MEANS OF PRODUCTION:

1
MEANS OF PRODUCTION

• Tools and raw materials used to make a product

ECONOMIC HANDBOOK PAGES 816-825
2
ANSWER THE FOLLOWING QUESTION AFTER LISTENING TO
THE SOUND CLIP (Follow along in your text page
100)What factors spurred industrial growth in
the late 1800s?
WHY IT MATTERS
ENCOURAGING INDUSTRIAL GROWTH

• The demands of the Civil War, the availability of
  natural resources, an increase in immigration,
  and supportive government policies encouraged
  industries to expand.

3
Edwin Drake discovers Oil Black Gold
4
(No Transcript)
5
ECONOMIC SYSTEMS
TEXT PAGE 816
What is meant by the term above??? Give
examples to support your understanding
6
Laissez Faire Capitalism

• Theory of Adam Smith
• Businesses are left free from government
  regulation to compete in a free market
• Most people believed government regulation would
  reduce individuals chances of prosperity

7
Utilitarians Limited Government

• Theory of Jeremy Bentham
• Goal of society should be to provide
• Happiness for the greatest number of people
• Government should regulate business in certain
  circumstances

• Democratic government absorbed many ideas from
  Bentham

8
SOCIALISM

• Utopians early socialists
• Robert Owen established Owens Utopia
• Theory of collective ownership of all business
  means
• More equal incomes across the board

9
COMMUNISM

• Theory of Karl Marx wrote Communist Manifesto
  Discussed communism as solution to Capitalism
• Argued that the working class did not have the
  opportunity to prosper under a capitalist system
  because the power lies in the hands of few
• No individual ownership of property - everyone
  within society should share property and
  ownership of production
• Marxs theory would create a classless society
• Communism later evolves to small elite group
  controlling all economic and political aspects of
  life

10
How did new technologies shape industrialization?
INNOVATION DRIVES THE NATION
Page 102

• New technologies improved communication and
  transportation. Improved transportation allowed
  factories to change the way they created goods
  and led to the system of mass production, which
  replaced performing tasks by hand.

11
Telephone - Alexander Graham Bell (1876)
Telegraph Samuel F.B. Morse (1837)
Morse Code Enters Cyber Age http//www.npr.org/tem
plates/story/story.php?storyId1680529
12
The Kitty Hawk Flight 100 Years Ago, Wright
Brothers Launched First True Airplane by Joe
Palca http//www.npr.org/templates/story/story.php
?storyId1550446 (507)
13
Typewriter Christopher Sholes (1867)
ADDITIONAL INVENTIONS 1852 Passenger
elevator Elisha Otis 1864 Sleeping
Car George Pullman 1865 ice machine Thaddeus
Lowe 1869 electric voting machine Thomas
Edison 1879 cash register James Ritty 1882
electric iron Henry Seely 1886 electric
welding machine Elihu Thomas 1889 electric
sewing machine Singer Manufacturing
Co. 1899 motor-driven vacuum cleaner John Thurman
14
Phonograph Turns 130 (1877)http//www.npr.org/tem
plates/story/story.php?storyId16504888 (420)
Edison's New Jersey Lab http//www.npr.org/templat
es/story/story.php?storyId1431059 (458) (2003)
15
Necessity, who is the mother of invention.
Plato, The RepublicGreek author philosopher
in Athens (427 BC - 347 BC)
SCHOOLHOUSE ROCK Mother Necessity (309)
http//www.youtube.com/watch?v4OLWJ1TMuNE
16
THE HORSELESS CARRIAGE
The Duryea Brothers
America's first gasoline powered commercial car
manufacturers were two brothers, Charles Duryea
(1861-1938) and Frank Duryea. The brothers were
bicycle makers who became interested in gasoline
engines and automobiles. On September 20 1893,
their first automobile was constructed and
successfully tested on the public streets of
Springfield, Massachusetts. Charles Duryea
founded the Duryea Motor Wagon Company in 1896,
the first company to manufacture and sell
gasoline powered vehicles. By 1896, the company
had sold thirteen cars of the model Duryea, an
expensive limousine, which remained in production
into the 1920s. America's First Automobile Race
17
1914 Model T Ford _at_ Hempfield 11-10-14
Jerry Reed Lord Mr. Ford (1973
Song) https//www.youtube.com/watch?vcUcVUpGOejM
18
(No Transcript)
19
(No Transcript)
20
What impact did industrialization have on
Americans?
THE IMPACT OF INDUSTRIALIZATION
Page 104

