Post Reconstruction

Post Reconstruction

Republicans

• Because of Scandal and Crisis during Grant's second term Republicans nominated Rutherford B. Hayes.
• Hayes wanted to end Radical Reconstruction

Democrats

• Nominated Samuel Tilden who fought corruption in New York City

Election of 1876

The Election was very close

• Hayes-165
• Tilden-184
• there were 20 votes in dispute

Because of voter fraud no one could tell who won.

Congress appointed a commission to settle the dispute

• Results: Hayes won the 20 Disputed votes and the Election

the "New South"

Everyone was tired of Reconstruction politics

• Grant removed some troops from the South
• Hayes removes the rest in 1877.

Without Federal troops the Republican governments of the South collapsed and the Democrats regained control of the South.

Reconstruction was over.

the "New South"

Southern Democratic Leaders wanted a strong industrial economy.

This meant that Labor had to be managed and factories had to be built.

"New South"

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"New South"

Powerful White Southerners began to industrialize the South.

• By 1890 thousands of miles of railroad track connected cities and factories to plantations.
• Iron and Steel industry was booming around Birmingham, Alabama.
• Tobacco Factories and Cotton mills were built in the South.

"New South"

Despite Industrialization, most of the South was still agricultural.

The Collapse of Reconstruction ended African Americans' hopes of being granted their own land in the South.

So many Returned to Plantations that were owned by whites.

"New South"

Blacks who returned to Plantations found themselves as.....

• wage laborers-making little to no actual money
• tenant farmers-pay rent for the land they farmed
• This usually meant that they were unable to save money because the rent was more than their income

"New South"

Some tenant farmers became Sharecroppers-worked the land for whites and in exchange got to keep some of the crop they raised.

Because sharecroppers needed other things like flour, wood, or clothing they had to buy supplies on credit.

• often with interest as high as 40%

"New South"

To force sharecroppers to pay their debt merchants could impose a Crop Lien

Crop Lien-legal document allowing merchants to take crops as payment of debt.

"New South"

The Crop Lien system and high interest rates led many sharecroppers into a financial situation called debt peonage.

Debt peonage was the condition that trapped sharecroppers because they couldn't pay their debts.

They were not allowed to leave the property until they paid off all their debt.

"New South"

The "New South" for African Americans inculded

• Wage labor
• Tenant Farmers
• Sharecropping
• Crop Lien
• Debt Peonage

"New South"

When Reconstruction ended, the combination of social, political, and economic trapped African Americans in a situtation that was similar to slavery.

Quick Write

How did Post Reconstruction whites force Blacks to continue to work in conditions similar to slavery?

In a Paragraph Describe and Explain how the economic situation of African Americans after Reconstruction limited their freedom.

BE SURE TO INCLUDE the ideas of

• Wage labor
• Tenant Farmers
• Sharecropping
• Crop Lien
• Debt Peonage

The 2nd Industrial Revolution

Remember: 1st Industrialization was in the early 1800s

However, by the time of the Civil War most Americans still lived on Farms.

After the War millions of Americans left their farms to work in Mines and Factories

The 2nd Industrial Revolution

By 1900 the US was the leading industrial nation.

• GNP-Gross National Product
• the total value of all goods and services that a country produces in one year

1900- the GNP of the US was three times the GNP of 1860s

Natural Resources

The US had abundant Natural Resources including:

• timber
• coal
• Iron
• Copper
• Oil

Many of these resources were in the Western US which was being settled and expanded.

The Transcontinental Railroad made the transportation of raw materials quick and easy.

Natural Resources

The abundant and accessible natural resources allowed Companies to obtain raw materials very cheaply.

When companies spend less on materials they make more profit and reinvest and expand.

Natural Resources

Another Natural Resource that was crucially important to US success was Labor

• US Population tripled from 1860-1910
• Increased population provided industry with a large workforce and created a demand for consumer goods.

More People creates:

• Cheaper labor
• Demand for more goods

Natural Resources

Population increased from two sources:

• Large Families
• Better living conditions
• Better Medicine
• More Children lived to adulthood
• Immigration
• Social and economic conditions in Europe and China
• 17 million immigrants between 1870-1910

Technological Advancement

New inventions and Technology push industrialization.

Technology increases productivity and improves transportation.

