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American business and industry grew rapidly after the end of the Civil War. Industrialization changed the way people lived and worked.

The United States Industrializes

 Why was the United States successful at industrialization?

Although the Industrial Revolution reached the United States in the early 1800s, most Americans still lived on farms when the Civil War began in 1861. After the war, industry rapidly expanded, and millions of Americans left their farms to work in mines and factories. By the early 1900s, the United States was the world’s leading industrial nation. Its gross national product (GNP)—the total value of all goods and services that a country produces during a year—was roughly three times greater than it had been in the late 1860s.

Natural Resources

An abundance of raw materials was one reason for the nation’s industrial success. The United States had vast natural resources, including timber, coal, iron, and copper. This meant that American companies could obtain resources cheaply and did not have to import them from other countries. Many of these resources were located in the American West. The settlement of the West helped accelerate industrialization, as did the transcontinental railroad. Railroads took settlers and miners to the West and carried resources back to the East.

At the same time, people began using a new resource: petroleum. Even before the automotive age, petroleum was in high demand because it could be turned into kerosene. The American oil industry was built on the demand for kerosene, a fuel used in lanterns and stoves. The industry began in western Pennsylvania, where residents had long noticed oil bubbling to the surface of area springs and streams. In 1859 Edwin Drake drilled the first oil well near Titusville, Pennsylvania, and by 1900, oil fields had been drilled from Pennsylvania to Texas. As oil production rose, it fueled economic expansion.

A Large Workforce

The human resources available to American industry were as important as natural resources in enabling the nation to industrialize rapidly. Between 1860 and 1910, the population of the United States nearly tripled. This population growth provided industry with a large workforce and created greater demand for consumer goods.

Population growth stemmed from two sources—large families and a flood of immigrants. Because of better living conditions, more children survived and grew to adulthood. At the same time, social and economic conditions in parts of Europe and China convinced many people to immigrate to the United States in search of a better life. Between 1870 and 1910, more than 17 million immigrants arrived in the United States.

New Inventions

What invention from this period has had the most impact on your daily life?

New inventions and technology were also important to industrialization. New technology increased the nation’s productivity and improved transportation and communication. New inventions also resulted in new industries, which in turn produced more wealth and jobs.

Electric Power

Perhaps the leading pioneer in new technology was Thomas Alva Edison. A great innovator, Edison and his company worked tirelessly to invent new products and to improve products invented by others. He first achieved international fame in 1877 with the invention of the phonograph. Two years later he perfected the electric generator and the light bulb. His laboratory then went on to invent or improve several other devices, including the battery and the motion picture. In 1882, Lewis Latimer, who worked for Edison, invented a process for making cheap long-lasting carbon filaments for light bulbs. With this invention, electric lighting became increasingly affordable. In 1889 several Edison companies merged to form the Edison General Electric Company (today known as GE).

The revolution in electricity took another step forward when engineer George Westinghouse developed an alternating current (AC) system to distribute electricity over long distances using transformers and generators. With this innovation, electricity began to improve living standards rapidly. City streets became safer as streetlights were installed. Electric trolley cars improved commute times to work, and new electric devices in the home made domestic chores easier and less time consuming. AC current and transformers are still used today to distribute electricity.

Innovation using electricity also launched a revolution in communication. In 1874 Alexander Graham Bell began experimenting with ways to transmit sound via an electric current of varying intensity. In 1876 he succeeded. His device, which became known as the telephone, transformed communication and helped improve the nation’s standard of living. Family members could quickly get in touch with each other; businesses could place orders much more quickly; and news of events that might shape personal and business choices could be obtained in time for better decisions to be made. In 1877 Bell founded the Bell Telephone Company, which eventually became the American Telephone and Telegraph Company (AT&T).

Innovation Improves the Standard of Living

In ways big and small, technology improved the standard of living. Shortly after the Civil War, Thaddeus Lowe invented an ice-making machine—enabling people to obtain low-cost ice year round for ice boxes that kept food fresh. A few years later, in the early 1870s, Gustavus Swift hired an engineer to develop a refrigerated railroad car. Swift shipped the first refrigerated load of fresh meat in 1877. The widespread use of refrigerated shipping containers enabled fresh food, especially meat, to be shipped long distances. As a result, the price of food began to drop and the quality of food people could obtain year round rose dramatically.

