UGBA C172 Study Guide

John Stevens

The first railroad charter in the U.S. was given to Stevens and others in 1815 for the New Jersey Railroad. He designed and built a steam locomotive capable of hauling several passenger cars at his estate in Hoboken, New Jersey in 1825.The invention of the steam engine helped begin the modern railroads and trains. He also helped develop United States patent law. Stevens was a proponent for the railroad in the Pennsylvania Mainline Canal debate

30. Charles Finney's religious message

Unlike Jonathan Edwards, Finney placed a greater importance on a person's control to achieve one's salvation. He believed that the Gospel did not just get people saved but it also was a means of improving society. He used emotional prayers that addressed God in familiar language and preached for immediate dedications to Christ. The effect of this message gave laborers the idea that working hard was to please God and not just their masters. It placed a personal responsibility for sins, rather than the master-apprenticeship system of old. When workers joined the church it gave them connection, jobs, upward mobility, a standard of self-control, a sense of salvation, self-respect and alternatively the opposite for those who did not accept the message. A leading evangelist of the Second Great Awakening, he preached that each person had capacity for spiritual rebirth and salvation and that through individual effort could be saved. His concept of "utility of benevolence" proposed the reformation of society as well as of individuals.

7. Rosewall Lee

was the Superintendent at the Springfield Armory, which was privately owned. Unlike James Stubblefield from Harper's Ferry Armory, he embraced innovation and adopted the interchangeable parts method. Using interchangeable parts allowed standardization of parts and components which enabled Springfield Armory to mass produce guns more efficiently with consistent quality and repair these armaments quickly. He was also dedicated to the business' success and networked with other New England manufacturers. (referenced in Rosenberg reading about Technological Convergence pgs 31-45) Embraced Innovation, Networked with other New England manufactured, Business success oriented

47. Carnegie's "worst species of idolatry"

"The amassing of wealth is one of the worst species of idolatry! No idol is more debasing than the worship of money!" Carnegie saw excessive accumulation of wealth as a sin and promised to only take $50,000 of yearly income and spent the rest on philanthropy. In his last years, he devoted himself to philanthropy, building public libraries, music halls, and education institutions. However, Carnegie's actions did not always adhere to his words. His fierce competitiveness, reputation as a robber baron, workers treatment in Homestead strike, and shady dealings as a financier and bond salesman tarnished his philanthropic reputation. Andrew Carnegie was a complicated figure.

Alexis DeToqueville's description of America

DeToqueville wrote about America's democracy as a way to contrast it against the French aristocracy. He felt that democracy was a way for society to balance liberty and equality, as well as allow more freedom to the individual. He wrote about the link between religion and social control. He mentioned how the American capitalist society was inspired by the notion that if you work hard you can succeed and become rich. Everyone had to work to earn a living, every man had political power to spread their ideas, yet it still wasn't an entirely just society. The ones in power were questioned constantly by those beneath them, and there was still a lot of prejudice in the labor market.

41. Woodruff Sleeping Car Company

It was a pioneer in creating sleeping cars which facilitated business travel across long distances that became possible due to expanding railroad routes. Pennsylvania Railroad, the company in which Carnegie worked, began placing Woodruff's sleeping cars on its trains and the young enthusiastic Carnegie invested in the company. One can say that this was a form of insider trading. The investment proved a great success and source of profit for him. Woodruff sleeping car venture, 1865. They bought in with an installment plan; they paid for the rest of the investment through dividends. Woodruff was given the ability to put his profits back into the company. The PP RR benefited from the competitive advantage of using the cars, but only Carnegie and Scott benefited from the dividends (sleeping car for first class travel which facilitated business travel)

56. Munn & Scott scandal

Munn & Scott was a major operator of grain elevator and storage. The firm gained a lot of market power by forming trusts and increasingly engaged in shady practices. For example, the company would lie about grain spoilage in the storage so that the farmers who owned them would sell their grains cheaply. They also issued fake grain storage receipts or in other words, they were selling non-existent grains to merchants and among others, they rerouted distribution of certain kinds of grains so that they would have monopoly over those grains. The Munn case allowed states to regulate certain businesses within their borders, including railroads, and is commonly regarded as a milestone in the growth of federal government regulation o Formed a cartel, pushed small opponents out, horizontally integrated and fixed prices o Outcome: government argue that they should regulate elements that effect the public, they have a vested right o Munn vs. Illinois: if a private company is used for a public good, it should be regulated (this being constitutional)