• Industrialization increased the population of
  U.S. cities because farms required fewer workers.
  Increased production made the United States more
  involved with the economies of foreign nations.
  Waste from industries created pollution and
  caused people to be concerned about their
  environment.

21
EDWIN DRAKE AND TITUSVILLE. PENNSYLVANIA

• Colonel Edwin Drake, not really colonel, was
  the first to successfully drill for and find oil
  in Titusville, PA.
• This set off an oil boom in PA, that rapidly
  spread around the nation.

DRAKE AND HIS WELL (1859)
22
Early oil pipeline right-of-way (ROW) near
Titusville, PA.  The ROW has been cleared and the
tong gang is busy screwing together the joints of
pipe.  Straight scars like this one became common
in the oil regions as the criss-crossing network
of pipelines were laid in the 1860's-70's and
on.  Photo from a postcard
23
MOVING OIL DOWN THE ALLEGHENY
24
(No Transcript)
25
BENNINGHOF FARM (1860)
26
John D. Rockefeller
27
WHY OIL?

• Whale oil had been used to light lamps in homes
  for hundreds of years, with whales becoming more
  scarce, it was getting too expensive.
• Kerosene, derived from petroleum, was a viable
  alternative.
• Oil had been collected as it seeped to the
  ground, but there had to be a better way to find
  it to make it cheap enough.

28
ROCKEFELLER AND STANDARD OIL

• The making of the worlds richest
• man, and one titan of a company.

29
How an oil well works1. Find underground
features that usually hold oil.2. Drill
underground until pressure from natural gas
forces oil to the top.3. Cap the well, and
slowly drain the pool of oil.
30
OIL REFINING

• Oil is relatively worthless until it is REFINED,
  or put through a process that takes out
  impurities to make kerosene or gasoline (Gas was
  burned off or dumped in rivers in the days before
  the automobile!
• Whoever refines the oil must get it to market,
  making refining the KEY part of the process.
• Lots of value is added to crude oil through these
  two areas (refining and transport). Lots of money
  can be made ?

31
HOW REFINING WORKS
32
ENTER JOHN D. ROCKEFELLER

• Rockefeller was not interested in drilling for
  and finding oil, only in refining it,
  transporting it, and marketing it under the
  Standard Oil name as a guarantee of quality.
• Lots of VALUE is added to oil in these areas, and
  his company became the biggest in the world by
  controlling these three areas of the energy
  business.

33
ROCKEFELLER BUSINESS PHILOSOPHY

• Always cut costs as much as possible to beat
  competitors.
• Bring your competition to their knees then buy
  them cheap.
• Get REBATES (low rates) from railroads to ship
  your product, or build pipelines to do it
  cheaper.
• Produce a high quality product with a brand name
  and price it lower than your competitors.

34
Standard Oil Office and Sign
35
STANDARD OIL

• The company started with one refinery in
  Cleveland, near Pennsylvania oil.
• It quickly grew as they bought out all of the
  competitors and consolidated into one large
  business.
• Rockefeller formed a corporation, then a TRUST to
  have complete control over the company and the
  oil market.

36
RAILROAD REBATES

• One of the most controversial business practice
  that Standard Oil used was to demand lower prices
  from its shippers, and even get rebates of money
  when its competitors used a railroad. (Yes, the
  railroads paid Rockefeller money from his
  competitors.)
• Why would they do this? Simple, he was the
  biggest customer, so they needed his business.
• Many said this gave Rockefeller an unfair (and
  illegal) advantage over his rivals.

