Pacific Railway Act creates a transcontinental railroad.
Union Pacific & Central Pacific build it.
Union Pacific – Run by Grenville Dodge
Began building westward from Omaha Nebraska, 1865
Workers: (10,000) civil war veterans, immigrants, ex-
Daily Life: rough, blizzards, desert heat, problems with
Central Pacific – Started by Theodore Dehone Judah in
Workers: were in a shortage in CA, so they hired
10,000 from China.
Supplies: Shipped (boats) from the east.
Railroad Expansion Spurs Industrial Growth
steel, coal, timber, services
Opens up markets in new towns for new
products and services – cattle & other
Railroad Consolidation – create single rail system
to link all disconnected rails to one
Ex: Cornelius Vanderbilt - centralized New York
rail lines and extended it to Buffalo then
National Rail System -
Safety – setting of 4 times zones across
the country to avoid collisions on the
tracks from scheduling errors.
Speed up long distance transportation
Average price per mile for a ton of freight went from
two cents in 1860 to ¾ a cent in 1900.
Technology: airbrakes allowed for
longer/heavier trains = more efficient.
Unites Americans in different regions and
promotes mixing of cultures.
Land Grants - large tracts of land given by the
federal government to the railroad companies to
Railroads would then sell the land to settlers,
real estate companies and business to raise
money to continue building.
Ex: 1850’s & 1860’s the Gov’t awarded 120 million
acres of land.
Robber Barons – Railroad entrepreneurs amassed
great wealth in this time and were often accused
of using unethical means when making their
Robber Barons vs. Captains of Industry
Credit Mobilier: Construction company
created by Union Pacific. Exploited
The Great Northern: The Great Northern
was the first transcontinental built without
public money and just a few land grants. In
1893, when the government-subsidized
railroads went bankrupt, Hill’s line was able
both to cut rates and turn a substantial
Ch. 9, Section 3
The Rise of Big Business
Major change in economic structure:
small businesses and farming
=> huge, complex corporations
The Role of Corporations
Corporation – organization owned by many people
but treated by law as though it were a single person.
Can: own property make contracts
pay taxes sue and be sued.
Stockholders – owners of the corporation.
Stock – shares of the ownership in the corporation
that can be sold while spreading the financial risks
involved in corporate ownership.
Economies of Scale
Corporations produce goods more cheaply because
they produce quickly using new manufacturing
• Fixed Costs – business has to pay these whether
or not it is operating. Ex: rent, loans, taxes.
• Operating Costs – occur when running a company.
Ex: wages, shipping charges, raw materials.
Which companies benefit based on cost:
small vs. large?
Small corporations have difficult time competing with larger
Consolidation of Industry
With the large number of companies competing,
prices were falling.
Companies form pools agreeing to maintain prices at a
Were not supported by courts and the U.S. legislature.
Often broke up easily because of infighting and lack of
By 1870’s only a select few large highly efficient corps.
Vertical and Horizontal Integration
Vertical Integration - company which owns all of
the different businesses on which it depends for
Horizontal Integration - company which
combines many firms engaged in the same type
of business into one large corporation.
Result of these effective strategies for corporate
growth: BIG Business!
Ex: Standard Oil controlled approximately 90%
of the oil refining industry by 1880.
See graph on page 321
Monopoly – when a single company has control of an entire
Feared by people – who controls price?
Legislation in some states made it illegal for one
company to own stock in another without permission
from state legislature.
Trust – business merger allowing one person to manage
another person’s property as a “trustee”.
Way for business to get around the laws against 1
company owning another.
Holding Company – Does not produce anything itself, but
just owns the stock of companies that do produce goods
and controls all of the companies it owns.
Basically merging all into one (huge giant super rich all