Economic drivers of Industrial Revolution

On the demand side: - There was large population growth with the rise in immigration - Urbanization as these immigrants and other natives moved to larger cities to find work labor wages - Growth of regional markets with the Commerce Clause in the Constitution and transportation improvements - Business demand to grow and expand to wider markets - Technological innovation taking place by introducing machinery into the American workplace. On the supply side: - There was an abundance of raw materials such as coal and oil - Labor was scarce and inexpensive up to the 1840s when the Irish immigrated due to the potato famine - Capital to invest in new business was increasingly available as people got money together to build new businesses or put money back into their own businesses as well as european investors that wanted to invest in the new marketplace as technological innovations proved business ventures as guaranteed profits Demand Side drivers: population growth, urbanization, labor wages, growth of regional markets (commerce clause of constitution (could sell between states), transportation improvement) Supply side drivers - population growth, urbanization, labor wages, growth of regional markets (commerce clause, transportation improvements), business demands, technological innovation (price of goods go down, people can afford them) o Raw materials - relatively abundant o Labor - relatively scarce and expensive in 1840's (after the Irish came due to potato famine) o Capital - scarce, but increasingly available (tech needs capital to develop), also investments coming from Europe since there Industrial Revolution was 100 years earlier

10. Pennsylvania Mainline Canal

Pennsylvania Mainline Canal 1826-1834. Originally constructed to transport manufactured and agricultural goods between the east and west, the canal was also soon flooded with passengers who were eager to settle in western Pennsylvania, or to journey down the Ohio River to lands in the west. An attempt to copy the success of the Erie Canal. The town was deciding between building a railroad or building a canal. The pros of a canal was it was proven to work and that it would be a lot cheaper. The pros of a railroad was that it would be a lot faster, would be safer for products because it would be one continuous shipment, and its operation was not dependent on a water supply. This canal shows the public mentality against innovation and negative attitude towards risk at the time. Canal proposed from Philadelphia to Pittsburg, thought to bring success to Philadelphia similar to what the Erie Canal had created for New York City. This was pushed by "the Society" headed by Mathew Carey - They wanted a shipping lane to benefit the business community - From extensive research, an 1825 study showed that the canal was feasible - They were afraid that the RR system would not work since it was a new technology The canal was unable to fulfil its projected expectations and overall did not bring economic success to the region as planned. Fragmentation of transportation solutions between the mainline and railroad was much too inefficient.

37. Matthew Josephson

Published The Robber Barons in 1934, it was the Great Depression and America wasn't loving business at the time. It was about his interpretation of how business evolved- said they were all greedy businessmen who were exploiting the working class. That the Robber Barons got their wealth by taking other people's money, creating their own wealthy influential aristocracy. For example, John Rockefeller's method of "turning the screw" where his way of dealing with competitors was by forcing them into buying his product by controlling the rest of the market, etc. Became a derogatory term applied to wealthy and powerful 19th-century American businessmen author of "The Robber Barrons" o Published in 1934 (during the depression) o Characterized them as evil and popularized the term "robber barron" o Rockefeller "turned the screws" on his competitors (both vertical and horizontal power, wasn't afraid to resort to criminal activities forcing competition to sell out)

46. Three most important keys to Carnegie's long term success in iron and steel

1. valued tech innovation, research, and development While Carnegie did not invent new technologies in the iron and steel industry, he was able to recognize their potential very well. He pioneered the adoption of the Bessemer/Thomas process which significantly improved the efficiency of steel production. Also, his chemists were able to recognize that some wastes were actually high quality raw materials and recycled them accordingly. Carnegie also did not wait to use these new technologies. He immediately used new Bessemer converters instead of waiting until his machines ran out of life. 2. cost control system Carnegie wanted to track all revenues and expenses in the iron and steel production, a practice which he instituted during his time in Pennsylvania Railroad. This enabled him to price his steel accordingly i.e. below his competitors' but still enough to turn in profits, identify and reward productive personnel, and know which production aspects to focus on to gain more efficiency. 3. vertical and horizontal integration Carnegie integrated his steel industry vertically forward and backward. For forward vertical integration, he bought a line of lake steamships to distribute his iron and steel as well as having investments in Keystone Bridge Works and Pennsylvania Railroad. For backward integration, he bought suppliers of pig iron and coke as well as rival Homestead Steel Works, which included an extensive plant served by tributary coal and iron fields to ensure supply of raw materials. Horizontally, he "scooped the market" and bought out his rivals. Others: Hired smart managers, smart finance strategies

53. Homestead Strike

1892 steelworker strike near Pittsburgh against the Carnegie Steel Company. Ten workers were killed in a riot when "scab" labor was brought in to force an end to the strike. The second biggest strike in US labor history, culminating in a battle between the workers of Carnegie Steel Company and the Pinkertons, private security agents. Carnegie placed Henry Clay Frick in charge of the factory while he was away in Scotland, as a way to avoid responsibility. Frick desired to dissolve The Amalgamated Association of Iron and Steel Workers (the AA), the union of which the workers were members and succeeded in doing so. The Homestead strike broke the AA and it set back workers' rights until early 1930's when federal government recognized labor unions.

9. Erie Canal

A canal between the New York cities of Albany and Buffalo, completed in 1825. The canal, considered a marvel of the modern world at the time, allowed western farmers to ship surplus crops to sell in the North and allowed northern manufacturers to ship finished goods to sell in the West. It brought forth the access to external market which in turn brought a greater demand. Entrepreneurs were no longer producing simply for their small town but rather all towns the canal had access to. Small towns like Rochester also grew in size and population because it was not an isolated town anymore.