37
PREDATORY PRICING

• Predatory Pricing is when you sell your product
  at a price BELOW your production cost, actually
  losing money in an attempt to run your rivals out
  of business.
• Most companies could not afford to do this, but
  Standard Oil could because they were so huge.
• They could afford to lose money in one area
  because they made so much in others.
• Often, they would raise prices after there were
  no competitors left, hurting the consumer with no
  choice and higher prices.

38
HORIZONTAL INTEGRATION

• Unlike Carnegie, Rockefeller made his business
  larger buy buying out all the refineries. He did
  not care to produce the oil, only to make it into
  something useful.
• This is called Horizontal Integration, unlike
  Vertical Integration where you want to own all
  pieces of an industry from raw materials to final
  product, Horizontal Integration is only
  interested in owning one sector of the industry.
• Think of McDonalds buying Burger King, Wendys,
  KFC, Taco Bell, Panera, etc.

39
MARKET SHARE OF STANDARD OIL (Refining)
40
VALUE OF THE STANDARD OIL COMPANY
41
HOW DID ROCKEFELLER BECOME THE RICHEST MAN IN THE
WORLD?

• He used the profits of the company to buy out all
  of his competitors. (page 110 Horizontal
  Integration)
• He found the lowest cost methods to refine and
  ship his product. (means of production)
• By forming a trust, he was able to include many
  of his former competitors into his company as
  shareholders. They made money too, so they did
  not ALWAYS mind being bought out.
• By 1900 Standard Oil controlled 92 of the entire
  national kerosene market. It was the biggest
  company in the world.

42
Share of Standard Oil stock, you could purchase
stock in the company and share the profits.
43
(No Transcript)
44
(No Transcript)
45
Another use for crude oil!!!
46
BUILDING CARNEGIE STEEL

• How Carnegie took control of the steel industry
  and revolutionized business practices nationwide.

ANDREW CARNEGIE
47
CARNEGIES KEYS TO SUCCESS

• Always invest in the newest technologies.
• Always find ways to cut costs. This allows you to
  price lower than your competitors.
• Control the production process from start to
  finish, it keeps all profits within the company.
• Drive your competitors to the brink of bankruptcy
  and buy them at low prices.
• All of these allowed Carnegie to control a vast
  steel empire and to become the second richest
  person in American history.

48
WHAT MADE CARNEGIE A SUCCESSFUL BUSINESSMAN???

• Hard working
• Ability to master the details of a business very
  quickly
• Daring and forceful not afraid to make
  decisions and follow through
• Ability to pick gifted associates who reflected
  his style of management.

49
STEEL MAKING TECHNOLOGY

• The Bessemer Process allowed steel to be made in
  large quantities at much lower costs. Though an
  expensive investment up front, in the long run
  savings means more business.
• The Open Hearth Process was hotter and more
  efficient than the Bessemer. This allowed more
  steel to be made faster and even cheaper.
• Carnegie started with the Bessemer Process, then
  shortly after, scrapped these furnaces for newer
  Open Hearth technology. Cutting costs ?

50
BESSEMER PROCESS
51
OPEN HEARTH FURNACE
52
THE EFFECT OF NEW TECHNOLOGY
53
THE INDUSTRIAL REVLOUTION IN FULL SWING
54
WHAT IS NEEDED TO MAKE STEEL

• A factory with the proper technology and
  diversified labor.
• Coal, converted to coke, for a heat source.
• Iron ore and other chemicals to make the iron
  into steel.
• Transportation network to move materials.
• Guarantees that the needed materials will be
  supplied and delivered on time by your suppliers.

55
VERTICAL INTEGRATION

• Vertical Integration is the practice of merging
  all of the needed processes in a business into
  one large company.
• Carnegie was able to do this by owning The iron
  ore fields, the coal and coke for energy, the
  factories, and even the railroads and boats
  needed to move all of these materials to
  production.
• It would be like McDonalds owning a paper
  company, a meat farm, a wheat and flour company,
  a marketing company, etc.

