2.2 Industrialization and the Rise of Big Business
3 min read•july 31, 2024
The saw rapid industrialization transform America's economy and society. , , and fueled the rise of . Factories, railroads, and corporations reshaped the landscape, while tycoons amassed unprecedented wealth and power.
This era of progress came with significant costs. Workers faced harsh conditions, wealth inequality soared, and unchecked growth led to environmental degradation. The changes of industrialization set the stage for reform movements and debates over 's future role in American life.
Factors of Industrialization
Abundant Natural Resources and Infrastructure
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- Abundant natural resources, including coal, iron ore, oil, and timber, fueled industrial growth and expansion
- The expansion of the facilitated the transportation of raw materials and finished goods, connecting markets across the country
Labor Force and Government Policies
- A large influx of immigrants provided a cheap and abundant labor force for factories and industrial sites
- Government policies, such as and to railroads, encouraged industrial development and protected domestic industries
Financial Institutions and Market Growth
- The rise of and the availability of capital through banks and stock markets supported industrial investment and growth
- The emergence of a , driven by population growth and increasing consumer demand, spurred industrial production
Technological Innovations and Big Business
Manufacturing and Production Innovations
- The development of and the revolutionized manufacturing, enabling mass production and economies of scale
- Advancements in , including the and , transformed factories and cities, enabling 24-hour production and improved working conditions
- The rise of the , driven by the and , provided essential materials for construction, transportation, and manufacturing
- The development of the , facilitated by and , provided a new source of energy and lubricants for machinery
Communication and Office Innovations
- Innovations in communication, such as the and , allowed for faster information exchange and improved business coordination
- New inventions, like the and , increased office efficiency and facilitated the growth of white-collar jobs
Transportation Innovations
- Innovations in transportation, such as the () and improved railroad technology (), expanded markets and reduced shipping costs
Business Consolidation Strategies
Vertical and Horizontal Integration
- , whereby companies controlled all stages of production from raw materials to finished products (), reduced costs and increased efficiency
- , involving the acquisition of competitors to gain market share and control prices (), led to the formation of and
Monopolistic Practices
- The use of , , and allowed businesses to fix prices, divide markets, and limit competition
- The formation of , which owned stock in multiple corporations (), enabled financiers to control entire industries
- The exploitation of and the use of allowed companies to maintain exclusive control over key technologies and innovations ()
- The use of , whereby businesses temporarily lowered prices to drive out competitors (), helped establish market dominance
Political Influence
- The influence of business leaders on government policies, through lobbying, campaign contributions, and revolving door practices, ensured favorable legislation and regulations
Industrialization's Impact on Society and the Environment
Labor Conditions and Inequality
- The rise of the factory system led to the deskilling of labor, as workers performed repetitive tasks and lost control over the production process
- Low wages, long working hours, and poor working conditions characterized industrial labor, leading to the growth of () and strikes ()
- and the exploitation of immigrant workers were common practices, as businesses sought to minimize costs and maximize profits
- The concentration of wealth and power among a small group of industrial elites led to growing and
Urbanization and Environmental Degradation
- Rapid , driven by the growth of factories and the influx of immigrants, led to overcrowding, poor sanitation, and the rise of and ()
- Environmental degradation, including air and water pollution (), deforestation, and the depletion of natural resources, resulted from unchecked industrial expansion
Consumer Culture
- The rise of consumerism and the availability of mass-produced goods transformed American culture and social norms, creating new forms of leisure and entertainment (department stores, amusement parks)
Key Terms to Review (56)
Assembly line: An assembly line is a manufacturing process in which a product is assembled step-by-step along a conveyor belt or workstations, with each worker performing a specific task. This method greatly increased production efficiency and reduced costs, playing a vital role in the rise of mass production and large-scale manufacturing during the industrial age.
Automobile: An automobile is a self-propelled vehicle designed primarily for transportation on roads, typically powered by an internal combustion engine or electric motor. The rise of the automobile marked a significant transformation in both society and the economy, leading to increased mobility, urbanization, and the development of related industries.
Bessemer Process: The Bessemer Process is a method developed in the 1850s for the mass production of steel by blowing air through molten iron to remove impurities. This innovation significantly lowered the cost of steel production, leading to its widespread use in construction, transportation, and manufacturing, which fueled industrial growth and the rise of big businesses in the United States.
