• The economic progress of the North America during the eighteenth and nineteenth centuries was absolutely unparalleled in history.
    • There was hardly any point in those two hundred years when it did not enjoy the highest rate of growth in the world.
    • For most of the first half of the period this growth was based on the exploitation of natural resources, agricultural and mineral, but from the early nineteenth century, industrialisation also became increasingly important.
  • By 1850 the U.S. was firmly established in a strong process of industrialisation and by 1900 it was one of the world’s top three economic powers.
  • In the twentieth century its power continued to grow making it world’s most advanced and largest economy.
  • The profile of industrialisation in America is quite similar to that of western Europe, but for often very different reasons. Thus there was
    • slow industrial development during the eighteenth century;
    • a marked speeding up during the period of the European French and Napoleonic wars;
    • post war dislocation and de-industrialisation with the return of peace and renewed British competition;
    • recovery and sustained growth during the second quarter of the century.

The Eighteenth Century

  • From the 16th to the late eighteenth century, the north American continent was divided between a number of European empires – mainly the Spanish, French and Dutch.
  • During the colonial period every aspect of American economic development was shaped by the “British Colonial System” which was gradually evolved in the context of mercantilist economic philosophies during the seventeenth century.
    • In essence the policy assumed that colonies had only one reason for existence – to serve the “mother country”.
    • Thus the American colonies were encouraged to develop as food and raw material producers (most notably tobacco, rice, sugar, timber products) but discouraged from developing all but a narrow range of manufactures.
  • Although these constrictions generated rising frustrations among the colonists, who with increasing wealth and generational distance from England wanted more political freedom, they also brought many economic benefits, e.g.
    • privileged access to the rapidly expanding British market;
    • access to the trading opportunities of the growing British Empire; and,
    • perhaps most important of all, development in the context of a set of British cultural, social, and political institutions which were more conducive to private enterprise and capitalist expansion than any other system in the world at that time.
  • With successful revolution, the British were thrown out, the constrictions of the old colonial system removed, and American businessmen unleashed for independent development.
    • However, at first things did not go well. The newly independent nation was suddenly awakened to the advantages that they previously had enjoyed. Without the protective defensive hand of the British, their very continued independence could be cast into doubt.
    • At that point, however, things fortuitously took a sudden change for the better with the outbreak of general warfare in Europe.

The French and Napoleonic Wars 1794 to 1815

  • War in Europe meant sea warfare, as the British, and the French and their allies, fought for control of the sea-lanes to their colonies and other long-distance markets.
  • The British won and cut off the other European powers from their empires.
  • The only way that trade and other links could be maintained was by means of neutral shipping. The Americans were more than pleased to accept this role, and American ports, particularly in New England, experienced a return to unparalleled commercial prosperity.
  • Markets for American primary products, particularly the large tobacco crop, also picked up.
  • All went well until economic warfare in Europe replaced major military activities after 1806.
    • First Napoleon and then Britain attempted to inflict injury with their respective Continental System and Orders in Council.
    • While these had arguably beneficial effects on the process of “continental” industrialisation, they made life harder and harder for the neutrals that tried to sustain Europe’s external trade.
    • America retaliated in 1807 with her own Embargo act.
    • Relations with Britain gradually deteriorated until a second outbreak of war in 1812.
  • While economic and military warfare had disastrous consequences for American primary producers and mercantile and shipping interests, it created the first real opportunity for the development of large-scale domestic industry.
    • As in continental Europe, the protective conditions fostered an explosion of industrial activity led by textiles and metal manufacturing.

The Post-War Period 1815 to the Early 1820s

  • In the immediate post-war period, a British import invasion, underpinned by their superior technology and with deliberate prices cut to wipe out future competitors, dealt a near lethal blow to the momentum of industrialisation.
    • Many manufacturing companies were forced to close.
    • Entrepreneurs turned away from industry and back towards primary production and commercial activity.
  • The population was increasing rapidly; the frontier had spilled across the Appellation mountain range and was racing across the mid-west; the nation was increasingly able to look inwards, at the exploitation of its own domestic potential, rather than outwards to the international economy that had dominated its earlier years.
  • But there was one last great international opportunity to be taken – namely the supply of raw cotton to the insatiable appetite of the British and developing European textile industries.
  • Throughout the 1810s, ‘20s, ‘30s, ‘40s, rapid economic growth in the nation as a whole was driven by the expansion of the cotton crop and the southern “Cotton Kingdom”.
  • The southern plantations’ need for additional food supplies encouraged the expansion of commercial agriculture in the West, and the increasing wealth of both regions created a demand for manufactured goods that the Northeast could begin to supply alongside the British.

