The Industrial Revolution began in Great Britain for a
variety of reasons including, capital for
investment, natural resources, a large labor
force, and technological innovations.
This revolution quickly spread to the United States
which had many of the same advantages. The
Industrial Revolution in the U.S. was primarily centered
in the northern states, as the southern states
continued to rely on agriculture, which was extremely
profitable using slave labor under the plantation
Factories and mills spread quickly throughout New
England prior to the Civil War due to good supplies of
such as iron and coal, and the ease of
transporting finished goods along the many navigable
rivers. This in turn lead to the building of more
railroads and canals to handle the increased
traffic. The South relied upon the North to
purchase its agricultural products, and as a market for
finished goods. This made the North economically
stronger than the South.
The Civil War increased industrialization as both North
and South required weapons. The North was in a
better position to expand as they already had
industrialized to a certain extent. Factories for
guns, ammo, clothing, and various
other supplies quickly grew. Also,
mechanization in agriculture became a primary
concern as many farmers were away fighting the war.
Post Civil War
After the war, the transcontinental railroad
opened commerce across the country, and further
stimulated economic growth. The North continued to
industrialize at a rapid pace, while the South switched
to sharecrop farming after the end of slavery.
Sharecropping is where a farmer would lease out parcels
of land for others to work in exchange for a portion of
the crops. This left many sharecroppers poor as
the larger landowners took nearly everything they
As the Industrial Revolution grew, new
business practices developed. Before, most
business was owned by a sole proprietor (single owner),
or a small partnership. But, ways of doing business
changed dramatically during industrialization.
New Ways of
||A business with
many share holders. Corporations are formed
to raise capital for expansion. Share
holders receive dividends when the company makes a
profit, and can only lose what they put in.
||A monopoly is
when a company or corporation controls an entire
market. This allows them to raise prices to
any level. Government regulation prevents
all but a few monopolies such as utility
||Companies in a
single market making an agreement on prices and
the division of business. Railroad companies
practiced this until it was outlawed by the
the same market or related markets would form a
trust that put control of business under a single
group of trustees. Share holders still received
dividends, but had no say in the business.
Trusts were later outlawed.
company would buy enough stock in different
companies to control them. This was done to
get around the outlawing of trusts. Eventually,
holding companies were outlawed also.
that owns many different unrelated businesses.
Conglomerates are formed by mergers, where one
company would take over another. These are
still in practice today.
This was an economic philosophy begun by Adam Smith in
his book, Wealth of Nations, that stated that
business and the economy would run best with no
interference from the government. This economic
system dominated most of the Industrial Revolution, and
resulted in the government taking a more active role in
U.S. Business and the economy.
In the late 1800's the
government decided to take a more active role in
business and the economy. The U.S. slowly moved
away from the policy of laissez-faire, and more toward a
mixed economy where the free market and the government
shared power over the economy.
Munn v. Illinois
decision stating that states had the ability to
regulate private property if it affected public
|Declared that it
was unconstitutional for states to regulate
interstate commerce. Showed need for Federal
regulation of interstate commerce.
Interstate Commerce Commission
Congress passed the Interstate Commerce Act that
setup the ICC. This act states the federal
government has the ability to regulate all aspects
of interstate commerce.
Congress passed this act which prohibited
monopolies or any business that prevented fair
Tariffs: The U.S. pursued an aggressive tariff
policy as a way of promoting domestic business. A
tariff in 1890 that protected American sugar growers
lead to Americans in Hawaii leading a revolution against
the native government and subsequent annexation by the
U.S.. The Wilson-Gorman Tariff of 1894 raised the
tax on Cuban sugar to 40%. This led Cuba to revolt
against Spain because of the economic problems they
The Progressive Era
The Progressive Era was a time of reform across the
country. Economic reform took many different forms
inlcuding a Constitutional Amendment allowing Congress to
impose an income tax, further regulation of business,
and more government involvement in the direction of the
Ending of many trusts and a
strengthening of the Interstate Commerce
Commission with passage of the Hepburn
1906. This allowed the ICC to regulate
railroads, pipelines, bridges and
William Howard Taft:
The Mann-Elkins Act was
passed (1910) which allowed the ICC to regulate
telephone and telegraph business.
The 16th Amendment passed
allowing Congress to levy an income
The Underwood Tariff Act
was passed (1913) which lowered
tariffs and created a graduated
The Federal Reserve Board
was established in 1913 to give the
government a national banking
system. The country is divided into 12
districts, each with a Federal Reserve Bank.
This gave the government the ability to control
the monetary supply and issue new currency which
was more stable.
The Federal Trade Commission Act was
passed (1914) which was meant to prevent unfair
The Clayton Antitrust Act of 1914
passed allowing the government to regulate
business practices that tried to prevent