- [Instructor] The period
from the end of the Civil War
to the start of the
20th Century was one of
incredible economic transformation
in the United States.
In 1865 the United States
was the 4th largest
industrial economy in the world.
By the 1890s, it had leapt to 1st place.
At the same time, where people
worked, how people worked,
and how much money they made,
all changed drastically.
During the Gilded Age, the
United States went from
being a nation of farmers to
a nation of factory workers.
The nature of work itself also changed
as large corporations began to implement
management techniques aimed at
increasing efficiency and profit.
The gap between rich
and poor also increased
considerably during this era.
So what caused this
economic transformation?
In this video I want to
explore some of the factors
that contributed to these
changes in work and the economy:
technological advancements,
new business strategies,
business consolidation, and
pro-growth government policies.
So let's dive a little
deeper into each of these.
One of the biggest factors
contributing to the rise
of industrial capitalism was technology.
The late 19th Century
was an era of innovation.
Nearly half a million patents were issued
between 1860 and 1900.
Improvements in machinery
and manufacturing processes,
like the Bessemer process to make steel,
increased productivity.
And there were new technologies
that helped business:
the telephone to coordinate
transactions over
long distances, the typewriter
to speed up record keeping,
and electricity which made it possible
to work safely after dark.
And the expansion of the
railroad, made it easy
to get raw materials to factories
and finished goods to markets.
Corporations also devised new strategies
to cope with doing business
at a national scale.
In this era the first
national brands emerged.
Companies like Coca-Cola
and Kellogg's Corn Flakes
began advertising to national audiences.
And mail order catalogs like
Montgomery Ward and Sears
sold products across the country.
An integrated nation-wide
system of business and shipping
made it easy for customers
and companies to connect.
During the Gilded Age
coordinating supplies and workers,
time tables and sales, became its own
full time job called management.
Managers worked to increase
efficiency and cut costs.
They did this in a number of ways:
by replacing workers with machines,
increasing working hours, and
decreasing wages for laborers.
The titans of industry used other measures
to maximize profits as well.
The Gilded Age was an era of
ruthless business competition
and the magnates of each industry set out
to crush their enemies.
Many of the men who made fabulous fortunes
during the Gilded Age, started
out in the railroad industry
taking advantage of government
subsidies and land grants.
The U.S. Government took a laissez faire,
or hands off, approach to
regulating business at this time.
And there were no
corporate or income taxes
so it was possible for a few
individuals and companies
to amass enormous wealth.
They did so by consolidating
their businesses,
reducing competition,
and controlling markets.
Steel baron Andrew Carnegie
was one of the first
businessmen to employ vertical
integration in his companies.
The goal of vertical
integration is to control
every part of the supply
chain for a product.
For example, Carnegie
owned not just steel mills,
but the mines that produced
the iron ore and coal
necessary for making steel,
and the ships and
railroads that transported
raw materials to the factories,
and finished steel from the factories.
This cut out middlemen and ensured that
Carnegie never had to
wait for other companies
to send him supplies.
Big businesses in the
Gilded Age also reduced
competition through holding
companies, trusts, and pools.
Holding companies and
trusts allowed mergers
that put many companies under the control
of one parent company.
Using these tactics, John D. Rockefeller
who owned Standard Oil, controlled 95%
of the country's oil supply by
the end of the 19th Century.
Standard Oil become the nation's first
billion dollar company.
Some companies realized that cooperation
was better than competition
and simply agreed
to divide markets and
profits between them.
These groups of supposedly
competing business entities
were known as pools.
The rise of industrial
capitalism had major consequences
on American life, politics,
and foreign policy.
For some, this new economy meant a higher
standard of living than ever before,
with cheap and plentiful
material comforts.
But this new way of doing
business came at the expense
of wages and working conditions,
leading workers to begin organizing unions
and advocating for political
solutions to economic problems.
And as the United States
produced more and more,
it would begin looking
abroad for new markets
to sell its goods and consequently,
for greater influence in the world.