21. Charles River Bridge case

A case in 1837 where the US supreme court rejected the ancient notion of implied monopoly because it would undermine competition. This not only made language in a charter very important but it also demonstrated that competition is a good thing and that entrepreneurs have to accept the risk of competition. Dispute over the toll bridge of Charles River and the free bridge of Warren. The court ruled in favor of Warren. Reversed Dartmouth College v. Woodward; property rights can be overridden by public need Charles River Bridge Company granted a charter to construct a bridge connecting Boston and Cambridge. Commonwealth of Massachusetts sanctioned another company to build the Warren Bridge that would be very close in proximity to the first bridge and would connect the same two cities; Charles River Bridge claimed that the Massachusetts legislature had broken its contract with the Charles River Bridge Company. The owners of the first bridge claimed that the charter had implied exclusive rights to the Charles River Bridge Company. The Court ultimately sided with Warren Bridge. US Supreme Court rejected ancient notion of implied monopoly

32. Anti-masonry

A movement ignited in 1826 with the mysterious disappearance of William Morgan, a bricklayer in western New York who supposedly had broken his vow of secrecy as a Freemason by preparing a book revealing the organization's secrets. The movement was part of the projected fears, anger, and desire for control that occurred during that time. Later, this movement even caused distrust amongst the elite and caused a division amongst them. developed in New York, had emerged in the 1820's in response to widespread resentment against the secret and exclusive, hence supposedly undemocratic, Society of Freemasons. Whigs used their ideas to attack Jackson and Van Buren, both Freemasons, by implying that they were connected with the antidemocratic conspiracy. Came about as a response to a realization of the corruption held within the ranks of the Mason's and how they had been able to secure a firm grip on multiple power positions within the local government of Rochester.

19. Sic utere tuo doctrine

A phrase in Latin meaning "so use your own so as not to injure others". It is a nuisance law that restrained property holders from using their property in ways that interfered with the right of neighbors to enjoy the use of their property. Based on this principle embodied in the sic utere tuo maxim, colonial governments passed ordinances requiring the owners of slaughterhouses and other nuisance business to clean their premises and forbidding them to toss their wastes into adjacent streets, street drains, and streams. Pages 98-99 of the reader. use yours so as not to harm other's; use your property in such a way that you do not damage others Courts treated the new nuisance industries differently (railroads, manufacturing, mining) o plaintiffs were not able to provide solid proof o the lack of precedent

49. Thomas Process

A process designed in 1878 by Sidney Gilchrist-Thomas, a London police-court clerk, to remove the phosphorous from high-phosphorous ore, which would not normally be refinable by traditional methods. The process involves lining the refining vessel with lime, which draws out the phosphorous from the molten pig iron. While the Americans had plenty of low-phosphorous iron ore, Britain did not, so this was of particular value to them. After hearing about this process while in England in 1879, Carnegie managed to sell the American rights to it for a hefty profit. He then implemented this process aggressively, as it proved incredibly successful. (Carnegie Biography 125 - 127) Thomas Process 1879 - (process that turned low quality ore into high quality steel) Solve the problem of eliminating phosphorus from iron produced by means of the Bessemer converter Bessemer process: revolutionized steel making. Before it was raw iron into pig iron, then had to turn it into "blister steel" and then to make high quality steel needed to be burned for hours on end. Bessemer turned the process from days into a half hour

43. Keystone Telegraph Company

Another case of insider trading by Carnegie. He organized the Keystone Telegraph Company and got the right to string wires along Pennsylvania Railroad poles. When it still had not laid a single wire, Carnegie sold it to Pacific & Atlantic Telegraph Company who needed telegraphic connection to Philadelphia. After making similar deals, he had enough stock to take control of P&A and exchanged his, Scott's, and Thomson's shares in P&A for shares in the much more valuable Western Union company. Keystone Telegraph Co. 1867 • Exploits PA RR right of way • PACIFIC & ATLANTIC DEAL • Stock profits & construction contracts • Western Union sale • "nimble two step" 1872

48. Carnegie's "scoop the market" strategy

A strategy that was also shared by Rockefeller. Carnegie realized that his steel company was the most efficient producer in the industry and therefore he could sell steel more cheaply than his competitors did while still turning in profits. Carnegie chose to do this instead of joining a pool or trust because of bigger long-term advantage. Being the most efficient producer, he could drive his competitors into bankruptcy, monopolize the market, and raise prices freely when there is no competition. Undercut everyone else by selling at significantly cheaper price. Pricing (scoop the market). Gave him the ability to see the gap between the market price and what he could offer it for, allowed him to stay away from a pricing war), employee management, make operational improvements, target capital investments (using the cost control systems) Instituted cost control systems: was able to put a number to each one of his processes, thus is pricing could be determined as what worked for him rather than by market value or competitors pricing. Competitors would only do these types of metrics once a year.