New inventions create new industries which create more wealth and jobs.

Technological Advancement

The 2nd industrial revolution occurred in part because of advances in electrical technology during the 1890s.

One of the most important inventors was Thomas Edison.

Technological Advancement

Thomas Edison became famous in 1877 when he invented the Phonograph.

Two years later (1879) he perfected the Electric Generator and the Lightbulb.

Technological Advancement

His laboratory went on to invent or improve other devices.

• Batteries
• Motion Picture

In 1889 several Edison Companies merged to for Edison General Electric Company (GE).

Electrical Revolution

George Westinghouse developed Alternative Current system (AC)

• This meant electricity could be distributed over long distances.
• This meant that electrical systems were more widespread.

Electricity could be used in people's houses!

Electrical Revolution

• Electrical Trolley Cars improved commutes.

• Electrical Appliances at home made chores easier

Electrical Revolution

In 1877 Alexander Graham Bell invented the Telephone, and founded the Bell Telephone company.

This revolutionized communication

• Businesses
• News
• Relationships

Innovation Improves Life

Refrigeration develops and improves.

• By 1900s Refrigeration had changed the way people lived and their health.
• Fresh Meat
• Fresh Vegetables
• New foods
• Food out of Season

Innovation Improves Life

Other inventions of the early 1900s include:

• Typewriter
• Automatic Dishwasher
• Hand held Camera
• Sewing Machine

Innovation Improves Life

Innovation improved life by taking multi-step process and simplifying them.

Efficiency pushes prices down and consumers benefit.

Free Enterprise

Free Enterprise

Critical Question: How did Laissez-Faire economics promote industrialization and innovation?

Free Enterprise

Another important reason the United States industrialized rapidly was the nation's Free Enterprise System.

• In the late 1800s the profit motive attracted many people of high ability and ambition into business.
• Entrepreneurs- people who risked their capital in organizing and running a business
• Because people are willing to risk capital businesses create innovation

Free Enterprise

People began to invest money in sectors of the economy that promised future growth.

• Earlier investments can yield larger rewards
• Incentive to invest early

Laissez-Faire (Less A Fair)

Entrepreneurs were attracted to the US from all over the World.

Because of Laissez-Faire economics people wanted to invest in businesses.

Laissez-Faire- government should interfere as little as possible in the nation's economy

Laissez-Faire (Less A Fair)

Laissez-Faire proponents believe that the government should only interfere to protect property rights and keep peace.

If the government is constantly regulating the economy they will artificially increase costs and hurt the economy.

• Focus on supply and demand
• not government set wages and prices.

Supply and Demand

Demand-how many people want to buy

Supply-how many are available

Laissez-Faire (Less A Fair)

A Free Market with competing companies leads to greater efficiency and creates more wealth for everyone.

Laisses-Faire also favored low taxes and low government spending to make sure that consumers get to determine how their money is spent.

Businesses can solve most problems without the Government needing to spend people's tax money.

Laissez-Faire (Less A Fair)

Because of the hands off policy, entrepreneurs had a great opportunity to maximize profits.

This made creating your own business or investing in new inventions lucrative.

Because it was economically beneficial many new business and factories were created for the purpose of making money.

This pushed industrialization and innovation.

Free Enterprise

Google Classroom: How did Laissez-Faire economics promote industrialization and innovation?

Railroad Expansion

How did the transcontinental Railroad transform the West?

Railroad Expansion

In 1865 the US had 35,000 miles of Railroad track, and almost all of it was East of the Mississippi.

After the War railroad construction expanded dramatically.

• by 1900 there were more than 200,000 miles of track

The Transcontinental Railroad

The Pacific Railway Act was passed in 1862

It gave two railroad companies permission to build a transcontinental railroad.

• Union Pacific
• Central Pacific

Both companies received land along their paths.

The Transcontinental Railroad

Thousands of miles of track meant Railroad companies needed more labor.

To complete this momentous task tens of thousands of people were hired.

• Civil War Veterans
• Irish immigrants
• Frustrated miners
• Farmers
• Cooks
• ex-convicts
• Chinese Immigrants

The Transcontinental Railroad

Despite the challenges and size of the project, the transcontinental railroad was completed in 4 years.

Each mile of track required 400 rails and each rail required 10 spikes.