Revived Industrialisation 1820s – 1850s

  • Just as war had provided the protective market conditions to start a rush into manufacturing between 1812 and 1814, the introduction of a protective tariff in 1816 did much first to arrest the decline, then to initiate recovery, and finally to sponsor sustained industrial progress.
    • British manufacturers gradually abandoned the market for basic, low quality, utility goods – where profit margins were small – to American manufacturers and concentrated instead on the upper end of the market.
  • Together with various other stimuli, like resource abundance and high labour costs, this market structure was to initiate experiments with entirely new forms of mass production technology which were to lead to a new and characteristically American form of manufacture.
  • Just as important to fostering growth was the constant westward shift in the functional centre of the U.S. economy and the progressive improvement of domestic transport facilities.
  • By 1860, the cotton textile industry, based mainly in Northeast, had been almost entirely mechanised and was in no way inferior in its technology to that commonly used in England.
  • In the iron industry, latest new British coal fuelled techniques in smelting and refining was adopted apart from use of ready availability of traditional wood fuel.
  • America also began to produce its own new technologies.
    • The sewing machine, for example, developed by Howe, Singer and Wilson from the late 1840s, greatly facilitated the work of women as well as revolutionising the shoe and garment trades in the production of utility products for working men.
  • During this long period of growth and change there were inevitably times of doubt and crisis, distortions brought by civil war and internal conflict, but America was the “land of the free”, where the entrepreneurial could flourish and the market was left to promote unrestrained social Darwinism. There’s was a roller-coaster of success.

Early Innovations In USA

  • Thomas Somers and the Cabot Brothers founded the Beverly Cotton Manufactory in 1787, the first cotton mill in America, the largest cotton mill of its era, and a significant milestone in the research and development of cotton mills in the future. In 1793, Samuel Slater founded the Slater Mill in Rhode Island and went on to own 13 textile mills.
  • Daniel Day established a wool carding mill in Massachusetts in 1809.
  • Merchant Francis Cabot Lowell from Massachusetts memorised the design of textile machines on his tour of British factories in 1810.
  • The industrialization of the watch industry started 1854 in Waltham, Massachusetts, at the Waltham Watch Company, with the development of machine tools, gauges and assembling methods adapted to the micro precision required for watches.

Industrialization and reform in USA– Second Industrial Revolution Era (1870-1916):

  • The industrial growth that began in the United States in the early 1800’s continued steadily up to and through the American Civil War.
    • Still, by the end of the war, the typical American industry was small.
    • Hand labour remained widespread, limiting the production capacity of industry.
    • Most businesses lacked the capital needed for business expansion.
  • After the Civil War, however, American industry changed dramatically.
    • Machines replaced hand labour as the main means of manufacturing, increasing the production capacity of industry tremendously.
    • A new nationwide network of railways distributed goods far and wide.
    • Inventors developed new products the public wanted, and businesses made the products in large quantities.
    • Investors and bankers supplied the huge amounts of money that business leaders needed to expand their operations.
  • The industrial growth centred chiefly on the North. The war-torn South lagged behind the rest of the country economically.
  • America’s role in foreign affairs also changed during the late 1800’s and early 1900’s. The country built up its military strength and became a world power.