Big business: Big business refers to large-scale corporate enterprises that dominate a specific industry or sector, often characterized by significant financial resources, a large workforce, and the ability to influence market conditions. This term is closely linked to the industrialization era in the United States, where technological advancements and changes in production methods led to the emergence of powerful companies that could achieve economies of scale and reduce competition.
Capitalism: Capitalism is an economic system where private individuals or businesses own and control the means of production and trade, aiming to generate profit. This system emphasizes free markets, competition, and minimal government intervention, allowing supply and demand to dictate prices and production levels. Capitalism has shaped various aspects of society, influencing economic policies, social structures, and labor relations throughout history.
Carnegie Steel: Carnegie Steel was a dominant steel production company in the late 19th century, founded by industrialist Andrew Carnegie. It became a leading force in the steel industry and was integral to the development of infrastructure in the United States during the era of industrialization. The company’s innovative production methods and business strategies allowed it to produce steel more efficiently and at lower costs, contributing to the rise of big business and transforming American manufacturing.
Cartels: Cartels are formal agreements among competing firms to control prices, limit production, or divide markets to maximize profits at the expense of competition. These collaborations can lead to reduced market competition and are often illegal in many countries, as they undermine free-market principles. The rise of cartels during industrialization allowed businesses to consolidate power and stabilize profits amid fierce competition.
Cash register: A cash register is a mechanical or electronic device used to calculate and record sales transactions, typically featuring a drawer for storing cash. In the context of industrialization and the rise of big business, cash registers played a crucial role in the evolution of retail operations, streamlining the sales process and enhancing financial management for businesses.
Child labor: Child labor refers to the practice of employing children in work that deprives them of their childhood, education, and potential, often in dangerous and unhealthy conditions. During the period of industrialization, the demand for cheap labor led many factories and industries to hire children, resulting in significant social and economic implications as families sought to survive in a rapidly changing economy.
Cuyahoga River Fires: The Cuyahoga River Fires were a series of significant blazes that occurred on the Cuyahoga River in Ohio, most notably in 1969, highlighting the severe pollution of the river. These fires symbolized the environmental degradation resulting from industrial waste and neglect, and served as a catalyst for the modern environmental movement, prompting public awareness and legislative action regarding pollution and environmental protection.
Drilling techniques: Drilling techniques refer to the various methods and technologies used to bore holes into the earth's surface, primarily for extracting natural resources like oil and gas. These techniques evolved significantly during the period of industrialization, allowing for more efficient and extensive resource extraction, which fueled the rise of big business and transformed the economy.
Economic Inequality: Economic inequality refers to the disparity in wealth and income distribution among individuals or groups within a society. This concept is crucial in understanding the social and economic landscape, highlighting the gap between the rich and poor, which often leads to significant disparities in opportunities and living conditions. Economic inequality is influenced by various factors such as industrialization, social policies, and access to education, shaping the dynamics of class relations and affecting reforms aimed at addressing these disparities.
Edison's Patents: Edison's patents refer to the numerous inventions and innovations attributed to Thomas Edison, an American inventor and businessman who profoundly impacted industrialization. His patents, totaling over 1,000, played a significant role in the development of technologies such as electric lighting and sound recording, which fueled the rise of big business during the late 19th and early 20th centuries. Edison's relentless pursuit of innovation not only transformed industries but also laid the groundwork for modern corporate research and development.
Electric motors: Electric motors are devices that convert electrical energy into mechanical energy through the interaction of magnetic fields. These motors played a crucial role in the Industrial Revolution, powering machinery and equipment in factories, which significantly increased production efficiency and transformed industries.
Electricity: Electricity is a form of energy resulting from the presence and flow of electric charge, primarily electrons. Its development and implementation in the late 19th century revolutionized industries and everyday life, leading to advancements in manufacturing processes, transportation, communication, and urbanization. As a catalyst for technological innovations, electricity became a driving force behind industrial growth and played a crucial role in the rise of large-scale businesses during this period.