56
(No Transcript)
57
UNITED STATES STEEL HOLDINGS
58
THE EFFECTS OF CARNEGIES WORK
59
CARNEGIES SKIBO CASTLE IN SCOTLAND
60
CARNEGIE STEEL PLANT IN BRADDOCK
61
THE HOMESTEAD WORKS
62
HOMESTEAD WORKS TODAY
63
EDGAR THOMPSON WORKS TODAY CARNEGIES LEGACY
64
By 1890, the richest 10 controlled 9/10 of the
wealth
65
William Graham Sumner on Social Obligations
A man who is present as a consumer, yet who does
not contribute either by land, labor, or capital
to the work of society, is a burden.
and the State is thus made to become the
protector and guardian of certain classes.
Poverty is the best policy. It you get wealth,
you will have to support other people if you do
not get wealth, it will be the duty of other
people to support you.
66
William Graham Sumner on Social Obligations
Every honest citizen of a free state owes it to
himself, to the community, and especially to
those who are at once weak and wronged, to go to
their assistance and help redress their wrongs.
We each owe it to the other to guarantee rights.
The class distinctions simply result from the
different degrees of success with which men have
availed themselves of the chances which were
presented to them.
67
SOCIAL DARWINISM

• Theory of Charles Darwin (On the Origin of
  Species1859)
• Stated society progresses through competition
• Survival of the Fittest
• Encouraged racism between nationalist groups

68
Interstate Commerce Commission
February 4, 1887 Law passed by Congress stating
that all railroad charges should be fair and
reasonable, and that forbade interstate railroad
abuses. Its established a five-member Interstate
Commerce Commission to administer the provisions
of the law.
Sherman Antitrust Act
July 2, 1890 Legislation passed by Congress to
break up monopolies (pg.108). The first of
several antitrust (pg.109) acts designed to curb
the power and growth of monopolies, the law
forbade companies to join in a trust in order to
control interstate trade. The law was also used
to break up unions. Penalties for violation
included a 5,000 fine, a years imprisonment, or
both. Because its wording was unclear and it was
difficult to enforce, the Sherman Anti-Trust Act
was supplemented by the Clayton Anti-Trust Act in
1914.
69
LABOR UNIONS

• ORIGINS AND
• MAIN GOALS

70
CHILD LABOR IN AMERICA
71
FACTORY GIRLS
72
BOYS AT THE MINE
73
BREAKER BOYS AT WORK
ARTICLE Children in PA coal mines
74
BREAKER BOYS
75
BOYS IN THE MINES
76
MINE ELEVATOR
77
BOYS IN A COTTON MILL
78
CIGAR WORKERS IN A FACTORY
79
EARLY PAPER BOY
80
OYSTER PICKERS
81
CLAM DIGGER
82
BERRY PICKER
83
DOGS AND PRETZELS
84
SHINE YOUR SHOES?
85
RIDING THE RAILS
86
DELIVERING HATS
87
MAKING CLOTHES AT HOME
88
(No Transcript)
89
(No Transcript)
90
(No Transcript)
91
(No Transcript)
92
COMPANY TOWNS READING Would you sign the
contract?
SIXTEEN TONS https//www.youtube.com/watch?vE5VM
ZqgVzRo
93
Labor Articles

1. New Exotic Investment Latin Baseball Futures
   (Nov.2010)
2. Hollywood Screenwriters Strike Looms (Oct.2007)
3. Machinists Union Reaches Tentative Deal With
   Boeing (Nov.2011)
4. Garment Workers, Police Clash in Cambodia 1
   killed (Nov.2013)
5. Apple Answers Sweatshop Claims (Aug.2006)
6. Samsung Under Fire for Alleged Brazil Labor
   violations (Aug. 2013)
7. BPA At Work Raised Risk of Impotence, Sexual
   Problems (Nov.2009)

Mexican Megafarms Supplying U.S. Market Are Rife
With Labor Abuses December 10, 2014 http//www.npr
.org/blogs/thesalt/2014/12/10/369645204/mexican-me
gafarms-supplying-u-s-market-are-rife-with-labor-a
buses
94
Kosher Meat Plant Faces Child Labor
Allegations by Jennifer Ludden
September 10, 2008
http//www.npr.org/templates/story/story.php?story
Id94449437
95
PROBLEMS OF WORKERS

• Long hours, often 12 hours a day 6-7 days a week.
• Unsafe and dangerous working conditions
• Relatively low pay, while company owners were
  becoming fabulously wealthy.
• Children working in dangerous conditions at very
  early ages(5-6 years old)

96
REASONS UNIONS HELP WORKERS
Organization of wage earners, formed for the
purpose of serving the members interest with
respect to wages and working conditions.

