5 featured were essential in the rise of Modern Industrialization: I) Exploits of coal deposits as source of cheap energy II) Rapid spread of technological innovation and the factory system. III) Constant competition by cutting costs and prices, as well as elimination of rivalries and creations of monopolies. IV) Drops in Price levels. V) Money supply not keeping pace with productivity levels, thus raising interest rates and restricting credit.

Railroad innovations: Issued stocks in order to meet their extraordinary Capital needs, separated ownership from management, created new organizational and management structures.

Railroads did receive huge amounts of land and loans from the federal, state, and local governments.

Yet railroads were in debt, so they had to raise capitals.

New integrated transportation and communications network brought advantages to both factory owners and consumers. Companies could use the national market to buy raw materials, why farmers and storekeepers could buy food and other amenities only available in the East Coast.

Railroad Pools: Negotiated agreements to divide the traffic proportionally and charge uniform rates.

Interstate Commerce Act: Established the ICC to oversee the practices of railroads which had multi-state routes. Law also banned monopolistic activities like the pools, and rebates.

J. P. Morgan, a banker, took over weakened railroad systems, and reorganized their management, refinanced their debts, and built alliances. Thanks to bankers, by 1906, 7 giant networks controlled 2/3 of the railroads.

Carnegie: Steel king. Used Vertical Integration (controlling all aspects of manufacturing). Carnegie Steel employed 20K people, and became the world's largest corporation. 

Horizontal integration: merging competing companies into one giant system. Standard Oil, ran by the Rockefellers, did this.

Sherman Antitrust Act: Outlawed trusts and any other contracts or combinations in restrain of trade, and gave violators fines of $5K and 1 year in jail. Yet the Courts disagreed with it, since it didn't define trust or restraint of trade.

Machines drove up profits, lowered costs, and improved efficiency.

By the late 1800's Industrialists saw that they were often producing more supply than what the market could take in. Then in order to sell they advertised. They put brand names, trademarks, guarantees, slogans, endorsements, and other gimmicks, and thus had consumer loyalty.

The new industrial America was built thanks to laborers who were paid menial wages and who had not a secure economic situation, most of these people were immigrants.

The South lagged behind in this era of industrialization.

The South's average Per Capita Income was $509, the North's was $1,165.

This was due to the physical devastation stemming from the Civil War, to the low numbers of towns and cities in the south, due to lack of education, and northern control of the markets. There were almost no banks in the region, thus few could finance industry.

New South Creed: Due to the South's number of natural resources and cheap labor, some said that it was only natural that the South would be the center of industrialization. So Southern States began to attract northern capital by giving them tax exemptions and leased convicts from the state prisons to serve as cheap labor.

Southern industry reflected the patterns of racism in the south, yet southern blacks who worked in the iron and steel industry earned more than southern whites who worked in the textile industry. Textile mills dominated the lives of the workers.

Industrialization in the south occurred at a lower level and at a lower pace than it did in the north.

Many made a transition from workshop to factories. These had impacts on both skilled artisans, and unskilled laborers alike.

A working class culture that had reinforced group solidarity was now dismissed by owners and so foremen as wasteful and inefficient.

Child labor was apparent in the coal mines and cotton mills, typical age was eight or nine.

In the north Immigrant labor was used.

Factory work tied the immigrants to a rigid timetable, very different from the pace of farm life.

Women's work experiences in the nineteenth century were shaped both by marital status and by social class.

Growing numbers of single women abandoned domestic employment for the better-paying, less demeaning work.

Many young women relished the independence they gained through factory employment.

Yet women's real achievement was defined in terms of marriage and family.

For unskilled immigrant laborers, the opportunities for advancement were considerably more limited.

Average real wages climbed 31% for unskilled workers and 74% for skilled workers between 1860 and 1900.

National Labor Union (NLU): Endorsed 8 hour work day, wanted currency and banking reform, end to convict labor, a federal department of labor, and restriction on immigration, especially Chinese. NLU also endorsed the cause of working women. It also urged black workers to organize, albeit in segregated organizations.

Knights of Labor: Welcomed all wage earners or former wage earners, excluded: bankers, doctors, lawyers, stockbrokers, professional gamblers, and liquor dealers. Knights wanted equal pay for women, end to child and convict labor, graduated income tax, and cooperative ownership. Allowed segregated assemblies. Also wanted restrictions on immigration.

Chinese Exclusion Act: Placed a ten year moratorium on Chinese immigration.

American Federation of Labor (AFL): Replaced Knight's grand visions with practical tactics aimed at bread-and-butter issues.

"Yellow Dog" Contracts: Workers were required to sign these in which they promised not to strike or join a union.

Thanks to Haymarket Labor violence, Americans felt animosity towards labor unions.

Defenders of capitalism advocated laissez-faire (hands off). Insisted that gov't should never attempt to control business. Smith in The Wealth of Nations (1776) argued that self-interest acted as an "invisible hand" in the marketplace, automatically regulating the supply of and demand for goods and services.

Henry George of Progress and Poverty: Wanted state-controlled economic system that distributed resources according to need - without socialism's great disadvantage, the stifling of individual initiative.

Karl Marx in Das Kapital: Rested on the proposition that the labor required to produce a commodity was the only true measure of that commodity's value. As competition among capitalists increased, Marx predicted wages would decline to starvation levels, and more and more capitalists would be driven out of business.