Financial institutions: Financial institutions are organizations that provide financial services, including the management, investment, and allocation of money. They play a crucial role in the economy by facilitating transactions, offering loans, and helping businesses grow through access to capital. During industrialization and the rise of big business, these institutions helped to mobilize savings and allocate resources efficiently, which was essential for supporting expanding industries and large-scale enterprises.
Five Points: Five Points was a notorious neighborhood in Manhattan during the 19th century, known for its extreme poverty, crime, and ethnic tensions. It served as a melting pot for various immigrant groups, particularly Irish and Italian communities, contributing to its reputation as one of the most dangerous areas in New York City.
Gentlemen's agreements: Gentlemen's agreements refer to informal arrangements or understandings between parties, often based on trust and mutual respect, rather than formal contracts or laws. In the context of the rise of big business and industrialization, these agreements were commonly used to limit competition, control prices, and manage labor relations without resorting to legal measures or written documents.
Gilded Age: The Gilded Age refers to a period in U.S. history from the 1870s to about 1900, characterized by rapid industrialization, economic growth, and significant social changes that masked underlying issues of inequality, corruption, and exploitation. This era saw a surge in immigration, especially from Southern and Eastern Europe, leading to rising nativism as native-born Americans reacted to the influx. Furthermore, the rise of big business during this time brought wealth to a few while leaving many in poverty, creating a stark divide that fueled political corruption and prompted reform movements aimed at addressing these disparities.
High tariffs: High tariffs are taxes imposed by a government on imported goods, aimed at making foreign products more expensive to protect domestic industries. These tariffs can stimulate local manufacturing by discouraging imports, which played a significant role in the rise of big business and industrialization in the United States during the late 19th century.
Holding companies: Holding companies are firms that own the outstanding stock of other companies, effectively controlling them without directly managing their operations. This structure allows holding companies to consolidate control over various businesses, facilitating more efficient management and reducing risk through diversification. In the context of industrialization and the rise of big business, holding companies became instrumental in the creation of monopolies and oligopolies, shaping the competitive landscape of American capitalism.
Horizontal integration: Horizontal integration is a business strategy where a company acquires or merges with other companies at the same level of the supply chain, typically to increase market share and reduce competition. This approach became popular during the rise of big business in the late 19th century, as companies sought to consolidate their power and create monopolies in their respective industries, leading to greater efficiencies and economies of scale.
Immigrant labor: Immigrant labor refers to the workforce comprised of individuals who migrate from one country to another, often seeking better economic opportunities. This influx of workers was essential during the period of rapid industrialization, as industries needed a large and flexible labor force to meet the demands of growing factories and infrastructure projects.
Interchangeable parts: Interchangeable parts are standardized components that can be easily replaced or exchanged with one another in the manufacturing process. This concept revolutionized production methods by allowing for mass production and assembly, significantly increasing efficiency and reducing costs during the rise of industrialization and big business in the United States.
Knights of Labor: The Knights of Labor was one of the first significant labor organizations in the United States, founded in 1869. It aimed to unite all workers, regardless of skill level, race, or gender, advocating for better working conditions, an eight-hour workday, and the end of child labor. This organization emerged during a time of rapid industrialization, marked by technological innovations that transformed the workplace and led to the exploitation of workers.
Labor Unions: Labor unions are organized associations of workers formed to protect and advance their rights and interests, particularly in negotiations with employers regarding wages, working conditions, and benefits. They play a critical role in advocating for workers during periods of economic and social transformation, such as those seen in the post-Civil War era and the rapid industrialization of the United States. Labor unions emerged as a response to the harsh realities of working conditions and the rise of big businesses that often prioritized profit over employee welfare.
Land grants: Land grants refer to parcels of land given by the government to individuals or organizations for specific purposes, such as settlement, agriculture, or infrastructure development. These grants played a significant role in shaping the economic landscape of the United States during the era of industrialization and the rise of big business, facilitating the expansion of railroads and agriculture while providing opportunities for entrepreneurs and settlers.
Light bulb: The light bulb is an electric device that produces light when electricity passes through a filament or gas, transforming electrical energy into visible light. Its invention revolutionized both domestic life and industry, making it a cornerstone of the industrialization process and the rise of big business in the United States.