24. Putting out system

A system of subcontracting out work. Work is contracted by a central agent to subcontractors who complete the work in off-site facilities. It was often used in the textile industry. Since the demand was growing so fast and management could not handle all of it, it began to outsource the work which led to the rise of these middleman agents, runners, etc. Masters could not afford to house all of his workers and began to pay a wage rather than room and board. a compensation system under which employees are paid a certain amount for each unit of output they produce

25. Piece rate system

A system of wages where the worker was paid by the piece. This maximized output and labor efficiency as opposed to the personal, customized items that used to be made when demand was much lower. Workers were paid in a "piece rate" system, paid by how many things they made, maximizing productivity

18. Howard v. Dolittle, 1854

An application of the Will Theory that states that a tenant is still responsible for rent even if in the case that the property "ceases to be habitable, or is wholly destroyed". It also stated that the landlord is not obligated to any repairs unless explicitly stated in the contract. o Landlord not bound to repair, in any case, unless by force of express agreement, o Even when the tenement demised ceases to be habitable, or is wholly destroyed, is not discharged, in whole or in part, from the payment of the rent subsequently accruing...." (Application of Will Theory, Caveat Emptor (Buyer beware)

22. Master-apprentice system

Apprentices would often come from the East and would be young (under 30) journeymen who were looking for a opportunity. These men were often unattached and had a connection to the master. They would either be some sort of family or come with a letter of recommendation. They lived with the master and learned from him. When not doing work, they would drink, relax, and socialize together.

50. Captain Bill Jones

Bill Jones was hired by Carnegie as a labor manager. His approach to labor management was characterized by giving incentive to workers for good performance and paying them above market wages to retain good and experienced workers. Jones often argued with Carnegie for pay increases and awards for his workers. His approach was very much the opposite of Carnegie's management style, but it worked as evidenced by his workers' productivity. He integrated people of different ethnicities and backgrounds in the workplace to prevent group tensions, as well as introduced 3 8hr work days instead of 2 12hr days, which proved to increase productivity, made the work more attractive to employees, and beat out the competition in the treatment of their workers. When Bill Jones died, his methods got lost on behalf of the workers, and Carnegie went back to paying low wages, one of the causes of the Homestead strike (on top of the 1887 recession). • Didn't want to lower wages too low. There was surplus of labor • Ethnic groups: he tried to defuse the tensions between different ethnic groups, would mix these workers together • Hours: instead of two 12 hour days he would split it into three 8 hour days • Got rid of any troublemakers • This is remarkable because this was not the norm, labor was at an oversupply

23. Merchant capitalism

Came with the change at the end of the master-apprentice system, as entrepreneurs started industrializing to make more money and got involved with the putting out system, and paying with the piece rate system. The entrepreneurial class was fragmented into merchant capitalists and the others could become workers. When the master-apprentice system ended, the apprentice was no longer learning the skills to run his own business in the trade. The masters became merchant capitalists, trying to increase production and expand their businesses, and the apprentices were those who could become workers somewhere else before they could make it on their own, changes in their career path opportunities.

39. Management cost accounting at Penn Railroad

Carnegie developed a thorough management cost accounting system to track revenues and expenditures in all business aspects of the railroad. Although this is a standard practice now, it was not the case back then. Competitors were only doing cost accounting annually instead of weekly as Carnegie did. Cost accounting enabled the firm to identify which production needed improvement, determine pricing, and evaluate personnel. This method enabled Carnegie's railroad company to be the most efficient in the industry. o System to track (revenues, expenses, every aspect of RR system) o Fink figured out that there are 75 different kind of expenses that split into 3 different classes (movement, station, maintenance) Why was Fink's system important to PA RR? (very important development) o Was needed for pricing freight and passengers, gives the ability to use these metrics to track employee efficiencies, allows to see opportunity in markets o Forging these management system, huge level of innovation

44. Carnegie's achievements as a bond salesman (1865-1872)

Carnegie's achievements as a bond salesman were that he made a lot of money off of commissions from the bonds he was selling. He learns a lot about how stocks operate and also acts as a speculator for businesses. This allows him to speculate into the Telegraph business, encouraging him to start the Keystone Telegraph Co, and later the Keystone Bridge Co, which brought him bridge access for the railroad and new customers. St. Louis Bridge Co. Bond Deal - They structured the deal so that AC and his associates would take fees from building the bridge, fees taken in the form of securities. They would also get bonds, and being a bonds salesman he could sell these products, and even take commission on the sales of these bonds. Another "synergetic deal" of AC's

