The 2nd Industrial Revolution Flashcards
Define Laissez-faire.
Laissez-faire is a French term, translated roughly as “let them be,” and refers to a belief that natural market forces, rather than the government, should regulate the marketplace. Although part of American economic policy since the country’s birth, laissez-faire began to show its weakness in the late 1800s, as consolidation reduced natural competition, prompting the first government regulations of business and the economy.
Define land grant.
A land grant is a gift of real estate. After the Civil War, land grants by the federal government were used to finance the building of railways in the western United States. Congress granted land to more than 80 railroads, which the railroads then sold to settlers, applying the proceeds to finance construction.
Land grants were used in other ways as well; for instance, several states created “land grant universities.”
Who was Cornelius Vanderbilt?
Cornelius Vanderbilt was the President of the New York Central Railroad during the 1860s and 1870s. The New York Central dominated rail traffic between Chicago and New York City, and was the result of the merger of several smaller railway lines in 1867.
Between the Civil War and 1900, railway track miles in the U.S. increased from 35,000 to 193,000. What negative effects did this massive growth have?
Many of the new railways were of shoddy construction and the land grant system by which Congress funded their growth was fraught with corruption, including scandals such as the Crédit Mobilier. Some 80 different railroad companies built railway lines, and many were in precarious financial shape from the outset. In both 1873 and 1893, railroad overbuilding and speculation in railroad stocks led to the collapse of the stock market and major economic depressions.
How did railroads affect consumerism during the late 1800s?
Both food and durable goods were shipped throughout the country via railway. The development of the refrigerated railroad car meant that meat could be shipped long distances, and the increased number of canned goods meant that vegetables grown in Illinois could be eaten in Boston without spoilage. Companies such as Sears & Roebuck and Montgomery Ward pioneered the idea of shopping by catalog, allowing distant farm families to purchase goods, which were then shipped to them via railroad.
What were some of the positive effects of the growth of railroads in the years following the Civil War?
The massive growth of railroads resulted in a rise of mass consumption, spurring economic growth as manufactured goods were shipped throughout the country, and farmers and ranchers moved their products into urban areas. Related economic sectors, such as coal and steel, also experienced exponential growth during the period. The complex nature of railway construction and finance also led to the creation of more complex forms of corporate structuring, such as trusts, and an increased use of the corporation.
In addition, the growth in railroads also spurred the standardization of time, resulting in the four time zones that exist today.
As a result of railway overbuilding, the United States suffered a stock market crash and long depression in 1893, during which several railway companies went bankrupt. How did J.P. Morgan react?
J.P. Morgan, with the assistance of other bankers, organized the consolidation of various small railway lines into seven regional lines, which dominated railway traffic. While Morgan’s system was more efficient, it also led to monopolization and reduction in competition.
Define Merger.
A merger is where two companies are joined into one, e.g. Company A and Company B are consolidated to form Company C. Mergers were first used during the railway boom after the Civil War, as companies were consolidated to increase efficiency and to reduce duplication of railway lines.
Define interlocking directorates.
An interlocking directorate takes place when a member of the board of directors of one company also serves on the board of directors of a competitor. By serving on both boards, the director is able to coordinate policy between the two, harming competition. Often used by corporations during the late nineteenth century, interlocking directorates became illegal with the Clayton Act (1914).
In 1868, a revolution broke out in Cuba against Spain. How did President Grant react?
When Congress attempted to recognize the Cuban rebels, Grant sent a message to Congress reasserting his administration’s position of neutrality. Grant did attempt to negotiate the purchase of Cuba from Spain, but was rebuffed. Spain eventually put down the Cuban insurrection.
Which country did Ulysses S. Grant propose annexing in 1870?
Grant proposed annexing the Caribbean nation of Santo Domingo, now known as the Dominican Republic. Both Grant and the government of Santo Domingo supported annexation, but Congress refused to authorize it.
In 1868, Congress ratified the Burlingame Treaty with China. What did this treaty establish?
The Burlingame Treaty allowed unrestricted Chinese immigration, and large numbers of Chinese immigrants arrived on the West Coast. Many of the new immigrants found work in mines or building the western half of the Transcontinental Railroad.
How did the state of California react to the high numbers of Chinese immigrants arriving as a result of the Burlingame Treaty of 1868?
In response to the influx, California included articles in its 1878 state constitution which disenfranchised the Chinese, blocked their work on public projects, and disallowed their employment with any corporation licensed by the state. The federal courts struck down these measures as unconstitutional, but they signaled a growing hostility towards Chinese immigrants.
The process of pumping air through molten iron is known as the —–.
Bessemer Process
By removing impurities, the Bessemer Process converts iron into steel, a stronger building material than iron alone. The Process revolutionized the making of steel by significantly lowering the cost of its production.
Who was Andrew Carnegie?
Carnegie was the owner of the Carnegie Steel Company, which by the late 1880s supplied half of all steel used worldwide. A poor Scottish immigrant, Carnegie became one of the nation’s wealthiest men by using a business technique known as vertical integration.
What is vertical integration?
Under vertical integration, all the aspects of production for a manufactured good are owned by a single person or trust. For instance, Andrew Carnegie’s steel company owned the iron mines where steel originated, the distribution network where steel was sold, and everything in between.
What is horizontal integration?
Horizontal integration is where a single person or trust owns virtually all of one aspect in the production process. Horizontal integration is usually brought about by consolidating several smaller companies in the same field into one cooperating enterprise. John D. Rockefeller’s Standard Oil Company controlled virtually all the oil refining capability in the United States in the late 1800s by using horizontal integration. The control of this crucial phase in the production of oil gave him power over the entire market for oil.
