~ By 1900, U.S. leading industrial power by a combination of factors : * Natural Resources (coal, iron ore, copper, lead..)
* Labor Supplies (immigrants)
* Advance transportation network
* Capital (Americans funding the economic expansion)
* Technologies increasing productivity
* Friendly gov policies (tariffs, land grants, loans)
* Talented entrepreneurs
A. The Business of Railroads.
~ The nation’s first big business : railroads, which had greatest impact on Am economic life.
- Created a market for goods & encouraged mass production, mass consumption, & economic specialization.
- Resources used promoted growth of industries (coal & steel).
- The American Railroad Association dividing nation into 4 time zones (1883)
- Most important : Created modern stockholder corp. & development of complex structures in finance, business management, and the regulation of competition. a. Eastern Truck Lines
~ (1830-1860) building of dozens of separated local lines resulted in diff gauges (distance btwn tracks) & incompatible equipment, but after Civil War due to consolidation of competing railroads into integrated truck lines reduced.
- “Commodore” Cornelius Vanderbilt used $$ from steamboats business to merge local railroads into NY Central Railroad (1867).
- Other truck lines (Baltimore & Ohio Railroad and PA Railroad) connected east seaports w/ Chicago & other Midwest cities & set standards of excellence and efficiency for the rest of the industry. b. Western Railroads
~ Their roles in the trans-Mississippi West :
(1) promote settlement on Great Plains
(2) link West & East to create one great national market.
( Federal land grants.
~ Seeing western railroads lead to settlements, federal gov provided railroad companies with loans & land grants.
- Got more than 170mil acres of public land (given in alternate mile-sq sections), so they could sell the land to new settlers to finance construction.
- Through railroad would increase both value of gov lands & provide preferred rates for carrying the mails & transporting troops. Neg consequences: (1) promoted hasty / poor construction
(2) led to widespread corruption in gov.
- Insiders used construction companies (Credit Mobilier) to pocket huge profits, while bribing gov officials and legislators. - In 1880s, protest on land grants b/c railroad companies controlled half lands in west states. ( Transcontinental Railroads.
~ During Civil War, Congress gave land grants/ loans to build first transcontinental railroad (finished in May 10,1869) to link Atlantic & Pacific states ; divided work for 2 companies :
1.) Union Pacific (General Grenville Dodge) used war veterans & Irish immigrants to build westward across Great Plains, from Omaha, Nebraska.
2.) Central Pacific (Charles Crocker) used Chinese to blast tunnels thru Sierras mountains eastward from Sacramento, CA. ~ Before 1900, 4 other trans railroads constructed across diff sections in West. - In 1883, 3 of them competed
(1) Southern Pacific tied New Orleans to LA
(2) Atchison, Topeka, & Santa Fe carried ppl between Kansas City & LA (3) Northern Pacific connected Duluth, Minnesota w/ Seattle, Washington. (4) the 4th trans connected St. Paul, Minnesota & Seattle in 1893.
- James Hill’s planned Great Northern was the only trans to be built w/o federal help. c. Competition & Consolidation
~ Railroads built in 1870s & 1880s were unprofitable/overbuilt, usually suffered from mismanagement & outright fraud.
- Speculators (Jay Gould) went into railroad business for quick profit made millions by selling assets & watering stock (inflating value of assets/profits before selling).
- To survive, railroads competed by offering rebates (discounts) & kickbacks to favor shippers while charging exorbitant freight rates to smaller customers like farmers. Also, increase profits by forming pools where competing companies agreed secretly &...