57. Backlash against the railroads

Grain farmers and merchants were protesting railroad trusts for price fixing which made it harder for them to sell their goods. Around the same time, there were growing anti-trusts and anti price fixing regulations from the government. In 1887, the federal government passed the Interstate Commerce Commission Act, attempting to regulate railroad companies across the US. Demand for regulation (professor wants to concentrate on railroad regulations since at the time they are at the center of the economy) o First big business o Development of management techniques o Causal role is growth Consumer perspective (viewed as an evil monopoly) - Shippers (farmers, business) unfair pricing, monop profiteering (secret rebates, drawbacks) - Passengers (monopoly pricing, scheduling. Conditions & safety of trains, stations Collisions, grade crossing hazards, smoke and noise The big hub areas have a lot of competition, rural areas less so RR industry perspective: high fixed costs, rate wars on the competitive lines Railroad regulation o Started in 1869 in Massachusetts, "sunshine" regulation to educate the railroads o Dominant approach starts in Illinois. Problem = monopoly power, thus you must regulate these businesses o 1887 Interstate Commerce Commission Act (required railroads to give "just/fair" rates, outlawed rate discrimination on short hauls, rebates, quick price changes, pools etc.)

55. Harper's Weekly 1881 series on Newtown Creek

Harper's Weekly was an American political magazine based in New York. The series were publications aimed at showing how pollution, especially from wastes of oil industries along the creek, was sickening local residents. The aim was to push for waste management reforms. In summer 1881 Harper's Weekly ran a 3 week series of exposes about the abominable conditions of Newton Creek. These included dramatic descriptions of adults choking in their sleep, children growing pale and babies dying in their mothers' arms from the stenches. o Ran a series of exposes about the abominable conditions on Newtown Creek. o For three weeks the national magazine startled readers with dramatic descriptions of adults choking in their sleep, children growing pale...ect., all accounting from the stenches. Blamed the oil businesses for disregarding the health of local citizens. There was use of cartoons depicting the pollution at demons in people's homes and bedrooms. o Revealing the horrors of Newtown Creek, the magazine incited an aroused public to demand reform.

52. William P. Shinn

He was Carnegie's early business partner and together with Carnegie, he honed their cost accounting methods with the opening of Edgar Thomson Works. Carnegie hired Shinn, the best engineer in the business, to help with his new steel project as a treasurer. He was a cost accounting genius, and diligently watch over AC's accounts weekly instead of annually like the competitors

51. Alexander Holley

He was a mechanical engineer and was considered the steel and plant engineer and designer of his time, especially in regard to applying research to modern steel manufacturing processes. He also improved the Bessemer process, which allowed faster production of steel from molten pig iron. Carnegie hired him to design and build steel mills. Carnegie Engineer (crucial to Carnegie's use of technological innovation) Considered the foremost steel and plant engineer and designer of his time, especially in regard to applying research to modern steel manufacturing processes. He received 15 patents, 10 for improvements in the Bessemer process, which he purchased the rights to in 1863 and brought to the United States.

11. Matthew Carey

He was a well known Philadelphia publisher and propagandist and chairman of the Pennsylvania Society for the Promotion of Internal Improvement's Acting Committee. At first, he was very neutral and open to all options for improve transportation but as soon as he saw the success of the Erie Canal and the need to have some sort of operating system now rather than later, he went from neutral to pro-canal. And when support for the railroad began to rise and engineer Stickland sent news of the railroads possibility in America, Carey went from pro-canal to anti-railroad. 1824 - Leader for Penn. Society for the Promotion of Internal Improvements - They wanted a shipping lane to benefit the business community (looking to the Erie) - From extensive research, an 1825 study showed that the canal was feasible - They were afraid that the RR system would not work since it was a new technolog

40. Thomas A. Scott

He was the fourth president of Pennsylvania Railroad and was the general superintendent when Carnegie joined the company. Scott took a special interest in mentoring aspiring railroad men, such as Carnegie and taught him the basics of railroading, investment, and management and had a great impact on Carnegie's later business life.

54. J.D. Rockefeller's business strategies

His main strategy was to integrate horizontally and he was able to do this by eliminating his competitors and forcing them to sell their refineries very cheaply. Rockefeller used his firm's size to get rebates from railroad companies transporting his oil. He also undercut the prices of his competitors until they went bankrupt and raised prices when all competitions disappeared. Rockefeller's strategy of establishing a virtual monopoly over one aspect of the production process—in his case oil refining—was labeled horizontal integration. To eliminate his competitors, Rockefeller used his firm's superior size to negotiate preferential rates from the railroads that transported both his and his competitors' oil, making it nearly impossible for his competitors to stay in business. o Rockefeller vertical & horizontal integration (Josepheson's "turning of the screw" analogy) o Railroad transport strategy (REBATES: he was able to secure rebates because he was bigger, they gave him a discount because they wanted his business and also got DRAWBACKS) o There were 30 refineries in Cleveland, Ohio. Too much oil, not enough demand at the time. He turned the screws on his competitors, forced them to sell out to him. Rockefeller would fix the market price for oil and his competitors could not keep up (pooling with competitors to push others out)

34. Horizontal integration

Horizontal integration is when a company buys other companies that are in the same business in the attempt of monopolizing the market. This was a clear business strategy of J.D. Rockefeller. Absorption into a single firm of several firms involved in the same level of production and sharing resources at that level o Acquiring and controlling your competition o Strategy where a company creates or acquires production units for outputs which are alike - either complementary or competitive.