• Workers banding together can force a company to
  shut down, thus costing the company profits and
  production.
• Together, workers are much more powerful than
  they would be alone.

97
EARLY LABOR UNIONS

• Knights of Labor Founded Uriah Stephens in 1869
  Terrance Powderly assumed leadership in the
  1870s
• American Federation of Labor (AFL) Founded by
  Samuel Gompers (1886)
• Congress of Industrial Organizations (CIO) led by
  John L. Lewis (1938)

98
WHAT DID UNIONS WANT?

• The 10 hour work day was a main goal, they wanted
  the government to make it a law.
• Higher pay for workers.
• Better conditions at workplaces
• Get rid of child labor. Not only because it was
  bad, but also because children took jobs that
  adults could have sometimes. (This is a little
  greedy, but looked good)

99
Workers Occupy Factory After Closing http//www.la
times.com/video/?slugla-na-worker-sit-in9-2008dec
09-vid
100
TOOLS OF THE COMPANY

• LOCKOUT Refuse to let workers come to work until
  they have no money and beg to come back.
• STRIKEBREAKERS When a company hires replacement
  workers to work in place of the original ones.
  (Scabs)

101
TOOLS FOR UNIONS

• Strike Refuse to work to hurt the company, and
  make them lose money.
• Boycott Get consumers to refuse to buy a
  companies product.
• Work to Rule Slow down production by only doing
  what is absolutely necessary and explicitly
  stated in a contract.

