The Age of Innovation andIndustry
Ohio’s own Thomas Edison
•Invented over 1,000 items including the lightbulb, phonograph.
•Born in Milan, Ohio.
•Edison’s Mono Park lab reconstructed atGreenfield Village in Michigan.
Building on Edison
•Inventions such as the light bulb and beingable to distribute electricity more efficientlyresulted in a new age of innovation and therise of big business.
Vast changes in Technology
1865 most Americans kept fresh foods in an icebox, sent letters that took over a month to bedelivered and used lamps for lighting.
By 1900 many Americans had electric lights,kept foods cold in an electric refrigerator, andcould send messages across the continent inan instant by telegraph or telephone (Bell)
Investors
•This age of invention led to an increase ofCapitalism-economic system in whichfactories, equipment and other means ofproduction are privately owned (MarketEconomy)
Investing Example
•Wealthy banker J.P. Morgan supported Edisonwith $150,000.00 to research in return Edisongave the company the rights to his light bulbfor 5 years.
•Edison Electric Light Company
Innovation
•1790-Government began providing patents
•By 1860 only 36,000 patents had been issued
•Between 1860-1900 over 600,000 wereissued.
New energy source
•Before the Civil War, lamps mainly burnedwhale oil…very expensive.
•1858 former railroad conductor Edwin Drakeleased land in Titusville, PA to studytechniques of drilling salt wells. He decides todrill for oil and by August, 1859 he strikes oil.
•Supplies fuels for lamps, oils for machines andlater gasoline for cars.
Steel
•Bessemer Process-Removed impurities fromsteel (Henry Bessemer)
•Andrew Carnegie saw this and investedheavily opening the Carnegie Steel Companywhich would build the largest and mostmodern steel mill near Pittsburgh, PA.
•Made steel cheaper, quicker and betterquality.
Steel manufacturing
•Used improved steel in building railroads,bridges, and skyscrapers.
•Below is 1932 workers at Rockefeller Center
Assembly Line
•Frederick Taylor used time and motion studiesto determine how fast an assembly line shouldmove and broke up work in a way to reducewasted time.
•This increased productivity which increasedprofits.
Henry Ford
•Used to take 12 hours to assemble a Model TFord.
•Divided the assembly into 84 distinct steps.
•Each worker responsible for one step reducinginjuries and making time more efficient.
•Time cut in less than half to make a care…by1927 Ford had produced more than 15 millionmodel T’s.
Henry Ford
•Wanted to make cars in a manner that averageAmericans can own a car.
Factors of Production
•Land, Labor, Capital and Entrepreneurship
•Land and Labor was abundant
•Capital is any asset that can be used toproduce an income…money, buildings, toolsand machinery…all of this required financialbacking.
Rise of Corporations
•A company that is organized by lawindependent of its owners.
•Owned by shareholders
•Competition gives a variety of products at thebest prices
John D. Rockefeller
•Formed a corporation called Standard Oil inCleveland, Ohio (1870)
•Bought out smaller oil companies, includingrefineries.
•Undercut competitors with lower prices(economies of scale)
•Forced competitors to be sold to them or gobankrupt.
Monopoly
•1882-Standard Oil becomes a monopoly.
•A company that completely dominates aparticular industry.
•If competitors are out of the way, a companycan raise its prices and get great profits.
Trusts
•A set of companies that are managed by asmall group of people.
•Trustees that run the trust have the power toprevent companies in the trust fromcompeting with each other.
Late 1800’s business environment
•Laissez-faire-the free market, through supplyand demand, would regulate itself if thegovernment did not interfere.
•French word meaning “Hands off…or leavebusiness alone”
Social Darwinism
•This idea that grew out of Darwin’s Theorythat only the strong survive.
•This held that the best run businesses andindividuals would be the survivals…survival ofthe fittest.
Business had the power
•Federal government did not stop monopoliesbut actually assisted the businesses by settinghigh tariffs on imported goods.
•Policies seemed to be working…exportsdoubled from 1877 – 1900…by 1900 Americahas the strongest economy in the world.
Sherman Anti Trust Acts
•Passed in 1890 that outlawed trusts,monopolies, and other forms of business thatrestricted trade.
•Vague language that left it open to courts toenforce…though they did not enforce
Gilded Age
•Mark Twain book about rich industrialist andcorrupt politicians.
•Something that is Gilded looks good on theoutside but only on the outside.
Philantropists
•Industrialists Andrew Carnegie, JohnRockefeller, and Cornelius Vanderbilt were risktakers (entrepreneurs) that became verywealthy but many of their workers were inpoverty.
•Philantropist-person who gives money tosupport wealthy causes.
•Over one billion dollars given to causes by1900.
Robber barons or captains of industry