The pace of innovation continued rapidly throughout the late 1800s. In 1873, Christopher Scholes invented the typewriter. In 1886, Josephine Cochrane developed the automatic dishwasher. In 1888 George Eastman patented the first handheld camera—the Kodak camera. In 1893, Frank and Charles Duryea built the first gasoline-powered carriage. Power-driven sewing machines and cloth cutters rapidly moved the clothing business from small tailor shops to large factories. Similar changes took place in shoemaking. Large factories began using new processes and inventions to mass-produce shoes efficiently and inexpensively and could pass those savings on to their customers in the form of lower prices. By the early 1900s, tailors and cobblers had nearly disappeared. Prices of many other products also dropped as the United States industrialized.

SKILLS PRACTICE
Use a concept map to help you understand new vocabulary in this lesson. Write the word "laissez-faire" in the center circle, and write details and ideas about the word in the surrounding circles. Do the same with the term "entrepreneur."

Free Enterprise

How did laissez-faire economics promote industrialization?

Another important reason the United States industrialized rapidly was the nation’s free enterprise system. In the late 1800s, the profit motive attracted many people of high ability and ambition into business. Entrepreneurs—people who risk their capital in organizing and running a business—believed they could make money in manufacturing and transportation. Many of the new inventions that transformed society would not have been possible without entrepreneurs willing to risk their money to help develop and implement their inventions. Many entrepreneurs from New England, who had accumulated money by investing in trade, fishing, and textile mills, invested their money in factories and railroads. An equally important source of private capital was Europe, especially Great Britain. Foreign investors saw great opportunities for profit in the United States.

The Benefits of Laissez-Faire

Part of what attracted entrepreneurs to invest in American businesses was society’s and government’s support in principle for the idea of laissez-faire (leh•say•FAR), a French phrase meaning “let people do as they choose.” Supporters of laissez-faire believe that the government should not interfere in the economy other than to protect private property rights and maintain peace. They argue that if the government regulates the economy, it increases costs and eventually hurts society more than it helps.

Laissez-faire relies on supply and demand rather than the government to regulate wages and prices. Supporters believe a free market with competing companies leads to greater efficiency and creates more wealth for everyone. Laissez-faire advocates also support low taxes and limited government debt to ensure that private individuals, not the government, will make most of the decisions about how the nation’s wealth is spent.

The Government’s Relationship to Business

In many ways, the United States practiced laissez-faire economics in the late 1800s. State and federal governments kept taxes and spending low. They did not impose costly regulations on industry or try to control wages and prices. In the late 1800s, the United States was also one of the largest free trade areas in the world. Unlike Europe, which was divided into dozens of countries, each with tariffs, the entire United States was open to trade. The Constitution bans states from imposing tariffs, and there were few regulations on commerce or immigration. Supporters of laissez-faire say these factors played a major role in the country’s rapid economic growth.

In other ways, however, the government went beyond laissez-faire and introduced policies intended to promote business. Since the early 1800s, leaders in the North and the South had different ideas about the proper role of the government in the economy. Northern leaders wanted high tariffs to protect manufacturers from foreign competition and supported federal subsidies for companies building roads, canals, and railroads. Southern leaders opposed subsidies and favored low tariffs to promote trade and to keep the cost of imported goods low.

The Civil War ended the debate. After the southern states seceded, the Republican-controlled Congress passed the Morrill Tariff greatly increasing tariff rates. By 1865, tariffs had nearly tripled. Congress also gave vast tracts of western land and nearly $65 million in loans to western railroads and sold public lands with mineral resources for much less than their market value. Historians still debate whether these policies helped the economy grow.

High tariffs, however, contradicted laissez-faire ideas. When the nation raised tariffs on foreign goods, other countries raised their tariffs on American goods. This hurt American companies trying to sell goods abroad, particularly farmers who sold their products overseas. Despite these problems, many business leaders and members of Congress believed tariffs were necessary. Few believed that new American industries could compete with established European factories without tariffs to protect them. Later, in the early 1900s, after American companies had become large and efficient, business leaders began to push for free trade. They believed they could now compete internationally and win sales in foreign markets.

Analyzing PRIMARY SOURCES
The Birth of the Telephone
"He then sketched for me an instrument that he thought would [transmit speech], and we discussed the possibility of constructing one. I did not make it; it was altogether too costly and the chances of its working too uncertain, to impress his financial backers . . .who were insisting that the wisest thing for Bell to do was to perfect the harmonic telegraph; then he would have money and leisure enough to build air castles like the telephone."
—Thomas A. Watson, from "Recollections of the Birth and Babyhood of the Telephone," 1913

Reviewing Vocabulary

TEKS: 3B

 

Using Your Notes

TEKS: 3B, 15B, 27A, 28A

 

Answering the Guiding Questions

TEKS: 3B, 15B, 27A, 28A

 TEKS: 27A, 28A

TEKS: 15B

 

Writing About History

TEKS: 3B, 15B, 27A, 28A