102
(No Transcript)
103
Railroad Workers Strike (1877)
The Great Railroad Strike of 1877 began on July
17, 1877, in Martinsburg, West Virginia. Workers
for the Baltimore Ohio Railroad went on strike,
because the company had reduced workers' wages
twice over the previous year. The strikers
refused to let the trains run until the most
recent pay cut was returned to the
employees. West Virginia's governor quickly
called out the state's militia. Militia members,
for the most part, sympathized with the workers
and refused to intervene, prompting the governor
to request federal government assistance.
President Rutherford B. Hayes sent federal troops
to several locations to reopen the railroads. In
the meantime, the strike had spread to several
other states, including Maryland, where violence
erupted in Baltimore between the strikers and
that state's militia. In Pittsburgh,
Pennsylvania, and St. Louis, Missouri, strikers
temporarily gained control of the cities until
federal soldiers reestablished order. In Chicago,
Illinois, more than twenty-thousand people
rallied in support of the strikers. The strike
also affected Ohioans. Governor Thomas Young
encouraged Ohioans to form private police forces
to defend businesses from strikers. He also
dispatched the Ohio militia to several locations
to maintain law and order. Cleveland residents
opposed to the strike responded to the governor's
call and formed their own police force to protect
Baltimore Ohio Railroad property. In Columbus,
mobs attacked and destroyed much railroad
property. Protests in Zanesville, Lancaster, and
Steubenville also briefly shut down rail service.
The worst agitation occurred in Newark, a major
depot for the Baltimore Ohio Railroad. On July
18, 1877, strikers blockaded the railroad,
refusing to let any trains to pass. Governor
Young quickly dispatched militia forces to the
city, hoping to avoid violence. By the end of
August 1877, the strike had ended primarily due
to federal government intervention, the use of
state militias, and the employment of
strikebreakers by the Baltimore Ohio Railroad
Company. The Great Railroad Strike was typical of
most strikes during this era. The availability of
laborers and government support for businesses
limited workers' ability to gain concessions from
their employers.
104
HAYMARKET AFFAIR (May 4, 1886) Violent incident
in Chicagos Haymarket Square during the
McCormick Harvester Machine Company Strike.
Although the labor rally began peaceably, someone
threw a bomb, killing seven policemen. Police
responded by killing four demonstrators. Eight
anarchists (a person who promotes disorder or
excites revolt against any established rule, law,
or custom.) were found guilty of inciting a riot
and murder. Four were hanged and one committed
suicide. Seven years later, in an act that
helped destroy his political career, Illinois
governor John Peter Altgeld pardoned the
remaining three, believing they had received an
unfair trial.
105
Homestead Strike (1892) Labor dispute between
steel workers and the Carnegie Steel Company in
Homestead, Pennsylvania, one of the most bitter
strikes in American history. The striking trade
union, the Amalgamated Association of Iron and
Steel Workers, refused to accept a decrease in
wages and stepped-up production demands by plant
manager Henry Clay Frick, who was determined to
break the union. When he brought in three
hundred Pinkerton guards to break the strike,
they were met by ten thousand workers and
violence erupted. Sixteen men were killed and
many more injured. The governor then sent in
eight thousand state militia who guarded
non-union strike breakers running the plant. The
strike ended after five months. The first major
struggle between organized labor and big business
resulted in failure for the most important craft
union of the age and exhibited the power of
American big business
106
Pullman Strike (May 11 July 20, 1894) Violent
strike between the American Railway Union (ARU)
and the Pullman Palace Car Company of Illinois.
About 2,500 employees went on strike against the
company to protest wage cuts and high rents in
the companys town of Pullman, south of Chicago.
Eugene V. Debs led the ARU in a nationwide
boycott of Pullman cars. When railroads fired
union members, the strike became national. United
States Attorney General Richard Olney obtained a
federal court injunction barring the union from
interfering with the running of the trains after
he had deputized about 3,600 men to keep the
trains moving. A rioting mob wrecked a mail
train on July 1, causing President Grover
Cleveland to call in federal troops to Chicago
on July 4 rioting broke out again and several
strikers were killed. By July 10 troops had
broken the strike and labor leaders were jailed
for disobeying the injunction. The U.S. Supreme
Court upheld the use of the injunction by the
government in 1895.
A federal panel appointed to investigate the
strike sharply criticized the company's
paternalistic policies and refusal to arbitrate,
advancing the idea of the need for unions and for
increased government regulation in an age of
large-scale industrialization.
107
HOMESTEAD AND PULLMAN STRIKES

• SIMILARITIES
• Both were a byproduct of a recession.
• Both turned violent
• Both ended the union in their respective
  companies
• Both needed the militia to stop them, in the
  Pullman case, half of the U.S. Army
• Both tarnished the reputation of labor unions to
  make them seem too radical and violent, thus
  hurting the future of the labor movement.

• IN GENERAL THE STRIKES ILLUSTRATE
• The workers feeling that the rich should help out
  when times get tough.
• The company attitude that if I built it, Ill run
  it, and that workers are simply a piece of the
  production process.
• OVERALL Age-old rich versus poor distribution
  of wealth fight, it got bloody but did not end up
  like the French revolution.

108
Anthracite Coal Strike (1903) Reading.
109
Labor Negotiations

• You are to negotiate terms for
• Wages
• Hours of employment
• Vacation time
• Medical insurance
• Other fringe benefits
• General working conditions

• OLD AGREEMENT
• Workers must be on the job 12 hours per day, six
  days a week
• No paid sick days
• All employees may take one week off per year for
  vacation, but will not be paid for that week
• Management is not responsible for medical bills
  resulting from job related injuries or illnesses
• Weekly wages are 5 for men, 3 for women, and 2
  for children

Other issues inadequate heating lighting,
insufficient number of fire escapes, and hiring
of immigrants and very young children
110
THE URBAN TRANSFORMATION http//player.discoveryed
ucation.com/index.cfm?guidAssetIdCD4B111C-046E-49
3E-98FE-213071243A5DblnFromSearch1productcodeU
S
111
The Age of Invention