American Industrialization: 1877-1900

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American Industrialization – 1877-1900
Industrialization impetus grounded upon steel industry – 1870; America greatest steel producing nation

By 1870, mechanization sufficiently developed and available to facilitate industrialization

Panic of 1873 increases unemployment, decreases standard-of-living and income – availability of labor for industry

Steel industry based in upper-New York

; 1,643 tons of steel ingot – 1897; 7.1 million steel ingot

Substantial competition between Iron companies labors upon railroads – companies resort to ruthless tactics (e.g., price slashing, sabotage, blackmail, seeking of rebates, unfair advantages, mergers) to ensure success (and survival)

; Andrew Carnegie opens first steel plant – uses persuasion, acquaintances to create effective administrative structure in a limited partnership steel corporation; transforms attained capital to self-perpetuate (build more plants, acquire more raw materials, etc.)

Carnegie ultimately produces 2 million tons of steel in 1900

Bankers challenge industrialists for economic influence – J.P Morgan spearheads this; he seeks to consolidate entire industry into a sole monopoly; forms Federal Steel Company

Companies seek to become self-sufficient, independent from Carnegie – beginning inter-industrial conflict

Morgan resolves to buy-out Carnegie - $.5 billion to form United States Steel Corp. in 1901; constitutes 3/5ths of steel business

John Rockefeller, the Carnegie of Oil – similar to Carnegie in business astuteness and disposition to maximizing efficiency

Though, Rockefeller abhors free competition, emphasizes monopoly as way of future – combines oil refiners into Standard Oil Company

Railroad replacement of oil-transporting role by pipelines, Standard Oil seeks to establish control over pipelines with Standard Oil Trust as supervision in 1890s

Other industries imitate with their own trusts

Natural American conviction – Republicanism, individuality in liberty – becomes suspicious of big-business and holds that business should be organized in small units; desires unregulated competition, maximum opportunity

Popular sentiment is described in the speeches of political leaders in 1880s

People and big-business turn to Federal government for answer

State legislatures attempt to regulate railroads – ineffective

Wabash decision of 1886 limits states in authority and leaves problem to Feds

John Sherman; Ohio; submits antitrust bill in 1890 – passed

On the surface, trusts eliminated – in reality, they are simply reorganized into massive corporations

, Standard Oil abandons trust agreed to in 1882

Concentration of control pretty much unaffected

, US vs E.C. Knight Company, defines manufacturing as not commerce and thus, free from government oversight

Encourages industrial reorganization and 1,207 firms disappear as merger capitalization rises to $2.2 billion

B ut, 1898 and 1899, Supreme Court rules that any comb. of business firms “formed to fix prices or allocate markets” violates Sherman Antitrust Act – merger movement declines temporarily after formation of US Steel in 1901

Industrialization in concurrence with rise of inventions and technology

-New forms of corporate organization capable of amassing large amounts of capital

-Industrialization contributes to urban growth

-Stimulates transportation expansion

-Capitalists and workers spread across country in search of material

-Beginning of globalization with US at forefront

-Growing middle class; polarizing upper and lower classes

-Looming crisis in distance (i.e., Great Depression)

-Abundant raw materials, labor supply, technological innovation, entrepreneurship, government assisting of business, expanding market

-1868, altered form of Bessemer process introduced to US by Abram Hewitt

-Steel industry: western Penn., eastern Ohio, upper New York

-1870s, furnaces redesigned as...
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