The Transcontinental Railroad

New Train technology increased the efficiency of Railroads.

• Air brakes
• Integrated Railroad Tracks
• Advanced Steam engines

Railroads also allowed Frontier towns in the West access to national markets.

Frontier towns were no longer disconnected from the rest of the nation.

The Transcontinental Railroad

Building a railroad often cost more than private investors could raise.

To encourage construction of Railroads across the Great Plains, the Federal Government gave Land Grants to some companies.

The Railroad Companies would either use the land, or sell it to raise money for construction.

The Transcontinental Railroad

Land Grants were difficult to sell, so RR companies sold land at a very low price.

At this time newspapers and pamphlets were used to encourage people to move Westward.

The Integrated Railroad system made the trip out West much quicker and easier.

More people began to settle the Western United States.

Railroad Expansion

Google Classroom:

How did the transcontinental Railroad transform the West?

Robber Barons

How did government grants result in large-scale corruption?

Robber Barons

As wealth grew because of Entrepreneurship and the expansion of the Railroad system there were many accusations of corruption.

Rich businessmen were accused of building their fortunes by

• swindling investors and taxpayers
• Bribing officials
• cheating on contracts and debts

Robber Barons

One of the most notoriously corrupt railroad owners was Jay Gould.

He practiced "insider trading" and manipulated stock prices.

He was worth over $70 million.

Robber Barons

Bribery occurred frequently partly because the government was so involved in funding the Railroads.

Investors discovered they could make more money by selling free government land than by actually running a railroad.

So some used their wealth to ensure that representatives voted for more Government land grants.

Credit Mobilier Scandal

Corruption in the Railroad industry became public in 1872 with the Credit Mobilier Scandal.

Credit Mobilier was a construction company owned by stockholders of the Union Pacific Railroad.

• Congressman Oakes Ames

Ames sold shares of Union Pacific to other Congressmen at a discount to convince them to give Union Pacific more land grants.

Credit Mobilier Scandal

During the election of 1872 a list of Congressmen who bought Union Pacific shares appeared in the paper.

People were outraged.

People started calling Railroad entrepreneurs

• "Robber Barons"

Robber Barons

How did government grants result in large-scale corruption?

Big Business

What advantages do large corporations have over small businesses?

Big Business

Because of industrialization and innovation large businesses began to dominate society.

By 1900 vast factory complexes and distribution centers were common.

Corporations sprang up.

• company owned by stockholders
• made big business possible

Selling stock allows a corporation to spread risk and increase reward. (similar to Joint-Stock)

Big Business

The freedom to form a Corporation was one of the benefits of Laizzes-Faire economics.

With money from selling stocks corporations could...

• Invest in new technologies
• Hire large workforces
• purchase machinery

This increased efficiency.

Big Business

Because corporations increased efficiency they achieved economies of scale.

Economies of scale- when the cost of manufacturing is decreased by producing goods in large quantities.

Big Business

All companies have fixed and operating costs

Fixed-costs that businesses pay even if they are not operating

• loans
• mortgage
• maintenance
• Taxes

Big Business

Operating-costs that business only pay if they are operating

• wages
• shipping costs
• raw materials

Big Business

Small Businesses usually had low fixed costs, but high operating costs

If sales drop it makes more sense for small businesses to close temporarily.

Big Business

Large Businesses usually had High fixed costs, but Low operating costs

If sales drop large manufacturers can stay open because their operating costs are low.

Big Business

Because large businesses can continue to operate during slow times, they have several advantages.

• They could produce more goods at a lower cost
• They can cut prices to increase sales

Big Business

Google Classroom:

(3-5 Sentences) What advantages do large corporations have over small businesses?

Consolidating Industry

What is the difference between Horizontal and Vertical Integration?

How did businesses weaken and eliminate their competition?

What was the Result?

Consolidating Industry

Laissez-Faire economics created competitive markets and drove consumer prices down.

Many business owners did not like competition because it mean they had to lower the cost of their product.

Lower costs=lower profits

Consolidating Industry

Because businesses did not want to lose profit they began to organize into pools.

These pools would agree to keep prices at a certain level to avoid losing profit.

Consolidating Industry

Because these pools were not legally issued they usually dissolved once one member undercut the price of the others.