35. Three methods used by nineteenth century firms to achieve horizontal integration

Horizontal integration was when firms wanted to expand to control/own the competition. They tried to do this by forming: pools, which were agreements to divide the business in a given area and share the profits, which were trust based; trusts, where they would persuade competitors to agree to put their stock into a trust that they controlled to control their business; or mergers, which weren't legal until 1889 when two businesses would join together. o "Pools" - entering into an agreement with your rivals. They "pool" money together in case an upstart comes in and tries to undercut them. They utilize this money to have one company undercut the upstart, and distribute this money back into the pool. Used but not totally successful o Trusts - developed by Rockefeller. Would bring competitors into a room, would have each company bring their stock together and from there would dictate prices o Mergers (not legal till 1889) couldn't own stock in other companies

31. Electoral reform in Rochester

In 1827 a new state voting law passed that gave voting rights to the propertyless. A new city charter also passed around this time which changed Rochester elections from an at-large, voice ballot format into a ward, secret ballot one. o Kidnapping and disappearance of William Morgan (man who authored a piece showcasing the corruption present in local government) o Citizens realized everyone in seat of power were Mason. o Antimasons came together forming a political party, this occurring alongside the publication of Thurlow Weed's "Masonic Enquirer," bringing these issues of corruption to the minds of concerned citizens. o Direct accusations of corruption and crime were put on the Mason's in office, eventually pushing them out of politics, bringing Antimason political leaders into their relinquished seats of power.

29. Management of labor at Lowell (type) mills

In Lowell-type mills, all employees worked in the mills and lived within boarding houses. In an effort to retain traditional cultural values management kept close supervision and imposed a lot of rules on its female labor force. It required worship requirements, abstinence, and curfews. Their workdays were clearly set with cake time, candy time, and drink times all built in. This system eventually breaks down due to increasing market pressures and the influx of new labor from the Great Famine in Ireland. These mills combined the processes of spinning and weaving under the same roof eliminating the "putting-out" system in favor of mass production of high-quality cloth. An important factor of these type of mills is that they made use of the region's underutilized labor of women and children as semi and unskilled machine tenders. Pg 42 of reader.

13. Role of transportation "revolution" in industrial revolution

In reference to railroad. It was a new development at the time and was becoming popular for faster transportation for people and businesses to ship products. The railroad expanded the industrial market allowing businesses to expand their business where they hadn't been able to before, it also connected new cities together and allowed for migration into larger cities. When people were willing to take risk in the market, they invested in a railroad to help business grow as well as connect larger cities to one another. Much faster that canal transportation. It was also the first big business to be established in the US, employing more than any other industry as well as changing the management systems, i.e. when Andrew Carnegie worked for the Pennsylvania Railroad. Cost of shipping good (freight rates) go way down to do all of these new modes of transportation (RR, Canal, etc.)

42. Keystone Bridge Company

Keystone Bridge manufactured iron bridges which were fireproof and longer-lasting than their wooden counterparts. Carnegie's investment in this company was another form of insider trading which was a win-win deal for both Pennsylvania Railroad and the bridge company. The deal secured demand for the bridge company because Pennsylvania Railroad would be using the bridges. In turn, Penn Railroad could expand their routes since the bridges afforded access to territories across water. created by Carnegie which built the first steel arch bridge over the mississippi river and provided the infrastructure for the Brooklyn bridge over ny's east river. - company that build bridges for railroads. Does not own the bridges, rather there are investors who gain from charging the railroads - They offer the contract with PP RR and other railroads thus giving clients and investors guaranteed contracts and revenue (competitive advantage) - They structured the deal so that AC and his associates would take fees from building the bridge, fees taken in the form of securities. They would also get bonds, and being a bonds salesman he could sell these products, and even take commission on the sales of these bonds. Another "synergetic deal" of AC's

Technological convergence

Technological convergence could be defined as the sharing of ideas and information that led to the widespread use and advancement of basic technology, which attributed to the success of multiple areas of industry in the industrial age and late 19th century. Machine production used to be built by industry firms as a specialized product however after some time it was discovered that the machinery used to make one product could be adapted to make parts for an entirely different product that had similar production needs. This namely took place in the machine tool industry where metal parts for firearms needed to be grinded and cut a certain way, and then the machines developed for those could easily cut and grind parts necessary to the function of sewing machines with a little bit of modification, and the same applied to other industries. Without the sharing of this technology, each of these industries would've had to figure out on their own how to produce a specialized machine that could create a more efficient machine tool for their product, however by distributing the ideas in a different sector's technology they were able to learn from one another's advancements to make their own. By technological convergence, Rosenberg means the processes in which various technological methods advance towards serving similar purposes, where "existing techniques are adapted to the production of new products." Important because you can use one technology to improve multiple problems in different industries. In the pursuit of solving a specific problem, other similar processes can gain further effectiveness from this same solution.

