INDUSTRIALIZATION IN THE USA (1870-1930)

I. INDUSTRIAL GROWTH AND CHANGE

Railways

application of steam power to transportation

growth accelerated and productivity began to rise in amore sustained fashion

A. The ‘Decline’ of Britain

Britain’s decline was relative to the growth of it’s rivals

1. Science and Technology

british science continued to perform respectably well into the 20 th

century

2. Organization

british business organization proved hardly able to adapt to the

large scale and high capital intensity of modern industry.

Failure to introduce modern managerial systems played a part in

british ‘decline’.

3. Finance

instead of turning to domestic manufacturing when the

infrastructural booms expired, British financial system turned overseas, to
financing similar infrastructural developments in other countries.

4, Demand

British goods encountered rising competition from the exporters

of the newer countries

British manufactured exports appeared to become trapped in a

vicious cycle of slow export growth and low investment at home.

B. The New “Techno-Economic Paradigm’

‘Third Kondratiev’ (steel, heavy engineering, and electric supply)

‘Fourth Kondratiev’ (chemicals and motor vehicles)

C. American Industrial Supremacy

US economy before its civil war was characterized by regional

specialization in functions.

Recent estimates of Total Factor Productivity (TFP) levels suggest that the
USA was only a little below the UK as early as 1880 and not far ahead sixty years
later.

At the micro level, there are indications from individual industries such as
steel that the USA did not surpass Britain in TFP until the early years of the 20 th
century.

Labor force grew rapidly. (mass migration)

II. TECHNOLOGY: AMERICANS AS BORROWERS

Did not initiate major technologies (third Kondratiev).

Developed new technology systems / organization of new technologies.

(ex. Electricity supply network)

A. Demand Factors

1. Composition of Demand

concentration on cheaper, more standardized items. (ex. Guns)

Standardization, including standardization of weights and

measures.

2. Demand and Innovation

growth of demand interacted with the lack of growth of supply

B. Supply Factors

Adaption of borrowed technologies to the different context of

supply conditions in the USA. (reinvention)

1. Difference in Natural Resources

Abundant supplies of land available.
Homestead Act (1862)
In Agriculture, the technology allowed limited labour supplies to
work more land.

CHEAP LAND = cheap timbre and water inputs

Widespread use of wood rather than iron. (use of wood as fuel in

construction rather than coal. Production of wooden items such as furniture’s
and gun-stocks)
 Also there was a need for cheap mass transportation.

Steamboats

Railroad construction

Automobile

2. Labour and Capital

labour source (South and East Europe)

capital source (UK)

C. New technology Systems

USA lagged behind Britain when it comes to modern technologies. But led
in reorganizing technological systems,

Electricity – widely used for communications by the 1870s

Commercialized for lighting (Edison and Westinghouse) by

the end of 1870s.

GENERAL ELECTRIC (1892)

Adoption of electricity as motive power.

1900 – supplied 4 percent of power used in manufacturing

1920s – 50 percent

D. Research and Development

Scientific knowledge remained low.

Development took place through trial and error.

Technology continued to lead science in the field of metallurgy until well

into the 20th century. (major product advances: high-speed steel, sintered
tungsten carbide, development of crystallography.)

Laboratories were largely involved in routine tasks: grading and testing

materials, assaying minerals, controlling quality, writing specifications.

American Society for Testing Materials was founded in 1902

Greater use of experimental science, which was originally chemistry-

based and eventually physics-based.

Start of in-house Research and Development.

General Electric Labs won two Nobel Prizes, and Bell Labs of AT&T as
many as eight.