast capital to be raised iii Began in RR industry spread to others in steel industry Andrew Carnegie struck deals with RRs bought up rivals purchased coal mines w partner Henry Clay Frick controlled steel process from mine to market iv Financed undertaking by selling stock Bought out 1901 by JP Morgan who formed United States Steel controlled 2 3 of nation s steel production v Corporate organizations developed new management techniques division of responsibilities control hierarchy cost accounting procedures and middle manager btwn owners and labor introduced Consolidation now a possibility g Consolidating Corporate America i Consolidation occurred thru horizontal integration forming competing firms into single corporation and vertical integration control production from raw materials to distribution Also thru pool arrangements most failed ii Most famous corp empire John D Rockefeller s Standard Oil thru horizontal vertical integration came to control 90 of refined oil in US iii Consolidation used to cope w cutthroat competition feared too much competition lead to instability best was to eliminate absorb competition h The Trust and the Holding Company i Failure of pools informal agreements to stabilize rates divide markets led to less cooperation and more centralized control trust emerged stock transferred to group of trustees who made all decisions but shared profits ii Beginning w NJ 1889 states changed laws to allow companies to buy other companies trust unnecessary holding companies emerged as corporate body to buy up stock and establish formal ownership of corporations in trust iii End of 19th cent 1 of corps controlled 33 of manufacturing system where power in hands of a few men NY bankers JP Morgan industrialists Rockefeller ect iv Substantial economic growth ultimately from this arrangement costs cut industrial infrastructure formed new markets stimulated new unskilled jobs 2 Capitalism and Its Critics a The Self Made Man i Defenders argued capitalist economy expanding opportunities for individual advancement and some tycoons were self made men But most came to be wealthy as a result of ruthlessness arrogance corruption financial contributions to political parties ii Many industrialists were modest entrepreneurs trying to carve role for their business in an unstable economy fragmented highly competitive industries b Survival of the Fittest i Assumptions that wealth earned thru hard work and thrift and that those who failed earned their failure became basis of Social Darwinism only fittest individuals survived and flourished in the marketplace ii English philosopher Herbert Spencer championed theory in America William Graham Sumner promoted similar ideas absolute freedom to struggle compete succeed and fail iii Appealed to businessmen b c justified their tactics efforts to raise wages by labor thru unions or govt regulation would fail laws of supply and demand and invisible hand or market forces would determine wages and prices iv Yet tycoons themselves thru monopolies tried to eliminate competition c The Gospel of Wealth i Gospel of Wealth 1901 by Andrew Carnegie advocated idea that w great wealth came great responsibility to use riches to advance social progress ii Author Horatio Alger promoted stories of individual success in his works anybody could become rich thru work perseverance and luck d Alternative Visions i Groups emerged challenging corporate and capitalistic ethos ii Sociologist Lester Ward in Dynamic Sociology 1883 argued natural selection didn t shape society and active govt in positive planning best for society Skeptical of laissez fire ppl should intervene to serve their needs iii Famous dissidents emerged to challenge ideas Socialist Labor Party founded 1870s by Daniel De Leon Henry George and his Progress and Poverty 1879 argued poverty due to wealth of monopolists and their high land values Edward Bellamy and his Looking Backward 1888 spoke of fraternal