20. Legal response to the pollution of the "new manufacturing industries"

The "new manufacturing industries" were associated with the industrial revolution - such as textile and iron mills, steam-powered sawmills, machine and other metal-working shops, mines, smelters and the like, and the steam locomotives, engine houses, and depots of the newly emerging railroad industry. These sectors boomed between 1840 and 1865, sparking the transformation of the US economy from small-scale, handcraft production in which pollution was not a significant problem, to large scale, mechanized, mass production that created serious air, water, and noise pollution problems. Page 101 of the reader. As opposed to the hard ruling of the courts against the "traditional" industries where judges ruled against the industries, the judges were ruling in favor of the "new" industries where they accepted claims that its pollution was not inflicting a material injury on the plaintiff. 102. It was hard for the plaintiffs to come up with evidence that these "new" industries were producing harmful pollution. By the courts refusing to hold these new industries to the rigorous sic utere tuo standard to which they held traditional industries, they removed what could've been a serious impediment to industrial growth and supported the rise of an increasingly important segment of the entrepreneurial class. 107.

36. Chandlerian "new school" approach to explaining the rise of big, vertically and horizontally integrated firms

The Chandlerian approach focuses on the corporate organizational structure and management strategies, focus on internal change in response to market conditions (such as demand, supply, competition). Focuses on response to market drivers, rationality and problem solving. Tries to avoid moral judgment. Which is why big businesses are able to rise. They don't give a hoot about the workers. o Focus on corporate organizational structure and management strategies o Internal change - - not external impacts o Key drivers are external market forces o Supply and demand conditions o Competition o Focus not on greed

27. New York auction system

The New York auction system was part of the reason why business grew so fast in New York City. It eliminated reserve prices since everything had to be sold and made the use of British agent's unnecessary. It was open to all sellers and buyers including local artisans as well. Eliminated: Reserve prices, British agent commissions Open to all comers, Including local artisans and manufacturers

33. Vertical integration

The combination in one company of two or more stages of production normally operated by separate businesses. This was a business strategy typically used by Carnegie and other big business in the attempt of lowering the cost of production. Practice where a single entity controls the entire process of a product, or the supply-side chain, from the raw materials to distribution to cut out the middleman/extra costs o Companies integrate multiple stages of production of a small number of production units. o Controlling the means of production from raw materials to final product o Vertically integrated companies in a supply chain are united through a common owner

38. Interlocking, moving infrastructure of railroads

The infrastructure of railroads was very complex and widespread. There were multiple stations along one line in different cities, and people working at each of these stations for the RR. There were also the train conductors collecting tolls for passengers and business transport, and then employees that maintained the railways and controlled repairs to the lines, all of the customers/sales, the amount of freight, handling competition as well as capital invested that all needed to be handled in a way to control costs and turn profit, with all of the money going in and out of the company. Each of these things had to be managed and watched tightly to make sure they were running efficiently, which is the reason and inspiration for Carnegie's new management strategy. 75 types of expenses 3 classes of accounts 1. Maintenance and general expenses (1-29) 2. Station Expenses (30-40) 3. Movement expense (41-75) (Varies with the amount of business and with number of trains run)

28. NYC's "ready to wear" trade

The introduction of ready made clothes into the retail market. Most poor families had to sew and make their own clothes, where most wealthy families could afford for their clothing to be tailor made specifically for them. Starting when the lathe was perfected in shoe manufacturing, it allowed for shoes to be made easier and faster, creating a standardized sized shoe that was ready made. With the help of the NY auction system, the "ready to wear" trade was developed. Cheap "ready to wear" trade - Competitive with stuff that was being locally produced - Prices go down, particularly in NY

26. Sabbatarianism

The observance of Sabbath in Christianity, typically characterized by devotion of the entire day to rest and worship. Businesses were worried that when they took Sunday off, their competitors would gain an advantage and consequently take their market share. This indirectly encouraged religious revival, so that everyone could be on the same playing field. This also lead to a disagreement amongst the elite.

8. Eminent Domain

The power to take private property by the state, government, private person, or corporation with just compensation to use the land for public use or common welfare. This was enacted in claiming land used in the construction of the Pennsylvania Mainline Canal. The power of the federal or state government to take private property for a public purpose, even if the property owner objects • From Lecture 4: Govt's Role in the IR (slide 18) o State and local government gave the canal and railroad companies the right to take people's land for fair market value to do public works (build schools, roads, etc...) o The idea of giving private corporations the right to take private land was problematic when you think of government's traditional role • Broader Significance o Granting eminent domain, land grants, and other subsidies to canal and railroad companies was the state and local government's way of supporting the growth of the Industrial Revolution. Big Business being given great powers and privileges that elevated them in society and introduced a new phenomenon where the economy and market became more important to the government than the rights of citizens.