Model T: The Model T was an affordable automobile produced by the Ford Motor Company from 1908 to 1927, designed by Henry Ford to revolutionize personal transportation. It is often credited with making cars accessible to the average American, significantly impacting the automotive industry and contributing to the rise of a consumer culture driven by mass production techniques.
Monopolies: Monopolies are market structures where a single seller or producer dominates the entire market, resulting in no competition for their goods or services. This dominance allows the monopolist to control prices and supply, often leading to higher prices for consumers and reduced choices in the marketplace. During periods of industrialization, many businesses sought monopolistic control to maximize profits, leading to significant economic and social implications.
National market: A national market is an economic system where goods and services are exchanged across the entire nation, creating a unified marketplace that transcends regional boundaries. This concept emerged during the industrialization period, as advancements in transportation and communication technologies enabled businesses to reach consumers nationwide, driving economic growth and the rise of big corporations.
Natural Resources: Natural resources are materials and substances that occur in nature and can be used for economic gain, including minerals, forests, water, and fossil fuels. In the context of industrialization, these resources provided the essential raw materials necessary for manufacturing processes and fueled the rise of big businesses by supporting mass production and technological advancements.
Northern Securities Company: The Northern Securities Company was a large railroad trust formed in 1901, which controlled several major railroads in the northern United States. It was significant because it epitomized the rise of monopolistic practices during the era of industrialization, leading to major legal challenges that highlighted the growing conflict between big business and government regulation.
Oil industry: The oil industry refers to the global economic sector involved in the exploration, extraction, refining, transportation, and marketing of petroleum products. This industry emerged as a dominant force during the late 19th and early 20th centuries, significantly influencing industrialization and contributing to the rise of big business through the establishment of large corporations that capitalized on oil as a critical energy resource.
Open-hearth furnace: An open-hearth furnace is a type of industrial furnace used for the production of steel by melting scrap iron and other materials in a shallow hearth. This process allowed for greater control over the quality and composition of steel, making it a key development in the steelmaking industry during the period of industrialization and the rise of big business.
Patent laws: Patent laws are legal frameworks that grant inventors exclusive rights to their inventions for a limited period, typically 20 years. These laws encourage innovation by providing a financial incentive for inventors to develop new technologies and products without fear of competition. In the context of industrialization and the rise of big business, patent laws played a crucial role in promoting technological advancements and fostering competition among businesses.
Patent pooling: Patent pooling is an agreement between multiple patent holders to combine their patents for a particular technology and share the rights to use those patents. This practice helps reduce litigation costs, encourages innovation, and facilitates the sharing of technologies among companies, especially during periods of rapid industrialization and the growth of big businesses.
Pools: Pools refer to agreements between competing businesses to fix prices, control market shares, or limit competition in a particular industry. This practice emerged during the late 19th century, a time of rapid industrialization and the rise of big business, as companies sought to stabilize their profits and reduce the unpredictability of market fluctuations.
Predatory pricing: Predatory pricing is a strategy used by businesses to drive competitors out of the market by setting prices extremely low, often below the cost of production. This tactic aims to establish market dominance, allowing the company to raise prices later once competition is eliminated. It played a significant role in shaping the competitive landscape during the rise of big business, where monopolistic practices became a common concern.
Pullman Strike: The Pullman Strike was a nationwide railroad strike that took place in 1894, sparked by wage cuts and high rents in the company town of Pullman, Illinois. This event became a pivotal moment in labor history, highlighting the struggles workers faced during the rise of industrialization and the increasing tensions between labor and management, while also intertwining with broader social and economic issues of the time.
Railroad network: A railroad network refers to the interconnected system of railroads that facilitate the transportation of goods and passengers across vast distances. This network played a crucial role in the industrialization of the United States by enabling efficient movement of raw materials, products, and labor, which fueled economic growth and the rise of big business during the late 19th century.
Refining processes: Refining processes refer to the methods and techniques used to convert raw materials into usable products, primarily in the context of industries such as oil, sugar, and metals. These processes are essential for transforming crude or unprocessed materials into refined goods that are necessary for manufacturing and consumption. The efficiency and innovations in refining processes played a significant role in the rapid industrialization and the emergence of big business during the late 19th and early 20th centuries.