The rise of big business

  • The value of goods produced by American industry increased almost tenfold between 1870 and 1916. Many interrelated developments contributed to this growth.
  • Improved production methods:
    • The use of machines in manufacturing spread throughout American industry after the Civil War.
    • With machines, workers could produce goods many times faster than they could by hand.
    • The new large manufacturing firms hired hundreds, or even thousands, of workers.
    • Each worker was assigned a specific job in the production process. This system of organizing labourers, called the division of labour, also sped up production.
  • Development of new products:
    • Inventors created, and business leaders produced and sold, a variety of new products. The products included:
      • typewriter (1867),
      • barbed wire (1874),
      • telephone (1876),
      • phonograph (early form of record player) (1877),
      • electric light (1879),
      • petrol engine car (1885).
  • Natural resources:
    • America’s rich and varied natural resources played a key role in the rise of big business.
    • The nation’s abundant water supply helped power the industrial machines.
    • Forests provided timber for construction and wooden products.
    • Miners took large quantities of coal and iron ore from the ground.
  • A growing population:
    • More than 25 million immigrants entered the United States between 1870 and 1916.
    • As American wages were much higher than those in Europe, especially for skilled workers, the period saw an influx of millions of European immigrants.
    • The rapid expansion of industrialisation led to real wage growth of 60% between 1860 and 1890, spread over ever increasing labor force.
    • Immigration plus natural growth caused the U.S. population to more than double during the same period, rising from about 40 million to about 100 million.
  • Distribution and communication:
    • In the late 1800’s, the American railway system became a nationwide transportation network.
    • The total distance of all railway lines in operation in the United States soared from about 14,500 kilometres in 1850 to almost 320,000 kilometres in 1900.
    • A high point in railway development came in 1869, when workers laid tracks that joined the Central Pacific and Union Pacific railways near Ogden, Utah.
      • This event marked the completion of the world’s first transcontinental railway system.
      • Mining companies used them to ship raw materials to factories over long distances quickly.
    • Manufacturers distributed their finished products by rail to points throughout the country.
    • In 1876, Alexander Graham Bell invented the telephone. These developments, along with the telegraph, provided the quick communication that is vital to the smooth operation of big business.
  • Investment and banking:
    • The business boom triggered a sharp increase in investments in the stocks and bonds of corporations.
    • As businesses prospered, people eager to share in the profits invested heavily. Their investments provided capital that companies needed to expand their operations.
    • New banks sprang up throughout the country. Banks helped finance the nation’s economic growth by making loans to businesses.

Life during the industrial era

  • The industrial boom had major effects on the lives of the American people.
  • The availability of jobs in industries drew people from farms to cities. In 1870, about 25% of the American people lived in urban areas. By 1916, the figure had reached almost 50%.
  • The lives of people in the cities contrasted sharply.
    • A small percentage of them had enormous wealth and enjoyed lives of luxury.
    • Below them economically, the larger middle class lived comfortably.
    • But at the bottom, a huge mass of city people lived in extreme poverty.
  • The wealthy:
    • The business boom opened up many opportunities for financial gain. The economic activity it generated enabled many people to establish successful businesses, expand existing ones, and profit from investments.
  • The middle class:
    • Other city people prospered enough to live lives of comfort, if not wealth.
    • They included owners of small businesses, and such workers as factory and office managers. They became part of America’s growing middle class.
  • The underprivileged:
    • The labourers who toiled in factories, mills, and mines did not share in the benefits of the economic growth. They usually worked at least 60 hours a week and had no fringe benefits.
    • As the nation’s population grew, so did the competition for jobs.
      • The oversupply of workers led to high unemployment.
    • The everyday life of the city poor was dismal and drab.
      • The poor lived crowded together in slums.
      • Much of their housing consisted of cheap apartment buildings called tenements. The crowded slum neighborhoods bred crime.
      • Overwork, poor sanitation, and inadequate diet left slum dwellers vulnerable to disease.
      • Many poor children received little or no education, because they had to work to contribute to their families’ welfare.
  • The farmers:
    • American farmers also suffered hardships after the Civil War.
    • Advances in agricultural equipment and techniques had enabled most of the farmers to increase their production. However, middlemen between the farmers and the consumers took a large share of the money earned from farm products. The middlemen included owners of railways, mills, and gins.
  • Government:
    • Political leaders strongly favoured business interests.
    • But the government of the era was marked by widespread corruption. Corruption also flourished in state and local government.
  • The Gilded Age:
    • Mark Twain called the era of industrialization “The Gilded Age” i.e. era of serious social problems masked by a thin gold gilding. For e.g. the era was of rapid industrialisation, increasing wages etc. but also with abject poverty and inequality.
    • Most Americans, however, had a far different idea of culture.
      • They enjoyed fairs that exhibited industrial machines, the latest inventions, and other items related to America’s material progress.
      • The American people were eager spectators at circuses, vaudeville shows, and sporting events.Baseball became so popular after 1900 that it was called the national pastime.
      • Also after 1900, a new kind of entertainment, the cinema, began attracting public interest.
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