16. Equitable theory of contract

The principle that courts would not enforce contracts where the terms were obviously not fair. This was linked to the Title Theory, which claimed that items had an intrinsic value and contracts need to reflect on this value. The equitable theory offered no certainty and was highly subjective.

15. Role of the courts and common law in industrial revolution (need more detail)

The role of the courts was mainly to provide solutions to problems and legitimize and structure the market and business activity. The courts in the industrial revolution often depended on the "rules of the game" which relied heavily on traditional English common law doctrine and the importance of precedence. Don't know when it changed, but the courts started to rule differently when new industry problems came up that hadn't been seen before such as pollution cases. Possibly also influenced the will theory, as another example of the change in industrial law. Kept the flow going. Rarely led in creating social and or political change. Allowed big businesses to rise. Governments role: subsidization, legitimization, rule setting (regulation) Local Government : were also investing in infrastructure o Only 1 in 25 make a profit (still benefits because they got access to markets) (Huge injections of capital into the market, creates business demand for materials, parts, labor) Also state and local government were providing bounties and tax exemptions, loans, financed by taxes bonds and fees Role of the courts: Providing solutions to problems, In structuring and legitimizing markets and business activity All of these sectors indirectly subsidizing industrial growth

17. Will theory of contract

The will theory was a combination of will and embodied caveat emptor or "Let the buyer beware". This theory had the signees accept the risk that conditions could change. This was in response to the market issue of imperfect information and also demonstrated a cultural shift towards the acceptance of more risk. Change shown in cases Dyett v Pendleton (1826 equitable theory) and Cleves v Willoughby (1846 will theory). the dominant legal theory: the essence of contract is the expression of initial will that does in to conception of the contract; if two parities agree, it is an expression of will Caveat Emptor (Buyer beware) - Judges in effect are showing that they want people to operate in a free market

12. Risk culture during industrial revolution

There was tension between a desire and pressure for growth and fear and resistance to change. A lot of fear and anxiety. Shifts were shown in the change from equitable theory to will theory, ruling on Charles River Bridge Case...Also the opinion of risk changed over time as people saw the benefits of it (i.e. making a lot of money on investments, etc)

14. Market failure (during industrial revolution)

There were a lot of market failures and imperfections during the industrial revolution. With the rise of demand and a pressure for efficiency, monopolies began to pop up and squeeze out the competition. There was also imperfect information and buyers/customers did not always not what they were getting and where it came from. In addition, the market featured unaccounted externalities and human irrationality. Finally, there was also a problem of distribution in regards to income, housing, etc. Financial Markets during the IR Poorly Developed - Lots of small startups (shops, small mills) - Fewer big startups (integrated textile mills, large iron mills - Even fewer very big startups (transportation) Local Source of Capital - Families, friends - Investor class - US Europe

Technological Disequilibrium

This is when some parts of a machine work better or worse than others and have to be altered to achieve greater efficiency, which then can sometimes lead to another disequilibrium in the machine, in which the cycle starts all over again, ending up with a completely new and modified machine. Technological disequilibrium encouraged a constant modification of the machine to make it more efficient which sped up the process of production. The driver for change, upon improving one process, another bottleneck comes into the foreground (Rosenburg is arguing that technological innovation is natural). Lecture: Bottleneck concept - When you improve some aspects there's a pile up of up of problems/issues elsewhere - Causes more innovation b/c you have no choice but to fix those other aspects and have the other improvement go

The Crystal Palace Exhibition

This was held in London in 1851, sort of an early World's Fair. America presented itself as a tech prowess by bringing its newly manufactured goods unlike the Europeans who focused more on the Arts. The exhibition held competitions, many of which America won: Alfred Hobbes, a locksmith, picked a lock in 19 hours which had previously never been picked, America's yacht won the yacht race, the McCormick reaper was faster than any others for crops, and Colt's repeating pistols were one of the first automatic repeating rifles that impressed everyone. America had obviously pulled ahead of Europe in manufacturing. This inspired a period of celebration and glorification of the machine in American culture. It was the first in a series of World Fair exhibitions of culture and industry that became popular in the 19th-century. Dawning realization - Americans realized they had pulled ahead of the British Competitions

James Stubblefield (first half of 1800s)

Was the superintendent at Harper's Ferry [Government] Armory, produced less guns at higher prices than Springfield Armory. Why? After the war of 1812 he was resistant to tech change, impact towards attitude on innovation, his personality made it so he did not want to innovate, did not care as much about business and he did about the culture of the armory itself. Harper's Ferry produced more kinds of armaments and also had a labor shortage, but James Stubblefield was also resistant to technological change. He held a traditional close relationship to his workers and wanted them to be able to do as they pleased at the workplace, and keep them happy with leisure time. He didn't force them to change to the interchangeable parts system which would've allowed for cheaper production, but would've taken the artistry and ownership out of the production process. (referenced in Rosenberg reading about Technological Convergence pgs 31-45)