Refrigerated railcars: Refrigerated railcars, also known as reefer cars, are specialized freight train cars equipped with refrigeration units designed to transport perishable goods over long distances. These innovations played a crucial role in expanding the distribution of fresh food and other perishables, significantly impacting the meatpacking and agricultural industries during the era of industrialization and the rise of big business.
Rockefeller's Strategy: Rockefeller's strategy refers to the business practices and tactics employed by John D. Rockefeller to dominate the oil industry in the late 19th century. This approach included aggressive competition, consolidation of rival companies, and the establishment of a monopoly through the Standard Oil Company. His strategy not only transformed the oil industry but also exemplified the broader trends of industrialization and the rise of big business during this period.
Slums: Slums are densely populated urban areas characterized by substandard housing, poor infrastructure, and inadequate access to basic services such as clean water, sanitation, and healthcare. These areas emerged during the rapid industrialization of cities, as many people migrated from rural areas seeking jobs in factories, leading to overcrowding and the establishment of makeshift housing.
Social stratification: Social stratification refers to the hierarchical arrangement of individuals or groups within a society based on factors such as wealth, income, education, and social status. This system of classification can lead to unequal access to resources and opportunities, contributing to the persistence of class distinctions and social inequality over time.
Standard Oil: Standard Oil was an American oil producing, transporting, refining, and marketing company founded by John D. Rockefeller in 1870. It became one of the largest and most influential corporations in history, exemplifying the rise of monopolies during the late 19th century and prompting significant political and social reforms aimed at regulating big business.
Steel industry: The steel industry refers to the sector of the economy involved in the production and manufacturing of steel, an essential material for construction, infrastructure, and machinery. This industry played a crucial role during the late 19th and early 20th centuries, fueling industrialization and contributing to the rise of big business in the United States.
Technological innovations: Technological innovations refer to the creation and application of new tools, machines, and processes that significantly enhance production efficiency and effectiveness. These innovations were crucial during periods of industrialization as they transformed industries, enabled mass production, and laid the foundation for the rise of big business by increasing output and reducing costs.
Telegraph: The telegraph is a communication system that transmits messages over long distances using electrical signals, revolutionizing the way information was shared. Its invention marked a pivotal moment in technological innovations, allowing for rapid communication that facilitated industrial growth and the expansion of big business across the United States. This breakthrough technology enabled companies to coordinate operations, manage logistics, and respond quickly to market changes, ultimately contributing to the emergence of a more interconnected economy.
Telephone: The telephone is a communication device that allows individuals to transmit voice messages over distances by converting sound waves into electrical signals. This invention revolutionized personal and business communication, making it possible to connect people instantly regardless of their location, which played a significant role in the rapid industrialization and the rise of big business.
Tenements: Tenements were multi-family urban dwellings that emerged in the late 19th century as a response to the rapid influx of immigrants and workers in American cities. Typically characterized by overcrowding and inadequate living conditions, tenements became emblematic of the struggles faced by the urban poor during the period of industrialization and social reform. These buildings highlighted the stark contrast between wealth and poverty, prompting efforts for reform and regulation to improve housing standards.
Trusts: Trusts are large business entities formed by multiple companies or corporations that come together to control an industry or market, often reducing competition and increasing profits. This practice emerged during the late 19th century as a response to the rapid industrialization and consolidation of wealth, leading to significant impacts on the economy and regulation.
Typewriter: The typewriter is a mechanical device used for writing in which characters are produced by striking keys that cause type elements to hit an inked ribbon and transfer the impression onto paper. This invention revolutionized the way documents were created and played a significant role in the industrialization era by enhancing productivity, communication, and the rise of clerical jobs.
Urbanization: Urbanization is the process by which an increasing percentage of a population comes to live in urban areas, typically associated with industrial growth and economic development. This shift leads to the expansion of cities and changes in social structures, resulting in diverse populations, new opportunities, and challenges such as overcrowding and infrastructure strain.
Vertical integration: Vertical integration is a business strategy where a company expands its operations by acquiring or merging with different stages of production or distribution within the same industry. This approach allows firms to control more of the supply chain, reduce costs, and increase efficiency, all of which became crucial during the era of industrialization and the rise of big business. By consolidating various processes, from raw materials to finished products, companies could minimize reliance on outside suppliers and potentially monopolize markets.