Chapter 20 - The New American Economy

Patents

• ^^Inventors were able to benefit from their inventions and defend their products from being copied^^
• 1836 - Reorganized patent law + established the Patent Office
• Expanded the economy + encouraged more innovation

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Brooklyn Bridge

• Built by John + Washington Roebling
• Completed in 1883

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Skyscrapers

• Made of steel
• Designed by Louis Sullivan
• ^^Famous skyscrapers included the Woolworth Building + Empire State Building^^
• 1st skyscraper completed in 1885

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Wabash Case

• 1886
• The Supreme Court stated that because railroads were interstate, they couldn’t be regulated by state governments

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James J. Hill

• Rags to riches
• ^^The chief executive officer of a family of lines headed by the Great Northern Railway, which served a substantial area of the Upper Midwest, the northern Great Plains, and Pacific Northwest^^
• 1893 - Finished the Great Northern Railroad

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John D. Rockefeller (Standard Oil)

• Took over the oil industry + integration
• 1870 - Formed Standard Oil
• Used horizontal integration for efficient production
• 1911 - Breakup of Standard Oil
• Believed in philanthropy

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Cornelius Vanderbilt

• Consolidated railroads
• ^^His use of uniform steel rails improved the efficiency of railroads^^

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Bessemer Process

• 1855 - Bessemer process received patent
• Invented by Henry Bessemer
• Forcing air up through molten iron would make steel
• Process to cheaply manufacture better steel
• Made building American infrastructure much easier

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Stock Market

• 1895 - Began issuing annual reports
• Bond trading + stock issuing
• New York Stock Exchange
• ^^People were able to build their wealth and invest in a reliable market^^

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Andrew Carnegie (US Steel)

• Used vertical combination for more efficient production
• In “Gospel of Wealth,” he wrote about how he believed the rich should have a responsibility of philanthropy
• 1901 - Sold US Steel

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The Gospel of Wealth

• 1889 - Written by Andrew Carnegie
• ^^Believed the gov’t shouldn’t interfere with companies making money^^
• Money should be used to benefit communities
• Justified Social Darwinism

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Social Darwinism

• Coined in 1877
• “Survival of the fittest”
• Believed that the rich were superior to other people and were therefore justified to their wealth
• Inspired philanthropy

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Robber Barons vs. Captains of Industry

• ^^Consolidating businesses helped them survive competition^^
• Grew US industrial strength
• Because they were so wealthy, they also gained much political power

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Whiskey Pool

• Formed in 1887
• A pool is an informal alliance of producers that agree to share the markets
• Reducing competition would lead to high demand and earnings
• The producers in these pools ended up cheating the public and each other on their agreements

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Trust

• ^^If a company purchases the majority of stock of another company, they effectively had control over that company^^
• Huge trusts were able to control smaller companies and reduce competition

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Horizontal Integration

• A business strategy in which one company acquires or merges with another that operates at the same level in an industry
• A monopoly was one company that was able to control the entire industry
• Illegal

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Vertical Integration

• One company was able to control every step of the production process
• This was more efficient, leading to cheaper prices and higher profits for the company
• Legal

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JP Morgan

• Not rags-to-riches
• 1895 - Began his own investment firm
• ^^Acquired companies + railroads (like US Steel) and consolidated them^^
• Stabilized the US economy

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New South

• An economic revival in the South with railroads + cotton mills
• Economy of agriculture + Northern textiles
• Still racist

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Henry George

• ^^1879 - Wrote Progress and Poverty^^
• Only supported property taxation
• Ideas never seriously applied

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Edward Bellamy

• 1888 - Wrote Looking Backward, which supported a utopian philosophy
• Believed that perfect societies cannot exist
• Ideas faded from popularity

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Henry Demarest Lloyd

• Progressive muckraker
• ^^Exposed the corruption of Standard Oil^^
• 1894 - Wrote Wealth Against Commonwealth
• Supported laborers
• Defended Haymarket Square Riots
• Populist

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Interstate Commerce Act

• ^^A United States federal law that was designed to regulate the railroad industry, particularly its monopolistic practices^^
• 1877 - Munn v. Illinois
• 1887 - Interstate Commerce Act was implemented

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Sherman Antitrust Act

• 1890 - Passed by Congress
• Used to prosecute monopolistic trusts
• Initially used to break up unions
• Theodore Roosevelt enforced it heavily

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BIG PICTURE

• Developments in technology + infrastructure → Expand US economy
• Giant corporations → Huge fortunes
• Combine markets → Efficiency + economic growth
• Regulate businesses + limit power of trusts
• New legislation → Monitor business + prosecute monopolies

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