Unit 6: Topic 6 - The Rise of Industrial Capitalism Flashcards
What is industrialism and how did laissez-faire help industrial capitalists?
Industrialism describes the change in the the way products are made for sale, specifically the move towards mass production and mass consumption of goods.
Laissez-faire policies boosted capitalists’ agenda as the political ideology rejected government intervention in the economy. Instead, businesses would be motivated by their own self-interest to offer improved goods and services at low prices.
How did expanding communication networks during the late 1800’s generate economic development and business consolidation?
Expanding communication networks:
- Cornelius Vanderbilt opened 4,500 miles of track for local railroads running from NYC to Chicago
- Government granted 170 million acres of public land as subsidies to railroad companies for railroads route extension
- Shipping discounts given to favored shippers and smaller rates charged for farmers
Business Consolidation:
- Financial Panic of 1893 forced 1/4 of railroads into bankruptcy
- J. Pierpont Morgan and other bankers took control of the bankrupt railroads and consolidated them
How did business use vertical and horizontal integration during the growth of industrial capitalism to increase profit and the production of goods?
Vertical integration: A company controls every stage of the industrial process, from mining the raw materials to transporting the finished product. This can help boost profit and allow companies more immediate access to consumers.
Horizontal integration: Integration of an industry, in which former competitors are brought under a single corporate umbrella. This can help companies expand in size, diversify product offerings, reduce competition, and expand into new markets.
How did advances in marketing during the late 1800’s increase profit and the production of goods?
Advances in marketing during industrial capitalism:
- Mass marketing: The process of appealing to an entire market rather than one targeted group. This is cost-effective and garners a wider range of consumers, which leads to an increase in sales. With a higher demand, companies have to produce more goods to sell to consumers. Also, recognizable brand names like Kellogg’s Corn Flakes attracted long-time customers.
- Advertising techniques : Lit-up signs, billboards, print advertising in newspapers and national magazines
How did businesses use the growing labor force to increase the production of goods during the growth of industrial capitalism?
Mass immigration after the Civil War brought many cheap, unskilled laborers ideal for factory work. Women were also hired more since they were paid less and cheaper to employ.
What are trusts and holding companies?
Trusts: A board of trustees manages all of companies for an organization (horizontal integration with trustees).
Holding Companies: Companies that own shares of other companies to form a corporate group. They don’t produce goods or services themselves.
What are “robber barons” and “captains of industry”?
Robber barons and captains of industry are two opposing terms that can be used to describe the leaders of industrialization.
Robber baron : A term given to industrialists and financiers who made fortunes by monopolizing huge industries through the formation of trusts, engaging in unethical business practices, exploiting workers, and paying little heed to their customers or competition.
Captains of industry : A term given to industrial leaders that generated great industrial strength, benefit to the society, and showed acts of philanthropy.
Why were JP Morgan, Cornelius Vanderbilt, John D. Rockefeller, and Andrew Carnegie called robber barons in the age of industrial capitalism?
- JP Morgan: He was the richest man of the 19th century. After buying the bankrupt railroads during the 1893 Panic, he created a holding company for the businesses he owned. He manipulated the railroad industry in order to control prices and increase his wealth.
- Cornelius Vanderbilt: In the steamboat and railroad industry, he gave poor working conditions, long hours, low wages, and monopolized the industries.
- John D. Rockefeller: Used horizontal integration make a fortune with Standard Oil Co and used trusts to manage companies.
- Andrew Carnegie: Used vertical integration to make a fortune in the steel industry by owning every step in steel production.
What is the application of Social Darwinism to economics? How was Andrew Carnegie’s Gospel of Wealth used to respond to the belief?
Industrial leaders argued that Social Darwinism could apply to economics with the idea that the world’s wealth would be concentrated into the hands of those who were deemed the most fit. Andrew Carnegie argued that the wealthy had a God-given responsibility to carry out projects of civic philanthropy for the benefit of society, the idea of the Gospel of Wealth.
Why did the US purchase Alaska in 1867?
The US purchased Alaska from Russia because they worried that England might try to establish a presence there and having the land would help the US become a Pacific power. Americans foresaw a potential for gold, fur and fisheries, as well as additional trade with China and Japan.
How did the US attempt to control markets and natural resources in the Pacific Rim and Latin America?
Annexation of Hawaii (1898): Hawaii would provide a strategic naval base in the Pacific, the islands were an excellent gateway to Asian trade, and the native population and Japanese immigrants provide cheap labor.
Acquisition of Puerto Rico, Guam, and the Philippine Islands (1898) : In the Treaty of Paris ending the Spanish-American War, Spain renounced all claim to Cuba, ceded Guam and Puerto Rico to the US, and transferred sovereignty over the Philippines for $20 million.