So by the late 1800s competition had reduced many industries to a handful of large, highly efficient corporations.

Andrew Carnegie

Carnegie started working at a textile factory at the age of 12.

He worked his way up to superintendent of the Pennsylvania Railroad.

Then he bought shares in iron mills and factories that made sleeping cars and train engines.

Andrew Carnegie

By his early 30s, Carnegie quit his job and focused on his investments.

On a trip to Europe he met Sir Henry Bessemer.

Bessemer had invented a new, more efficient process for making high quality steel. (The Bessemer Process)

Andrew Carnegie

After meeting Bessemer, Carnegie returned to Pennsylvania and opened a steel mill in Pittsburgh in 1875.

He used the Bessemer Process to make steel more cheaply than any other company.

Andrew Carnegie

In order to make his company more efficient, Carnegie began the vertical integration of the Steel industry.

Vertical integration-Combining two or more stages of production normally operated by separate companies.

Andrew Carnegie

A Vertically integrated company owns all of the different businesses on which it depends for operation.

Instead of paying other companies for raw materials, Carnegie Steel company bought:

• coal mines
• limestone quarries
• iron ore fields.

Andrew Carnegie

A Vertically integrated company owns all of the different businesses on which it depends for operation.

Instead of paying other companies for raw materials, Carnegie steel company bought:

• coal mines
• limestone quarries
• iron ore fields

Andrew Carnegie

Because of his vertical integration and Bessemer Process Carnegie's steel was very affordable.

No other companies could compete with the prices of Carnegie's steel.

Carnegie became extremely wealthy.

Fun Fact: During the last 18 years of his life, he gave away $350 million

Rockefeller and Standard Oil

Successful Business owners also created Horizontal Integration.

Horizontal Integration is the process of growth by merging or buying competitors.

Rockefeller and Standard Oil

Rocke

Rockefeller and Standard Oil

Horizontal integration took place frequently as companies competed.

If a company started to lose a share in the market they would sell out to a competitor.

John D. Rockefeller achieved great success through Horizontal Integration.

Rockefeller and Standard Oil

Rockefeller founded Standard Oil and began to merge and buy out his competition.

By 1880 the company controlled 90 percent of the oil refining industry in the United States.

Consolidating Industry

What is the difference between Horizontal and Vertical Integration?

New Business Organization

What is a monopoly?

What are the Dangers of a monopoly?

What is a trust?

What is a holding Company?

New Business Organization

The success of Horizontal Integration, especially Rockefeller's Standard Oil, raised concerns over monopolies.

Monopoly-total control of a type of industry by one person or one company.

New Business Organization

A Monopoly is dangerous because they can set the price of their product without having to worry about competition.

New Business Organization

In the Late 1800s many states wanted to stop Horizontal Integration because they feared Monopolies.

They made it illegal for one company to own stock in another company.

New Business Organization

Businesses quickly found a way around these laws.

1882-Standard Oil formed the first Trust.

Trust-a combination of companies formed by a legal agreement, especially to reduce competition

New Business Organization

Instead of buying a company straight out, Standard Oil had stockholders give their stocks to a group of Standard Oil Trustees.

In Exchange the stockholders received shares in the trust, which entitled them to a portion of the trust's profits.

New Business Organization

Because Trustees did not own the stock, they were not violating the law.

Trustees could control a group of companies as if they were one large company.

New Business Organization

In 1889 New Jersey law allowed corporations to own stock in other businesses.

Holding companies sprang up.

Holding companies-a company that does not produce anything, but owns controlling shares in other companies

New Business Organization

Holding companies manage the companies that they own stock in.

This means that they operate like a merged company,

BUT it is not illegal.

New Business Organization

Another increase to corporations was Investment Banking.

Investment Bankers helped companies issue and manage stock.

Companies would sell large blocks of stock to Investment Bankers, who would find investors and sell stock for profit

New Business Organization

One of the most successful Investment Bankers was J.P. Morgan.

In 1901 Morgan bought Carnegie Steel and merged it with other large steel companies to create an enormous holding company called....

United States Steel Company.

New Business Organization

What is a monopoly?

What are the Dangers of a monopoly?

New Business Organization

What is a monopoly?

What are the Dangers of a monopoly?

The Future