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Primary Sources - Workshop in American History Cans,Coal and Corporationshomesitemap
Introduction -Link Before You Watch - link Lectures and Activities Classroom and Applications - Link

Workshop 5:  Lectures & Activities

Lecture Transcript One:
Cans, Coal, and Corporations

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So by 1893, the railroad has come to be a major technological impact on the United States. It provides for something extremely interesting and extremely significant to the nationalization of the American economy. The railroad is capable, and it's most effective at shipping high-bulk but low-yield, low-profit items at vast distances. This facilitates something the economists call comparative advantage. It means that it frees up certain areas of the country to take advantage of its particular set of resources, whatever it has, and to be able to specialize, and by specializing, increase productivity to such an extent that the economy becomes interdependent.

1893 is also fortuitous because it's the final completion of the last transcontinental railroad, the Great Northern. The Great Northern was the only railroad, the only transcontinental railroad, to be constructed with relatively few subsidies. James J. Hill constructed it with the idea in mind that it would actually have to earn a profit by its operations, not by the large land grants that railroads, other transcontinental railroads, had received. But in order to do this, Hill realized very early on that he needed customers, and one of the people that he contacts is a fellow by the name of Frederick Weyerhaeuser, as in Weyerhaeuser Paper. And Weyerhaeuser is given vast tracks of land, or is told ahead of time where he could buy land, so that he will be one of Hill's customers.

The transcontinental route that Hill chose also stretched across the northern Great Plains, areas that were ripe for exploitation by the new technologies in plowing and harvesting, which meant that wheat could be grown. And so here's a classic advantage in which a comparative advantage works. Weyerhaeuser and the various wheat farmers would be able to ship their grain to market, earn significant incomes, and then turn around and get on the return cars all the goods that they needed to survive—milk, if they needed it, from Borden, but more especially things like flour and other manufactured goods. In Bell County, Texas, for example, before the railroad arrives, Bell County grows pretty much everything that it needs. It grows a little cotton so that it can earn some money. But on the whole, the county itself is self-subsistent. The railroad moves in, and everybody starts to grow cotton, because Charley Pillsbury could sell flour of better quality in Bell County, Texas, than wheat farmers in Bell County could produce.

So we have with the railroad cheap transportation that helps to integrate a national economy. We also have an industry that provides a basic customer for coal and steel, which creates ripple effects throughout the metal industries, which help to encourage the development of techniques for making more tin cans. So in that sense we've come back to Borden's invention.

The railroad also does something very interesting, and it's something that parallels the rise of Chicago as an important city in 1893. A young railroad clerk, Andrew Carnegie, a telegrapher on the railroad, got an idea, and it was an idea confirmed by looking out at the Chicago stockyards. The same way that railroads had to adjust when trains were leaving and when they were arriving, and when goods and services had to be brought to their transshipment points, and the way in which animals moved through the stockyards of Chicago, struck Carnegie as an interesting way to raise new economies of scale in terms of his production. Andrew Carnegie gets the idea of the vertical trust, of an industry that takes all the processes of producing a good, starting from the mining of the ore, to its actual production, and encouraging and finding ways of saving money. Think about the steel industry that Carnegie gets involved in. In the old steel industry, there would be the miner, who would then ship the ore to the iron foundry, which would then turn the ore into pig iron, which would then be shipped out to another metal worker. Carnegie simply integrates all of these processes.

So what do we have with the railroad? We have the railroad being the prototype of the modern American corporation. The very organizational skills that it provides help to increase productivity, not only in the railroad but in other industries, and in the process facilitates the rise of industries like Borden's, which now are situated to feed the workers on the railroad, in the cities, to create an interdependent national economy, all of which can be celebrated by Chicago. The very same conditions which give rise to the railroad, which provide their economies, also make Chicago the gateway city. It becomes the access route from the West and into the East, and provides it with enormous economic advantages that are celebrated in the Chicago World's Fair.

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